Case: KORUKONDA CHALAPATHI RAO &amp; ANR Vs. KORUKONDA ANNAPURNA SAMPATH KUMAR

3. The respondent is the younger brother of the appellants. The respondent instituted the present Suit (O.S. No.39 of 2001) seeking declaration of title over the plaint schedule property and for eviction of the appellants who are the defendants and consequential perpetual injunction is also sought against the appellants.4. It is not in dispute that there was a partition between the appellants, the respondent and their other siblings. The partition list is marked as Exhbit-A8 in the suit. It is dated 17.11.1980. The plaint schedule properties are a part of F-Schedule in the Deed of partition allotted to the respondent. The case of the respondent is based on the said partition deed allotting F-schedule to him. It is, inter alia, his case in the suit as amended by order dated 19.12.2012 that he was in hospital as in patient for treatment of his liver ailment. The appellants allegedly obtained his signatures on papers and made up the alleged settlement dated 15.4.1986 and the alleged receipt dated 08.12.1983 (The documents which are in controversy). It is his further case that appellants are in occupation of the property with his permission. On refusal of the appellants to vacate and after exchange of notices, the suit is filed seeking the relief as noted. There are two plaint schedule items. Item No.1 is the terrace house, ground floor and upstairs. Item no.2 is half share nadava portion in the boundaries in terms of F-Schedule of the partition deed.5. On the other hand, the case of the appellants is that while partition list dated 17.11.1980 was executed recording the fact of partition, which was already effected, there were subsequent developments. The respondent and his wife raised dispute before elders complaining that the portion given to them was not sufficient. At the intervention of the elders, it was settled and agreed between the appellants and the respondent that respondent should give away his portion to the second appellant and respondent should also give away his one-third portion in Nadava margam to the appellants and in consideration for the same the first appellant was to give Rs.25,000/- and the second appellant was to give Rs.75,000/- to the respondent. The said amounts were paid. On the advice of the elders the case of the appellants is that Khararunama dated 15.04.1986 was executed recording the facts. On the pleading of respondent and his wife to permit them to stay on, the respondent was permitted to occupy the property. It is the further case of the appellants that in December, 1993, respondent and his wife informed the appellants that they would vacate the portion in the second appellants house and leave the same but defendants should pay some more money as they intended to vacate the property. The elders settled the matter and it is alleged that Second appellant had to pay Rs.2,00,000/-. Out of affection towards the respondent and to purchase peace, the second appellant agreed to pay Rs.2,00,000/- (Rupees Two Lakhs). Accordingly, Rs.2,00,000/- was paid on 08.12.1993 in the presence of elders and the receipt dated 08.12.1993 was issued by the respondent to the second appellant and on the same day, respondent is alleged to have vacated and left the portion in his occupation in the house of the second appellant and shifted to a rented portion.6. After completion of the evidence on behalf of the respondent, appellants filed the evidence affidavit and sought to mark the Kharurunama and receipt dated 08.12.1993. As already noticed, the trial court allowed the said documents to be marked. By the impugned judgment the High Court has found that in the absence of registration and not being stamped the documents were inadmissible.

Court's reasoning:
11. As far as the receipt is concerned, it is signed on a 20 paise revenue stamp. It is allegedly executed by the respondent having received Rs.2,00,000/- (Rupees two lakhs) on 08.12.1983 as per the advice of the elders besides the amount of Rs.1,00,000/- (Rupees one lakh) already paid to the respondent mentioned in the Khararunama dated 15.04.1986 while vacating the house portion mentioned in the Kharurunama excepting the shop room which fell to the share of the respondent under the Partition List 1980 purportedly signed by two witnesses. It is executed in favour of the second appellant.Kale v. Dy. Director of Consolidation AIR 1976 SC 807  . This Court has summed up the essentials of the family settlement in the following proposition: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) The family settlement must be a bona fide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the various members of the family;(2) The said settlement must be voluntary and should not be induced by fraud, coercion or undue influence;(3) The family arrangement may be even oral in which case no registration is necessary;(4) It is well settled that registration would be necessary only if the terms of the family arrangement are reduced into writing. Here also, a distinction should be made between a document containing the terms and recitals of a family arrangement made under the document and a 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.19. In Ram charan v. Girja Nandini AIR 1966 SC 292  , this Court was dealing with a case of a compromise decree and this Court went on to hold that it was a family arrangement. It went on to hold as follows:.. For as the Privy Council pointed out in Mst. Hiran Bibis case, AIR 1914 PC 44 in a family settlement each party takes a share in the property by virtue of the independent title which is admitted to that extent by the other parties. It is not necessary, as would appear from the decision in Rangasami Gounden