Court’s Decision
The Delhi High Court dismissed the Regular First Appeal filed by the plaintiff/appellant and upheld the order of the learned District Judge rejecting the plaint under Order VII Rule 11 CPC.
The Court held that the Family Arrangement dated 10.10.2009 required compulsory registration because it was not merely a record of an earlier oral settlement, but was a document which, for the first time, sought to create and determine rights in immovable properties.
Since the Family Arrangement was unregistered, it could not be relied upon to challenge the registered Gift Deed dated 21.05.2018 executed by Smt. Chandrawati in favour of Defendant No. 1.
The Court further held that the suit property continued to remain in the exclusive name of Smt. Chandrawati, and she was competent to execute the Gift Deed.
Accordingly, the appeal was dismissed along with pending applications.
Facts
The appeal arose out of a civil suit filed by Sh. Deepak Kaushik seeking declaration and permanent injunction.
The family dispute related to properties allegedly belonging to late Ramphal Kaushik, who died intestate on 09.10.2003. He was survived by his wife Smt. Chandrawati, four sons and two daughters.
The plaintiff claimed that, in 2009, the family members entered into a Family Arrangement dated 10.10.2009 to settle their shares in the properties of late Ramphal Kaushik. According to the plaintiff, the arrangement was only a written record of an earlier oral family settlement.
The dispute specifically concerned agricultural land measuring 12 bighas 14 biswas situated in Village Bakoli/Alipur Farm. The plaintiff asserted that although the land stood in the name of Smt. Chandrawati, it had been purchased by late Ramphal Kaushik from joint family funds and was kept joint under the Family Arrangement.
The plaintiff further claimed that the parties had acted upon the arrangement, including by contributing Rs. 25,000 each towards the maintenance of the farm/water pump.
The grievance of the plaintiff was that Defendant No. 1, Vinod Kaushik, allegedly got Smt. Chandrawati to execute a registered Gift Deed dated 21.05.2018 in his favour in respect of the entire suit property.
The plaintiff, therefore, filed a suit seeking declaration that the Gift Deed was null and void and also sought permanent injunction restraining Defendant No. 1 from selling, alienating or creating third-party rights in the suit property.
Issues
- Whether the Family Arrangement dated 10.10.2009 required compulsory registration.
- Whether an unregistered Family Arrangement could be relied upon to challenge a registered Gift Deed.
- Whether the Family Arrangement was merely a memorandum of an earlier oral settlement or whether it created rights in immovable property for the first time.
- Whether the plaint disclosed a valid cause of action.
- Whether the learned District Judge was justified in rejecting the plaint under Order VII Rule 11 CPC.
Appellant’s Arguments
The appellant argued that the learned District Judge wrongly rejected the plaint at the threshold.
The appellant submitted that the plaintiff was not challenging Smt. Chandrawati’s title as registered owner of the suit property. His case was that the property had been included in a family settlement during her lifetime and that all family members, including Smt. Chandrawati and Defendant No. 1, were parties to it.
It was argued that the property had been brought into the common hotchpotch of the family arrangement and was agreed to be kept joint.
The appellant further argued that even if the Family Arrangement was unregistered, it could still be looked into for collateral purposes.
Reliance was placed on judgments concerning family settlements to argue that courts generally lean in favour of family arrangements because they preserve family peace and avoid litigation.
The appellant also contended that the question whether the Family Arrangement was acted upon could not have been decided at the stage of Order VII Rule 11 CPC.
Respondents’ Arguments
The respondents opposed the appeal and supported the rejection of the plaint.
They argued that Smt. Chandrawati was the registered and exclusive owner of the agricultural land. The property was stated to have been purchased by her from Shri Hukum Singh on 12.09.1988.
According to the respondents, since the property was exclusively owned by Smt. Chandrawati, she was legally competent to execute the registered Gift Deed dated 21.05.2018 in favour of Defendant No. 1.
The respondents argued that the plaintiff had no right, title or interest in the suit property.
They further contended that the suit was barred by the Benami Transactions law because the plaintiff was trying to claim rights over property standing in another person’s name.
The respondents also argued that the Family Arrangement dated 10.10.2009 dealt with immovable properties worth more than Rs. 100 and therefore required compulsory registration under Section 17 of the Registration Act, 1908.
