DEED OF FAMILY SETTLEMENT

Submitted by:

Parth Shama

Roll no- 1543, B.A, LL.B

Submitted to:

DR. B. Ravi Narayan Sarma

Assistant Professor of Law

Final draft submitted in fulfilment of the course Pleadings, Drafting and Conveyancing
(DPC) for the completion of B.A, LL.B (HONS.) course

MARCH, 2020

CHANAKYA NATIONAL LAW UNIVERSITY

NAYAYA NAGAR, PATNA

 DEED OF FAMILY SETTLEMENT

ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my guide Dr. B.R.N.
Sarma, for his exemplary guidance, monitoring and constant encouragement throughout the course
of this thesis. The blessing, help and guidance given by him time to time shall carry me a long way
in the journey of the life on which I am about to embark.

I am obliged to staff members of Chanakya National Law University, for the Valuable information
provided by them in their respective fields. I am grateful for their Cooperation during the period of
my assignment.

Lastly, I thank almighty, my parents, brothers, sisters and friends for their constant encouragement
without which this assignment would not be possible.

Thanking you,
Parth Sharma
Roll.-1543
Semester-8th
B.A, LL.B(hons).

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TABLE OF CONTENTS
CHAPTER-I ............................................................................................................................................... 7
INTRODUCTION ...................................................................................................................................... 7
SPECIAL EQUITY APPLICABLE TO FAMILY ARRANGEMENTS:...................................................... 8
CHPTER II ................................................................................................................................................. 8
THE OBJECT OF FAMILY ARRANGEMENT ......................................................................................... 8
CHAPTER III ............................................................................................................................................. 9
ESSENTIALS OF FAMILY ARRANGEMENTS ....................................................................................... 9
CHAPTER IV ........................................................................................................................................... 10
VALIDITY OF THE ARRANGEMENTS ................................................................................................ 10
CHAPTER V ............................................................................................................................................ 11
REGISTRATION REQUIREMENT ......................................................................................................... 11
CHAPTER VI ........................................................................................................................................... 13
TAXATION ASPECT OF FAMILY ARRANGEMENTS......................................................................... 13
SHARES TRANSFERRED PURSUANT TO A GIFT .......................................................................... 15
CHAPTER VII .......................................................................................................................................... 17
MODEL FORMAT ................................................................................................................................... 17
CHAPTER-VIII ........................................................................................................................................ 26
CONCLUSION ......................................................................................................................................... 26
BIBLIOGRAPHY ..................................................................................................................................... 26

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 DEED OF FAMILY SETTLEMENT

DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the B.A, LL.B (Hons.) Project Report entitled
“Suit for Setting Aside Adoption” submitted at Chanakya National Law University, Patna is
an authentic record of my work carried out under the supervision of Dr. B.R.N. Sharma. I have not
submitted this work elsewhere for any other degree or diploma.

I am fully responsible for the contents of my project report.

Sign:

Name: Parth Sharma

RollNo.-1543

Semester:VIIIth

B.A, LL.B (hons.)

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INTRODUCTION
The Indian courts and judiciary is no stranger to family disputes. Majority of the cases relate to
disputes with regards to family property and its division. Thus, in order to solve such disputes the
Indian courts have taken a very liberal and broad view with regards to the validity of the family
settlement and have always tried to uphold it and maintain it. The central idea in the approach made
by the courts is that if by valid consent of parties a matter has been settled, it should not be allowed
to be re-opened by the parties to the agreement on frivolous or untenable grounds. Court described
„family arrangement‟ as a transaction between members of the same family for the benefit of the
family so as to preserve the property, peace, and security of the family, avoidance of family dispute
and litigation and for saving the honor of family. Such an arrangement is based on the assumption
that there was an antecedent title in the parties and the agreement acknowledges and defines what
title is.

Thus, oral partition or family arrangement is an extremely valuable power whereby the peace,
happiness and welfare of a family are secured and litigation is avoided. It is specifically helpful in
the case of illiterate members or not well off members of a family or who have no means to bear
expenditure of legal process/advice. By family arrangements it is intended to set at rest competing
claims or to settle claims finally amongst various members of the family to secure peace and amity.

