The Entire Law Relating To Family Settlements Explained

Shri. K. H. Kaji & Manish Kaji

The Entire Law Relating To Family Settlements Explained

K. H. Kaji  & Manish K. Kaji, Advocates

The legal implications of a family settlement, from the perspective of general law, the Transfer of Property Act, the Registration Act, the Income-tax Act, etc has been explained in a succinct manner. All the important case laws on the issue have been cited

1. What is Family Settlement?

Halsbury’s Laws of England, Volume 18, Fourth Edition, deals with this subject at length.

Para 301 defines a family arrangement as follows :-

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 right 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 agreement is applied”.

2. Examples of division of property accepted as family arrangement.

Some examples of division of property judicially approved and accepted as family arrangements are stated in para 303 of Halsbury’s Laws of England. These are :-

(1) an agreement for the division of family property by way of compromise of a family quarrel or litigation about a disputed or lost will, or even to prevent family friction, where there is no question as to the devolution of the property nor any disputed right, there being some consideration for the arrangement other than love and affection, or any arrangement as to division of property where the construction of a will or other instrument under which the parties claim is doubtful,

(2) an agreement dividing up family property, though entered into under a misapprehension of the legal rights of the parties, provided the misapprehension is not induced by any party to the agreement, even where the fact the misapprehension existed has been established by subsequent legal decision;

(3) an agreement between members of a family to divide equally whatever they obtain under the will of an ancestor,

(4) an agreement between co-heiresses dividing the property between them;

(5) an agreement between the heir-at-law and a person supposed to be entitled under a lost will dividing the property between themselves and other members of the family;

(6) an agreement dividing the family property between members of the family where some of the members had a title independently of the will of their father, who purported to dispose of the whole among his sons and daughters”.

3. Principles governing family arrangements

Family arrangements are governed by principles which are not applicable to dealing between strangers. When deciding the rights of parties under a family arrangement or a claim to upset such an arrangement, the court considers what in the broadest view of the matter is most in the interest of the family, and has regard to considerations which, in dealing with transactions between persons not members of the same family, would not be taken into account (see para 304 of Halsbury’s Laws of England).

4. Considerations favouring family arrangements.

Considerations which will lead a court to support a family arrangement are that as a result of the family arrangement disputes are avoided in the family, the honour of the family is safeguarded, or various obligations, morally binding on a family, are provided for, or family property is continued in the family (see para 305 of Halsbury’s Laws of England).

5. Parties in General

Any members of a family may be parties to a family arrangement. Thus, agreements between husband and wife, parent and child, legitimate or illegitimate, uncle and nephews or nieces, coheiresses and brothers have all been supported as family arrangements (see para 309 of Halsbury’s Laws of England).

6. How far consideration is required.

Since the consideration for a family arrangement is partly value and partly love and affection, the pecuniary worth of the consideration is not regarded too closely. The court will not, as a general rule, inquire into the adequacy of the consideration, but there is an equity to set aside a family arrangement where the inadequacy of the consideration is so gross as to lead to the conclusion that the party either did not understand what he was about, or was the victim of some imposition (see para 312 of Halsbury’s Laws of England).

7. Basis for validity of Family Settlement

We may now have a look at the concept of family settlement and the basis on which the same is recognized as valid and binding between the parties. It is often found that between members of the family claims and counter-claims are made against one another in respect of properties held by the members of the family and claims of ownership, maintenance, etc. are canvassed. With a view to avoid protracted litigation and exposure to public gaze of private family disputes, very often the family members try to bring about an amicable settlement of the family differences by invoking the assistance of a well-wisher of the family and arrive at a settlement of their mutual rights and obligations. Such family settlements may result in transfer of properties or recognition of the rights of some members of the family in various properties in dispute or may create limited rights in respect of such properties in favour of various members of the family. The word “family” is not to be interpreted in the narrow sense of members of a joint Hindu family as defined in Hindu Law but it would include wide range of persons who belong to one family in its comprehensive sense. The basis on which such family settlements are held as valid and binding between all parties is the mutual consideration which flows between the parties while putting an end to the claims and counter claims between them. It has been held under the law of contract that it is lawful consideration for a party when he gives up his claim to any property in return for any payment or transfer of property made to him or any obligation undertaken by the party. Existence of the right in the property is not necessary in order to make the family settlement valid and binding for a valuable consideration. The existence of the dispute or a threatened dispute between the members of the family is considered to be a precondition for a valid family settlement and such disputes and the consequent giving up of claims and counter-claims between the various members of the family constitutes good and valid consideration between the parties for enforcement of the rights and obligations created by such a family settlement. The family settlement, therefore, is not founded on existing rights or liabilities but rather on existing claims and disputes between the parties which are amicably resolved notices may be given by contending parties, even suits may be filed matters may be referred to arbitration and award may work out as family settlement.

