Tuesday, 13 July 2021

Whether a compromise decree regarding land, which is not the subject matter of suit but is part of the settlement between the family members, requires compulsory registration?

The only question in the present appeal is whether a compromise decree in respect of land which is not the subject-matter of suit but is part of the settlement between the family members requires compulsory registration in terms of Section 17(2)(vi) of the Registration Act, 1908. {Para 6}

7. We find that the judgment and decree passed by the High Court is

clearly erroneous and cannot be sustained in law. The parties are

the sons of late Vijendra Singh. As an heir of deceased, the

appellant had a right in the estate left by the deceased. Therefore, it was not a new right being created for the first time when the parties entered into a compromise before the civil court but rather an pre-existing right in the property was recognized by way of settlement in court proceedings.

8. Though, the Gair Mumkin Land (Non-cultivable land) was not

subject-matter of the suit, but the compromise entered between

the parties before the learned Trial Court leading to decree on

3.11.1981 included such non-cultivable land. It is to be noted that

compromise decree can be passed even if the subject-matter of the agreement, compromise of satisfaction is not the same as the

subject-matter of the suit in terms of the provisions of Order XXIII Rule 3 of the Code of Civil Procedure, 1908. 

 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2336 OF 2021


RIPUDAMAN SINGH Vs TIKKA MAHESHWAR CHAND

Dated: JULY 6, 2021.

Leave granted.

1. The plaintiff is in appeal before this Court challenging the judgment

and decree passed by the High Court on 28.10.2006 whereby

appeal filed by the defendant was allowed and the suit for

declaration challenging the orders passed in mutation proceedings

was dismissed.

2. The parties herein are the two sons of late Vijendra Singh. The

appellant filed a suit for possession in the year 1978 disputing the

Will dated 04.12.1958 executed in favour of the defendant. The

appellant claimed half share of the land as described in the plaint.

During the pendency of suit, a decree was passed on the basis of

compromise arrived at between the parties. The terms of

compromise read as under:


“The plaintiff shall be delivered possession of Khasra No.

513/1 area measuring 8 Kanals 18 Marlas as per Tatima

Ex.P-2 by the defendant and the plaintiff shall be

exclusive owner thereof and the defendant shall

continue to remain in physical possession as an owner

of Khasra No.513/2 area measuring 143 Kanals and 16

Marlas.

The plaintiff shall be owner of Khasra No. 516/1 area

measuring 27 Kanals 11 Marlas and the defendant shall

also pay to the plaintiff a sum of Rs.10,000/- within one

month from today. The plaintiff shall also be owner in

respect of the land recorded in the ownership of the

defendant in Patwars Dhaneta, Nohngi, Choru and

Saproh in respect of Ghair Mumkin Land.”

3. In pursuance of the decree so passed, the plaintiff sought a

mutation of the 1/2 share of the land vesting to him which was

allowed by the Naib Tehsildar on 10.02.1983. However, an appeal

against the said mutation was disposed of with a direction to Naib

Tehsildar to decide the mutation afresh as the mutation was

sanctioned without granting any opportunity of being heard to the

respondent.

4. The appellant thereafter filed an appeal before the Divisional

Commissioner. Such appeal was dismissed on the ground that the

compromise decree in the absence of registration is against the

provisions of the Registration Act, 1908. It was held as under:

“From the perusal of the record, it is revealed that the

decree passed by the Ld. Sub Judge in Civil Suit No. 45

of 1978 is a compromise decree concerning delivery of

possession of Khasra No.513/1 measuring 8 Kanals 18

Marlas and owner of Kh. No.516/1 measuring 27 Kanals

11 Marlas situated in patwars Dhaneta, Nohang, Choru

and Saproh in respect of Gair Mumkin Land. The present

appeal is in respect of other land which was not the

subject matter of suit in the civil court under section

17(2)(vi) of Indian Registration Act the compromise

decree which related to the subject matter of the suit

remained immune from registration. The compromise

decree which incorporated matters beyond the scope of

the suit, requires registration. Therefore, the land under

dispute which is beyond the scope of the suit or

compromise decree requires registration. The Assistant

Collector, IInd Grade Nadaun vide his orders dated

24.6.89 has sanctioned the mutation without the

registration of the compromise decree is against the

provision of the act ibid and the Ld. Collector has rightly

accepted the appeals of the respondent Tikka

Maheshwar Chand. Hence, these appeals are dismissed

and the order of the Collector dated 13.2.91 is upheld.”

