By Lucy Rana and Devika Mehra
Where there is a ‘Will’, there is a way. But what should one do when there is no Will? Where the Testator / Deceased has left behind a Will on his/her demise, the legal heirs of the deceased are made well aware of the last wishes of the deceased and hence, even in the existence of a dispute, there exists a legitimate document leading the dispute towards a direction. However, where the deceased has died intestate, the property disputes tend to carry on by his legal heirs.
There are already existing a large number of pending property disputes in India. Most disputes seek judicial intervention. Problems may arise owing to absence of a registered Will or someone may try to challenge validity of his Will. In such dire scenarios, one may either choose to proceed to the Courts and enter into endless legal battles stretching over innumerable years, or the parties may choose to enter into a family settlement drafted on the basis of mutual, amicable resolution and understanding.
Memorandum of Family Settlement
A family settlement or an arrangement has not been defined statutorily under Indian laws. However, the Halsbury’s Law of England defines it as a settlement among members of the same family, intended to be generally and reasonably for the benefit of the family, either by compromising doubtful or dispute rights or by preserving the family property or the peace and security of the family by avoiding litigation or by saving its honour. A family settlement is similar to a partition deed. The settlement must mention names of all the family members whose decision matters in this regard, details of ownership of the property and the specific terms of the distribution of the said property. Further, including all details of the property with the house number, area, and even a site map makes the settlement agreement more definite.
All members / parties to the family settlement declare that they agree with each other and consent to the terms and conditions of the settlement. They further agree and declare that the settlement is the final word and it ends the ongoing dispute within the family with respect to the property.
The purpose of a family settlement is to resolve or avert a future dispute, and to maintain peace and harmony in the family. Such an agreement is a valid, legally binding enforceable contract, applicable to all the signatories of the settlement. A family settlement need not strictly be a single document incorporating the distribution of assets. It may also be a series of documents spelling out the property rights of each family member.
Registering a memorandum of family settlement is not mandatory[1]. However, getting the document registered not only makes the settlement more definite, but also increases the sanctity of the same. Even without registration, a written document of a memorandum of family settlement / family arrangement can be used as a corroborative evidence[2].
The most important thing to remember is that a family settlement neither can be treated as a gift deed nor as a transfer deed under the Income Tax Laws. Hence, either separate gift deeds or transfer documents in this regard are a must. Also, mutation in terms of a family settlement can also be carried out for the purposes of land revenue in respect of agricultural land.
Essentials of Family Settlement- Supreme Court
The essentials of a family settlement agreement were laid down by the Supreme Court in the case of Kale & Ors. vs. Deputy Director of Consolidation[3] stated herein below:
- The family settlement must be bonafide in order to resolve present or possible future disputes among family members and to ensure equitable distribution of property among the family members;
- The family settlement must be honest, voluntary, and should not be induced by fraud, coercion, and undue influence;
- Family settlement may be oral, in which case registration is not necessary;
- Registration is necessary only if the family settlement arrangement is reduced to writing;
- The memorandum recording the family settlement itself does not create or extinguish any rights in the immovable property, therefore not compulsorily registrable;
- Those entering into the family settlement must have an antecedent title, claim, or interest in the property
In conclusion, a memorandum of family settlement should be carefully drafted to convey the amicable and mutual understanding between the parties to reach a settlement pertaining to the property in question outside the ambit of Courts for the peace and prosperity of the family.
[1] Ravinder Kaur Grewal & Ors. vs. Manjit Kaur & Ors. [Supreme Court, July 31, 2020]
[2] Subraya M.N. v.Vittala M.N., (2016) 8 SCC 705
[3] 1976 AIR 807, 1976 SCR (2) 202
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