Allowed

yallapragada manjulata rao v. state of maharashtra

Bombay HC13 Jul 2016APP/753/2006

Case brief

AI extract

What is this about?

The Bombay High Court held that shares in a registered co-operative housing society constitute a security under the Indian Succession Act, 1925. The earlier order denying maintainability of the succession certificate application was set aside.

What did the court decide?

The impugned order setting aside the application for succession certificate in respect of co-operative society shares was set aside.

yallapragada manjulata rao Vs state of maharashtra — Cooperative Societies | Bombay HC (2016)

osapeal753

ssp

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.753 OF 2006 IN
 TESTAMENTARY PETITION NO.595 OF 2005

¶5

Yallapragada Manjulata Rao
vs.
State of Maharashtra

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...Appellant

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...Respondent

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Mr.Anilkumar Menon for the appellant
None for the respondent

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CORAM : A.S.OKA, &
 A.A.SAYED,JJ.

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 DATE : JULY 13, 2016

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ORAL JUDGMENT: (PER A.S.OKA,J.)

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1Heard the learned counsel for the appellant.
By this Appeal, the appellant has taken an exception
to the order passed by the learned Single Judge
dated 25th August 2006 by which the issue of
maintainability of the application made by the
appellant for grant of succession certificate under
section 372 of the Indian Succession Act,1925 has
been decided.

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2With a view to appreciate submissions, a
reference of few facts will be necessary. The
appellant is the widow of deceased Yallapragada
Shankar Rao who died on 29th May 1999. It is stated

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in the application that the deceased was Hindu and
he died intestate. The succession certificate is
sought in respect of the amounts lying to the credit

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of the deceased in two bank accounts as well as in
the public provident fund account. The succession
certificate is also sought in respect of the shares
of the Trishul SSSP Unit 14 Co-operative Housing
Society Limited which is a co-operative housing
society duly registered under the Maharashtra Co-
operative Societies Act,1960 (for short `the said
Act of 1960'). By the impugned order, the learned
Single Judge held that the application for grant of
succession certificate was not maintainable in
respect to the shares of a co-operative housing
society registered under the said Act of 1960. The
learned Single Judge held that the share certificate
issued by the co-operative housing society is
linked with the right to occupy a flat in the
building of the society and therefore, the
application for succession certificate will not be
maintainable.

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3The learned counsel for the appellant invited
our attention to sections 370 and 372 of the said
Act of 1925 and in particular clause(c) of sub-
section 2 of section 370 which defines security to
mean a share in a company or other incorporated
institution. His submission is that the consequence
of holding a share in a tenant cooperative society
is not relevant for deciding the issue of
applicability of section 372 of the said Act of 1925
as a co-operative society is also an incorporated
institution. He would, therefore, submit that the
impugned order is erroneous especially when in view
of sub-section 2 of section 212, the appellant was

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not required to apply for a grant of letters of
administration. He stated that as regards other
debts and securities mentioned in the application
filed by the appellant, the succession certificate
has been issued.

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4We have carefully considered the submissions.
Part X of the said Act of 1925 contains the
provisionsregardinggrantofsuccession
certificate. The succession certificate can be
granted only in respect of debts and securities.
The law as regards effect of grant of succession
certificate is well settled. The certificate
granted under Part X with respect to the debts and
securities specified therein is conclusive as
against the persons owing such debts or liable on
such securities. Therefore, grant of succession
certificate in favour of the applicant does not
confer any title on the applicant to the exclusion
of the legal representative who are otherwise
entitled to inherit the estate of the deceased.

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5For the purpose of part X of the said Act of
1925, securities have been defined under sub-section
2 of section 370 which reads thus:

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“(2) For the purposes of this Part, "security" means--

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(a) any promissory note, debenture, stock or other security of the Central Government or of a State Government; (b) any bond, debenture, or annuity charged by Act of Parliament 1*[of the United Kingdom] on the revenues of India;

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(d) any debenture or other security for money issued by, or on behalf of, a local authority;

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(e) any other security which the 2*[State Government] may, by notification in the Official Gazette, declare to be a security for the purposes of this Part.”

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6Security for the purpose of part X is
inclusive of a share in a company or any
incorporated institution. A co-operative society
duly registered under the said Act of 1960 is also
an incorporated institution. On plain reading of the
definition of the security, the shares issued by a
registered co-operative society will fall in the
definition of the security.

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7Now we may advert to the impugned order. The
learned Single Judge has considered the decision of
the Apex Court in the case of Ramesh Shah vs.
Harsukh Jadhavli Joshi1. Relying upon the said
decision, the learned Single Judge observed that by
virtue of holding shares in a tenant co-partnership
housing society, a member of the society gets right
to occupy a premises of the society. The question
before the learned Single Judge for consideration
was whether the shares in respect of which the
succession certificate was prayed were the
securities within the meaning of sub-section (2) of
section 370 which defines “security” for the purpose
of Part X. By virtue of holding such shares,
several benefits may accrue to the holder of such
shares. While dealing with the application for
grant of succession certificate, the Court is
concerned only with the limited issue whether the

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1 AIR 1975 SC 1470

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shares subject matter of the application will fall
in the definition of security. The Court is not
concerned with the rights which the holder of the
security acquires by virtue of holding or transfer
of security in his or her name. The learned Single
Judge was impressed by the fact that by virtue of
holding shares in such a society, the shareholder
gets a right to occupy a premises of the society.
According to us, this legal consequence will not
affect inclusion of share of such society in the
definition of sub-section (2) of section 370. The
learned Single Judge has not held that the shares in
the question will not fall in the definition of
security. The learned Judge has dealt with the
rights which one acquires by holding such shares.
Therefore, in our view, the finding recorded by the
learned Single Judge about the maintainability of
the application for grant of succession certificate
in respect of the said shares is erroneous and
accordingly, the Appeal must succeed.

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8Hence, we pass the following order:

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(I)The impugned order in relation to the
finding on issue of maintainability of the
application filed by the appellant is hereby
set aside;

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(II)The testamentary petition No.595 of 2005 is
held as maintainable in respect of the shares
in respect of which the relief is claimed as
the shares are covered by the definition of
security under sub-section 2 of section 370 of
the said Act;

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(III) Accordingly, the Testamentary Petition No.595 of 2005 shall be decided in accordance with law;

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(IV) We make it clear that we have not made any adjudication on the question whether the appellant is entitled to succession certificate in respect of the shares in question. This issue will have to be decided in accordance with law;

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(V) The appeal is allowed on above terms.

yallapragada manjulata rao v. state of maharashtra

Case brief

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yallapragada manjulata rao v. state of maharashtra

Case brief

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