FAM­ILY AR­RANGE­MENT in al­lot­ment of as­s­ests and prop­er­ties

It is ar­range­ment be­tween mem­ber of a fam­ily de­scend­ing from a common ances­tor or near relation try­ing to sink their dif­fer­ences and dis­putes, set­tle and solve their con­flict­ing claims once and for all to buy peace of mind and bring about har­mony and good

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1. The Supreme Court in Ram Cha­ran Das v. Girja Nan­dini Devi (AIR 1996 SC 323, 329 ) held that : “Court give ef­fect to a fam­ily set­tle­ment upon the broad and gen­eral ground that it’s ob­ject is to set­tle ex­ist­ing or fu­ture dis­putes re­gard­ing prop­erty amongst mem­bers of a fam­ily. The word ‘fam­ily’ in this con­text is not to be un­der­stood in the nar­row sense of be­ing a group of per­son who are rec­og­nized in law as hav­ing a right of suc­ces­sion or hav­ing a claim to a share in the prop­erty in dis­pute.” While it is nec­es­sary that there should be some common tie be­tween the par­ties to such fam­ily ar­range­ment, it need not be be­tween per­sons who are com­monly un­der­stood as con­sti­tut­ing a Hindu Fam­ily or for that mat­ter, a fam­ily in any re­stricted sense. It is not nec­es­sary that there should be a strictly le­gal claim as mem­ber of the same fam­ily. It is enough if there is a pos­si­ble claim or if they are re­lated, a sem­blance of a claim (Kr­ishna Be­har­i­lal v. Gu­la­bc­hand AIR 1971 SC 1041, 1045 ).

A fam­ily ar­range­ment wherein an adopted son was a party was held to be valid though he turned out to be a stranger as the adop­tion was sub­se­quently held to be in­valid in the case of Shiva­murteppa Gu­rappa Ganiger v. Faki­ra­paa Basan­gauda Chan­nap­pa­gau­dar (AIR 1954 Bom. 430) C.G.T. v. Smt. Gol­la­pude Sari­ta­mmn (116 ITR 930, 936 AP.)

It is pos­si­ble that mar­ried daugh­ters or sis­ters who are not treated as mem­bers of the fam­ily of a par­ent/ brother on their mar­riage may still be con­sid­ered as mem­bers of the fam­ily for pur­poses of a fam­ily ar­range­ment.


(i) The fam­ily ar­range­ment should be for the ben­e­fit of the fam­ily in gen­eral.

(ii) The fam­ily ar­range­ment must be bonafide, hon­est, vol­un­tary and it should not be in­duced by fraud, co­er­cion or un­due in­flu­ence.

(iii) The pur­pose of the fam­ily ar­range­ment should be to re­solve present or pos­si­ble fam­ily dis­pute and ri­val claims not nec­es­sar­ily le­gal claims by a fair and eq­ui­table di­vi­sion of the prop­erty amongst var­i­ous mem­bers.

(iv) The par­ties to the fam­ily ar­range­ment must have an­tecedent ti­tle, claim or in­ter­est. Even if a pos­si­ble claim in the prop­erty which is ac­knowl­edged by the par­ties to the set­tle­ment will be suf­fi­cient.

(v) The con­sid­er­a­tion for en­ter­ing into fam­ily ar­range­ment should be preser­va­tion of fam­ily prop­erty, preser­va­tion of peace and hon­our of the fam­ily and avoid­ance of lit­i­ga­tion. Kale v. Deputy Di­rec­tor of Con­sol­i­da­tion (AIR 1976 SC 807)

(vi) Fam­ily peace is suf­fi­cient con­sid­er­a­tion A ques­tion arises as to what is the con­sid­er­a­tion for al­lot­ment of prop­erty un­der a fam­ily set­tle­ment. It is said that a fam­ily set­tle­ment is ar­rived at be­tween the mem­bers of the fam­ily with a view to com­pro­mise doubt­ful and dis­puted right. It, there­fore, fol­lows that the a l - lot­ment of shares un­der a fam­ily set­tle­ment is not what a per­son is legally en­ti­tled to since some of the mem­bers can be al­lot­ted a much lesser share of as­set than what they are en­ti­tled to un­der the law, while oth­ers a much larger share than what they are en­ti­tled to , yet some oth­ers may get a share to which are not legally en­ti­tled to since the main con­sid­er­a­tion is surely and cer­tainly pur­chase of peace and amity amongst the fam­ily mem­bers and such a con­sid­er­a­tion can­not be deemed as be­ing with­out con­sid­er­a­tion.

