1. HAMOODUR RAHMAN, C. J.-Both these appeals raise a common question of law, namely, as to whether a nomination made under section 27 of the Co-operative Societies Act validly effects a transfer of an immovable property in favour of the nominee.
2. The appellants in Civil Appeal No. K-19 of 1967 are the widow, son and daughter of one Muhammad Yakub who was a Central Government employee. In 1948, while still a bachelor and living with his sister, the respondent No. 3 herein, he filed an application for the membership of the Pakistan Employees' Co-operative Housing .Society Limited, Karachi, and under the bye-laws of the Society read with section 27 of the Bombay Co-operative Societies Act, 1925, he in this application nominated his sister Mst. Musarrat Parvin as his heir in case of his demise to all his "interests and rights in the Society" which he would enjoy on becoming a member.
3. After making this application, he married the appellant No. 1 on the 22nd of October 1949 and had two sons and a daughter out of this marriage. In 1953, the Society allotted three plots to him, namely, Plot No. 2/88-N measuring 400 sq. Yds. For residential purposes and Plots Nos. 347 and 349 measuring 132 sq. Yds. Each for commercial purposes, but delivered possession of only the residential plot. Soon after this, unfortunately, Muhammad Yakub died on the 8th of November 1953.
4. One of his sons also died in 1954. Subsequently, the appellants as well as the sister (respondent No. 1) approached the Society for mutation of their names in respect of these plots. The Society, relying upon the nomination, mutated the name of the respondent No. 1 in respect of the residential plot and delivered possession thereof to her. The commercial plots were not given to anyone, because, possession, had not been delivered of these plots to the deceased during his lifetime.
5. The appellants then filed a suit on the 20th of November 1957, for a declaration that they were entitled to all the plots as the legal heirs of the deceased Muhammad Yakub and for possession thereof. The sister, the mother of the deceased and the Society were all made defendants in the suit. The Society, however, did not contest the suit.
6. The trial Court held that the nomination amounted to a will which, according to Muslim Law, could be valid only to the extent of 1/3rd and, therefore, by its decree of the 13th of April 1959, gave a declaration in favour of the appellants and respondent No. 2 to the extent of 2/3rds and in favour of respondent No. 1 to the extent of 1/3rd but this was restricted only to the residential plot. No declaration was given with regard to the commercial plots holding that they did not form part of the estate of the deceased, as no possession had been delivered during his lifetime.
7. On appeal, however, the learned Additional District Judge reversed the decision of the trial Court holding that the nomination could not amount to a will and that it could not change the law of succession. A decree was, therefore, made in favour of the appellants and the mother (respondent No. 2) to the extent of the full share of the residential plot. The decree in respect of the commercial plots was, however, affirmed.
8. From this decision, the respondents Nos. 1 and 2 came to the High Court in Second appeal, and a Division Bench of the High Court of West Pakistan, Karachi seat, relying on an earlier Division Bench decision of the same High Court in the case of Karim v. Hajyani Hanifa (PLD 1970 KAR 613), held that the nomination prevailed in supersession of the personal law and the title to the properties left by the deceased nominator passed to the nominee and not to his legal heirs. The suit was, accordingly, dismissed.
9. Gabriel Rocha died on the 29th of April 1950, leaving his surviving wife (the nominee), two daughters and two sons, and in due course, the Society relying on the nomination transferred the shares of the said Gabriel Rocha to his nominee Mrs. Stael Mary Rocha as also mutated her name in its records as the owner of the property belonging to the deceased; but the children of Gabriel Rocha continued to live with their mother in the said ,house.
10. Unfortunately, on the 28th of June 1963, Mrs. Mary Rocha made a gift of the property in favour of the respondent No. 1, one of her daughters, to the exclusion of the other heirs of Gabriel Rocha.
