This article is written by Tulna Rampal, 5th Year BBA LLB(H) student of Vivekananda Institute of Professional Studies, New Delhi pursuing a Diploma in US Intellectual Property Law and Paralegal Studies. This article has been edited by Ojuswi (Associate, Lawsikho).
This article has been published by Sneha Mahawar.
An old saying, “Blood is thicker than water” is an accepted notion in our society, where immense importance is given to family members before any other relatives or friends. Such a notion gets tainted once the family is involved in court disputes over the partition of their property. Things that could be amicably sorted out with the help of mutual understanding, get dragged to the courts, thus disintegrating their cordial ties and creating a rift between the members.
In such situations, The Memorandum of Family Settlements (also known as MOFS) is a great instrument to adopt for mutually deciding on terms of distribution of the property. It consists of orally agreed terms of the division of properties between them. It is the best solution against a lengthy tenure in the litigation process. This article focuses on the family disputes arising because of property and also talks about how the memorandum of family settlements has completely changed the perspective on property disputes in India.
Property disputes between blood relations
Property disputes are a very common occurrence among Indian families, especially joint families. Ancestral property is divided among the legal heirs and thus the problem escalates when one member of the family intends for partition while the other member objects to their proposal. It has now become a part and parcel of every family dispute. What most people don’t realize is that the litigation process for family disputes takes a long course in court battles and becomes a very tedious and expensive procedure that in the end, does not even guarantee sufficient or adequate results. Even the Indian judicial system cannot give the assurance whether the current generation or the generations to come will get the desired outcomes, and that too is in their favour or not. There are innumerable suits for partition pending before our judiciary that are still waiting to be disposed of. Hence, such a long, tiring, and complex procedure hinders families from entering this judicial arena.
Concept of memorandum of family settlements
In layman’s terms, a Memorandum of Family Settlements refers to a written document that states the arrangement between family members and acts as a record of the mutual agreement regarding the terms of the division of property. It is done for mutual benefit and to avoid tedious litigation resulting in bad blood and discourse among family members. One can avoid the hardships and shortcomings of lengthy, time-consuming legal procedures with this Memorandum of family settlements. This is the best tool available for harmoniously solving family disputes. Some people confuse this with the Partition deed. However, there exists a distinctiveness between the two. The MOFS records the already orally agreed terms and conditions regarding the property whereas partition deeds only state the rights and titles on the property, which is eventually mandatory to register. If the MOFS alters any rights and titles to the property, the registration becomes mandatory. There exist certain essentials for family settlements which are laid down in the Supreme Court’s judgment in the landmark case of Kale vs Deputy Director of Consolidation, [1976 AIR 807] wherein it states that
- Family settlements should be bona fide
- Family settlements must be voluntary and should not be induced by fraud or coercion or undue influence
- The said settlements maybe even oral, wherein no registration is mandatory
- Registration is only necessary when the family settlement is reduced to writing
- There should exist an intention to resolve the dispute and the existing antecedent title
Apart from this landmark case, there are numerous judgments upholding the validity of the Memorandum of family settlements, thus deeming it to be of higher judicial hold.
Process and legal requirement of family settlement
The essential conditions have already been explained but there also exist some legal requirements for family settlements. First and the foremost step is to execute the Memorandum of family settlement with the help of a third person, usually a senior member /lawyer. The lawyer helps in understanding both parties’ contentions and mutually agreeing on common grounds. Furthermore, it must be signed by all the parties/ family members involved in the settlement dispute. Then the next step would be to register the MOFS under section 17 of the Indian Registration Act, 1908 (which is optional if it is an oral agreement). It is pertinent to mention that this instrument should not be treated as a sale deed or gift. While a duly executed memorandum of family settlement cannot be revoked, except with a court decree, it can be challenged.
Case study and judicial analysis
Khunni Lal & Ors. vs Kunwar Gobind Krishna Narayan & anr,1911 (13) BOMLR 427
In this judgment, the Bombay High Court stated that if the family relinquishes all their claims in the property disputes so as to appear as if they have concluded a settlement between the family members, the court will deem it to be a family settlement and it is the duty of the courts to uphold such arrangements.