8. Is Family Settlement a transfer?

The question has often arisen before the Courts as to whether such family settlements result in transfer of properties from one person to another and whether such transfer can be said to be without consideration. A reference may be usefully made to the decision of the Supreme Court in the case of Ramcharandas V/s. Girjanandinidevi, AIR 1966 SC 323.

The Supreme Court has therein observed as follows :-

Such family settlement between the members of the family bonafide to put and end to the dispute amongst themselves is not a transfer. It is also not a creation of an interest. In a family settlement, each party takes a share in the property by virtue of independent title which is admitted to that extent by the other parties. Every party who takes benefit under it need not necessarily be shown to have under the law claim to share in property. All that is necessary to show is that the parties are related to each other in some way and have a possible claim to the property or a claim or even a semblance of a claim on some other ground as, say, affection”.

In the same case, the Supreme Court has given the reason d’tre for recognizing such family settlements as valid. It has observed:-

Courts give effect to a family settlement upon the broad and general ground that its object is to settle existing or future disputes regarding the property amongst members of the family. The word “family” in the context is not to be understood in a narrow sense of being a claim to share in the property in dispute”.

9. Is writing necessary for effecting family settlement?

Observations in the case of Tek Bahadur V/s. Debi Singh, AIR (1966) SC 292 also indicate that “Such Family Arrangements can be arrived at orally. Its terms may be recorded in writing as memorandum of what had been agreed upon. The memorandum need not be prepared for the purpose of being used as a document on which future title of parties is to be founded. It is generally prepared as a record of what had been agreed upon in order that there are no hazy notions about it in future. It is only when the family arrangement is reduced to 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 requires registration, because it is then that it would amount to document of title declaring for future what rights and in what properties the parties possess. But a document which is no more than a memorandum of what had been agreed to between the parties does not require compulsory registration under Section 17, Registration Act. Similar observations regarding registration are found in AIR (1966) SC 1836, Pulliah v/s. Narasimham.

The nature of Family Settlement and the allied questions whether such settlements amount to “Transfer” for purposes of Capital Gains or Registration have been dealt with by several decisions of the Supreme Court & also by some High Courts which explain what is family settlement and why it does not amount to “transfer” and why the memorandum of family settlement does not require registration. They are listed as follows:-

1. CGT v/s. D. Nagrirathinam – (2003) 129 Taxman 822 (Mad)

2. CIT v/s. AL. Ramanathan – (2000) 245 ITR 494, (2003) 128 Taxman 87 (Mad)

3. Lakshmi Ammal v/s. Chakravahthi – AIR 1999 SC 3363

(4) C G T v/s. S.N Zaman and S.M Elahi – (1996) 221 ITR 842/ (1997) 91 Taxman 177 (Gauhati)

(5) S.K Sattar S.K Mohd Choudhari v/s. Gundappa Amabadas Bukte – (1996) 6 SCC 373

(6) Bakhtawar Singh v/s. Gurdev Singh & Anr. – (1996) 9 SCC 370

(7) Taraknath and Anr. v/s. Sushil Chandra Dey by Lrs. & Ors. – (1996) 4 SCC 697

(8) A.L Ramanathan v/s. ITO -(1990) 37 ITR 55 (Mad)

(9) Roshan Singh v/s. Zile Singh – AIR(1988)SC 881

(10) H H Maharani Manekaraje Pawar v/s. ITO (1986) 15 ITD 545 (Indore)

(11) Kale v/s. Dy. Director of Consolidation- AIR 1976 SC 807.

