Family Settlement Memo is not a compulsorily registrable document
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Family Settlement Memo is not a compulsorily registrable document

Introduction

The issue in respect of requirement of compulsory registration of a document, settlement between members of the family popularly known as ‘family settlement’, as interest in immovable property worth more than Rs. 100 transferred in party to the settlement, has been way back answered by the Full Bench (three judges’ bench) of the Hon’ble Supreme Court (SC) in Kale & Ors. vs. Deputy Director of Consolidation & Ors. (1976) 3 SCC 119 (“Kale case”). However, such issue being an issue of fact comes for consideration in different cases on the basis of their own peculiar facts. Recently, such issue has arisen in Ravinder Kaur Grewal & Ors. Versus Manjit Kaur & Ors. CIVIL APPEAL NO. 7764 OF 2014 (“Ravinder Kaur case”), the issue was answered by the Division Bench (two judges’ bench) of the SC through its reported judgment on July 31, 2020.

Settled legal position

The SC in Ravinder Kaur case reiterated the settled legal position in respect of family settlement. It has been observed 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 be enforced if honestly made. 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, as observed in Kale case. The emphasis has further been given by the SC in Ravinder Kaur case that the courts have leaned in favour of upholding a family arrangement instead of disturbing the same on technical or trivial grounds. Where the courts find that the family arrangement suffers from a legal lacuna or a formal defect the rule of estoppel is pressed into service and is applied to shut out plea of the person who being a party to family arrangement seeks to unsettle a settled dispute and claims to revoke the family arrangement under which he has himself enjoyed some material benefits.

Essentials of a family settlement

The SC in Ravinder Kaur case observed that in paragraph 10 of the Kale case, the Court has delineated the contours of essentials of a family settlement as follows: “10. In other words to put the binding effect and the essentials of a family settlement in a concretised form, the matter may be reduced into the form of the following propositions: “(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.” (Emphasis supplied)

Caveat in respect of sub-para 4 of para 10 of Kale case

Though in sub-para 4 of para 10 of Kale case it says about the mischief of Section 17(2) of the Registration Act, it seems that there is typo error in the same and it ought to be read as Section 17(1)(b) of the Registration Act instead of Section 17(2) of the Registration Act. The same is also evident from a separate concurring judgment written by Justice R.S. Sarkaria in Kale case.

Principle of Estoppel to family arrangement

The SC in Ravinder Kaur case observed that in Kale case the SC has restated that a family arrangement being binding on the parties, clearly operates as an estoppel, so as to preclude any of the parties who have taken advantage under the agreement from revoking or challenging the same. In paragraph 38 of Kale case, the SC noted as follows over which emphasis has been supplied by the SC in Ravinder Kaur case: “38. … Assuming, however, that the said document was compulsorily registrable the courts have generally held that a family arrangement being binding on the parties to it would operate as an estoppel by preventing the parties after having taken advantage under the arrangement to resile from the same or try to revoke it. …..” (Emphasis supplied)

Conclusion

The issue of fact will time and again come to be interpreted in the court of law on its own peculiar facts. However, if the 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 then that distinction will lead to an answer whether the document is such of which registration is compulsory or not. If the document is only a memorandum of family settlement, then its registration is not compulsory. Court is known as temple of justice and justice cannot be overshadowed by mere technicalities over family arrangement ought to be governed by a special equity peculiar to them and would be enforced if honestly made. Thus, where the courts find that the family arrangement suffers from a legal lacuna or a formal defect the rule of estoppel is pressed into service and is applied to shut out plea of the person who being a party to family arrangement seeks to unsettle a settled dispute and claims to revoke the family arrangement under which he has himself enjoyed some material benefits.

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