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Report No. 67

4.41. Recommendation.-

It is desirable that the conflict of opinions between the Madras and Mysore High Courts on the question of release, as also the obscurity as to the words "what is not otherwise specifically provided for", should be clarified. In particular, the fact situations of a co-owner transferring his share in the common property for a consideration to another co-owner, needs specific consideration. Three classes of transactions may be considered in connection with release-

(1) Sales which do not involve a release.-For example, a sale between two persons who had no prior common interest in a property sold, does not involve a release, as a release pre-supposes the existence of common interest of the parties to the transaction.

(2) Sale involving release.-For example, if the seller and the purchaser have a prior common interest in the property, there is, in a sense, a release by the seller of his interest in the property. But the transaction is also a sale.

(3) Release not resulting in sale.-For example-

(a) a release relating to a settlement of a doubtful claim;

(b) a release of a right which is not capable of being transferred in law, like the right to maintenance, or the mere right to sue;

(c) a release of a debt by the creditor (here the debt is not transferred from the creditor to the debtor);

(d) a double or multiple release accompanied by the acquisition of the full right by each co-owner in the portion of the property allotted to him, which may amount to a partition between the co-owners.

As against this, where "release" is by a co-owner of his share in the common property which is legally capable of being transferred in favour of another co-owner, for a consideration in the shape of a sum of money coming from outside the common property, the transaction amounts to a sale of the undivided share.

4.42. Amendment.-

In our view, it would be useful to add an Explanation in the definition of "conveyance", to cover an instrument whereby a co-owner transfers a share to another co-owner. The intention is that this should apply whether or not the transfer is for consideration. Many of the replies to our Questionnaire1 have expressed agreement with such a view. The charging article on "Release" also lends some support to such an approach2. Some have raised the objection that this amounts to levying a tax for the first time, but we would point out that it is not so, as will be apparent from some of the reported cases referred to above.

1. Question 7 in the Questionnaire.

2. Article 55.

4.43. Section 2(10)-Definition of "conveyance and family arrangement".-

While on the subject of 'conveyance', we may also discuss the question family arrangements. There appear to be two senses in which the expression "family arrangement" is used. A family arrangement in the narrower sense is the bona fide settlement of a claim or dispute (i.e. a claim or dispute which has arisen or may arise), by the members of a family1, for the benefit, peace or security of the family generally or for preserving its property or honour2. In the wider sense, it means any arrangement between members of the same family3 for the benefit of the family.

1. (a) Bakhar Singh v. Dulari, ILR 52 All 716;

(b)Ameer Hasan v. Md. Ejaz Khan, AIR 1929 Oudh 134;

(c) Sital Singh v. Kalka Singh, AIR 1937 Oudh 433 (434).

2. Basant Kamar v. Lala Ram Sankar, ILR 59 Cal 859.

3. See infra.

As Cheshire and Fifoot observe1:

Multitude of arrangements covered.-"The expression 'family arrangement' .covers a multitude of agreements made between relatives and designed to preserve the harmony, to protect the property or to save the honour of the family2. It comprises such diverse transactions as the following: a resettlement of land made between the father as tenant for life and the son as tenant in tail in remainder; an agreement to abide by the terms of a will that has not been properly executed, or to vary the terms of a valid will the release of devised property from a condition subsequently imposed by the testator; or an agreement by a younger legitimate son to transfer family property to an illegitimate elder son."

1. Cheshire and Fifoot Law of Contract, 18th Edn., (1973), p. 277.

2. Cheshire and Fifoot Law of Contract, 18th Edn., (1973), p. 277.

4.44. Special rules of substantive law.-

Family arrangements are specially favoured by the substantive law, in certain respects-e.g., no separate consideration is required1:

The courts view any such arrangement with favour and will uphold it unless there are strong reasons for doing otherwise2. Again, the Specific Relief Act, 19633, section 15(c), corresponding to section 23(c) of the Specific Relief Act, 1877, allows, in the case of a family arrangement, a suit by beneficiaries who are not parties to the arrangement. We have referred to these rules relating to family arrangement by way of illustration. It is not necessary, for the present purpose, to enumerate all the rules of the substantive law applicable to family arrangements.