If the true character of the transaction appears to the courts to be a settlement between the several
members of the family of their disputes with each one relinquishing all claim in respect of all
property in dispute other than that falling to his share, and recognizing the right of the others as
they had previously asserted it to the portion allotted to them respectively, the court will effectuate
it as a family settlement. It will confer a new distinct title on each other, that the parties themselves
seem to have regarded in the arrangement, and it is held that it is the duty of the courts to uphold
and give full effect to such an arrangement.

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 DEED OF FAMILY SETTLEMENT

In S. Shanmugam Pillai v. K. Shanmugam Pillai the entire issue regarding family arrangements was
discussed and the Court observed as follows:

“If in the interest of the family properties or family peace the close relations had settled their
disputes amicably, this Court will be reluctant to disturb the same. The courts generally lean in
favour of family arrangements.”

The courts have leaned strongly in favour of family arrangements that bring about harmony in a
family and do justice to its various members and avoid, in anticipation, future disputes which might
ruin them all. In the case of Sahu Madho Das the judges Vivian Bose Jagannadhadas and B.P.
Sinha relied on Clifton v. Cockburn, and William v. William. As observed in various cases the
family arrangement can as a matter of law be inferred from a long course of dealings between the
parties.

OBJECTIVES OF THE STUDY

By doing this research, the researcher want to highlight the meaning of family settlement and the
deed of settlement.

RESEARCH QUESTION

The researcher has formulated following questions:

1. What is the meaning of the term family settlement?

2. What are the procedure of family settlement?

RESEARCH METHODOLOGY
The researcher will be using only doctrinal method of Research. Doctrinal method will include
library sources.

SOURCES OF DATA

 Primary Sources
Income-tax Act, 1961
Gift Tax Act, 1958
Transfer of Property Act, 1882.
Registration Act, 1908

 Secondary Sources

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 DEED OF FAMILY SETTLEMENT

Journals

Websites

Books

LIMITATIONS OF THE STUDY

The researcher has monetary limitations, Time limitations and Territorial limitations.

CHAPTER-I

INTRODUCTION

The word 'family' in the content is not to be under stood in a narrow sense of being a group of
persons who are recognized in law as having a right of succession or having a claim to a share in
the property in dispute. The consideration for such a settlement, if one may put it that way, is the
expectation that such a settlement will result in establishing or ensuring amity and goodwill
amongst persons bearing relationship with one another. That consideration having been passed by
each of the disputants the settlement consisting of recognition of the right asserted by each other
cannot be permitted to be impeached thereafter.

In Krishna Biharilal v. Gulabchand 1 it was pointed out that the word 'family' had a very wide
connotation and could not be confined only to a group of persons who were recognised by law as
having a right of succession or claiming to have a share. The word "family" in the context of a
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.

Thus, 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.

1
1971 AIR 1041, 1971 SCR 27
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SPECIAL EQUITY APPLICABLE TO FAMILY ARRANGEMENTS:

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" 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 honesty 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 that their rights actually are, or of the points On
which their rights actually depend.”

In Maturi Pullaiah and Another v. Maturi Narasimham 2 the Court held that conflict of legal claims
in present or in future is generally not necessarily a condition for the validity of family
arrangements. Even a bona fide dispute present or possible, which may not involve legal claims
would be sufficient. Members of a joint Hindu family may, to maintain peace or to bring about
harmony in the family, enter into such a family arrangement. If such an agreement is entered into
bona fide and the terms thereto are fair in the circumstances of a particular case, the courts would
more readily give assent to such an agreement than to avoid it.

CHPTER II

THE OBJECT OF FAMILY ARRANGEMENT

Various courts have referred to Kale v. Deputy Director of Consolidation (“Kale”) 3 to highlight the
object of such arrangements to protect the family from long drawn litigation 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 courts have held that in the present times 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

2
AIR 1966 SC 1836
3
1976 AIR 807, 1976 SCR (2) 202
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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 administrating 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 successions so that future disputes are sealed forever 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 favour 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 estoppel is pressed into
service and is applied to shut out plea of the person who being a 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.

CHAPTER III

ESSENTIALS OF FAMILY ARRANGEMENTS

The Kale case along with others have referred to Halsbury's Laws of England, which have 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 arrangement shall be voluntary and should not be involve any fraud, undue influence or
coercion. The agreement may necessarily not be a written one. It may very well be implied from a
long course of negotiations. However, while dealing with such negotiations, it is more usual to
embody or to effectuate the agreement in a deed to which the term "family arrangement" is applied
or can easily be implied.

