CAN A FAMILY SETTLEMENT, WHICH IS UNREGISTERED, BE ENFORCED BY COURT OF LAW?
By virtue of the Registration Act, 1908 (in short, the Registration Act), the enactments relating to the ‘registration of documents’ were consolidated. The Registration Act provides for the ‘Registrable Documents’, ‘Time of Presentation’, ‘Place of Registration’, ‘Effect of Registration and Non-Registration’ ‘Penalties’ etc.
In simple words ‘registration’ means the process of recording the particulars of a document into the ‘book’ provided to every registering officer by the State Government. Such ‘book’ contains ‘forms’, which are prescribed by the ‘Inspector General of Registration’, in the form of pages which are consecutively numbered in print, and the number of pages in each book are certified on the title page by the officer by whom such books are issued.
Registration Act provides for the ‘documents of which registration is compulsory’, and the ‘documents of which registration is optional’ under the provisions of Sections 17 and 18 respectively.
In terms of Section 17 of the Registration Act instruments such as (a) instruments of gift of immovable property; (b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property; (c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and (d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent; (e) non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property are required to be registered.
The documents, which are performed in part, containing contracts to transfer for consideration any immovable property, are also required to be registered.
There are some ‘non-testamentary instruments’ which are exempted from the application of Section 17 of the Registration Act such as (i) any composition deed; or (ii) any instrument relating to shares in a joint stock Company, notwithstanding that the assets of such Company consist in whole or in part of immovable property; or (iii) any debenture issued by any such Company and not creating, declaring, assigning, limiting or extinguishing any right, title or interest, to or in immovable property except in so far as it entitles the holder to the security afforded by a registered instrument whereby the Company has mortgaged, conveyed or otherwise transferred the whole or part of its immovable property or any interest therein to trustees upon trust for the benefit of the holders of such debentures; or (iv) any endorsement upon or transfer of any debenture issued by any such Company; or (v) any document other than the documents specified in sub-section (1A) not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest; or (vi) any decree or order of a Court except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject-matter of the suit or proceeding; or (vii) any grant of immovable property by Government; or (viii) any instrument of partition made by a Revenue-Officer; or (ix) any order granting a loan or instrument of collateral security granted under the Land Improvement Act, 1871, or the Land Improvement Loans Act, 1883; or (x) any order granting a loan under the Agriculturists, Loans Act, 1884, or instrument for securing the repayment of a loan made under that Act; or (xa) any order made under the Charitable Endowments Act, 1890, vesting any property in a Treasurer of Charitable Endowments or divesting any such Treasurer of any property; or (xi) any endorsement on a mortgage-deed acknowledging the payment of the whole or any part of the mortgage-money, and any other receipt for payment of money due under a mortgage when the receipt does not purport to extinguish the mortgage; or (xii) any certificate of sale granted to the purchaser of any property sold by public auction by a Civil or Revenue-Officer.
Apart from above, there are some documents which do not require compulsory registration and their registration is optional. These documents are (a) Instruments (other than instruments of gift and wills) which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of a value less then one hundred rupees, to or in immovable property; (b) instruments acknowledging the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; (c) leases of immovable property for any term not exceeding one year, and leases exempted under section 17; (cc) instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of a value less than one hundred rupees, to or in immovable property;] (d) instruments (other than wills) which purport or operate to create, declare, assign, limit or extinguish any right, title or interest to or in movable property; (e) wills; and (f) all other documents not required by section 17 to be registered.
Before we address the core issue, let’s understand the basic terms used in this context such as ‘immovable property’ ‘non-testamentary instruments’ etc.:
Section 2 of the Registration Act, 1908 defines ‘Immovable Property’ which ‘includes land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of land, and things attached to the earth, or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops nor grass’.
A ‘will’ is a testamentary instrument. In simple words, any instrument which is executed with sole intent that it could only be exercised upon the death of the executor is a testamentary instrument as the words “a will” denote any testamentary document. Contrary to it is a ‘non-testamentary instruments’ which instrument is executed with sole intent to immediately give effect to its exercise.
It is clear from the reading of Section 17 of the Registration act that any instrument which creates, declares, assigns, limits or extinguishes any right, title or interest to or in immovable property of the value of one hundred rupees and upwards is required to be registered.
It is pertinent to note here that registration of any instrument is entirely a different process and must not be misunderstood from that of the ‘notorisation’. It is true the notorisation, as a process, assures that a document is authentic and can be trusted, since it is carried out by a ‘Notary Public’ and consists of vetting, certifying and record keeping. However, the main purpose behind notorisation is to ensure that such a document is authentic, its signatures are genuine and that its signers have acted without duress or intimidation, with intent to give full effect to its terms and conditions.
The effect of non-registration of a document, which is required to be registered, is dealt with in Section 49 of the Registration Act, according to which ‘no document required by section 17(1)or by any provision of the Transfer of Property Act, 1882, to be registered shall— a) affect any immovable property comprised therein, or b) confer any power to adopt, or c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered.’ This Section further provides that ‘an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882, to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877or as evidence of any collateral transaction not required to be effected by registered instrument.’
It is clear from the above that a document, which is required by the law to be registered, if is not registered then it becomes inadmissible in evidence. Meaning thereby it can neither be produced as piece of evidence nor can it be proved in the court of law.[1] This is because of the need of the exclusion of the oral evidence in the documentary evidence and to ensure that the entire oral understanding is reduced into writing in the form of the document. In other simple words we can say that the admission of oral evidence for proving the contents of a document is excluded, meaning thereby that once a document is proved, its contents, including the terms and conditions, etc., therein are deemed to be proved and thus no oral evidence is required.[2] Therefore, one can say that no evidence can be produced before the court to prove the statement when the terms of a contract are reduced in writing except the document itself.
It is, therefore, clear as to registration of what all documents is compulsory, optional and exempted in law.
In the light of above the core question which emerges is what is the position of a family settlement, or a family arrangement, with regard to immovable property via-a-via the requirements of Registration Act?
The questions concerning the applicability of the Registration Act was in question before the 3 judges Constitutional Bench of the Hon’ble Supreme Court of India in ‘Kale[3]’, it was held by the 3 judges Constitutional Bench therein that:
“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 members 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 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.”