An­tecedent ti­tle, claim or in­ter­est or even a pos­si­ble claim :

The mem­bers who may be par­ties to the fam­ily ar­range­ment must have some an­tecedent ti­tle, claim or in­ter­est or even a pos­si­ble claim in the Prop­erty which is ac­knowl­edged by the par­ties to the set­tle­ment. Even if one of the par­ties to the set­tle­ment has no ti­tle but un­der the ar­range­ment the other party re­lin­quishes all its claims or ti­tles in favour of such a per­son and ac­knowl­edges him to be the sole owner, then the an­tecedent ti­tle must be as­sumed and the fam­ily ar­range­ment will be up­held and the Court will find no dif­fi­culty in giv­ing as­sent to the same. Kale v. Deputy Di­rec­tor of Con­sol­i­da­tion (AIR 1976 SC 807).

But where the per­son, in whose favour cer­tain prop­er­ties have been trans­ferred un­der the guise of a fam­ily ar­range­ment, has no and can­not have any claim or pos­si­ble claim against the trans­feror, & there­fore, the same can­not be re­garded as a fam­ily ar­range­ment.CED v.

Chan­dra Kala Garg 148 ITR 737 ( All.)

CIT v. R.Pon­nam­mal 164 ITR 706 (Mad.)

In the case of Roshan Singh v. Zile Singh (AIR 1988 SC 881) the Supreme Court held that the par­ties to fam­ily ar­range­ment set up com­pet­ing to the prop­er­ties and there was an adjustment of the rights of the par­ties. By fam­ily ar­range­ment it was in­tended to set at rest com­pet­ing claims amongst var­i­ous mem­bers of the fam­ily to se­cure peace and amity. The com­pro­mise was on the foot­ing that there was an an­tecedent ti­tle of the par­ties to the prop­er­ties and the set­tle­ment ac­knowl­edged and de­fined ti­tle of each of the par­ties. 1. A fam­ily set­tle­ment is con­sid­ered as a pi­ous ar­range­ment by all those who are con­cerned and also by those who ad­min­is­ter law. A fam­ily set­tle­ment is not within the ex­clu­sive do­main of the Hindu Law but equal­ity ap­plies to all fam­i­lies gov­erned by other re­li­gions as well. Thus, it shall ap­ply to Mus­lims, Chris­tians, Jews, Parsees and other faiths equally. 2. The con­cept of fam­ily ar­range­ment is an age old one. It is not only ap­pli­ca­ble to Hin­dus but also to other com­mu­ni­ties in which there is a common unit, common mess and joint liv­ing. In the case of Bibi­jan Begum v. In­come Tax Of­fi­cer (34 TTJ 557), the Gauhati Bench of the Ap­pel­late Tri­bunal in a very elab­o­rate judge­ment held that there is no bar for Mo­hammedans to ef­fect a fam­ily ar­range­ment. In that case the as­sessee had an ab­so­lute right over her Mehr prop­erty and in ex­change of that land the as­sessee re­ceived another land over which a multi-storeyed build­ing was to be con­structed. The as­sessee’s two daugh­ters and two sons had an­tecedent right to the prop­er­ties in the ca­pac­ity as her heirs though their shares were not spec­i­fied. The Tri­bunal held that by a fam­ily ar­range­ment the rights of those chil­dren had been spec­i­fied. The fam­ily ar­range­ment by which the as­sessee and her four chil­dren re­ceived 1/5th share each in the multi-storeyed build­ing was, there­fore, valid. The Tri­bunal there­fore, held that the as­sessee lady could not be as­sessed in re­spect of that share of house prop­erty which was given to her chil­dren pur­suant to the fam­ily ar­range­ment.

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