Deed of family settlement – Merely recording of past transaction – Registration not mandatory – It may not require to be stamped [Registration Act, 1908., S. 17, S. 49; Code of Civil Procedure, 1908, Ord. 13, R. 3]
FACTS
An issue regarding partition of property arose between the plaintiff and the respondents. The High Court did not admit the Kharurunama (family settlement) as the same was not registered or stamped.
The contention of the appellants was that the Kharurunama dated 15th April, 1986 merely sets out the arrangement arrived at between the brothers which is the family arrangement and it was a mere record of the past transaction and therefore by itself it did not create or extinguish any right over immovable property. As a result, the document did not attract section 17(1)(b) of the Registration Act.
HELD
As per section 49(1)(a) of the Registration Act, a document which it is compulsory to register but which is not registered, cannot have any effect on the rights in immovable property by way of creation, declaration, assignment, limitation or extinguishment. Thus, it prevents an unregistered document being used ‘as’ evidence of the transaction, which ‘affects’ immovable property.
If the Kharurunama by itself does not ‘affect’ immovable property, there would be no breach of section 49(1)(c) of the Registration Act, as it is not being used as evidence of a transaction affecting such property. The transaction or the past transactions cannot be proved by using the Kharurunama as evidence of the transaction. Merely by admitting the Kharurunama containing a record of the alleged past transaction, it is not to be understood as if those past transactions require registration or that it would have any legal effect on the immovable properties in question.
It is further held that the Kharurunama being a record of the alleged transactions, it may not require to be stamped. The appeal is allowed.
6 Asha John Divianathan vs. Vikram Malhotra AIR 2021 Supreme Court 2932 Date of order: 26th February, 2021 Bench: A.M. Khanwilkar J, Indu Malhotra J, Ajay Rastogi J
Foreign Citizen – Transfer of immovable property – Without taking mandatory prior approval from RBI – Transfer unenforceable [Foreign Exchange Regulation Act, 1973 (FERA), S. 31]
FACTS
Mrs. F.L. Raitt, widow of the late Mr. Charles Raitt, is a foreigner and the owner of the immovable property. The property was gifted to respondent No. 1 (Vikram Malhotra) without obtaining previous permission of the Reserve Bank of India u/s 31 of FERA. Before executing the gift deed, she had executed an agreement of sale in favour of one Mr. R.P. David, father of the appellant (Asha John Divianathan).
The appellant filed a suit against the respondent No. 1 to declare the gift deed and the supplementary as null and void.
The Karnataka High Court held that lack of permission u/s 31 of FERA does not render the subject gift deeds as void much less illegal and unenforceable. An appeal was filed against this order of the Karnataka High Court.
HELD
A contract is void if prohibited by a statute under a penalty, even without express declaration that the contract is void, because such a penalty implies a prohibition. The condition predicated in section 31 of FERA of obtaining ‘previous’ general or special permission of the RBI for transfer or disposal of immovable property situated in India by sale or mortgage by a person, who is not a citizen of India, is mandatory.
Until such permission is accorded, in law, the transfer cannot be given effect to; and for contravening that requirement, the person concerned may be visited with penalty u/s 50 FERA and other consequences provided for in the 1973 Act.
The decision of the High Court taking the view that section 31 of the 1973 Act is not mandatory and the transaction in contravention thereof is not void or unenforceable, is not a good law. The Appeal was allowed.
7 Jagannath & Ors. vs. Radheshyam and Ors. AIR 2021 (NOC) 645 (Chh) Date of order: 19th August, 2020 Bench: Sanjay K. Agarwal J
Deeds – Unregistered gift deed – Immovable property – Not admissible [Transfer of Property Act, 1882, S. 123; Registration Act, 1908, S. 17]
FACTS
The dispute relates to the property left by Parau and his wife Sumrit Bai. They had four daughters, namely, Samundra Kunwar (defendant No. 1 is her son), Badki Kani (defendant No. 2), Majhali Kani (defendant No. 3) and Nanki Kani (defendant No. 4). The plaintiff, Radheshyam, is the son of defendant No. 4. The plaintiff filed a suit for permanent injunction and, in the alternative, restoration of possession pleading inter alia that the suit property was originally held by Parau and he was in possession of the suit property during his life time.