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 DEED OF FAMILY SETTLEMENT

These family arrangements are governed by principles which are not applicable to dealings
between strangers for obvious reasons. One cannot equate agreements between strangers to
agreements between members of the same family having rights in common ancestral property
inherited from their forefathers. In the light of the sensitive nature of such arrangements, courts
when deciding the rights of parties under family arrangements or claims to upset such
arrangements, considers what in the broadest view with respect to the dispute keeping in mind the
best interest of the family members. Not just this, the judges also give regards to considerations to
the fact that case may also deal with transactions between persons not members of the same family.
However, in most scenarios this factor would not be taken into account as any property transferred
to non-members is done through contracts other than family arrangements. Thus, it is pertinent to
note that usually the matters which would be fatal to the validity of similar transactions between
strangers are not objections and do not usually affect the binding effect of family arrangements.
This factor alone highlights the legal sanctity and validity attached to the arrangements.

CHAPTER IV

VALIDITY OF THE ARRANGEMENTS

As discussed above, only a few factors affect the validity of family arrangements. In Maturi
Pullaiah and Anr.v. Maturi Narasimham4 it was held that even if there was no conflict of legal
claims but the settlement was a bona fide one it could be sustained by the court. Similarly it was
also held by the court that even the disputes based upon ignorance of the parties as to their rights
were sufficient to sustain the family arrangement. The Court further held that the compromise is
based on the assumption that the members to the agreement already have a title to the property and
the agreement does nothing more acknowledging the same title. It clearly defines the title of each
member and the portions allotted to each of them. This is the reason why no conveyance is required
in such an arrangement as it is already assumed that the person receiving the property already had a
right over it.

The said notion can be used by the courts to lean in favour of family arrangements that bring about
harmony in a family and do justice for all members involved. The peaceful settlement also avoids
in anticipation, future disputes which might lead to distortion of peace. The only exception to such

4
AIR 1966 SC 1836
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a circumstance is fraudulent conduct on the part of any members which can disrupt the whole
process.

However, one set of members abandons all claim to all title and interest in all the properties in
dispute and acknowledges that the sole and absolute title to all the properties resides in only one of
their number and are content to take such properties as are assigned to their shares as gifts pure and,
simple from him or her, or as a conveyance for consideration when a consideration is present.

CHAPTER V

REGISTRATION REQUIREMENT
As mentioned before, family arrangement as such can be arrived at orally. Its terms may be
recorded in writing as a memorandum of what had been agreed upon between the parties. The
memorandum need not be prepared for the purpose of being used as a document on which future
title of the parties be founded. It is usually prepared as a record of what had been agreed upon so
that there be no hazy notions about it in future. It is only when the parties reduce the family
arrangement in writing with the purpose of using that writing as proof of what they had arranged
and, where the arrangement is brought about by the document as such, that the document would
require registration as it is then that it would be a document of title declaring for future what rights
f in what properties the parties possess.

In Mahadeikunwar v. Padarath Chaube 5 it was held that there may be a family settlement in which
there is some transfer of property as well along with the settlement of dispute, which to the extent
of such transfer would stand on a different footing. By and large, a document styled as family
arrangement is not immune from registration. However, it is a question of fact where a family
arrangement requires compulsory registration or not, to be determined in each case based on the
contents and interpretation of the document and the surrounding circumstances of the case, by
taking into consideration whether the document in question itself creates title or it only
acknowledges antecedent title to the property. If the family arrangement involved a declaration of
right, then, it requires registration.

5
AIR 1937 All 578
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 DEED OF FAMILY SETTLEMENT

In Ramgopal v. Tulshi Ram6 has also taken the view that a family arrangement could be oral and if
it is followed by a petition in Court containing a reference to the arrangement and if the purpose
was merely to inform the Court regarding the arrangement, no registration was necessary. In this
connection the full bench adumbrated the following propositions in answering the reference:

"We would, therefore return the reference with a statement of the following general propositions:

With reference to the first question:

(1) A family arrangement can be made orally.

(2) If made orally, there being no document, no question of registration arises.

(3)If though it could have been made orally, it was in fact reduced to the form of a "document",
registration (when the value is Rs. 100 and upwards) is necessary.