11. The appellants, therefore, filed the present suit in 1964 against their mother, the donor, their sister, the donee, and the Society for restraining them from transferring the property. The suit was subsequently withdrawn with permission to file another suit, and a second suit being No. 302 of 1964 was filed for a declaration that the deed of gift was invalid and inoperative and not binding on the appellants and that the appellants were legally entitled to their respective shares in the immovable property No. 242, Catholic Colony, Karachi, which belonged to their late father Gabriel Rocha. Again the Society did not contest the suit which was contested only by the nominee and the donee-daughter. It was, however, decreed in favour of the appellants on the 15th of September 1965, by the trial Court which held that the nomination had not conferred any right on the mother who, on the demise of the nominator, became only a co-sharer of the property. The mutations which were made behind the backs of the other heirs were invalid and ineffective and so was the gift.
12. On appeal, however, the learned Additional District Judge, relying upon the then unreported judgment of the High Court in the case of Mst. Mussarat Pervin v. Mst. Amtul Habib, from which arises Civil Appeal No. K-19 of 1967, reversed the decision of the trial Court and held that Mrs. Stael Mary Rocha being the nominee had acquired full title to the property to the exclusion of the other heirs.
13. On second appeal, this decision was affirmed by one of the learned Judges of the West Pakistan High Court, Karachi Seat, who was the author of the judgment in the case of Mst. Mussarat Pervin v.
14. Mst. Amtul Habib. He also refused to certify the case as fit for appeal under the Letters Patent.
15. Leave was granted in Civil Appeal No. K-19 of 1967 on the 15th of December 1965, and in Civil Appeal No. K-1 of 1971 on the 8th of January 1969.
16. Since both these impugned judgments are based on the judgment of the Division Bench in the case of Karim v. Hajiyani Hanifa, learned counsel has challenged the correctness of that decision on the ground that, since it is based on the analogy of the corresponding provision of the Provident Funds Act, 1925, without noticing that the non obstante clause appearing in section 5(1) of the Provident Funds Act is missing from section 27 of the Bombay Co-operative Societies Act, it cannot be considered to be a proper decision, nor the anology apt.
17. The provisions of section 5 of the Provident Funds Act, 1925, read as follows :- "5.-(1) Notwithstanding anything contained in any law for the time being in force or in any disposition, whether testamentary or otherwise, by a subscriber to, or depositor in, a Government or Railway Provident Fund of the sum standing to his credit in the Fund, or of any part thereof, where any nomination, duly made in accordance with the rules of the Fund, purports to confer upon any person the right to receive the whole or any part of such sum on the death of the subscriber or depositor occurring before the sum has become payable or before the sum, having become payable has been paid, the said person shall, on the death as aforesaid of the subscriber or depositor, become entitled, to the exclusion of all other persons, to receive such sum or part there- -of, as the case may be, unless-
(a) such nomination is at any time varied by another nomination made in like manner or expressly cancelled by notice given in the manner and to the authority prescribed by those rules, or
(b) such nomination at any time becomes invalid by reason of the hap--pening of some contingency specified therein,- and if the said person predeceases the subscriber or depositor, the nomination shall, so far as it relates to the right conferred upon the said person, become void and of no effect: Provided that where provision has been duly made in the nomination in accordance with the rules of the Fund, conferring upon some other person such right instead of the person deceased, such right shall, upon the decease as aforesaid of the said person, pass to such other person.
(2) Notwithstanding anything contained in the Succession Certificate Act, 1889, or the Bombay Regulation VIII of 1827, any person, who becomes entitled as aforesaid, may be granted a certificate under that Act, or that Regulation, as the case may be, entitling him to receive payment of such sum or part, and such certificate shall not be deemed to be invalidated or superseded by any grant to any other person of probate or letters of administration to the estate of the deceased.
(3) The provisions of this section as amended by subsection (1) of section 2 of the Provident Funds (Amendment) Act, 1946, shall apply also to all such nominations made before the date of the commencement of that Act: Provided that the provisions of this section as so amended shall not operate to affect any case, in which before the said date any sum has been paid, or has under the rules of the Fund become payable in pursuance of any nomination duly made in accordance with those rules."
