Family settlement — Can be among not only heirs of particular class, but also can take in its fold, persons outside purview of succession — Family settlement — Non-registration — Cannot be treated as inadmissible — Transfer of Property Act section 5, Stam

One Mr. Ghouse Khan had
three brothers i.e., respondent Nos. 1 to 3 and two sisters, the first appellant
and late Malika Begum, the mother of the second appellant. Ghouse Khan did not
marry and remained a bachelor. He purchased the suit schedule property through a
registered sale deed dated 29-7-1981. After the death of Ghouse Khan, the
appellants and the respondents effected a family settlement through document
dated 7-2-1992. According to this, the second appellant was to be given part of
the suit schedule house and the first appellant and the respondent Nos. 1 to 3
were to be allotted ¼th share each in the rest of the property. The appellants pleaded that in spite of repeated demands, the respondents did not
agree for partition of the property in accordance with the settlement.

In the light of the
arguments advanced on behalf of the parties, the question raised for
consideration was as under; whether there can be a family
settlement among the persons who are not sharers according to Law of Succession.

The Court observed that the
settlement in family is not confined to any particular category of people. The
medium of settlement is chosen to resolve the disputes among the family members.
It is resorted to not only when the disputes as such exist, but also when there
exists a possibility for them to surface.

A family settlement need not
be confined to only one among the legal heirs, or successors. If the aim is only
to provide for arrangement in accordance to succession, the whole exercise would
be redundant. The reason is that the Law of Succession would take its course. It
is only when an arrangement, in slight or major deviation from natural
succession, as a price for bringing about comity and harmony is chosen, that a
settlement comes into existence.

The connotation of the word
‘family’ changes depending upon the context. For instance, its purport under the
Income-tax Act may not be the same as the one under the Urban Land (Ceilings and
Regulation) Act or other similar Enactments. Much would depend upon the context
in which the term is used. Where the concept of joint family exists, the family
may comprise persons of 3 to 4 generations. In a narrow sense, the family may
comprise the spouses and their children. In the context of settlement, the
family takes in its fold several persons, some of whom may be a bit distantly
related to those who constitute the core of the family.

Sub-section (24) of section
2 of the Indian Stamp Act defines the term ‘settlement’. Thus settlement,
particularly within a family need not be restricted to the members of the family
up to a particular degree. Therefore, the irresistible conclusion is that a
family settlement can be among not only heirs of a particular class, but also
can take in its fold persons outside the purview of succession.

As regard to registration of
family settlement, it was observed that though the object underlying the
settlement is to bring about harmony among the parties to it, the legal
implications arising out of settlements are not uniform. In some cases, the
settlement may bring about transfer or conferment of rights instantly upon the
parties to it, vis-à-vis movable or immovable properties. If the
settlement confers rights upon the individual, vis-à-vis on items of immovable
property, which he is not otherwise entitled to, under the relevant Law of
Succession, a transfer comes into existence, and thereby the deed of settlement
becomes liable to be registered.

It is not uncommon that
settlements provide for arrangements which would materialise at a future date.
In such cases, the manner in which the rights are to be conferred on various
parties is defined, and the actual transfer of rights takes place at a future
date.

In Tek Bahadur Bhujil v.
Debi Singh Bhujil and Ors., AIR 1966 SC 292, it was held by the
Supreme Court that there can be oral family arrangements also and that the gist
of the same can be recorded in writing.

Family arrangement as such
can be arrived at orally. Its terms may be recorded in writing as a memorandum
of what has 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 has 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 requires
registration, as it is then that it would be a document of title declaring for
future what rights in what properties are possessed by whom.

Thus, a settlement which does not create any
right ‘in praesenti’ cannot be treated as inadmissible on the ground that
it is not registered.