(12) Ziauddin Ahmed v/s. CGT- (1976) 102 ITR 253 (Gauhati)

(13) Shambhu Prasad Singh v/s. Phool Kumari – AIR 1971 SC 1337

(14) Shanmugam Pillai v/s. K. Shanmugam Pillai AIR 1972 SC 2069

(15) Maturi Pullaiah v/s. Maturi Narasimham- AIR 1966 SC 1836

(16) Ram Charan v/s. Girja Nandini Devi – AIR 1966 SC 323

(17) Tek Bahadur Bhujil v/s. Debi Singh Bhujil & Ors. AIR 1966 SC 292

(18) Ponnammal v/s. R. Srinivasarangan – AIR 1956 SC 162

(19) Sahu Madho Das v/s. Mukand Ram – AIR 1955 SC 481

(20) Mohd. Amin v/s. Vakil Ahmad – AIR 1952 SC 358


Family Settlements and Tax Planning

We may now examine the scope of tax planning in connection with family settlements. We have already seen above what is really a family settlement and what is the nature of the transaction brought about as a result of such family settlement. The utility of the instrument of family settlement for tax planning may be examined in the context of : (1) joint family properties, and (2) individual properties.

1. Joint Family Properties

In the case of joint family properties, the most commonly used media of tax planning is effecting complete or total partition. Supreme Court has now held in the case of Apoorva Shantilal Shah v/s. CIT (1983) 141 ITR 558 (SC) that father can effect partial partition even if he has minor sons, in exercise of his powers as patria potestas. He is not disabled to look after interests of his minor sons. It has also been held that even unequal partition can be effected by the father or with consent of all the coparceners, and only the concerned parties aggrieved by it can challenge the same till then it is valid. See CED v/s. Kantilal Trikamlal 105 ITR 92 (SC). Though the decisions relate to partial partition which were recognized as valid under s. 171 of the Income Tax Act, it equally applies in the case of total partition of joint family properties. Now w.e.f 1-1-1970, only total partition is recognized under s. 171.

2. Single Coparcener

Similarly, where there is only a single coparcener and the other members of the family are females not entitled to any share, such as wife, mother, unmarried sisters, unmarried daughters etc. who have right of maintenance, a family arrangement can be arrived at with those members by Karta allotting to them specific properties in settlement of their claims. For example, in a joint family between the mother and son, it would be quite legitimate for the son to give one half property to the mother in lieu of her right of maintenance by way of family arrangement. See CIT v/s. Narain Dass Wadhwa (1980) 123 ITR 281 ( P & H) Similarly, it would be open to the Karta to allot properties to the unmarried daughters or sisters in lieu of their claim of maintenance and marriage expenses by way of family settlement. Therefore, where partition cannot be effected for some reason or the other, it would be advantageous to allot the properties under a family settlement.

3. Requisites for family settlement

The requirements of a valid family settlement are :

(a) existing or future disputes or differences between the members of the family in respect of their rights on the properties.

(b) existing of claims or semblance of a claim of the various members of the family on such properties and,

(c) resolving of the said claims by family settlement arrived at between the members of the family including the guardians of minors involved.

Thus, prior to the settlement there should be some evidence of claims or counter claims or differences or disputes between the members of the family on this issue which will justify a family arrangement taking place. The best evidence of this would be litigation in court or exchange of legal notices between parties, and adjudication through arbitrator. But this is not absolutely essential – Pulliah v. Narsimham AIR 1966 SC 1836. Further, it may also be noted that in the case of non Hindus also family settlements can be arrived at between the members of the family.

4. Non Hindus and family settlements

It may also be noted that in the case of non-Hindus also family settlements can be arrived at between the members of the family. If there are disputes, whether the properties are individual properties or joint family properties, such disputes can on filing suits and then arriving at some family arrangement be settled and property transferred to other members which will not attract gift tax or capital gains tax nor invite Registration. Of course, now after 1-4-1997, gift tax levy is abolished.

5. Individual Properties

In the case of individual properties, whether in respect of Hindus or other communities, there can be a valid family settlement. The other family members can have claims in the estate either on account of rights of maintenance or otherwise and in settlement of such claims a family arrangement can be arrived at which will be considered to be one for a valid consideration and, therefore, such a settlement will not fall within the ambit of Section, 64 of the Income Tax Act, 1961. Such a transaction is clearly with and for a valid consideration. Obligations regarding maintenance are to be found under the general law and specifically, under the Hindu Adoption and Maintenance Act, 1956 and if any settlement takes place in this connection, it will be for a valid and valuable consideration. It is also significant that in case of family settlement, the Courts have gone so far as to hold that such family settlements do not amount to a transfer. Those observations are to be found in the decision of the Supreme Court in Ramcharandas v/s. Girjanandinidevi AIR 1966 SC 323 and other cases referred to therein. A particular instance of family settlement is found in a decision of the Supreme Court in CWT v/s. Vijayaba, 117 ITR 734(SC) where there did not appear to be any legal claim of the son against the Maharani, but even then a promise by her to pay certain amount to the son was held to be a valid liability created by her by way of a family settlement which was binding on the parties concerned. It may be that at times, the line is thin between a gift and a family settlement. A gift cannot masquerade as a family settlement which has to be bonafide and preceded by some dispute or difference between the parties as regards their claims. It is not necessary that the claim should be a legal and valid claim in order that there should be a valid family settlement, but nonetheless, there should be some differences or disputes in order that it should amount to a valid family settlement.

