JUDGMENT
Vijender Jain, J.
1. This appeal challenges, inter alia, the impugned order passed by the learned Single Judge on an application for clarification pursuant to an order passed by the Registry, inter alia, calling upon the appellant to get the property valued for payment of stamp duty under article 45 of the Stamp Act.
2. After the communication of the said order of the Registry, the appellant filed an application before the learned Single Judge for striking down the order of the Registry as no stamp duty was to be paid by the appellant. To appreciate the contention of the parties, it is relevant to reproduce the contents of the order passed by the learned Single Judge in the suit for injunction filed by the plaintiff being CS(OS) No. 2027/1996, which are as under :
In view of the settlement, as recorded, the suit is decreed in terms of Memorandum of Family Settlement, Ex.C-3. Ex.C-3 shall form part of the decree. It is clarified that the mere factum of the suit being decreed in terms of Ex.C-3, shall not tantamount to either the waiver or discharge from liability for payment of any statutory levies, municipal taxes or stamp duty.
3. It seems that in view of the later part of the said order/decree the Registry had given notice that market price of the property be valued and stamp papers be filed accordingly. The learned Single Judge, in the application for clarification, took the view that Ex.C-3 was not a family settlement but it was a partition deed and therefore, provisions of Section 2(15) of Stamps Act were applicable and the decree passed in the suit was in the nature of a decree for partition and duty as levied in the said provisions of the Indian Stamps Act was leviable.
4. Mr. Nigam, learned counsel appearing for the appellant, has contended that a family settlement was arrived at between the parties during the course of the suit pending since 1996 as the parties in the suit were close relatives. The appellant Mahip Singh Thakur was son of Sh.Manmohan Singh Thakur; whereas the respondent Ms. Hema Thakur was the widow of Sh. Kuldeep Singh Thakur who was brother of Sh.Manmohan Singh Thakur and other respondents were the sons and daughters of late Sh.Kuldeep Singh. Therefore, it was contended before us that in order to achieve peace in the family and in order to put an end to the litigation with the help of common relatives and family friends a settlement was arrived at between the parties to the suit pursuant to an oral family settlement in February 2002 and thereafter, the same was filed in the court on 5th day of February, 2003. The relevant paragraphs of the said family settlement are as follow:
AND WHEREAS on the intervention of common relatives and family friends, and with a view to not only save the honour of the family but also to preserve the peace and security of the family by avoiding litigation, and to bring an amicable end to all the disputes and differences which have arisen and which might arise between the Parties, the Parties arrived at the following full and final oral Family Settlement in February 2002, in order to effect distribution through mutual adjustment of their already existing rights and interest in the above mentioned properties for exclusive possession, ownership and better use, occupation and enjoyment, in the manner hereinafter described:
1. The Delhi property, which was owned jointly by the First Party and the Fifth Party in the shares mentioned above, would now be owned absolutely and exclusively by the First Party. The Fifth Party shall have no right whatsoever in the Delhi property and shall therefore not claim any right, title or interest and shall not challenge or contest the same before any forum, court or any authority.
2. The Nahan property, which was owned jointly by the First Party and the Fifth Party in equal shares, would now be owned absolutely and exclusively by the Fifth Party. The First, Second, Third or Fourth Party shall have no right whatsoever in the Nahan property and shall therefore not claim any right, title or interest and shall not challenge or contest the same before any forum, court or any authority.
5. The facts in brief are that late Sh. Shiv Dutt Singh, father of Sh.Manmohan Singh and Sh.Kuldip Singh purchased the property at Nahan. On 11.6.1963, by means of a registered gift deed, he gifted the said property to his wife Smt. Shanti Devi, who executed a will on 13.1.1986 in favor of her two sons Sh. Manmohan Singh Thakur and Sh.Kuldip Singh Thakur in one-half share each. After the death of Smt. Shanti Devi in 1986 both Sh.Manmohan Singh Thakur and Sh.Kuldip Singh Thakur became co-owners of the property at Nahan in two equal shares. Sh.Manmohan Singh Thakur executed a will on 10.11.1995 and by the said will he bequeathed his share in the property at Nahan in favor of his son Sh.Mahip Singh Thakur, the appellant before us. Sh.Manmohan Singh Thakur died on 17.11.1995. In the mean time, Sh.Kuldip Singh Thakur, the other co-owner of the Nahan property died on 19.3.2000, however, prior to his death he executed a will dated 29.6.1998 and pursuant to that will he bequeathed his share in Nahan property to his wife Smt. Hemlata who is first respondent before us. Sh.Mammohan Singh Thakur had also purchased a property at Karol Bagh and by means of his will dated 10.11.95 (supra) besides the Nahan property, he had bequeathed 60% of the Karol Bagh property, (hereinafter referred to as Delhi Property) in favor of his son Mahip Singh Thakur, who is the appellant before us, and 40% of the said Delhi Property in favor of his brother Sh.Kuldip Singh Thakur, who by means of his will dated 29.6.1998 (supra) besides the property at Nahan, bequeathed his 40% share in Delhi property to his wife Ms. Hemlata, respondent No. 1 before us.