v. Nachiappa Gounden 46 Ind App 72 (AIR 1918 PC 196), that every party taking benefit under a family settlement must necessarily be shown to have, under the law, a claim to a share in the property. All that is necessary is that the parties must be related to one another 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.21. We may notice that in Sita Ram Bhama v. Ramvatar Bhama (2018) 15 SCC 130 ,  wherein the appellant and respondent were brothers, according to the appellant, a memorandum of settlement as decided by their late father was recorded in regard to his acquired property. The question arose as to whether the settlement was admissible. It is necessary to notice paragraph-10, which reads as under:10. The only question which needs to be considered in the present case is as to whether document dated 9-9-1994 could have been accepted by the trial court in evidence or the trial court has rightly held the said document inadmissible. The plaintiff claimed the document dated 9-9-1994 as memorandum of family settlement. The plaintiffs case is that earlier partition took place in the lifetime of the father of the parties on 25-10-1992 which was recorded as memorandum of family settlement on 9-9- 1994. There are more than one reasons due to which we are of the view that the document dated 9-9-1994 was not mere memorandum of family settlement, rather a family settlement itself. Firstly, on 25-10-1992, the father of the parties was himself owner of both, the residence and shop being self-acquired properties of Devi Dutt Verma. The High Court has rightly held that the said document cannot be said to be a will, so that the father could have made the will in favour of his two sons, the plaintiff and the defendant. Neither the plaintiff nor the defendant had any share in the property on the day when it is said to have been partitioned by Devi Dutt Verma. Devi Dutt Verma died on 10-9-1993. After his death, the plaintiff, the defendant and their mother as well as sisters become the legal heirs under the Hindu Succession Act, 1956 inheriting the property being a Class I heir. The document dated 9-9-1994 divided the entire property between the plaintiff and the defendant which document is also claimed to be signed by their mother as well as the sisters. In any view of the matter, there is relinquishment of the rights of other heirs of the properties, hence, the courts below are right in their conclusion that there being relinquishment, the document dated 9-9-1994 was compulsorily registrable under Section 17 of the Registration Act.22. Thereafter, we may notice the view of this Court in paragraph-13 as under:13. There is only one aspect of the matter which needs consideration i.e. whether the document dated 9-9-1994, which was inadmissible in evidence, could have been used for any collateral purpose. In a suit for partition, an unregistered document can be relied upon for collateral purpose i.e. severancy of title, nature of possession of various shares but not for the primary purpose i.e. division of joint properties by metes and bounds…23. No doubt in the said case, the court has followed the Judgment in Yellapu Uma Maheswari and Another (supra). It found that the unregistered memorandum could be used for collateral purpose within the meaning of Section 49 of the Registration Act subject to payment of penalty and stamp duty.26. The proviso carves out two exceptions. We are only concerned, in this case, with only one of them and that is contained in the last limb of the proviso. The unregistered document can be used as evidence of any collateral transaction. This is however subject to the condition that the said collateral transaction should not itself be one which must be effected by a registered document. It is this expression contained in the proviso which leads us to ask the question as to what would constitute a collateral transaction. If it were collateral transaction, then an unregistered document can indeed be used as evidence to prove the same. Would possession being enjoyed or the nature of the possession on the basis of the unregistered document, be a transaction and further would it be a collateral transaction? We pose this question as the contention of the appellants is that even if the Khararunama dated 15.4.1986 cannot be used as evidence to prove the factum of relinquishment of right which took place in the past, the Khararunama can be looked into to prove the conduct of the parties and the nature of the possession which was enjoyed by the parties.28. An attempt to derive support from the said judgment was refused on a different set of facts by this court in Kirpal Kaur v. Bachan Singh and Ors. AIR 1958 SC 199  . In the said case the court was dealing with the following facts. The widow of a Hindu upon the death of her husband came by possession of the plaint schedule properties. She even got the property mutated. A gift was made by her. The reversioners thereafter approached her and an unregistered document was entered into with her wherein she purported to acknowledge that she had only a life estate. Thereafter the suit came to be filed. The widow set up the case of adverse possession. On the other hand, the plaintiffs placed reliance on the unregistered document and relied upon the judgment of the N. Varada Pillai (supra). This Court repelled the case of the plaintiffs and held as follows in Kirpal Kaur (supra):15. We cannot agree that on the authority of Varatha Pillais case (1918) 46 I.A. 285, the agreement of February 6, 1932, can be admitted in evidence in the case in hand to show the nature of Harnam Kaurs possession of the lands subsequent to its date. In Varatha Pillais case (1918) 46 I.A. 285, Duraisani had got into possession only after the petition