When members of a family settled their disputes mutually about family property or the property of a relation about the inheritance of which there is a bona fide dispute between them known as a family settlement or arrangement. That the settlement must be bona fide and that there must be some consideration. It is well settled that a family arrangement is for saving the honor of the family by the maintenance of peace and harmony and the avoidance of future discord or the preservation of property. It will binding in the absence of fraud, coercion or undue influence.
The object of the arrangement is to protect family from filing long drawn litigation or perpetual strife which mar the unity and solidarity of the family and create hatred and bad blood between the various members of the family.
That the family is to be understood in the 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, asembalance of claim or even if they have a spes succession is so that future dispute are sealed forever and litigation are avoided.
That 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 arrangements 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 mare 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) (sic) (sec. 17(1) (b) ?) 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 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 parties 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.
This article is based on decision given by the hon'ble Supreme Court in Kale versus Deputy Director of Consolidation and Others, AIR 1976 SC 807.The said principles reiterated in Badami(D) by her LR versus Bhali, 2012 (2) UAD 343 (SC).
NOTES :- To consider a settlement as family arrangement, it is not necessary that the parties to the compromise should all belong to one family.
The word "family" in the context of the family arrangement, is not to be understood in a narrow sense of being a group of persons who are recognised in law as having a right of succession or having a claim to a share in the property in dispute.If the dispute which is settled is one between near relations then the settlement of such a dispute can be considered as a family arrangement. Ram Charan Das versus Girija Nandini Devi, (3965) 3 SCR 841, AIR 1966 SC 323 (supra).