6. Therefore, both the parties had share as co-owners in Delhi Property as well as the property at Nahan. On the basis of the aforesaid facts, it was contended before us that reliance placed by the learned Single Judge in the impugned order on Col. Raghuvir Singh Dahiya v. Shri Rajinder Singh and Ors. in suit No. 1108/1992, Tarak Nath and Anr. v. Sushil Chandra Dey [JT 1996 (5) 272] and on Laxmi Kant Mukt v. Jitender Kumar Aggarwal [18 (1980) DLT 40] was misplaced as in the case before hand admittedly there was share of both the parties in the properties and if one party wanted to have peace in the family by releasing one part of its share in favor of other party who also had a share in that property, would not tantamount to partition of the property but would be simplicitor release of her/his right, title and interest in the said property. In support of his submissions, learned counsel for the appellant has relied upon (1976) 3 SCC 119 titled Kale and Ors. v. Deputy Director of Consolidation and Ors., AIR 1968 Madras 159 Chief Controlling Revenue Authority, Referring Officer v. Rustorn Nusserwanji Patel, a Full Bench decision of Madras High Court, which was later on followed in another Full Bench decision of Madras High Court in AIR 1970 Madras 348 titled The Chief Controlling Revenue Authority, Board of Revenue, Madras v. Rm.L.Rm.L. Lakshmanan Chettiar, AIR 1978 Madras 242 titled The Chief Controlling Revenue Authority, Board of Revenue, Madras, v. V.Daniel and AIR 1982 Madras 113 titled Chief Controlling Revenue Authority, Board of Revenue, Madras, v. Tvl Inca Cables (Pvt.) Ltd.
7. It was contended that in the case before us, the provisions of Section 42 of the Stamp Duty Act would not be applicable as the case would not be a case of partition but of release. It was emphasised that in catina of cases, it has been held that family settlement can be arrived at orally. There is no need for the same to be registered under Section 17 of the Registration Act and, therefore, no stamp duty is to be paid on such an instrument.
8. We have given our careful consideration to the arguments advanced by learned counsel for the parties. The law is well settled with regard to the documents of release of property or release of a share from the property owned by two co-owners and one of them effacing himself in favor of the other. The essential ingredients of release are that there should be already a legal right in the property vested in the releasee and the release should operate to enlarge that right into an absolute title for the entire property as far as the parties are concerned. There cannot be any release by one person in favor of another, who is not entitled to the property as co-owner. In Chief Controlling Revenue Authority v. Rustorn Nusserwanji Patel (supra), Full Bench of the Madras High Court took the similar view:
(11) On the contrary, we may emphasise that the essential ingredients of release are here present. There is already a legal right in the property vested in the releasee, and the release operates to enlarge that right into an absolute title for the entire property, as far as the parties are concerned.
(12) The next argument of the learned counsel that this kind of release does not fall within the ambit of Article 55 of Schedule I appears to be devoid of substance. Article 55 refers to release, that is to say any instrument ………..whereby a person renounces a claim upon any other person, or against any specified property. We do not think that this means that a releasor cannot validly state, in the instrument, that he is effacing his rights in the property, in favor of another named individual. There is an entity known to law as a document of release, and we have no reason to think that, by this Article that entity was no indicated but only one particular kind of sub-species release, wherein the person in whose favor the release is declared or intimated, is not designated by identity or name.
(13) We would, therefore, unhesitatingly answer the question in the form that the document was rightly interpreted as a release under Art.55 of Schedule I of the Indian Stamp Act and is liable to duty as such.
9. We need not go into the other authorities of the Madras High Court cited by learned counsel for the appellant, which have followed the decision in AIR 1968 Madras 159. In (1976) 3 SCC 119 titled Kale and Ors. v. Deputy Director of Consolidation and Ors., Supreme Court has laid down the broad parameters to determine as to whether an instrument is a release document or a deed of partition.
(9) 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 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. Today when we are striving to build up an egalitarian society and are trying for a complete reconstruction of the society, to maintain and uphold the unity and homogeneity of the family which ultimately results in the unification of the society and, therefore, of the entire country, is the prime need of the hour. A family arrangement by which the property is equitably divided between the various contenders so as to achieve an equal distribution of wealth instead of concentrating the same in the hands of a few is undoubtedly a milestone in the administration of social justice. That is why the term family has to be understood in a wider sense so as to include within its fold not only close relations or legal heirs but even those persons who may have some sort of antecedent title, a semblance of a claim or even if they have a spes successionis so that future disputes are sealed for ever and the family instead of fighting claims inter se and wasting time, money and energy on such fruitless or futile litigation is able to devote its attention to more constructive work in the larger interest of the country. The courts have, therefore, leaned in favor of upholding a family arrangement instead of disturbing the same on technical or trivial grounds. Where the courts find that the family arrangement suffers from a legal lacuna or a formal defect the rule of estoppal is pressed into service and is applied to shut out plea of the person who being an party to family arrangement seeks to unsettle a settled dispute and claims to revoke the family arrangement under which he has himself enjoyed some material benefits. 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 tobe 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.