5. The appellant subsequently filed a suit for declaration challenging

such order passed by the Commissioner. The suit was dismissed by

the learned Sub Judge, Ist Class, Hamirpur on 20.11.2002. But the

appeal preferred by the appellant was allowed by the learned

District Judge, Hamirpur in 19.08.2004. The said order was under

challenge in the second appeal before the High Court. The High

Court set aside the judgment and decree passed by the first

appellate court and the suit was dismissed on the ground that the

land even though being subject-matter of compromise, was not the

subject-matter of the suit and therefore the decree required

registration under Section 17(2)(vi) of the Registration Act, 1908.

6. The only question in the present appeal is whether a compromise

decree in respect of land which is not the subject-matter of suit but

is part of the settlement between the family members requires

compulsory registration in terms of Section 17(2)(vi) of the

Registration Act, 1908. The relevant provision of clause (v) and

clause (vi) of sub-clause (2) of Section 17 of the said Act reads as

under:

“17(2) Nothing in clauses (b) and (c) of sub-section (1)

applies toxxx

(v) any document other than the documents specified in

sub-section (1A) not itself creating, declaring, assigning,

limiting or extinguishing any right, title or interest of the

value of one hundred rupees and upwards to or in

immovable property, but merely creating a right to

obtain another document which will, when executed,

create, declare assign, limit or extinguish any such right,

title or interest;

(vi) any decree or order of a Court [except a decree or

order expressed to be made on a compromise and

comprising immovable property other than that which is

the subject-matter of the suit or proceeding];”

7. We find that the judgment and decree passed by the High Court is

clearly erroneous and cannot be sustained in law. The parties are

the sons of late Vijendra Singh. As an heir of deceased, the

appellant had a right in the estate left by the deceased. Therefore,

it was not a new right being created for the first time when the

parties entered into a compromise before the civil court but rather

an pre-existing right in the property was recognized by way of

settlement in court proceedings.

8. Though, the Gair Mumkin Land (Non-cultivable land) was not

subject-matter of the suit, but the compromise entered between

the parties before the learned Trial Court leading to decree on

3.11.1981 included such non-cultivable land. It is to be noted that

compromise decree can be passed even if the subject-matter of the

agreement, compromise of satisfaction is not the same as the

subject-matter of the suit in terms of the provisions of Order XXIII

Rule 3 of the Code of Civil Procedure, 1908. Order XXIII Rule 3 of

the Code of Civil Procedure, 1908 reads thus:

“3. Compromise of Suit. - Where it is proved to the

satisfaction of the Court that a suit has been adjusted wholly

or in part by any lawful agreement or compromise, in writing

and signed by the parties] or where the defendant satisfies

the plaintiff in respect of the whole or any part of the

subject-matter of the suit, the Court shall order such

agreement, compromise or satisfaction to be recorded, and

shall pass a decree in accordance therewith so far as it

relates to the parties to the suit, whether or not the subjectmatter

of the agreement, compromise or satisfaction is the

same as the subject-matter of the suit:

xxx xxx.”

9. Therefore, the compromise decree entered into between the

parties in respect of land which was not the subject matter of the

suit is valid and is thus a legal settlement. It would be relevant to

notice that defendant-respondent has not disputed such settlement

on any admissible grounds before any forum.

10. The question whether such settlement between the members of

the family would require registration or not has come up for

consideration before this Court in a judgment reported in Kale and

Others v. Deputy Director of Consolidation and Others1 which

reads as under:

“9…………The object of the arrangement is to protect

the family from long-drawn litigation or perpetual strifes

which mar the unity and solidarity of the family and

create hatred and bad blood between the various

1 (1976) 3 SCC 119

members of the family. Today 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 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 administration 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

successionis so that future disputes are sealed for ever

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.