(4) Whether the terms have been "reduced to the form of a document" is a question of fact in each
case to be determined upon a consideration of the nature and phraseology of the writing and the
circumstances in which and the purpose with which it was written.

(5) If the terms were not "reduced to the form of a document", registration was not necessary (even
though the value is Rs. 100 or upwards); and, while the writing cannot be used as a piece of
evidence for what it may be worth, e.g. as corroborative of other evidence or as an admission of the
transaction or as showing or explaining conduct.

(6) If the terms were "reduced to the form of a document" and, though the value was Rs. 100 or
upwards, it was not registered, the absence of registration makes the document inadmissible in
evidence and is fatal to proof of the arrangement embodied in the document."

Similarly in Sitala Baksh Singh and others v. Jang Bahadur Singh 7 it was held that where a
Revenue Court merely gave effect to the compromise, the order of the Revenue Court did not
require registration. In various cases, it has been assumed that there was a bona fide dispute
between the parties which was eventually composed each party recognizing an antecedent title in
the other. In such circumstances, the courts are of the opinion that there was no need for

6
AIR 1928 All 641
7
1976 AIR 807
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registration. In the opinions of the courts, it has no purpose to create, assign, limit, extinguish or
declare within the meaning of these expressions as used in S. 17(1)(b) of the Registration Act. It is
merely a recital of fact by which the court is informed that the parties have come to an
arrangement. Thus, if the antecedent title to property already existed and the courts are merely
informed of such title, the same would not require registration.

CHAPTER VI

TAXATION ASPECT OF FAMILY ARRANGEMENTS

Transfer under Section 2(47) and Section 45(4) of the Income-tax Act, 1961.

The courts have held that under a family arrangement or partition, any property transferred cannot
be taxed under capital gains. Such giving away of property under a scheme of family arrangement
cannot be construed as 'transfer' for capital gain purposes. Therefore, there is no liability to pay
capital gain tax under Section 45 of the Income-tax Act, 1961.

The High Court in Commissioner of Gift Tax( CGT) v. K N Madhusudan 8, has held that the word
„transfer‟ in section 45 does not include partition or family settlement as defined in the Income Tax
Act. The facts recorded in the family settlement are akin to a partition and hence cannot be taxed.
Family members under the scheme of arrangement have an anterior title to the property which is a
subject matter of partition or a family arrangement. Thus, under family settlement there is an
adjustment of shares, crystallization of respective rights in the family properties and therefore it
cannot be construed as a transfer in under the Taxing statutes. Thus, as there is no transfer in the
eyes of law, there is no capital gain and therefore no capital gain tax can be levied on such transfer.

In the case of Commissioner of Income Tax (CIT) v. A.N. Naik Associates9 by the Memorandum
of Family Settlement it was decided by the parties thereto that the business of six firms as set out
therein would be distributed in terms of the family settlement, as decided by the parties concerning
various matters relating to business and assets thereto be divided separately and partitioned. Under

8
Gift Tax Appeal No. 1&2/2008
9
[1979] 120 ITR 49
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 DEED OF FAMILY SETTLEMENT

the terms and condition of the settlement, it was set out that the assets proposed to be divided in
partition under the settlement were held by the firms and the individual partners. With reference to
the firms, the manner in which the firms were to be reconstituted by retirement and admission of
new partners was also set out. Based on these documents and subsequent deeds of retirement of
Partnership an order of the assessment was made holding that the respondents was liable for tax on
capital gains. The Tribunal held that the business continued to be run and there was no dissolution
of the firm and consequently Sec. 45(4) of the Act was not attracted.

Gift under Section 2(xii) and Section 4(1) of the Gift Tax Act, 1958

In the case of CGT v. D. Nagrirathinam10, the assessee was the owner of a half share in the building
which consisted of ground floor and first floor. She was the owner of residential house and a
building. Pursuant to the dispute between the assessee and her son, at the intervention of the
Panchayatdars, the assessee executed the deed of partition with a view to settle the dispute with her
son. As per the deed of partition, one of the properties was absolutely allotted to the son which was
belonging to the assessee. Therefore, the gift tax assessment was made in respect of the value of the
said property allotted to the son. The Tribunal held that only to solve the family dispute and bring
harmony in the family the transactions were entered into and there was a family arrangement which
did not constitute gift within the meaning of Sec. 2(xii) and 4(1)(a). The said decision of the
Tribunal was upheld by the Court on the ground that the family members intended to maintain
peace in the family and therefore, the family arrangement was arrived at which was bona fide one.
Hence, the tribunal decided that the transaction did not constitute gift within the meaning of Sec.
2(xii) and 4(1)(a) of the Gift-tax Act.

