He is not correct 

grand mother died intestate and your mother and uncle are legal heirs 

1. Your mother and her brother are entitled to equal share in the property owned by your grandmother, who died intestate.

2.  Your mother had released her share in the property in favour of your grandmother by registering a registered Release Deed during 1985 when your grandmother was alive.

3. Your mother is entitled now for equal share on par with her brother, in view of your grandmother's intestate death. 

Registered Release Deed executed by your mother in favour of your grandmother is not relevant legally now in view of your grandmother's intestate ( without executing a WILL ) death. 

Release deed executed in 1985 in favor mother. Daughter is legal heir of mother. After demise of mother daughter is claiming as legal heir. Had the daughter executed the sale deed in favor third parties, she would have lost her right of inheritance. Mother do have right to share in the property of grandmother under Hindu Succession Act.

Release deed is not void but after death of titleholder of property the property passes to legal heirs. Hence her daughter claiming property under the principles of Hindu law of inheritance as codified in Hindu Succession Act.

Since your grand mother died without a will on her demise mother has equal share in property 

The facts are not clear.  See, who was the actual owner of the property.  It seems to me that after the death of your grandfather, the property was inherited by your grandmother, mother and her younger brother.  In case your mother relinquished her 1/3 share in 1985 in favour of your grand mother, then your grand mother became owner of 2/3rd share and brother of your mother was the owner of 1/3 rd share (if he has not relinquished his share to your grandmother).

Option 1:

Now, in case your grandmother was owner of 2/3rd share and brother of your mother was owner of 1/3rd share, then 2/3 rd share of your grandmother would be inherited by your mother and her brother in equal share meaning thereby your mother would be owner of 1/3rd share and her brother would be owner of 2/3rd share, 1/3rd share of his own and 1/3 being acquired by her during the life time of grandmother.

Option 2:

The brother of your mother had also relinquished his 1/3rd share to grandmother, then after the death of grandmother, your mother and her brother would be owner of 1/2 share each.

Your mother no doubt had relinquished her rights in the property by executing a registered release deed by which her mother became an absolute owner of the property.

Now the subject of release deed is over because after the release deed her mother became absolute owner and she could have transferred the property to anyone of her choice or made any arrangement for the property before her death.

However since she being the absolute owner and reported to have died intestate, the properties left behind by her upon her death shall devolve equally on her own legal heirs, which is the second subject and matter of dispute now.

Your mother's brother is wrong in telling that your mother has no share in the property, left behind by her deceased mother who is reported to have died intestate.

Your mother being one of the legal heirs is entitled to an equal share in the property at par with the other legal heirs of your deceased grandmother to succeed to her estates as successors in interest.

If her brother is creation any problem, you r mother can issue a legal notice demanding partition of the properties left behind by her mother equally with separate possession of her legitimate share in it.  

After that she can file a suit for partition if he is not agreeing for an amicable partition.

The release deed is not void.

The release deed was already acted upon by her mother during her lifetime and she became an absolute owner by the virtue of the said release deed.

Now this property is your grandmother's property.

Hence after her intestate death, as per law inheritance your mother being one of the legal heirs to succeed to the estates of her mother, is entitled to an equal share in the property at par with other legal heirs. 

Dear Maam,

The validity of release deed executed by your mother in respect of her claim shall depend on four things, one the mental capacity and age of your mother when she executed the release deed, the situation under which the release deed was made if it can be proved it was made under fraud, coercion, misrepresentation, etc, third and most importantly on the terms of the release deed.

If any of those situation fall in favour, the deed can be challenged in court.

Thank you

Yes it will be void after her death. But the same depends on the averment stated in release deed to determine its inactive status after her death