Report No. 208
2. Judicial View
2.1 The Supreme Court of India in its judgment dated 21.01.1976 in Kale and Ors. v. Deputy Director of Consolidation and Ors., 1976 (3) SCC 119, while dealing with a memorandum of family arrangement through family settlement, held that the family arrangements are governed by a special equity peculiar to themselves and that the family arrangement may have been oral in which case no registration is necessary and that the registration would be necessary only if the terms of the family arrangement are reduced into writing.
2.2 The Supreme Court has observed: -
"By virtue of a family settlement or arrangement members of a family descending from a common ancestor or a near relation seek to sink their differences and disputes, settle and resolve their conflicting claims or disputed titles once for all in order to buy peace of mind and bring about complete harmony and goodwill in the family. The family arrangements are governed by a special equity peculiar to themselves, and will be enforced if honestly made, although they have not been meant as a compromise, but have proceeded from an error of all parties, originating in mistake or ignorance of fact as to what their rights actually are, or of the points on which their rights actually depend.
"The object of the arrangement is to protect the family from long drawn litigation or perpetual strifes which mar the unity and solidarity of the family and create hatred and bad blood between the various members of the family. It promotes social justice through wider distribution of wealth. Family therefore has to be construed widely. It is not confined only to people having legal title to the property.
"Courts lean in favour of family arrangements. Technical or trivial grounds are overlooked. Rule of estoppel is pressed into service to prevent unsettling of a settled dispute.
"Family arrangement may be even oral in which case no registration is necessary. Registration would be necessary only if the terms of the family arrangement are reduced into writing. Here also, a distinction should be made between the 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.
"So a document which was no more than a memorandum of what had been agreed to did not require registration.
"Hence a document which is in the nature of a memorandum of an earlier family arrangement and which is filed before the court for its information for mutation of names is not compulsorily registrable and therefore can be used in evidence of the family arrangement and is final and is binding on the parties.
"Even if a family arrangement which required registration was not registered it would operate as a complete estoppel against the parties who have taken advantage of the family arrangement.
"Before dealing with the respective contentions put forward by the parties, we would like to discuss in general the effect and value of family arrangements entered into between the parties with a view to resolving disputes once for all. By virtue of a family settlement or arrangement members of a family descending from a common ancestor or a near relation seek to sink their differences and disputes, settle and resolve their conflicting claims or disputed titles once for all in order to buy peace of mind and bring about complete harmony and goodwill in the family.
The family arrangements are governed by a special equity peculiar to themselves and would be enforced if honestly made. In this connection, Kerr in his valuable treatise Kerr on Fraud at p. 364 makes the following pertinent observations regarding the nature of the family arrangement which may be extracted thus:
The principles which apply to the case of ordinary compromise between strangers do not equally apply to the case of compromises in the nature of family arrangements. Family arrangements are governed by a special equity peculiar to themselves, and will be enforced if honestly made, although they have not been meant as a compromise, but have proceeded from an error of all parties, originating in mistake or ignorance of fact as to what their rights actually are, or of the points on which their rights actually depend.
"The law in England on this point is almost the same. In Halsbury's Laws of England, Vol. 17, Third Edition, at pp. 215-216, the following apt observations regarding the essentials of the family settlement and the principles governing the existence of the same are made:
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 rights 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 arrangement" is applied.
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 most for the interest of families, and has regard to considerations which, in dealing with transactions between persons not members of the same family, would not be taken into account. Matters which would be fatal to the validity of similar transactions between strangers are not objections to the binding effect of family arrangements."
2.3 The principles indicated above have been clearly enunciated and adroitly adumbrated in a long course of decisions of the Apex Court as also those of the Privy Council and High Courts in the following cases:
Khunni Lal v. Gobind Krishna Narain, ILR 33 All 356;
Mt. Hiran Bibi v. Mt. Sohan Bibi, AIR 1914 PC 44;
Sahu Madho Das v. Mukand Ram, AIR 1955 SC 481;
Ram Charan Das v. Girja Nandini Devi, AIR 1966 SC 323;
Tek Bahadur Bhujil v. Debi Singh Bhujil, AIR 1966 SC 292;
Maturi Pullaiah v. Maturi Narasimham, AIR 1966 SC 1836;
Krishna Beharilal v. Gulabchand, 1971 (1) SCC 837;
S. Shanmugam Pillai v. K. Shanmugam Pillai, 1973 (2) SCC 312.
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