However, since the abolition of Gift Tax from 1-4-1997 the tax implications of family settlements are reduced and the question assumes importance now only as regards Stamp Duty and Registration of documents recording family settlements and Capital Gains if they are construed as gifts or transfers of immovable properties.

6. What should be the procedure to avoid the stamp duty?

A family settlement arrangement be made oral. The concerned parties to deliver possession of the property allotted and the title deeds and records to the other. After few days, affidavits be recorded reciting therein the factum of settlement, date of settlement properties allotted, possession transferred documents of title handed over and arrangement implemented and acted upon etc. The parties may make necessary application for mutation in respect of agricultural land and for entry in register of record / title maintained by the municipal Council or local authority. If the property stands let out, notice of attorning in favour of the recipient be given, fresh rent deed be got executed and recipient to issue receipt. Necessary modification be got made with appropriate tax Departments for lands and buildings tax, house tax and to her taxes, electricity water etc. After some time a memorandum or confirmation recording the event may be executed for own satisfaction. It should not be in present tense but should be in past tense. It should not create or confer any interest or right or title but may acknowledge the factum of claims accepted and acted upon.

7. If the family arrangement is not required to be registered what is the evidentiary value of such family arrangement?

Even if the family arrangement is not registered it has evidentiary value. It is binding on persons who are parties to it and who have taken any advantage under such family arrangement.

A family arrangement being binding on the parties to the arrangement clearly operates as an estoppel to preclude any of the parties who have taken advantage under the agreement from revoking or challenging the same Kale vs. Dy. Director of Consolidation AIR 1976 SC 807.

Even a family arrangement, which was registrable but not registered can be used for a collateral purpose, namely for the purpose of showing the nature and character of possession of the parties in pursuance of the family settlement Kale vs. Director of Consolidation AIR 1976 SC 807 (1976) 3 SCC 119.

A family arrangement or settlement even embodied in a compromise decree is binding on all the parties to it. A consideration (which is the expectation that such a settlement will result in establishing or ensuring amity and goodwill amongst the relations) having 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. A party who had taken benefit under the transaction is not entitled to turn round and say that transaction was of a kind which the other party could not enter into and was therefore invalid Ra, Charan Das vs. Girija Nandini Devi AIR 1966 SC 329.

8. Whether is it necessary that the arrangement is bonafide and for consideration?

Yes. If a family settlement or a family arrangement is found to be bondafide, voluntary, without coercion, under influence, misrepresentation and stands acted upon, it deserves to be uphold and accepted by the courts, even if it involves release or relinquishment or surrender of disposition, assignment, or transfer. (Refer : Smt. Vidyawati Devi Rathi vs. C.G.T (1988) 169 ITR 708 CIT vs. A Indiramma (1986) 160 ITR 829 (Karnataka), K. Venugopal vs. CIT (2001) 248 ITR 251 (Mad), CGT vs. D. Nagrirathinam (2004) 266 ITR 342 (Madras).

Briefly stated, though conflict of legal claims in present or in future is generally a condition for the validity of a family arrangement, it is not necessary so. Even bonafide disputes, present or possible, which may not involve legal claims will suffice. 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 arrangement is entered into bonafide and the terms thereof are fair in the circumstances of a particular case, courts will more readily give consent to such an arrangement than to avoid it. (Refer : Pulliah vs. Narasimham – AIR 1966 SC 1836).

