Family Settlement or Family Arrangement in Law

Saji Koduvath, Advocate, Kottayam

Abstract

  • Perquisites of Family Settlement or Family Arrangement are the following-
    • It must be to settle disputes among family members (and it is not applicable to dealings between strangers); or for maintaining the interest and peace of the members of the family.
    • It must be for fair distribution of property.
    • The parties thereto must have been entered into voluntarily.
  • Distinctive characteristics of Family Settlement or Family Arrangement-
    • Oral family settlement is valid.
    • Only those who have an antecedent title, claim, or interest in the property can enter into a family settlement.
    • If it does not create or extinguish rights, registration is not mandatory.
    • Family Arrangement would operate as an estoppel
  • Kale v. Deputy Director of Consolidation, (1976) 3 SCC 119: AIR 1976 SC 807 is considered, in the subsequent decisions, as the leading Supreme Court decision that authoritatively laid down the essentials of Family Settlement or Family Arrangement.
  • In Ravinder Kaur Grewal v. Manjit Kaur, [2020] 9 SCC 706, it is held that it is not open to resile from the Family Settlement and the parties are estopped from contending to the contrary.

1. Kale v. Deputy Director of Consolidation, the leading decision

It is held in Kale v. Deputy Director of Consolidation, 1976-3 SCC 119, as under:

  • “10. In other words to put the binding effect and the essentials of 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 arrangements 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 immoveable properties and therefore does not fall within the mischief of Section 17(2) [Section 17(1)(b)?] 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.” ( Quoted in: K Arumuga Velaiah v. P R Ramasamy, 2023-3 SCC 757)

Finally it was held as under:

  • “We would, therefore, return the reference with a statement of the following general propositions:
    • With reference to the first question:
  • (1) A family arrangement can be made orally.
  • (2) If made orally, there being no document, no question of registration arises.
    • With reference to the second question:
  • (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.
    • With reference to the third question:
  • (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.”

Kale v. Deputy Director of Consolidation, 1976-3 SCC 119, is referred to in the following decisions:

  • K.  Arumuga Velaiah v. P. R.  Ramasamy, 2022-3 SCC 757
  • S.  Kuldeep Singh v. S.  Prithpal Singh, AIR 2022 SC 3967
  • Ripudaman Singh v. Tikka Maheshwar Chand, 2021-7 SCC 446
  • Khushi Ram v. Nawal Singh, AIR 2021 SC 1117
  • Vineeta Sharma v. Rakesh Sharma, AIR 2020 SC 3717; 2020-9 SCC 1
  • Ravinder Kaur Grewal v. Manjit Kaur, AIR 2020 SC 3799; 2020-9 SCC 706

2. Family Arrangement is binding and operate as an Estoppel

It is held in Kale v. Deputy Director of Consolidation, 1976-3 SCC 119, as under:

  • “The principle that there is no estoppel against the statute does not apply to the present case. 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.” (quoted and followed in Ravinder Kaur Grewal and Ors. v. Manjit Kaur and Ors., [2020] 9 SCC 706).

After referring various previous decisions [#] it was emphasised in Kale v. Deputy Director of Consolidation, 1976-3 SCC 119, fixing the legal position, as under:

  • “This Court has also clearly laid down that a family arrangement being binding on the parties to the arrangement 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.” (followed in K Arumuga Velaiah v. PR Ramasamy, 2023-3 SCC 757)
    • [#] Ramgopal v. Tulshi Ram, AIR 1928 All 641,
    • Sitala Baksh Singh v. Jang Bahadur Singh, AIR 1933 Oudh 347,
    • Kalawati v. Sri Krlshna Prasad, ILR 19 Lucknow 57,
    • Bakhtawar v. Sunder Lal, AIR 1926 All. 173,
    • Awadh Narain Singh v. Narain Mishra, AIR 1962 Pat 400.

3. “Family” be understood in a wider sense

In Khushi Ram v. Nawal Singh, AIR 2021 SC 1117, it is observed as under:

  • “23. A Three Judge Bench in the celebrated judgment of this Court in kale and Ors. Vs. deputy director of Consolidation and Ors., (1976) 3 SCC 119, had elaborately considered all contours of the family settlement. This Court laid down that term “family” has to be understood in a wider sense so as to include within its fold not only close relations or legal heirs but even those persons who may have some sort of antecedent title, a semblance of a claim or even if they have a spes successionis.”

4. Does Family Arrangement Requires Registration

It is further held in K Arumuga Velaiah v. P R Ramasamy, 2023-3 SCC 757 as under:

  • “Ultimately, this Court held (in Kale v. Deputy Director of Consolidation) that the family arrangement in the nature of a compromise which was considered in that case did not require registration. It was further held that since the existence of the family arrangement was admitted in that case, the same was binding on the principle of estoppel. Also, even if the family arrangement could not be registered it could be used for collateral purpose, i.e. to show the nature and character of possession of the parties in pursuance of the family settlement and also for the purpose of applying the rule of estoppel which flowed from the conduct of the parties, who, having taken benefit under the settlement for seven years, later tried to resile from the settlement.”

Finally, on the facts of the case, referring previous decisions[#] it is held in K Arumuga Velaiah v. P R Ramasamy, 2023-3 SCC 757 as under:

  • “On a perusal of the award which is in the form of a resolution, it is clear that there was no right created in any specific item or asset of the joint family properties in any person but the parties resolved to take certain actions in pursuance of a family arrangement. Therefore under Annexure P­10 (Ex. B­13) there was no right created in favour of any party in any specific item of joint family property. The said document which has been styled as an award is, in our view, only a memorandum of understanding/family arrangement to be acted upon in future. Hence, in our considered view, the said document did not create rights in specific properties or assets of the family, in favour of specific persons. Therefore, the same did not require registration under section 17(1)(e) of the Act. The said document was in the nature of a document envisaged under section 17(2)(v) of the Act.”
    • [#] Bhoop Singh v. Ram Singh Major, 1995-5 SCC 709, and
    • Ravinder Kaur Grewalv. Manjit Kaur, 2020-9 SCC 706,
    • Ripudaman Singh v. Tikka Maheshwar Chand, 2021-7 SCC 446.

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