Deed of Family Arrangement & Law

Deed of Family Arrangement & Law

Best way to family dispute settlement is to record the terms by way of Deed of Family Arrangement or Family Settlement.

What is Family Settlement? What does law say? Whether it requires registration? It attracts Stamp Duty?

Now we will take up first Question What is Family Settlement?

In the matter of Sahu Madho Das And Others vs Pandit Mukand Ram And Another 1955 AIR 481= 1955 SCR (2) 22 Meaning of Family Arrangement was expressed and interpreted the Courts lean in favour of family arrangements that bring about harmony in a family and do justice to its various members and avoid, in anticipation, future disputes which might ruin them all, that we have no hesitation in taking the next step (fraud apart) and upholding an arrangement under which one set of members abandons all claim to all title and interest in all the properties in dispute and acknowledges that the sole and absolute title to all the properties resides in only one of their number (provided he or she had claimed the whole and made such an assertion of title) and are content to take such properties as are assigned to their shares as gifts pure and simple from him or her, or as a conveyance for consideration when consideration is present.

In Ram Charan Das vs Girija Nandini Devi 1966 AIR(SC) 323 it was held that, Courts give effect to a Family Settlement upon the broad and general ground that its object is to settle existing or future disputes regarding property amongst members of a family. The word family in the context is not to be understood in a narrow sense of being a group of persons who are recognised in law as having a right of succession or having a claim to a share in the property in dispute

In Tek Bahadur Bhujil  vs Debi Singh Bhujil 1966 AIR(SC) 292   Family Arrangement as such can be arrived at orally. Its terms may be recorded in writing as a memorandum of what had been agreed upon between the parties. The memorandum need not be prepared for the purpose of being used as a document on which future title of the parties be founded. It is usually prepared as a record of what had been agreed upon so that there be no hazy notions about it in future. It is only when the parties reduce the Family Arrangement in writing with the purpose of using that writing as proof of what they had arranged and, where the arrangement is brought about by the document as such, that the document would require registration as it is then that it would be a document of title declaring for future what rights in what properties the parties possess

 Does it require Registration?

Ramgopal vs Tulshi Ram And Anr. AIR 1928 All 641

Following Principles were laid down:

(1) A family arrangement can be made orally.

(2) If made orally, there being no document, no question of registration arises.

 (3) If though it could have been made orally, it was in fact reduced to the form of a “document”, registration (when the value is Rs. 100 and upwards) is necessary.

(4) Whether the terms have been “reduced to the form of a document” is a question of fact in each case to be determined upon a consideration of the nature and phraseology of the writing and the circumstances in which and the purpose with which it was written.

(5) If the terms were not “reduced to the form of a document”, registration was not necessary ( even though the value is Rs. 100 or upwards); and, while the writing cannot be used as a document of title, it can be used as a piece of evidence for what it may be worth, e.g., as corroborative of other evidence or as an admission of the transaction or as showing or explaining conduct.

(6) If the terms were “reduced to the form of a document” and, though the value was Rs. 100 or upwards, it was not registered, the absence of registration makes the document inadmissible in evidence and is fatal to proof of the arrangement embodied in the document.

 (7) Where it has been found that there is not legally binding oral family arrangement, or that the arrangement, though reduced to writing with the intention that the document should be the document of title, cannot be proved for want of registration, and where no question of estoppel arises, the mere facts that mutation has taken place and that possession has been taken cannot remedy, by virtue of what is known to English law as the doctrine of “part performance”, the absence of registration.

In Mt. Jileba v. Parmesra, AIR 1950 Allahabad 700, it was observed that, If family arrangement is arrived at orally and information of its terms is given in writing to a Court, that writing would not be deemed to be a deed of family arrangement and could not require to be registered”.

In Kale  Vs  Deputy Director of Consolidation 1976 AIR(SC) 807 = 1976 (3) SCC 119 necessary requisite elements  of Family Arrangement was laid down by three Judges Bench. The Judgment Bench followed principles laid down in Lala Khunni  Lal & Ors v. Runwar Gobind Krishna Narain and Anr.  L.R 38  I.A. 8,.  102: Mt.  Hiran Bibi  and others v.Mt. Sohan  Bibi, A.I.R.  1914 P.C  44. Saltu Madho Das and others v.  Pandit -Mulkand  Ram  another 1955] 2 S.C.R. 22,42-43. Ram  Charan Das v. Girijanandini Devi & Ors. [1965] 3 S.C.R 841,  850-851. Tek  Bahadur Bhujil  v. Devi  Singh and others, A.I.R.1966 S.C. 292, 295: Maruri Pullaiah and Anr. v. Maturi  Narasimham and  Ors. A.I.R  1366 SC 1836; Krishna Biharflal v.  Gulabchand and  others. [1971] Supp. SCR 27 34 and S.     Shanmugam Pillai  and others  v. K. Shanmugam Pillai and others,, [1973] 2 S.C.C. 312, and Confirmed principles laid down in    Ram Gopal vs Tulshi  Ram and another, A.I.R. 1928 All.641 649; Sitala Baksh Singh and others v. lang Bahadur Singh and others,  A.I.R. 1933 Oudh 347, 348-349. Mst. Kalawati v. Sri Krishna  Prasad and   others, I.L.R. 19 Lucknow  57. 67.Bakhtawar v.  Sunder Lal  and others.  A.I.R. 1926 All. 173, 175 and               Awadh Narain  Singh and others v. Narain Mishra andothers, A.I.R. 1962 Patna 400, approved.

It laid down following principles to categorise a document as a family  settlement in a concretized 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 S. 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 .

Does it attract Stamp Duty?

In subsequent reference bench Judgment of Bombay High Court in the matter of the Chief Controlling Revenue Authority vs Shri Abdul Karim Ebrahim Balwa 2000 (Supp.1) Bom.C.R. 363 in which revenue authorities referred matter to Law Department Government of Maharashtra to consider Family Settlement is a Partition and attract Stamp Duty ?

Answering in negative Reference Bench held :’ Once we note this, it is clear that this agreement is settlement of dispute by way of family arrangement. It is nothing but mere record of fact which has taken place between the parties with the efforts of mediators and settlement of disputes inter se.” and confirmed ratio laid down in Kales Case Supra.

Shruti Desai

1st November,2017

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