9. Can any property he allotted to female by family arrangement and the quantum?

Yes. Any property can be allotted to a female in lieu of her right of maintenance, marriage or to discharge any other obligation. (Refer CGT vs. N. Jothi Kumar 91986) 157 ITR 785 (Madras), State of Kerala vs. K.P Gopal (1987) – 166 ITR 111(Kerala), Basant Kumar Aditya Vikram Birla vs. CGT – (1982) 137 ITR 72(Calcutta), Satpal Bansal vs. CIT (1986) 162 ITR 582 (P & H F), B.T Ravindra Nath Puja vs. CIT (1989) 179 ITR 243(Karnataka), Guramma Pharatan Deshmukh vs. Malappa Chambasappa – AIR 1964 SC 510, CGT vs. B.S Appa Rao (2001) 248 ITR 103(SC), Mandali Singhal vs. Ravi Singhal – AIR 1999 Delhi 156.

No set formula is, about the amount. It depends on the status of the family and the claimants. No set formula can be laid for fixing the amount of maintenance. It has in very nature of things to depend on the facts and circumstances of each case. Some scope for leverage can, however, be always there. Court has to consider the status of the parties, their respective needs, capacity of the husband to pay having regard to his reasonable expenses for his own maintenance. (Refer: Smt. Jaspeer Kaur Sahgal vs. District Judge – AIR 1997 SC 163).

10. Is a family arrangement transfer u/s. 2(47) of the Act attracting liability to capital gain?

No. It is not a transfer and there is no liability to capital gain. (Refer : CIT vs. AL Ramanathan (2000) 245 ITR 494, Smt. Vijaya Raje Scindia vs. ITO (ITA No. 2780(Bom./89) dated 17-12-1993, H.H Moharani Manekuraje Pawan vs. ITO (15 ITD 545 (Indore), Mohd. Haroon Japanwala vs. ITO (22 ITD 61) Delhi, DCIT, Spl. Rg. 46 vs. Smt Vaishali K. Shah (ITA No. 7074/Mum/96 A.Y 1992-93.

11. Whether the concept of family arrangement can be extended to firms and companies?

Family arrangement can be arrived at amongst individuals and not between Companies. The shareholders and the Company are separate and distinct persons and the shareholders have not interest in the business of the company. (Refer 27 ITR 1(SC), 112 C.C 379(SC). However, one can think of a family arrangement between the partners in respect of their share, if the partners were/are members of the family because the firm is not a legal person other than its partners. The partners are the real owner of the assets of the firm. The firm name is only a compendious name given to the partnership for the sake of convenience. The assets of the firm belong to and are owned by the partners of the firm. (Refer: N. Khadervali Saheb & Anrs. Vs. N. Gudi Sahib (20030 261 ITR 1(SC). 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 recognized in law as having a right of succession or having a claim to share in the property in dispute. To consider a settlement as a family arrangement, it is not necessary that the parties to the compromise should all belong to one family. If the dispute which is settled is one between near relations then the settlement of such disputes can be considered as a family arrangement (Refer : Ram Charan Das vs. Girija Nandini Devi – AIR 1966 SC 323). If the partnership is amongst the family members, it may be possible. However, if outsiders are also partners, then it appears that properties of such firm may not be available for a family arrangement. As far as company is concerned it appears that its properties cannot be subject matter of family arrangement even if all the shareholders are members of the same family.

Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. Neither the author nor and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied (except for personal, non-commercial use) without express written permission of

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44 comments on “The Entire Law Relating To Family Settlements Explained
  1. keerthana says:

    Sir can a husband by way of dhana settelment transfer second floor of a building(self acquired property) to his wife.

  2. Sameer Kamat says:

    Can l sell a property transferred few years ago in my name vide family agreement by my mother with noc of other members. Does a family agreement attract stamp duty and registration.

  3. Brij mohan gauri says:

    Mother original allotee of property get freehold and by registe will give 3 floors to we three brothers,we rebuild house of 4 floor ,sold 4 th floor and possession of 3 floors but jointly
    Want distribute one floor
    Each for 3 brothers as per will what to do

  4. Bhardwaj says:

    Request help.

    Mother was original owner of the house and gifted (via sale deed) roof rights of ground floor.
    Mother and two brothers entered into MOU about demolish and reconstruction of house. Use of floors before death of mother and after death of mother were defined.
    After few years, mother realised her mistake and wish to give her floor to only one son. And request other son to divide the roof rights between both as gifted before.
    During her lifetime, how can she get out of MOU bonds and change her decision of after death.