Following the Supreme Court decision the case of Sahu Madho Das v. Mukand Ram 11, Madras
High Court held in C.G.T. v. Pappathi Anni12 that an agreement between widowed mother and son
for division of property to be family arrangement not attracting gift tax as the parties genuinely and
bonafide, thought that both mother and son had right to half share in the property left behind by the
father and that allotment of property to son or the mother was not without any consideration.

10
2003 129 TAXMAN 822 Mad
11
1955 AIR 481, 1955 SCR (2) 22
12
[1981] 12 7 ITR 655
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The family settlement is the best medium of planning the distribution of the assets in such a way
that assets may pass to those who may have to bear the least possible tax. As already stated the
division of assets through family settlement is not a transfer, therefore it neither attracts capital gain
tax nor gift tax - CIT v. A.L. Ramanathan13. The clubbing provisions of section 64 of the Income
Tax Act are also not attracted to the family settlement. But one should be careful and cautious. The
family settlement should be bonafide, otherwise it may fail. In a case before the Madhya Pradesh
High Court in S.R. Kalani (HUF) v. C.I.T 14 ., a partnership was formed by family arrangement
giving a lump sum amount to the mother under family settlement. On the basis thereof, she was
admitted as a partner in the firm with the Karta of HUF, her only son. Earlier, it was claimed as a
partition which was rejected and the family was assessed in the status of HUF as before. Later on
the plea of partition was given up and it was claimed that the mother was given a sum of rupees one
lakh in lieu of her right to maintenance under the family arrangement. It was found on the facts that
the mother did not withdraw any amount for her maintenance. The story of quarrel with her
daughter-in-law was also found incorrect because she made a gift of her jewellery to the daughter-
in-law after the alleged family arrangement. Thus, the family arrangement was not found to be
bonafide and was rejected by the Court.

SHARES TRANSFERRED PURSUANT TO A GIFT

In the case of ACIT v. Bilakhia Holdings P. Ltd.15 the court held that the shares that are transferred
pursuant to a family arrangement is for a consideration and is not voluntary. Thus, it cannot be
considered to be a gift. In this case, three brothers of the same family by a deed agreed to transfer
shares of the companies held by the them to Bilakhia Holdings Limited( “taxpayer”) to consolidate
holdings and avoid any further disputes. However, the three brothers were also the directors of the
taxpayers not just this, they also held equal stake in the taxpayer. The brothers then transferred
loans worth millions to the company which were given to them by others. The company recorded
such loans by credit to the capital account reserves. The taxpayer then sold a few is such shares
received under the settlement deed. For calculating the capital gains on shares of these shares , the
company took the shares as gifts and took the cost and holding period of the earlier owners and

13
2000 245 ITR 494 Mad
14
CIT [1989] 177 ITR 259 (MP)
15
ITAT- ITA 981/AHD/2009
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offered long term capital gains to them. The company then showed the gain on the sale of shares to
be transferred to capital reserved instead of going through profit and loss accounts.

The authorities then taxed this gain on sale of shares as short term capital gains and said that the
loans were income. The officers also made the addition of gains in calculating book of profits
(“MAT Computation”) under Section 115JB of the Income Tax Act, 1961. In appeal, the
authorities overruled the addition of loans and held that gain by sale of shares was a long term
capital gain. However, in the MAT computation, the authorities in appeal confirmed the addition of
the gain.

When the case came up before the tribunal the company contended that there was no requirement
of natural love, care and affection for a gift to exist as defined under section 122 in Transfer of
Property Act, 1882. The company argued that the consideration in Section 122 is something
valuable and capable of being expressed in money or money‟s worth. In the case of the taxpayer, it
could not be denied that the no consideration in money was paid by the taxpayer. The family
arrangement was entered into by the three brothers by their own free will. Consequently, the shares
were transferred to the company. Hence, the binding nature of such arrangements cannot deem the
transfer to be voluntary. The company also contended that the members who had transferred their
shares have reflected it as gifts in their accounts. Thus, shares received as a gift are not investment
and hence gains on sale of these shares cannot be put through profit and loss account.