(10). 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:
(1)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 member of the family;
(2)The said settlement must be voluntary and should not be induced by fraud, coercion or undue influence;
(3)The family arrangement may be even oral in which case no registration is necessary;
(4)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;
(5)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 favor 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.
10. Let us now examine the cases relied upon by the learned Single Judge in the impugned order. The learned Single Judge has cited Laxmi Kant Mukt’s case (supra). With respect we may say that the said case deals with a dispute between the landlord and the tenant and the tenant had taken the plea that the landlord was seeking ejectment only from a part of the portion of the tenancy premises and not whole of it. In the said ruling itself the court has come to a conclusion that there is no dispute with the proposition that the award recognising the oral partition between the members of the family, which had earlier taken place, and the decree making it a rule of the Court, do not require execution on a stamp paper or to be compulsorily registered. Similarly, the ruling titled M/s Taraknath’s case (supra), in our view, does not support the levying of stamp duty under Article 45 of the Stamp Act. Paragraph 4 of the Taraknath’s judgment is to the following effect:
Having regard to the contention, the question arises: whether the High Court was correct in law in upsetting the judgment of the learned single Judge and the trial Court in dismissing the suit? It is true that there is no actual delivery of the possession pursuant to the gift said to have been made by five sisters in favor of five brothers. The property admittedly belonged to father Syed Md. Mahibullah who died in 1954. Thereby all the brothers and sisters become owners to the extent of their shares they had succeeded to the property. Thus all of them are co-owners. It would be open to the sisters to relinquish their right by way of gift, even oral, which is valid in personal law. Since the tenant has been in occupation, it would be constructive delivery of the possession. Delivery of the physical possession to the brothers, in the circumstances, is not warranted. As regards the family settlement of the brothers, it would be open to the brothers to resolve the prospective dispute by way of family settlement. The brothers having agreed for the settlement, though they have been imp leaded as party-respondents to the suit, they have not challenged the family settlement nor have they contested the validity thereof. It is not necessary, in the circumstances, that all the brothers be present at the settlement. One of the brothers living in London can authorise his other brothers to settle the dispute and he was a consenting party to it. Under those circumstances, we are of the view that the brothers obviously had a settlement pursuant to which the demised property has been allotted to the share of Syed Baitul Alam who had sold the property to the appellant under the sale deed dated August 6, 1979. The sale deed is a registered conveyance for valid consideration. Under those circumstances, by operation of section 17 of the Registration Act, the appellant gets valid title to the property. The pre-existing right, title and interest in the property of Syed Baitul Alam and his brothers stood extinguished by operation of the law. Thereby, the appellants get valid title to the property. Since the respondent was continuing as a tenant, obviously, he is bound by the title since the suit has been laid for eviction of the respondent and decree for eviction was rightly granted.
11. In the case before hand, none of the parties have challenged the family settlement nor they have contested the validity thereof. Therefore, it cannot be said that in order to buy peace in the family and 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, the family settlement cannot be arrived at as has been rightly observed by the Supreme Court in Kale’s case :
A family arrangement by which the property is equitably divided between the various contenders so as to achieve an equal distribution of wealth instead of concentrating the same in the hands of a few is undoubtedly a milestone in the administration of social justice. That is why the term family has to be understood in a wider sense so as to include within its fold not only close relations or legal heirs but even those persons who may have some sort of antecedent title, a semblance of a claim or even if they have a spes successionis so that future disputes are sealed for ever and the family instead of fighting claims inter se and wasting time, money and energy on such fruitless or futile litigation is able to devote its attention to more constructive work in the larger interest of the country.
12. From the above discussion and taking into consideration the fact that both the parties had share as co-owners in the property at Nahan as well as Delhi, the relinquishment by appellant of his share in the property at Delhi in favor of the respondents and respondent No. 1 releasing her share in the property at Nahan in favor of the appellant, by no stretch of imagination, can be construed as partition, therefore, the impugned order is set aside. In view of that, Ex.C-3 is instrument of release. The parties are not bound to pay stamp duty as per Article 45 of the Stamp Act. They will, however, pay the requisite stamp duty leviable on a release deed. Appeal is allowed. Registry is directed to draw the decree accordingly.
13. dusty.