18. The provisions of section 27 of the Bombay Co-operative Societies Act, on the other hand, are in the following terms: "27. Transfer of interest on death of member.-(1) On the death of a member of a Society such society may within a period of one year from the death of such member transfer the share or interest of the deceased member to a person or persons nominated in accordance with the bye- laws of the society, if duly admitted a member of the society, in accordance with the rules or the bye-laws of the society, or, if there is no person so nominated, to such person as may appear to the Committee to be the heir or legal representative of the deceased member if duly elected a member of the society, or may pay to such nominee, heir or legal representative, as the case may be, a sum representing the value of such member's share or interest as ascertained in accordance with the rules or by-laws: Provided that such nominee, heir or legal representative, as the case may be, may require that payment shall be made by the society within one year from the death of the member of the value of the share or interest of such member ascertained as aforesaid.
(2) A society shall subject to the provisions of section 25 and unless prevented by an order of a competent Court pay to such nominee, heir or legal representative, as the case may be, all other moneys due to the deceased member from the society.
(3) All transfers and payments made by a society in accordance with the provisions of this section shall be valid and effectual against any demand made upon the society by any other person."
19. It will be observed that the language of section 5 of the Provident Funds Act leaves no room for doubt that the nominee shall to the exclusion of all other persons be entitled to receive the amount to the credit of the deceased in the, Fund; but under section 27 of the Co-operative Societies Act, all that passes to the nominee is "a sum representing the value of such member's share or~ interest" in the Society. Section 27 does not deal with the properties allotted by the society to a member. A member of a Housing Society has two distinct and separate capacities:-
(1) as a member of the society itself, that is to say, as a shareholder in the society, and
(2) as an allottee under the society under its rules and bye-laws of plots or houses distributed or sold by the society.
20. The nomination transfers only shares or other interests such as dividends or . Profits which may have accrued to the member in his lifetime in respect of those shares in the society itself, but it cannot be said that this necessarily covers also all beneficial interests in all other transactions entered into between the deceased and the society in a different capacity.
21. The holding of a share is merely a qualification for the allotment of a plot or a house, but it does not follow from this that every member is necessarily entitled to a plot or house. It appears furthermore that under bye-law 12-A of the Bye-Laws of the Pakistan Employees Co-operative Housing Society Ltd., Karachi, even a non-member may become the owner of a plot if he has acquired the same by sale or mortgage or otherwise from a member of the society. It is, therefore, also not necessary that to acquire a plot one must be a member. The membership of the society is thus something different from the right to hold a plot or house under the society.
22. Apart from this, it appears to us that, unless a nomination can amount to a valid gift inter vivos, it cannot pass title to the nominee in respect of immovable property, nor can the making of a nomination give the right to the nominator at his own choice to change the law of succession B which would otherwise be applicable in the case of his death. Obvi--ously, the nomination cannot operate as a valid gift under the Muhammadan Law, because, such a gift, in order to confer title on the donee, must be accompanied by delivery of possession of the property gifted. In the case of plots allotted to Muhammad Yakub, there could be no delivery of possession at the time the nomination was made, for, at that time, no plot had even been allotted to him.
23. Learned counsel for the first two respondents in Civil Appeal No. K-19 of 1967 has, however, contended that the share or interest in the society means a share or interest relatable to the society or arising as a consequence of the membership of the society, and in support of this contention has relied upon a decision of the Court of Appeal in England in the case of Bennett v.
24. Slater ((1899) 1 Q B 45where in the case of a friendly society it was held that a nomination made by a member of a friendly society under section 15 (3) of the Friendly Societies Act, 1875, in respect of an amount not exceeding --100, was valid. In this case, Smith L. J. Took the view that the nomination made the nominee a person beneficially interested in the money, and Rigby, L. J.
25. Pointed out that by the provisions under consideration the "intention of the Legislature was to enable members of friendly societies to make by means of a nomination under the Act a gift of moneys insured by them with the society" therefore, that money did not form part of the residuary estate of the testator. The latter, we think, is the correct ratio of the decision and, therefore, this decision is of no assistance to the learned counsel. As we have already pointed out, unless the nomination can be treated as a valid gift, this question cannot arise, and a gift by a mere declaration cannot be made of immovable property even before the property has come into existence.