Tax department contended that the company cannot show natural love and care, which is a
prerequisite for a receiving any valuable object as gift. The consideration for such a transfer was to
the parties was to attain peace and settle disputes. The transfer could not be said to be one without
consideration. Such transfer was also not voluntary as it was under a binding agreement. Therefore
as the transfer did not satisfy both requirements of gifts, it could not be held as a gift under law.
The receipt of shares by the company was nothing but buying of shares on lower prices.

The Tribunal held that family arrangements were undoubtedly binding and such transfers under
agreements cannot be regarded as one being without consideration. The arrangement was done in
order to consolidate the holdings of the three brothers and hence, the consideration of transfer can
be measured in money or money‟s worth. Family disputes being settled in monetary terms by using
such arrangements leads to the result that said transfer was with consideration and the transfer was

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 DEED OF FAMILY SETTLEMENT

not voluntary as the agreements is binding and enforceable on all parties. No tax avoidance in garb
of arrangements:

However, family arrangements cannot be entered into just to avoid taxation on transfer of property.

In the case of Bansari Lal Aggarwal v. CGT 16 , the High Court refused to accept the family
arrangement arrived at between the husband on the one side and wife & four son on the other as
collusive one effected with a view to avoid payment of tax. In the said case, property owned by the
assessee was an individual property. He had a wife and four sons had only lent money to him to
buy the said property. The assessing officer held that by the mere creation of an antecedent title,
claim or interest of the five persons in the individual property of husband and consequently, the
family arrangement decree obtained by the parties concerned shall be set aside on the ground of
being collusive, obtained with a view to avoid payment of tax.

CHAPTER VII

MODEL FORMAT

MODEL-I

The Document of arrangement of properties is made by the free and mutual consent and belongs to
the family and its members made on (date) day of (month and Year) between Shri, Vara Prasad,
aged about 58 years, who is the head of the family and known as karta of the Hindu undivided
family, Mrs. Vara lakshmi, aged about 48 years, wife of the above head of the family or Karta and
also a member of the same Hindu undivided family, Kalyani „C‟ aged about 32 years and Kumari
„D‟ aged about 34 years, Kalyani and Kumari are the daughters of the Karta and members of the
said Hindu undivided family and Shri „Shravan‟ aged about 32 years, who is the son of the Karta
and also a member of the said Hindu undivided family.

All the above mentioned five members comprise of joint family which is governed by the Hindu
Law and they own various movable and immovable properties which are described in S. No. 1
to………………. Of Schedule A, 1 to……………….of Schedule „B‟ and 1 to ……………….. of
Schedule „C‟ and 1 to ………………. Schedule „D‟ attached hereto.

16
(1998) 230-ITR-114 (P&H).
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 DEED OF FAMILY SETTLEMENT

Since there are internal disputes between the above mentioned family members they are not able to
continue their enjoyment on joint properties belonging to the joint family. Hence, all the above
mentioned family members voluntarily with their free will have agreed to put an end to this joint
enjoyment of property and from this situation.

NOW THIS DOCUMENT WITNESSES as follows:

1. All the properties mentioned in S.No. 1 to ______________ of Schedule A will go to the share
of Miss. „C‟

2. All the properties mentioned in S.No. 1 to ___________ of Schedule „B‟ will go to the share of
Miss. „D‟.

3. All the properties mentioned in S.No. 1 to______________ of Schedule “C‟ will go to the share
of Mr. „E‟

4. All the properties mentioned in S. No. 1 to ______________ of Schedule „D‟ shall be in the joint
ownership of the above mentioned and the income of which shall be enjoyed jointly by all the
family members.

5. After this agreement, each party is entitled to get rent, or any income arising from the property
and pay taxes as the absolute owner of the property.

6. Each party has a right to enjoy sell transfer his/her share of property.

7. This agreement states that each of the parties agree that they have no right on the title, interest or
any other claims on the properties which have been allotted to others.

IN WITNESS WHEREOF etc.

