The property left behind by your deceased grandfather, upon his intestate death, shall devolve equally on all his legal heirs namely, his wife and all children including the children of his deceased legal heirs.
Just because your grandmother is residing in that house property, it will not become her own property.
If the legal heirs decide to transfer this property to one of the grandsons or any third party, all the legal heirs may execute a registered transfer deed jointly in favor of the chosen grandchild.
The transfer may be by gift deed or by a registered sale deed.
No relinquishment deed would be applicable in this situation.
It is advisable that all the legal heirs can execute a registered sale deed jointly in favor of the chosen person to avoid all future complication/litigation/dispute.