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Family Settlement: Courts lean on pragmatic approach

Family Settlement: Courts lean on pragmatic approach
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By Kamal Nijhawan

Since decades Courts have leaned in favour of Family Settlements as a Family Settlement is entered into by the family members to bring harmony amongst themselves and to avoid any present or possible litigation. When a signatory to a family Settlement resiles from his commitments made in the Family Settlement, the other family members use the family settlement as a shield to ward off the evil designs of a belligerent family member and the Court also strongly leans in favour of the Family Settlement.

Family Settlement and underlying principles are defined in the Law of England (Vol.17) 3rd Edition at page-215-216) as under:

A family arrangement is an agreement between members of the same family, intended to be generally and reasonably for the benefit of the family either by compromising doubtful or disputed right or by preserving the family property or the peace and security of the family by avoiding litigation or by saving its honour”.

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 agreement is applied”.

In Krishna Biharilal v. Gulabchand it was pointed out that the word family had a very wide connotation and could not be confined only to a group of persons who were recognised by law as having a right of succession or claiming to have a share. The Court then observed that to consider a settlement as a family arrangement, it is not necessary that the parties to the compromise should all belong to one family. As observed by the Court in Ram Charan Das v. Girjanandini Devi, the word family in the context of a family arrangement is not to be understood in a narrow sense of being a group of persons who are recognised in law as having a right of succession or having a claim to a share in the property in dispute. If the dispute which is settled is one between near relations then the settlement of such a dispute can be considered as a family arrangement.


Family arrangements are governed by principles which are not applicable to dealings between strangers. The court, when deciding the rights of parties under family arrangements or claims to upset such arrangements, considers what in the broadest view of the matter is more favorable in the interest of families.

The concept of family Settlement was considered by the Supreme Court in Kale And Others vs. Deputy Director of Consolidation and Others, (1976 3 SCC 119). After reviewing case laws on the subject, the Supreme Court inter alia held as under:

  1. In other words to put the binding effect and the essentials of a family settlement in a concretised form, the matter may be reduced into the form of the following propositions:
  • The family settlement must be a bona fide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the various members of the family;
  • The said settlement must be voluntary and should not be induced by fraud, coercion or undue influence; 
  • The family arrangement may be even oral in which case no registration is necessary; 
  • It is well settled that registration would be necessary only if the terms of the family arrangement are reduced into writing. Here also, a distinction should be made between a document containing the terms and recitals of a family arrangement made under the document and a mere memorandum prepared after the family arrangement had already been made either for the purpose of the record or for information of the court for making necessary mutation. In such a case the memorandum itself does not create or extinguish any rights in immovable properties and therefore does not fall within the mischief of Section 17(2)of the Registration Act and is, therefore, not compulsorily registrable; 
  • The members who may be parties to the family arrangement must have some antecedent title, claim or interest even a possible claim in the property which is acknowledged by the parties to the settlement. Even if one of the parties to the settlement has no title but under the arrangement the other party relinquishes all its claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed and the family arrangement will be upheld and the courts will find no difficulty in giving assent to the same; 

(6)   Even if bona fide disputes, present or possible, which may not involve legal claims are settled by a bona fide family arrangement which is fair and equitable the family arrangement is final and binding on the parties to the settlement.

In Lala Khunni Lal v. Kunwar Gobind Krishna Narain, the statement of law regarding the essentials of a valid settlement was fully approved of by their Lordships of the Privy Council. In this connection the High Court made the following observations which were adopted by the Privy Council. The learned Judges held as follows:

The true character of the transaction appears to us to have been a settlement between the several members of the family of their disputes, each one relinquishing all claim in respect of all property in dispute other than that falling to his share, and recognizing the right of the others as they had previously asserted it to the portion allotted to them respectively. It was in this light, rather than as conferring a new distinct title on each other, that the parties themselves seem to have regarded the arrangement, and we think that it is the duty of the courts to uphold and give full effect to such an arrangement.

Their Lordships had no hesitation in adopting that view. This decision was fully endorsed by a later decision of the Privy Council in Mt Hiran Bibi v. Mt. Sohan Bibi.

In Sahu Madho Das v. Pandit Mukand Ram, the Hon’ble Court amplified the doctrine of validity of the family arrangement to the farthest possible extent, where Bose, J., speaking for the Court, observed as follows:

It is well settled that a compromise or family arrangement is based on the assumption that there is an antecedent title of some sort in the parties and the agreement acknowledges and defines what that title is, each party relinquishing all claims to property other than that falling to his share and recognising the right of the others, as they had previously asserted it, to the portions allotted to them respectively. That explains why no conveyance is required in these cases to pass the title from the one in whom it resides to the person receiving it under the family arrangement. It is assumed that the title claimed by the person receiving the property under the arrangement had always resided in him or her so far as the property falling to his or her share is concerned and therefore no conveyance is necessary. But, in our opinion, the principle can be carried further and so strongly do the courts lean in favour of family arrangements that bring about harmony in a family and do justice to its various members and avoid in anticipation, future disputes which might ruin them all, and we have no hesitation in taking the next step (fraud apart) and upholding an arrangement under which one set of members abandons all claim to all title and interest in all the properties in dispute and acknowledges that the sole and absolute title to all the properties resides in only one of their number (provided he or she had claimed the whole and made such an assertion of title) and are content to take such properties as are assigned to their shares as gifts pure and simple from him or her, or as a conveyance for consideration when consideration is present.

In Ram Charan Das v. Girjanandini Devi the Hon’ble Court observed as follows:

Courts give effect to a family settlement upon the broad and general ground that its object is to settle existing or future disputes regarding property amongst members of a family. The word ‗family’ in the context is not to be understood in a narrow sense of being a group of persons who are recognised in law as having a right of succession or having a claim to a share in the property in dispute …. The consideration for such a settlement, if one may put it that way, is the expectation that such a settlement will result in establishing or ensuring amity and goodwill amongst persons bearing relationship with one another. That consideration having been passed by each of the disputants the settlement consisting of recognition of the right asserted by each other cannot be permitted to be impeached thereafter.

 The courts lean strongly in favour of family arrangements to bring about harmony in a family and do justice to its various members and avoid in anticipation future disputes which might ruin them all. The family arrangement can as a matter of law be inferred from a long course of dealings between the parties.

In S. Shanmugam Pillai v. K. Shanmugam Pillai, the entire case law was discussed and the Court observed that if in the interest of the family properties or family peace the close relations had settled their disputes amicably, this Court will be reluctant to disturb the same. The courts generally lean in favour of family arrangements.

The family arrangement can as a matter of law be inferred from a long course of dealings between the parties.  Even bona fide disputes present or possible, which may not involve legal claims would be sufficient. Members of a joint Hindu family may to maintain peace or to bring about harmony in the family, enter into such a family arrangement. If such an agreement is entered into bona fide and the terms thereto are fair in the circumstances of a particular case, the courts would more readily give assent to such an agreement than to avoid it.

The Supreme Court in its recent judgment of May 2019 titled as Thulasidhara & Anr Vs Narayanappa & Ors, while relying on its previous decisions held that even without registration a written document of family settlement / family arrangement can be used as corroborative evidence as explaining the arrangement thereunder and conduct of the parties.

-The author practices as an Advocate in the Delhi High Court


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