MODEL-II

This deed of family Settlement is made on this between:-

S/o , R/o (hereinafter called the party of the First Part)
AND

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 DEED OF FAMILY SETTLEMENT

S/o, W/o , R/o (hereinafter called the party of the Second Part)

WHILE, first Party is absolute owner and in real and physical ownership of with some
involving share of , admeasuring , total calculating Sq. Yards,
situated in which is confined as under:-

East - West
- North - South
-

AND WHEREAS, the above specified property was bought by the First party vide two distinct
Sales Deed bearing file Nos. dated listed in the office of and Sale Deed No. dated
registered in the office of . After buying of both the
some area of the was involved in the hence its dimension became total measuring
Square Yards. The conditions of this household settlement tracks as under:-

1- That the party of the primary share is the actual of the party of the secondary
part

2- That by asset of this household settlement the first party has uncontrolled, submitted and
surrendered his all privileges, title and interest in the above stated property in favour of the party
of the second part and thus the second party has develop complete owner and in actual physical
ownership of the said property since nowadays.

3- That the party of the primary part has put the party of the first part in the real and physical
ownership of the property in question on the spot and thus the second party has develop
owner and in ownership of the property stated above.

4- That the second party has develop permitted to sell, disaffect, and handover the said property
and advance, lien, lease out or to do any other such acts actions and things.

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 DEED OF FAMILY SETTLEMENT

5- That it has been permitted upon between the parties that the first party shall sign all the
concerned papers and would overthrow her declaration in favour of the second party for getting
the name of the another part recorded in any Administration office.

6- That current deed of Domestic settlement has been performed as per the allowed will and
agreement of both the parties without any terror, force or fraud.

IN WITNESSES THEREOF, both the parties have set their fingers on this deed of Family
Settlement on the daytime, month and year stated above.

WITNESSES

1- FIRST PARTY
2- SECOND PARTY

MODEL-III

GIFT SETTLEMENT DEED

(FOR CHARITABLE / RELIGIOUS PURPOSE)

THIS GIFT SETTLEMENT DEED FOR CHARITABLE TRUST made and executed on this the
day of year by, Sri S/o, D/o, W/o. , aged about years, Occupation.
Resident of Door No.

Represented by his / her agent

Being minor represented by Father/Mother/Brother/Guardian

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 DEED OF FAMILY SETTLEMENT

Sri S/o, D/o, W/o. ,

aged about years, Occupation:
Residing at under general / special power of attorney
dated Registered as Document Number of Year
Book - I / IV of RO/SRO .

Hereinafter called the “SETTLOR” which term shall mean and include all his/her heirs,
legal representatives, administrators and assignees etc. of the ONE PART

IN FAVOUR OF

Name of the trust / institution

Represented by Sri S/o, D/o, W/o. ,

aged about years, Occupation:
Resident of Door No.

Being minor represented by Father/Mother/Brother/Guardian

Sri S/o, D/o, W/o. ,

aged about years, Occupation:
Residing at

Hereinafter called the “SETTLEE” which term shall mean and include all its representatives,
executors, successors, administrators etc. of the OTHER PART

WHEREAS the SETTLOR herein is the sole and absolute owner and peaceful possessor of
the agriculture land bearing Survey No.

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 DEED OF FAMILY SETTLEMENT

admeasuring Acres,

at (Vill)

(Mandal) Districts, which was inherited / having acquired the same

from through a sale deed / Gift /Gift Settlement/Partition/Will deed
registered as No. of of S.R.O. copied in
Volume No. at Page vide pattadar pass book no
title deed no issued by M.R.O.

WHEREAS the SETTLOR is a religious and Charitable minded person and wish to donate the
above said property for the construction of the Educational Institute or Religious Building over the
above said property.

WHEREAS the SETTLEE above mentioned Trust approached the SETTLOR and
requested to donate the above mentioned property for the construction of an Building for the
common use of the all people. The SETTLOR in consultation with his/her family members and
other elders and well wishers, agreed to donate the above mentioned property for the above
mentioned purpose and the SETTLEE has accepted the said settlement through and this settlement
is Irrevocable.
NOW THEREFORE THIS GIFT SETTLEMENT DEED FOR CHARITABLE / RELIGIOUS
PURPOSE WITNESSETH AS FOLLOWS:

1) That the SETTLER has settled the above mentioned property fully described in the
schedule below, for the Charitable/Religious purpose for the construction of
Building, in favour of the above named SETTLEE, with his / her own free will and
consent, without coercion or compulsion.