10. In other words to put the binding effect and the

essentials of a family settlement in a concretised form,

the matter may be reduced into the form of the

following propositions:

“(1) xxx xxx

(4) It is well settled that registration would be necessary

only if the terms of the family arrangement are reduced

into writing. Here also, a distinction should be made

between a document containing the terms and recitals

of a family arrangement made under the document and

a mere memorandum prepared after the family

arrangement had already been made either for the

purpose of the record or for information of the court for

making necessary mutation. In such a case the

memorandum itself does not create or extinguish any

rights in immovable properties and therefore does not

fall within the mischief of Section 17(2) of the

Registration Act and is, therefore, not compulsorily

registrable;

(5) The members who may be parties to the family

arrangement must have some antecedent title, claim or

interest even a possible claim in the property which is

acknowledged by the parties to the settlement. Even if

one of the parties to the settlement has no title but

under the arrangement the other party relinquishes all

its claims or titles in favour of such a person and

acknowledges him to be the sole owner, then the

antecedent title must be assumed and the family

arrangement will be upheld and the courts will find no

difficulty in giving assent to the same;

(6) Even if bona fide disputes, present or possible, which

may not involve legal claims are settled by a bona fide

family arrangement which is fair and equitable the

family arrangement is final and binding on the parties to

the settlement.”

11. The said judgment has come up for consideration recently in a case

reported as Ravinder Kaur Grewal and Others v. Manjit Kaur

and Others2. It may be stated that this was not a case of

compromise decree but of a family settlement which was sought to

be enforced in a suit for declaration as one of the parties to the

settlement wanted to resile from it. Such family settlement was

held to be a document as per clause (v) of sub-section 2 of Section

17 of the Registration Act, 1908.

12. An aggrieved person can seek enforcement of family settlement in

a suit for declaration wherein the family members have some

2 (2020) 9 SCC 706

semblance of right in property or any pre-existing right in the

property. The family members could enter into settlement during

the pendency of the proceedings before the Civil Court as well.

Such settlement would be binding within the members of the

family. If a document is sought to be enforced which is not

recognized by a decree, the provision of clause (v) of sub-section 2

of Section 17 of the Registration Act, 1908 would be applicable.

However, where the decree has been passed in respect of family

property, clause (vi) of sub-section 2 of Section 17 of the

Registration Act, 1908 would be applicable. The principle is based

on the fact that family settlement only declares the rights which

are already possessed by the parties.

13. In respect of a question whether the decree requires registration or

not, this Court in Bhoop Singh v. Ram Singh Major and Others3

held that decree or order including compromise decree creating

new right, title or interest in praesenti in immovable property of

value of Rs.100/- or above is compulsory for registration. It was not

the case any pre-existing right but right that has been created by

the decree alone. This court explained both the situation, where a

part has pre-existing right and where no such right exists. It was

observed as under:

“13. In other words, the court must enquire whether a

document has recorded unqualified and unconditional words

of present demise of right title and interest in the property

and included the essential terms of the same; if the

document, including a compromise memo, extinguishes the

rights of one and seeks to confer right, title or interest in

3 (1995) 5 SCC 709

praesenti in favour of the other, relating to immovable

property of the value of Rs.100 and upwards, the document

or record or compromise memo shall be compulsorily

registered.

xx xx xx

16. We have to view the reach of clause (vi), which is an

exception to sub-section (1), bearing all the aforesaid in

mind. We would think that the exception engrafted is meant

to cover that decree or order of a court, including a decree

or order expressed to be made on a compromise, which

declares the pre-existing right and does not by itself create

new right, title or interest in praesenti in immovable

property of the value of Rs. 100 or upwards. Any other view

would find the mischief of avoidance of registration, which

requires payment of stamp duty, embedded in the decree or

order.

xx xx xx

18. The legal position qua clause (vi) can, on the basis of

the aforesaid discussion, be summarized as below:

(1) Compromise decree if bona fide, in the sense that the

compromise is not a device to obviate payment of stamp

duty and frustrate the law relating to registration, would not

require registration. In a converse situation, it would require

registration.