The defendants filed their joint written statement stating inter alia that they have never surrendered their share by way of gift deeds in favour of the plaintiff and that they are in possession of the suit property jointly and, as such, the suit deserves to be dismissed.
The trial court upon appreciation of oral and documentary evidence available on record, by its judgment and decree dated 7th April, 2007, dismissed the suit holding that the alleged gift deeds are inadmissible in evidence for want of registration, therefore, no title has been conveyed in favour of the plaintiff and the plaintiff is not in exclusive possession of the suit land.
The first Appellate Authority held that the plaintiff cannot be dispossessed from the suit land without following the due procedure of law and accordingly granted decree for permanent injunction in favour of the plaintiff restraining the defendants from interfering with his possession.
The defendants are in appeal against the said order.
HELD
The gift deeds by which the defendants have allegedly gifted the property to the plaintiff are unregistered gift deeds and by virtue of the provisions contained in section 123 of the Transfer of Property Act, 1882 gift deeds are required to be registered. In view of the matter, they are inadmissible in evidence for want of registration and thereby no title was conveyed to the plaintiff.
As the gift deeds have been held to be inadmissible by two Courts and affirmed by this Court, the first appellate Court could not have restrained the defendants from using the joint property by decree of permanent injunction.
The appeal was allowed.
8 High Court of Judicature at Madras Rep. by its Registrar-General vs. M.C Subramaniam and Others AIR 2021 Supreme Court 2662 Date of order: 17th February, 2021 Bench: Mohan M. Shantanagoudar J, Vineet Saran J
Court fee – Refund of Court fee – To be granted even in case of private settlement of dispute outside court [Court Fees Act, 1870, S. 16; Civil Procedure Code, 1908, S. 89; Tamil Nadu Court Fees and Suit Valuation Act, 1955, S. 69A]
FACTS
The respondent No. 1 purchased two vehicles from respondent No. 2. As per the terms of the agreements, respondent No. 1 was to pay sums in instalments to the respondent No. 2 as per the stipulated terms. On account of non-payment, the respondent No. 2 filed suits and sought recovery of the balance amounts along with interest thereon. Both the suits were partly decreed by the Courts.
The respondent No. 1 preferred an appeal before the High Court. While the appeal was still pending consideration, the parties entered into a private out-of-court settlement, thus resolving the dispute between them. The respondent No. 1 sought withdrawal of the appeal and refund of the court fee. Despite the order of the High Court, the Registry orally refused respondent No. 1’s request for refund of court fees on the ground that such refund is not authorised by the relevant rules.
The respondent No. 1 filed a Miscellaneous Application before the High Court which was allowed. The Registry is in appeal against the said order.
HELD
The provisions of section 89 of CPC must be understood in the backdrop of the long-standing proliferation of litigation in the civil courts, which has placed undue burden on the judicial system, forcing speedy justice to become a casualty. As the Law Commission has observed in its 238th Report on Amendment of section 89 of the Code of Civil Procedure, 1908 and Allied Provisions, section 89 of the CPC has now made it incumbent on civil courts to strive towards diverting civil disputes towards alternative dispute resolution processes and encourage their settlement outside of court. These observations make the object and purpose of section 89 crystal-clear – to facilitate private settlements and enable lightening of the overcrowded docket of the Indian judiciary. This purpose is sacrosanct and imperative for effecting timely justice in Indian courts. Section 69A of the Tamil Nadu Court Fees and Suit Valuation Act, 1955 also encourages settlements by providing for refund of court fees.
Further, the Court observed that the Court Fees Act is a taxing statute and has to be construed strictly and the benefit of any ambiguity has to go in favour of the party and not to the State. The High Court’s order was upheld.