  5. Subir Das says:

    Sir,Whether any deed of family settlement made by allotee of a govt. Plot on the basis of allotment letter(not any kind of deed)only is valid or not ? It is a case where allotee got the allotment letter of the govt. plot from Refugee Relief & Rehabilitation department of government of West Bengal on 1950 and got lease deed on 1976 deed of family settlement registered on 1974(before the lease deed got).

  6. Singh says:

    Need mobile no and Email address Mr KH Khaji and Mr Manish khaji

  7. Shree Chandra says:

    Dear Sir,

    We need your help in the family settlement which we signed with our late uncle in the year 14th November 1981.

    1- We have our joint house in Varanasi, U.P.
    2- This house was purchased and built by our Grand father in the 1947.
    3- Our grand father expired in the year 1963 leaving behind no will.
    4- It becomes inherited property shared by three sons
    Elder uncle, Our father and uncle.
    5-During life time of our grand father elder uncle had been given another house now the disputed property house was shared by our family and uncle family.

    6- Family settlement we endorsed with uncle in the year 1981 with conditions that ground floor area of the house shall be used by uncle and 1st floor and 2nd foot shall be used by our family.
    7- In addition to this another family settlement was signed among our elder uncle, we four brothers and uncle clearly stating that disputed house shall be shared 50℅ each by our family and uncle family and elder uncle will have no rights in the disputed in house we shared with our uncle.
    8- Both family settlement 1981 and 1994 are unregistered and unstamped.
    9-In the family settlement 1981 under clause 9 a condition is also mention that during any natural calimity and unprecedented situation entire house will be divided from bottom with 50℅ each to both parties.
    10- our father expired in the year 1972.
    11-Uncle 1st and 2nd sons had already expired leaving behind 1st son with one son and one daughter already married and 2nd son behind his wife, one son and two daughters already married. Uncle 3rd son is also married with one son and one daughter already married. Uncle has four daughters all are married.
    11- Now as per latest amendment daughters have equal rights in the ancestral property as per law 2005.
    12- Uncle made a will on dated 03.03.2016 authority giving to her daughter in law, his 3rd son and both grand son to sell ground floor area to third party without taking consent of the other coparcaners and sold ground floor to third party without our consent.
    12- Sale deed was signed by his third son and one grand son making his daughter in law and other grand son as pushtikarta and witnesser.
    13- Realisation has been shared by his daughter in law, both grand son and his son. No money was given to uncle.
    14- Sale deed was executed on the dated 27.03.2018. And uncle expired in the sept 2018.
    15- Entire matter is under court juridiction. We want to know legal position of our case. Please share your view urgently.

    Thanks & Regards

  8. Sushil Bhatia says:

    Sir, Under a family settlement if 1 faction of the family beneficiaries relinquishes their rights in property of the Family trust in the favour of the other beneficiaries, at the time of registration of this transfer, will this attract stamp duty if yes then what will be the percentage. The Trust and the Properties are situate in Mumbai. Thank you in anticipation of an early reply.

  9. Indet says:

    Wanted to know a important aspect.. If a WILL says that property is to divided 50% can family settlement change the same. 2ndly if any family members after the family settlement has been done sell the property.. Will the person buying be entitled for 50% share or he will be entitled as per portion given by FS in which the portion is more than 50%

  10. Pardeep K Dang says:

    Sir, If we sign MOU – Family settlement by all the legal heirs and get the document registered, still we have to go for Succession Certificate from court or the MOU itself is acceptable for transferring the rights of properties. Kindly respond.

  11. Pardeep K Dang says:

    Sir, If we sign MOU – Family settlement by all the legal heirs and get the document registered, still we have to go for Succession Certificate from court or the MOU itself is acceptable for transferring the rights of properties. Kindly respond.

  12. Antony says:

    I have given a property to my brother under settlement deed against a case of will.He have not yet taken the property from me and a period of 3 years have already lapsed.Now should I transfer the property to him?What is the validity of the settlement deed?Am I still liable?

    • ATIN MAITY says:

      On 11.06.1992, a Deed of Family Settlement Deed was registered by my father(died on 23.04.2004)being the 1st Trustee with the condition that the right of title deed of property, owned by our father, would be transferred to his two sons and one married daughter in absence of our parents. our mother(died on 06.03. 2020) became the 2nd Trustee of the said property after the demise of our father.