26. Apart from this, the decision in the case of Karim v. Hajyani Hanifa cannot be approved, for it has not taken into account a large number of decisions even under the Provident Funds Act where a contrary view has been taken by various High Courts in this sub-continent. Thus, in the case of Aimai v. Awabai Dhanjishaw Jamsetji (AIR 1924 Sind 57a Division Bench of the Sind Chief Court held that a nomination even under the Provident Funds Act was) neither a will nor a gift nor a trust, and that such a nomination was merely C a mandate, the validity of which expired with the death of the mandator, and, therefore, the Fund formed part of his own undisposed of estate on l his death.
27. Hardial Devi Ditta v. Janki Das (AIR 1928 Lab. 773), the Lahore High Court too held that the object of the nomination system under the Provident Funds Act was merely to designate some person to whom the provident fund money may be paid out.
28. Mt. Latifanbai v. Mt. Sakinabai (AIR 1939 Sind 107), another Division Bench of the Sind Chief Court went into this matter more fully and came to the conclusion that the Provident Fund moneys are the property of the deceased employee and pass on his death to his heirs, whoever be nominated by him for the purpose of receiving the money from the Fund and for giving sufficient quittance to the Fund. The monies standing to the credit of a deceased Mohammadan employee in the Provident Fund at the time of his death form part of his estate and are subject to the personal law of suceession of the deceased.
29. Again, in the case of Noor Mahmood v. Mst. Sardar Khatun (PLD 1951 Sind 1 the same view was taken and it was held that the Provident Funds Act confers on the nominee "nothing more than the right to receive the amount. It does not confer on the nominee the full rights of an owner, and does not touch the rights of those entitled to the sum as heirs or legatees, under the law applicable to the case." In other words, it merely obviates the necessity of obtaining letters of administration or succession certificates and the nominee has the right to collect the amount on behalf of all persons entitled to it under the law applicable to the nominator.
30. The same view has also been taken in the case of Mukadar Khan v. Burmah Shell Oil Storage do Distributing Co. Ltd., Karachi (PLD 1968 Kar. 523).
31. Contrary views had been taken in the cases of Ahmad Abdul Razzak v. Jamala Bint Mehdi (AIR 1935 Bom. 234), M. Mon Singh v. Moth! Bai (AIR 1936 Mad. 477), In the Goods of Stanley Austin Cardigan Martin (AIR 1939 Cal. 642and Mrs. Aiyasha Koreshi v. Hishmatullah Koreshi (PLD 1972 Kar. 653 The Bombay case is distinguishable for there the nominee was also a dependant and relying on section 3(2) of the Act the Court held that the fund vested in the dependant as specifically provided in the said section. The Calcutta case gives no reason for holding that the fund did not form part of the estate of the deceased subscriber. The Madras decision has assimilated section 5(1) with section 3(2) without noticing that under the latter section the vesting is only in favour of a dependant and not any other person. In the Karachi case a learned Single Judge followed the Division Bench ruling in the case of Karim v. Hajyani Hanifa.
32. We are of the opinion, however, that the correct view has been taken in the cases referred to earlier, namely, that the nomination merely confers a right to collect the money or to "receive the money".
33. It does not operate either as a gift or as a will and, therefore, cannot deprive the their heirs of the nominator who may be entitled thereto under the law of succession applicable to the deceased.
34. The nominee thus collects as a trustee for the benefit of all persons entitled to inherit from the decease employee. It is not without significance that section 5 of the Provident Funds Act neither vests the amount in the nominee nor declares hi to be the owner thereof. It merely gives him the exclusive right to receive the amount and nothing more. In any event the position under section 27 of the Bombay Co-operative Societies Act is different because the wording of this section is materially different. There is no analogy between the two.
35. For these reasons, we cannot approve of the decisions in which a contrary view has been taken as in the judgments under appeal before us.
36. These appeals are, accordingly, allowed. The judgment and decree of the High Court in Civil Appeal No. K-19 of 1967 are set aside and those of the Additional District Judge, Karachi, in Civil Appeal No. 106 of 1959 restored. In Civil Appeal No. K-1 of 1971 the judgments and decrees of the High Court and the Additional District Judge, Karachi, are set aside and those of the Civil Judge, Karachi, in Suit No. 302 of 1964 restored.
37. Since the appeals raised an important question of law on which there was considerable difference of opinion in the High Courts, we make no order as to costs.
…and 12 more citing cases