(2) If the compromise decree were to create for the first

time right, title or interest in immovable property of the

value of Rs 100 or upwards in favour of any party to the suit

the decree or order would require registration.

(3) If the decree were not to attract any of the clauses of

sub-section (1) of Section 17, as was the position in the

aforesaid Privy Council and this Court’s cases, it is apparent

that the decree would not require registration.

(4) If the decree were not to embody the terms of

compromise, as was the position in Lahore case, benefit

from the terms of compromise cannot be derived, even if a

suit were to be disposed of because of the compromise in

question.

(5) If the property dealt with by the decree be not the

“subject-matter of the suit or proceeding”, clause (vi) of sub-

section (2) would not operate, because of the amendment of

this clause by Act 21 of 1929, which has its origin in the

aforesaid decision of the Privy Council, according to which

the original clause would have been attracted, even if it

were to encompass property not litigated.

19. Now, let us see whether on the strength of the decree

passed in Suit No. 215 of 1973, the petitioner could sustain

his case as put up in his written statement in the present

suit, despite the decree not having been registered.

According to us, it cannot for two reasons:

(1) The decree having purported to create right or title in

the plaintiff for the first time that is not being a declaration

of pre-existing right, did require registration. It may also be

pointed out that the first suit cannot really be said to have

been decreed on the basis of compromise, as the suit was

decreed “in view of the written statement filed by the

defendant admitting the claim of the plaintiff to be correct”.

Decreeing of suit in such a situation is covered by Order 12

Rule 6, and not by Order 23 Rule 3, which deals with

compromise of suit, whereas the former is on the subject of

judgment on admissions.

(2) xxx xxx ”

14. In K. Raghunandan and Others v. Ali Hussain Sabir and

Others4, a decree was passed in respect of disputes between the

two neighbours over passage. It was held that such decree would

require registration.

“A statute must be construed having regard to the purpose

and object thereof. Sub-section (1) of Section 17 of the Act

makes registration of the documents compulsory. Subsection

(2) of Section 17 of the Act excludes only the

applications of clauses (b) and (c) and not clause (e) of subsection

(1) of Section 17. If a right is created by a

compromise decree or is extinguished, it must compulsorily

be registered if the compromise decree comprises

immovable property which was not the subject-matter of the

suit or proceeding. Clause (vi) is an exception to the

exception. If the latter part of clause (vi) of sub-section (2) of

Section 17 of the Act applies, the first part thereof shall not

4 (2008) 13 SCC 102

apply. As in this case not only there exists a dispute with

regard to the title of the parties over the passage and the

passage, itself, having not found the part of the

compromise, we do not find any infirmity in the impugned

judgment.”

15. The judgments of this Court in Bhoop Singh and K.

Raghunandan was found to be inconsistent in an order reported

in Phool Patti and Another v. Ram Singh (Dead) Through

Lrs. and Another5 and the matter was thus referred to a larger

Bench. The larger Bench in the judgment reported as Phool Patti

and Another v. Ram Singh (Dead) Through Lrs. and Another6

did not find inconsistencies between the two judgments.

16. Bhoop Singh was a case dealing with both the situations, decree

between the parties where the decree holder does not have any

pre-existing right in the property and also the situation where

decree holder has a pre-existing right. It was the second situation

where the decree holder has a pre-existing right in the property, it

was found that decree does not require registration. In K.

Raghunandan case, the dispute was not amongst the family

members but between neighbours regarding right over passage.

Obviously, none of them had any pre-existing right over the

immovable property in question.

17. In view of enunciation of law in Bhoop Singh’s case, we find that

the judgment and decree of the High Court holding that the decree

requires compulsory registration is erroneous in law. The

5 (2009) 13 SCC 22

6 (2015) 3 SCC 465

compromise was between the two brothers consequent to death of

their father and no right was being created in praesenti for the first

time, thus not requiring compulsory registration. Consequently, the

appeal is allowed and the suit is decreed.

.............................................J.

(SANJAY KISHAN KAUL)

.............................................J.

(HEMANT GUPTA)

NEW DELHI;

JULY 6, 2021.


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