      Now on going to mutate the property as per title deeds to the local authority, said Municipal authority raised an exorbitant house Tax Bill since 2001 with accumulated arrears when our mother, 2nd Trustee was title holder of the said period (24.04. 2004 to 06.03.2020) as per spirt of the Deed of Settlement.

      Whether the said charging of house tax with arrears is valid under any Law of the country when the beneficiaries got the right as per title Deed from the date following the date of death of our mother
      Above deed of family settlement deed does not appear to be always creating a trust

      Kindly help me to get the legitimate justice

      • Shashi Ashok Bekal says:

        Addressing your query, the property in question is an inherited property. When a property is inherited, along with the property, one also inherits all liabilities like any loans outstanding or government dues like property tax, etc.

        Further, the liability to pay the tax is fastened with the property, upon transferring the same to the trustee, it then becomes the liability of the trustee to pay the same. The trustee only acts in a fiduciary capacity where the trustee pays the liabilities from the estate of the trust.

        Therefore, in the event of non-payment of local government dues, they are at liberty to recover the same from the estate of the trust.

        Further, as per section 122 of the Indian Succession Act, 1925 – Onerous bequests—Where a bequest imposes an obligation on the legatee, he can take nothing by it unless he accepts it fully.

        Therefore, the property tax, which was payable during the period when the property was held with the private trust would be inherited by the beneficiaries. The beneficiaries are at an option to accept the liability along with the asset, or forfeit their share in the inheritance in toto.

        In conclusion the liability of house tax does not get absolved at any given point. As suggested, it is advisable to pay the same or the same can be recovered from the assets of the trust.

        Hope the same clarifies.

        Kind Regards,

        Shashi Ashok Bekal

        C.A., LL.M. (Tax Law)

        Tax Litigation & Advisory

        Mumbai | Delhi

  13. Diwakar says:


    I just want to know, if am settling my sisters with an X amount for the property that I inherit from my father. Will that X amount is taxable or not?


  14. Tapan Kumar Chaudhuri says:

    Thanks for such a beautiful potential article for junior Advoicates

  15. Santosh Ghosh says:

    Is it compulsory to prepare Joint Hindu Family agreement in Stamp paper only?
    Unstamped JUF agreement is invalid?

    • Shubham Jain says:

      No,a family settlement can be prepare on any blank pepar.. No stamp duty is required. But the term ‘family settlement’ must use in such document..

      • GovindaRaju Subramani says:

        My father in law created a will for a small property that his wife can enjoy the property until she is alive and then the right to own property to his 2 daughters. Can one of the daughter buy the right of other daughter through settlement deed for a consideration? Please provide the contact address of Bangalore to get connected

  16. Wants study the reply given.

  17. Venkat says:

    I am seeking a clarification.
    Can wife form a part of a family settlement? There is no divorce between wife and husband. Can wife form part of the family settlement among the husband, wife and children during the life time of the husband. It is not an ancestral property.

  18. Ashok Tejwani says:

    If there are five properties involved in family settlement among six family members. Circle rate values are supposed to be as under:

    Property A : Rs.100/-
    Property B : Rs.200/-
    Property C : Rs.300/-
    Property D : Rs.400/-
    Property E : Rs.500/-

    How the stamp duty calculated. Will it be like partition deed that largest portion (in Family settlement largest property) shall not attract stamp duty and duty will be payable on separating portions?

    No it is first time comment and not duplicate

  19. Ashok Tejwani says:

    If there are five properties involved in family settlement among six family members. Circle rate values are supposed to be as under:

    Property A : Rs.100/-
    Property B : Rs.200/-
    Property C : Rs.300/-
    Property D : Rs.400/-
    Property E : Rs.500/-

    How the stamp duty calculated. Will it be like partition deed that largest portion (in Family settlement largest property) shall not attract stamp duty and duty will be payable on separating portions?

  20. nilesh says:

    thanks for valuable information

  21. Mohit Raina says:

    A person X purchases a property. Please clarify as to whether the rest of the brothers of person X can claim property by Family settlement deed.


    We have residential land which is owned by my mother .she is the sole owner. now i want to take home loan on that property on my name .but as per income tax act i must be owner or co-owner of the property for availing tax to become co-owner of the property with my mother or doing settlement of the property to my name is sufficient for availing tax exemption ? .Is settlement of the property will give proper ownership ? or is there any other option to avail tax exemption(other than registration as the stamp duty fee for registration is very high in my state tamilnadu)

  23. Pravin Kotian says:

    Thanks for your valuable advice.
    Need your further help.
    Sir, please assist in further clarification.
    Whether a family settlement deed notarised in 2010 (distributing two different state – maharashtra and mangalore – property rights to two parts within a family (one father and two wives and their respective children) CAN BE REGISTERED IN ONE STATE IN COURT OR IN FRONT OF SUB_REGISTRAR OR WHETHER IT CAN BE “ADJUDICATED”?