Since the document was admittedly unregistered, it was inadmissible in evidence under Section 49 of the Registration Act.
They also raised the objection that the suit had not been properly valued for court fee purposes, as the value of the Gift Deed was Rs. 1,40,22,920 whereas only Rs. 200 court fee had been paid.
Analysis
The High Court first examined the nature and legal effect of family settlements.
The Court noted that family settlements are generally encouraged in law because they help preserve peace, goodwill and harmony within families and prevent prolonged litigation.
However, the Court clarified that all family settlements do not stand on the same footing for registration purposes.
A family settlement may be oral. If it is oral, there is no requirement of registration. If an oral family settlement is later reduced into writing merely as a record of what had already been agreed, such a memorandum may also not require registration.
But where the written document itself creates, declares, assigns, limits or extinguishes rights in immovable property, and the value of the property is more than Rs. 100, the document requires compulsory registration.
The Court then examined the Family Arrangement dated 10.10.2009. The document recorded that, on that date, in the presence of family members, the joint/mutual/collective properties were distributed. It listed shares of different family members, recorded adjustments of excess and deficient shares, and stated that Alipur Farm land was kept joint with each member contributing Rs. 25,000 towards maintenance.
The Court held that the document was not merely recording a prior oral settlement. Instead, the document itself reflected the manner in which the parties agreed to divide their shares for the first time.
Therefore, the Family Arrangement created and extinguished rights in immovable properties in praesenti and required compulsory registration.
Precedents
The Court referred to several important judgments on family arrangements and registration, including:
- Mathuri Pullaiah v. Maturi Narasimham
- Ram Charan Das v. Girjanandini Devi
- S. Shanmugam Pillai v. K. Shanmugam Pillai
- Sahu Madho Das v. Pandit Mukand Ram
- Kale v. Deputy Director of Consolidation
- Ram Gopal v. Tulshi Ram
- Korukonda Chalapathi Rao v. Korukonda Annapurna Sampath Kumar
- P. Anjanappa v. A.P. Nanjundappa
- Amteshwar Anand v. Virender Mohan Singh
- Govind Ram v. Madan Gopal
The Court reaffirmed that a family arrangement which merely records an earlier oral settlement does not require registration. But where the writing itself brings about the division or creates rights in immovable property, registration is compulsory.
Reasoning
The High Court distinguished the appellant’s reliance on P. Anjanappa.
In that case, even though the family arrangement was recorded in writing, the subsequent conduct of the parties showed that they had acted upon the arrangement. There was separate possession, separate cultivation, separate residence, independent dealings with allotted lands, and revenue records reflecting separation.
In the present case, the Court found no such conduct.
The Court held that there was nothing on record to show that the parties had acted upon the Family Arrangement dated 10.10.2009.
On the contrary, Smt. Chandrawati continued to deal with the suit property as her exclusive property and eventually executed the Gift Deed in favour of Defendant No. 1.
The Court therefore held that the unregistered Family Arrangement could not be admitted even for collateral purposes in the facts of this case.
The Court also held that the suit property did not become joint family property merely because of the unregistered Family Arrangement.
Since the suit property continued to stand in the exclusive name of Smt. Chandrawati, she remained competent to execute the Gift Deed dated 21.05.2018.
Conclusion
The Delhi High Court held that the learned District Judge had correctly rejected the plaint under Order VII Rule 11 CPC.
The Family Arrangement dated 10.10.2009 was not a mere memorandum of a past oral settlement. It was a document which itself sought to divide properties and create rights in immovable property. Therefore, it required compulsory registration.
As the document was unregistered and had not been acted upon, it could not be used to challenge the registered Gift Deed executed by Smt. Chandrawati.
The appeal was dismissed.
Implications
This judgment is significant for family property disputes because it clarifies that every document labelled as a “family settlement” does not automatically escape registration.
If the settlement is oral and later recorded only for memory or mutation purposes, it may not require registration. But if the document itself creates or changes rights in immovable property, registration is compulsory.
The judgment also highlights that parties relying on an unregistered family settlement must show that it was actually acted upon. Mere signatures or assertions may not be enough.
For litigants, the ruling is a reminder that family arrangements involving immovable property should be carefully ruling drafted and registered where they create rights, otherwise they may fail at the threshold itself.