S. Shanmugan Pillai & ors. vs K. Shanmugan Pillai & ors.,1972 AIR 2069
In this case, the Supreme Court inclined toward family arrangements that bring about harmony, by way of amicable settlement of any property dispute arising between the close relations. Further, the court shall be reluctant to disturb any peaceful settlement that may arise through mutual consensus of the parties involved.
Tek Bahadur Bhujil vs Devi Singh Bhujil, 1965 AIR 1966 SC 292
The Supreme Court in its judgment validated oral family arrangements and held that registration is compulsory if the arrangements are in writing.
Mt. Mahadei Kunwar vs Padarath Chaube & anr., AIR 1937
In this judgment, The Allahabad High Court held that some family arrangements could consider the transfer of property and settlement of a dispute. It is to the discretion of the court whether a family arrangement requires compulsory registration or not. In the end, it was concluded that if the family arrangement involved a declaration of rights, then, it requires registration.
The present position of law with regards to mofs
The most recent Supreme Court case on this subject is that of Ravinder Kaur Grewal & Ors. vs Manjit Kaur & Ors. 31st July 2020, A Three-judge bench eradicated the error in deciding this case by the Hon’ble High Court of Punjab and Haryana by reversing their judgment. The facts of the case are:
A family settlement was drawn between closely related parties with the intervention of their known people and family members. In the said settlement, the plaintiff was accepted and acknowledged to be the exclusive owner. However, after execution new issues were raised.
Thereafter, the parties filed a plea in the court claiming that they were the owner of the property according to the terms of the Memorandum of Settlement. The first Appellate court in its judgment allowed the appeal filed by the petitioner and decreed the suit. This urged the defendants to file a second appeal in the High Court of Punjab and Haryana. The High Court in its judgment reversed the decree of the Appellate court stating that registration is required for a document that creates a right in favour of the plaintiff for an immovable property in which he had no pre-existing rights Aggrieved by the judgment of the High Court, the petitioner approached the Supreme Court.
The Supreme Court in its observations concluded that the High Court did not deal with the factual aspects of the matter properly. The apex court further observed that between the parties, not only a univocal family arrangement had been established but also the same had been actively performed by them. In its ruling, the Supreme Court reiterated that a Memorandum of family settlement is just a recording of the terms of settlement between the parties which was previously agreed between them, and in such a case, the registration of such document is not compulsory yet valid before the law as it in itself does not create or extinguish any right or title. The Hon’ble Supreme Court heavily relied upon the jurisdictional court’s judgment in Kale (supra) to conclude that a family arrangement should be considered legal instead of invalidating the same on technical grounds and further that the Memorandum of Settlement, which is prepared after a family arrangement has been entered into and solely exists for the purpose of the record or for information of the court for making necessary mutation, did not have to compulsorily be registered under Section 17 of the Indian Registration Act, 1908.
This case was also earlier referred to a three-judge bench to answer the issue of whether a person claiming the title by virtue of adverse possession can maintain a suit under Article 65 of the Limitation Act,1963 for a permanent injunction seeking protection of his property. The three-Judge bench in its observation had concluded that there is no bar on the petitioner under Limitation Act,1963 and he can sue in the case of infringement of any rights.
As it is rightly said, where wealth accumulates, moral values decay. The tussle for property has blindsided family members and close ones as they are bent upon distorting their harmonious and amicable relations over property disputes by lingering on a suit for partitions in courts. The best alternative for such family disputes is the Memorandum of Family settlements, which has time and again proven to be more beneficial in saving cordial ties with our loved ones while simultaneously saving judicial time. The execution of MOFS should be done carefully as the registration requirement would entirely depend on the drafted terms of the MOFS. It should not be open to interpretation as that would attract provisions of partition deed and further attract payment of stamp duty. The Supreme court has also given many judgments upholding the validity of the Memorandum of family settlements, thus deeming it to be of higher judicial hold. Thus, in conclusion, MOFS has been a game-changer in family disputes over property by curating a much better alternative than the arduous task of litigation.
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