  24. Pravin Kotian says:

    Thanks for your valuable advice.
    Sir, please assist in further clarification.
    Whether a family settlement deed notarised in 2010 (distributing two different state – maharashtra and mangalore – property rights to two parts within a family (one father and two wives and their respective children) CAN BE REGISTERED IN ONE STATE IN COURT OR IN FRONT OF SUB_REGISTRAR OR WHETHER IT CAN BE “ADJUDICATED”?



  25. R k jha says:

    Whether settlement deed per se is document of title deed ?
    whether create eqitable mortgage can be created?””

  26. jatinder singh says:

    can any of HUF member clain against the HUF karta if karta sale HUF PROPERTY to anyother third party???

  27. Adv.Chetan S. Dale. Barsi;Solapur(Mah) says:

    This artile very useful for information with various Court of laws cases

  28. Adv.Chetan S. Dale? Barsi;Solapur(Mah) says:

    Its very impoartant topic & with most of Varios Court’s Dicision.this information is very useful for all

  29. Jayaraman Raju says:

    Very lucidly presented; thanks for your effort and sharing your knowledge;

  30. Anonymous says:

    Dear Sir
    I am the co-owner of an ancestral flat in Mumbai with my sister. I want to release my share in the flat to my sister for a certain amount.
    Will this be a release deed with consideration ?
    What will be the stamp duty since this is ancestral property if consideration amount is mentioned in the release deed ?

  31. Sister says:

    Dear Sir

    There are three co-owners who are real brother and sisters in this ancestral property and two co-owners will release their share to the third co-owner.
    Out of affection and gratitude, the sister may like to give some money to the kins who have released their share.
    We will make release deed without consideration which will be registered.
    Is this OK ?
    We have full faith in each other so we are not worried about recording transaction. Afterall this is out of affection because they are releasing their share and not really a sale. Maybe we can only make memorandum of the oral agreement after the release deed is registered.
    Please advise

    • Nem Singh says:

      Relinquish deed is best option for that transaction if there is mutual understanding between all.

  32. sangeeta mehrotra says:

    can portion of father’s property be transferred only on the basis of family settlement without paying stamp duty during father’s lifetime?

  33. Pawan Manaktala says:

    good explanation given in detail

  34. mahendra Agarwaala says:

    In my view Dayabhaga school of law followers, which is a branch of Hindus, can not form an HUF.
    This is a vital mistake in such a lucid article.
    Hope, the writers would clarify, otherwise the articles seem to be very informative and authoritative.



  35. N. Devanathan , Advocate says:

    It is also to be noted the law commission’s recommendation”
    The Supreme Court of India in its judgment dated 21.01.1976 in Kale and
    Ors. v. Deputy Director of Consolidation and Ors., 1976 (3) SCC 119 held that a
    document which is in the nature of a memorandum of an early family arrangement
    and which is filed before the court for its information for mutation of names is not
    compulsorily registrable and therefore can be used in evidence of the family
    arrangement and is final and binding on the parties. The above view of the
    Supreme Court has also been clearly enunciated and adroitly adumbrated in a long
    course of decisions of the Supreme Court and also those of Privy Council and
    High Courts. The courts have taken a liberal and broad view of the validity of a
    family settlement and have always tried to uphold it and maintain it. The
    Commission is of the view that the proposal for suitable amendment in the
    Explanation to section 6 of the Hindu Succession Act is absolutely necessary in
    public interest.

  36. B. M. Kothari ( Former Member, ITAT) says:

    All the three Artices by Respected Shri K.H.Kaji and Shri Manish Kaji on interesting topics of law relating to Family
    settlement, H.U.F. and WILL are indeed very useful for Chartered Accountants and tax consultants. The complicated points have been very aptly explained in simple language . I present my profound regards for the learned Authors/ B.M.Kothari

  37. Dipak J Shah says:

    Mr K H Kaji is master piece from Gujarat after Nani Palkhiwala. A Clean Man ..
    Shah D J

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