January 2019

FAMILY SETTLEMENTS - PART I

Dr. Anup P. Shah
Chartered Accountant

INTRODUCTION

Maximum disputes take place within family members rather than among strangers! Family fights have been popular in India right from the times of “the Mahabharata”. The fight between the Kauravas and the Pandavas is something which several Indian families witness on a regular basis. As family businesses grow, new generations join the business, new lines of thinking originate, disputes originate between family members and gradually it gives rise to a family settlement / arrangement.

 

Corporate India has witnessed a spate of family feuds in almost all major corporate houses.   A family arrangement is one of the oldest alternative dispute resolution mechanisms which is known. The scope of a family arrangement is extremely wide and is recognised even in ancient English Law. This is because the world over, Courts lean in favour of peace and amity within the family rather than family disputes.  In the last about 60 years, a good part of the law relating to Family Arrangement / Settlement is well settled through numerous court decisions including several decisions of the Supreme Court. It is ironic that in a country where a substantial part of businesses are run and owned by joint families, there is no legislation which governs or regulates such family settlements or arrangements. Hence, the entire law in this respect is case-law made. 

       

WHAT IS A FAMILY SETTLEMENT / ARRANGEMENT? 

It is important to analyse the basic principles governing family settlement involving properties held mainly by individuals. Various Courts, including the Supreme Court of India, have laid down the basic principles relating to family arrangements. Halsbury’s Laws of England also lays down some important principles in this respect:

 

“The agreement may be implied from a long course of dealing, but it is more usual to embody or to effectuate the agreement in a deed to which the term "family arrangement" is applied. Family arrangements are governed by principles which are not applicable to dealings between strangers.

--->

Past Issues

Flip-Book
HTML View
Current Issue