Memorandum of Family Settlement not required to be registered – Supreme Court

Memorandum of Family Settlement not required to be registered – Supreme Court. Read essentials ingredients of a Family Settlement

ABACUS Case Law Citation
ABCAUS 3351 (2020) (07) SC

Important case law relied upon by the parties:
Kale & Ors. vs. Deputy Director of Consolidation & Ors (1976) 3 SCC 119

In this case the question of Law involved was as to whether the Memorandum of Family Settlement was required to be registered as interest in immovable property worth   more   than   Rs.100/­   was   transferred thereby?

A family settlement was arrived between closely related parties at with the intervention of respectable persons and family members, whereunder ownership and possession in respect of the land including constructions thereon was decided, accepted and acknowledged. Under the Settlement, the plaintiff was accepted and  acknowledged to be the exclusive owner. The said memorandum was executed by all parties.

However, after execution of the memorandum of family settlement, new issues were raised by few parties thereto to resile from the family arrangement.

As a result, the plaintiff (predecessor of the appellant of the case) filed a suit for declaration praying for a decree that he was the owner in possession of the land. An alternative plea was also taken that since plaintiff was in possession of the whole suit property to the knowledge of the defendants openly and adversely for more than twelve years, he had acquired ownership rights by way of adverse possession.

The District Judge (The first appellate Court) declared the original plaintiff as owner of the suit land along with constructions. The Court opined that it was merely a memorandum of family settlement and not a document containing terms and recitals of the family settlement made thereunder.

However, the Hon’ble High Court set aside   the order of the first appellate Court and opined that the Family Settlement Memorandum which for the first time, created a right in favour of plaintiff in an immovable property in   which he had no pre-existing right would require   registration,  being the mandate of law.

Memorandum of Family Settlement not required to be registered

The Hon’ble Supreme Court observed that it had been clearly establish that there was not only univocal family arrangement between the parties, but it was even acted upon by them without any exception.

The Hon’ble Supreme Court stated that the settled legal position is that when by virtue of a family settlement or arrangement, members of a family descending from a common ancestor or a near relation seek to sink their differences and disputes, settle and resolve their conflicting claims or disputed titles once and for all   in   order to buy peace of mind and bring about   complete harmony and goodwill in the family, such arrangement ought to be governed by a special equity peculiar to them and would been forced if honestly made.

The Hon’ble Supreme Court stated that the object of such arrangement is to protect the family from long drawn litigation or perpetual strives which mar the unity and   solidarity of the family and create hatred and bad blood between the various members of the family

Essentials ingredients of a Family Settlement

The Hon’ble Supreme Court noted that three judge Bench of the Court had described the essentials ingredients of a family settlement as under:

(1) The family settlement must be a bona fide one so as to resolve family disputes and rival claims by a fair and equitable division or   allotment of properties between the various members of the family;

(2) The said settlement must be voluntary and should not be   induced by fraud, coercion or undue influence;

(3) The family arrangement may be even oral in which case no registration is necessary;

(4) It is well ­settled that registration would be necessary only if the terms of the family arrangement are reduced into writing. Here also, a distinction should be made between a document containing the terms and recitals of a family   arrangement made under the document and a mere memorandum prepared after the     family arrangement had already been made either for the purpose of the record or for information of the court for making necessary mutation. In such a case the memorandum itself does not create or extinguish any rights in immovable properties and therefore does not fall within the mischief of Section 17(2) of the Registration Act and is, therefore, not compulsorily registrable;

(5) The members who may be parties to the family arrangement must have some antecedent title, claim or interest even a possible claim in the property which is acknowledged by the parties to the settlement. Even if one of the parties to the settlement has no title but under the arrangement the other party relinquishes all its claims or titles in favour of such a person and acknowledges him to be   the sole owner, then the antecedent title must be assumed and the family arrangement will be upheld and the courts will find no difficulty in giving assent to the same;

(6) Even if bona fide disputes, present or possible, which may not involve legal claims are settled by a bona fide family arrangement which is fair and equitable the family arrangement is final and binding on the parties to the settlement.

Accordingly, the Hon’ble Supreme Court held that memorandum of a family settlement was not required to be registered.

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