Family Settlement - Nuts and Bolts

One of the Deeds which seems to escape the axe of section 17(2) of the registration Act is the Family Settlement.

In Halsbury's Laws of England a Family Arrangement has been defined as 'An Arrangement between the members of the same family intended to be generally and reasonably for the benefit of the family either by compromising doubtful or disputed rights or preserving family property or peace and security of the family by avoiding litigation or by saving its honour.

As per the definition, the agreement is among the members of the family, for settlement/arrangement of a property /properties and the consideration is the peaceful settlement / avoidance of litigation.

Requisites of Family Arrangement as listed out in M.N. Aryamurthi vs. M.L. Subbaraya Sastri[1] are as follows:

1. There must be an agreement between the members of the family for the benefit of the family.
2. The agreement should be for settling doubtful or disputed rights and secure peace and security of the family and avoid litigation.
3. The consideration for the agreement is the amity and goodwill among relations.

Added to the above in Kale & Others vs. Deputy Director Of Consolidation[2] the Supreme Court of India has ruled that a

1. It must be voluntary and not induced by fraud, coercion or undue influence

2. It may be even oral.

3. Registration is necessary only if the terms are reduced to writing but where the memorandum has been prepared after the family arrangement either for the purpose of record or for information of court, the memorandum itself does not create or extinguish any rights in immovable property and, therefore does not fall within the mischief of s. 17(2) of the Registration Act and is not compulsorily registrable;

4. The 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.

Though the definition says that the settlement has to be between the members of the family however, in Zaheda Begum vs. Lal Ahmed Khan[3]., it was held that family settlement can take within its fold persons outside the purview of succession.

Family arrangement is not binding on a person who is not a signatory to the agreement. So also a person who was a signatory to the agreement and accepted and made improvements to his share of the property, it was held the family settlement is acted upon[4]. Also in Kale vs. Deputy Director mentioned above, it was stated by the Apex Court 'the rule of estoppels is applied to shut out the plea of the person who being a party to the family arrangement, seeks to unsettle a settled dispute and claims to revoke the family arrangement under which he has himself enjoyed some material benefits".

The premise on which Registration is not made compulsory for the Family Settlement is that there is an antecedent title, claim, interest or possible claim in the property[5]. Since there is no transfer, hence that explains why a conveyance is not needed to pass title[6]. Since there is an antecedent title the agreement merely acknowledges and defines what a title is, the members of the parties relinquish all claims to the property except to that which falls to his share.

The Family agreement can be oral but a memorandum can be prepared as a record of what has been agreed upon. The memorandum does not require registration if to be used as a chronicle of events. But if it is intended to be used as a document of title for declaring for future what rights in what parties possess (a document on which future rights of the parties are founded) then the document would require registration[7].

Now coming to the question whether Family settlement brings to an end the joint family status of the family not unless it is effected to be so.

Family Settlement avoids litigation amongst members of a family but the allusion is the existence of mutual respect, trust and affiliation in the family.

Reference:

The Transfer of property Act Dr.Hari Singh Gour
Ram Charan Das Vs. Girija Nandini Devi A.I.R 1966 SC323
Kisto Chandra Mandal V. Anila Bala Dasi Mst A.I.R 1968 Pat 487
M.Pappu Reddiar V. Amaravathi Ammal A.I.R 1971 Mad. 182Kasturchand Chotamal V. Kapurchand Kewal Chand A.I.R. 1975 M.P. 136 at 140
Mostla Sharada Devi V. Chandbala Devi A.I.R 2007 Pat 162
Ramdev Food Products Pvt Ltd V. Arvindbhai Rambhai Patel A.I.R 2006 S.C. 3304
Mariyamma Thomas V. Remi Joseph A.I.R 2009 (NOC) 1076
D.V.Narayana Sah V. A.G. Nagammal A.I.R 2009 (NOC) 1061 (Mad)

[1] A.I.R. 1972 S.C. 1279
[2] A.I.R 1976 S.C. 807
[3] AIR 2010 A.P. 1at 5
[4] Gurucharan Ram vs. Tejwant Singh A.I.R 2008 (NOC) 1650 at p 494; K.Jagannathan v.A.M. Vasudevan Chettiar A.I.R 2001 Mad 184.
[5] Jagdish Vs. Rajwanti A.I.R 2008 P&H 27 at 30.
[6] Sahu Madho Das Vs. Mukund ram A.I.R 1955 S.C. 481
[7] T.B.Bhujil v. D.B.Bhujil A.I.R 1966 S.C 292