2) That the SETTLEE has accepted the settlement of the above mentioned property, on

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 DEED OF FAMILY SETTLEMENT

behalf of the trust / institution by namely . That

the settlee has become the absolute owner and possesser of the above said property.
And as such the SETTLOR or any person or persons on his /her behalf, and his/her
heirs and the legal representatives will not have any kind of right, claim, demand,
title or objections in the matter of the said gifted property. And any claim or demand,
if made in future, by any person, claiming on behalf of the SETTLOR, will be treated
as null and void and will not be entertainable in any manner.

3) That the settled property should be used for the above said purpose only, and will not
be used for any other purposes.

4) The SETTLER hereby covenants to the SETTLEE that the said gifted property is
free of encumbrances, claims and demands, of the Government and private and is
also free from prior sale, mortgages, gift, or any other kind of transfer etc. And that
no other person or persons have any kind of the right, share, claim or demand in it.

5) That, the SETTLEE is placed in possession and enjoyment of the said gifted property
to have and to hold as an absolute owner for ever.

6) THAT the SETTLOR and has read over all the contents of this Gift Settlement Deed
for the Charitable Purpose and he has understood the matter and the acknowledges
the same.

7) That the SETTLOR hereby agrees to cooperate with the SETTLEE to get the title of
the said property changed in the name of the SETTLEE in revenue records

8) The land is not an assigned land within the meaning of A. . Assigned lands
P

(Prohibition of Transfers) Act 9 of 1977 and it does not belong to or under mortgage
to Govt. Agencies/Undertaking.

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 DEED OF FAMILY SETTLEMENT

9) There is no House or any constructions in the said Land, if any structure is there the
parties may be prosecuted Under Section 27 and read with Sec. 64 of Indian
Stamp Act besides recovery of the stamp duty.

10) The Vendor further declare that the schedule land is not attracted by the

AP Reforms (Ceiling on Agriculture Holdings). Act. No.

provisions of Land
1 of 1973.
. .

11) The Vendor hereby declares that there are no Mango Trees / Coconut Trees/ Betal
Leaf Gardens / Orange Groves or any such other gardens; that there are no mines or
quarries of granites or such other valuable stones; that there are no machinery no fish
ponds etc., in the lands now being transferred; that if any suppression of facts is
noticed at a future date, I will be liable for prosecution as per law, besides payment
of deficit duty.

12) Rule 3 Statement of Market Value.

S.no Name of Village Rate per Acre Tot MarketValue

SCHEDULE OF GIFTED PROPERTY

All that the piece and parcel of Agriculture Land bearing Survey No.
admeasuring Ac. Gnts. / Hectors, situated in
Village Mandal , Under the jurisdiction of Sub

District and Registration District bounded by ,

NORTH :
SOUTH :

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 DEED OF FAMILY SETTLEMENT

EAST :
WEST :

More fully described in the plan annexed herewith. The plan will be part and parcel of
this Gift Deed.

IN WITNESS WHEREOF, the SETTLOR herein has signed on this Gift Settlement
Deed with his/her own free will and consent.

DONORS

WITNESSES :

1.
2.

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 CHAPTER-VIII

CONCLUSION
As discussed above, the courts have clearly appreciated the sanctity attached to a family
arrangement arrived at amicably by various members of the family. This practice not only
restores peace in the family but also avoid any future confrontations between the members of the
same family causing disruptions in the peaceful familial ties.

BIBLIOGRAPHY

BOOKS-

 Income-tax Act, 1961

 Gift Tax Act, 1958
 Transfer of Property Act, 1882.
 Registration Act, 1908
 Agarwal.M.C. and Mogha. G.C., Law of Pleadings in India, 17th edition, Eastern Law
House.

WEBSITES-

 https://highcourtchd.gov.in/family_court/pdf_data/judgments/Supreme_High_Court_judg
ment.pdf?fbclid=IwAR2TkP3RS57rIUSR-ldv1NDMTg0LYsFt_Z6EkKut-
01vyYW4nH_QwL3ZAms
 http://jurip.org/wpcontent/uploads/2017/08/ShreyaPatnaik.pdf?fbclid=IwAR0Mea46_40t
45RYJltA-2hwfBnKTGzuER2fY0OX_ACOzCE6h2j6TB5Y-j8
 http://www.advocatekhoj.com/library/judgments/announcement.php?WID=3394&fbclid
=IwAR2JN780SgIbYHifrX_RweI7ANejBejrKX7yu5JQrD4ktZPzbRmqC7I3nsM