1. (a) Muhammad Raza v. Abbas Bandi, (1932) 59 LA 236 (246) (PC);

(b)Chaudhry Ahmad Azim v. Chaudhry Safi Jan, ILR (1926) 2 Luch 335. (c) Lalif Jahan v. Mohammad Nabi, (1932) 30 All LJ 9;

(d)Ghulam Mohammad v. Ghulam Hussain, (1931) 59 IA 74 (87, 88) (PC).

2. Williams v. Williams, 1867 LR 2 Ch 304.

3. Section 15(c), Specific Relief Act, 1963.

4.45. Assumption of antecedent title-hence no transfer.-

We now revert to the two senses of the expression "family arrangement" mentioned above. It is stated that a deed in the nature of family settlement may be "based on the assumption that there was an antecedent title of some kind in the parties, and the agreement acknowledges and defines what that title is"1. Here, the narrower sense of the expression is intended.

In Mt. Hiren Bibi Mt. v. Sohan Bibi, AIR 1914 PC 44, the Privy Council, appioving its earlier decision in Khuni Lal v. Gobind Krishna, 1911 ILR 33 All 356 (PC), held that a compromise by way of family settlement is in, no sense, an "alienation" by a limited owner of property. Here again, the narrower sense is intended. It would appear that this is so because no new title is created, and the antecedent title is clarified by such compromise. Hence, where a family arrangement is based upon an assumption that there was an antecedent title of some kind2, it is not a transfer. In other words, if a family arrangement is for the settlement of disputes-existing or future3-it is not a "transfer".

1. (a) Rani Maya Kunzvar v. Rani Hules Kunwar, (1874) 1 IA 157 (166) (PC); (b)Khuni Lal v. Gobind Krishna, (1911) 38 IA 87 (103): ILR 33 All 356 (PC).

2. Bahadur v. Debi Sinha, AIR 1966 SC 292 (295).

3. Ram Charan v. Girja Nandini, AIR 1966 SC 323 (329).

4.46. Family arrangement in the wider sense.-

In the wider sense, a family arrangement, as already stated, is a transaction between members of the family which is for the benefit of the family generally1. So viewed, it goes beyond a mere compromise. It follows that a family arrangement in the wider sense can amount to a conveyance. Thus, where a document was executed in favour of a widow, whereby the executant, in pursuance of a rajinama filed in a suit for maintenance brought by the widow, transferred to the widow a piece of land valued at a certain sum in satisfaction of her claim, it was held2, to be a conveyance3.

1. (a)Madho Das v. Mukand Ram, AIR 1955 SC 481 (1490, 1491): (1955) 2 SCR 22;

(b) Kuppuswami v. Arumugam, AIR 1967 SC 1395.

2. Reference under the Stamp Act, 1898 ILR 21 Mad 422 (425).

3. See also Bhola Ram v. Emp., AIR 1934 Lah 530 (532).

4.47. Determination of the question whether family arrangement should be stamped as a conveyance.-

On the question whether a family arrangement does or does not amount to a "conveyance" for the purposes of the Stamp Act, the answer must, therefore, be sought in the nature of the instrument. What is called by the parties a family arrangement, may be a conveyance, or a partition, or a release1-2, or some other category of instrument. If an instrument operates as a conveyance, it does not matter whether it is described as a memorandum or a release. It is in this context that one must distinguish between a family arrangement in the narrower sense (a compromise), and a family arrangement in the wider sense.

1. Hira sal (in re:), 1908 ILR 32 Born 505 (532).

2. Khudmat Hubraji v. Deputy Commissioner, AIR 1943 Oudh 169 (172).

4.48. Amendment not necessary.-

Broadly speaking, if a family arrangement merely renounces a claim or declares or confirms rights, it is not a conveyance. If it transfers rights, it is a conveyance1. We have discussed these aspects concerning family arrangements in order to bring out certain important elements. We do not, however, consider any amendment on the subject to be necessary.

1. See, especially

(a)Marquess of Bristol, (1901) 2 KB 336;

(b) AIR 1955 SC 481;

(c) AIR 1966 SC 2920;

(d)AIR 1966 SC 323;

(e) AIR 1967 SC 1395.

4.49. Recommendation as to section 2(10).-

In the light of the above, we recommend the following re-draft of sub-section (10):

"(10) 'Conveyance' includes-

(a) a conveyance on sale;

(b) every instrument by which property whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided for by Schedule I:

Explanation.-An instrument whereby a co-owner of a property transfers his interest to another co-owner of the property, is, for the purposes of this clause, an instrument by which property is transferred."



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