and claimed to retain possession only under the gift mentioned in it. The petition was therefore admissible in evidence to show the nature of her possession. In the present case Harnam Kaur had been in possession before the date of the document and to admit it in evidence to show the nature of her possession subsequent to it would be to treat it as operating to destroy the nature of the previous possession and to convert what had started as adverse possession into a permissive possession and, therefore, to give effect to the agreement contained in it which admittedly cannot be done for want of registration. To admit it in evidence for the purpose sought would really amount to getting round the statutory bar imposed by Section 49 of the Registration Act.29. This is significant for the reason that the law is not that in every case where a party sets up the plea that the court may look into an unregistered documents to show the nature of the possession that the court would agree to it. The cardinal principle would be whether by allowing the case of the party to consider an unregistered document it would result in the breach of the mandate of the Section 49 of the Registration Act.30. We may also usefully refer to the views expressed by the Division Bench of the Madras High Court in K. Panchapagesa Ayyar and Ors. v. K. Kalyanasundaram Ayyar and Ors. AIR 1957 Madras 472:25. To sum up it is well settled in a long series of decisions which have since received statutory recognition by the Amending Act of 1929 (vide the concluding words of the new proviso to Section 49 of the Registration Act) that a compulsorily registrable but an unregistered document is admissible in evidence for a collateral purpose that is to say, for any purpose other than that of creating, declaring, assigning, limiting or extinguishing a right to immovable property.The expression collateral purpose is no doubt a very vague one and the Court must decide in each case whether the purpose for which it is sought to use the unregistered document is really a collateral one or is to establish directly title to the immovable property sought to be conveyed by the document. But by the simple device of calling, it a collateral purpose a party cannot use the unregistered document in any legal proceedings to bring about indirectly the effect which it would have had if registered.To quote Sir George Lowndes in James R. R. Skinner v. Robert Hercules Skinner ILR 51 All 771: MANU/PR/0091/1929 : AIR 1929 PC 269   (Z 22) the collateral purpose to which the document is put should be nothing else than an evasion of the statute and render almost nugatory the hitherto well-established rule relating to the limited uses to which an unregistered partition deed can be put to.32. In SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. Private Ltd.(2011) 14 SCC 66 ,  the question arose whether an arbitration agreement contained in a compulsorily registrable document which was not registered could be used to prove the collateral transaction, namely, the provision for arbitration. This court held as follows:11. Section 49 makes it clear that a document which is compulsorily registerable, if not registered, will not affect the immovable property comprised therein in any manner. It will also not be received as evidence of any transaction affecting such property, except for two limited purposes. First is as evidence of a contract in a suit for specific performance. Second is as evidence of any collateral transaction which by itself is not required to be effected by registered instrument. A collateral transaction is not the transaction affecting the immovable property, but a transaction which is incidentally connected with that transaction. The question is whether a provision for arbitration in an unregistered document (which is compulsorily registerable) is a collateral transaction, in respect of which such unregistered document can be received as evidence under the proviso to Section 49 of the Registration Act.16. An arbitration agreement does not require registration under the Registration Act. Even if it is found as one of the clauses in a contract or instrument, it is an independent agreement to refer the disputes to arbitration, which is independent of the main contract or instrument. Therefore having regard to the proviso to Section 49 of the Registration Act read with Section 16(1)(a) of the Act, an arbitration agreement in an unregistered but compulsorily registerable document can be acted upon and enforced for the purpose of dispute resolution by arbitration.33. If we apply the test as to whether the Khararunama in this case by itself affects, i.e., by itself creates, declares, limits or extinguishes rights in the immovable properties in question or whether it merely refers to what the appellants alleged were past transactions which have been entered into by the parties, then, going by the words used in the document, they indicate that the words are intended to refer to the arrangements allegedly which the parties made in the past. The document does not purport to by itself create, declare, assign, extinguish or limit right in properties. Thus, the Khararunama may not attract Section 49(1)(a) of the Registration Act.35. As far as stamp duty goes, on our finding regarding the nature of the document, viz., Khararunama, being record of the alleged transactions, it may not require to be stamped. We notice the following conclusion of the Division Bench of the Madras High Court in A.C. Lakshmipathy and others v. A.M. Chakrapani Reddiar and others AIR 2001 Madras 135:42. To sum up the legal positionxxx xxx xxx(V) However, a document in the nature of a Memorandum, evidencing a family arrangement already entered into and had been prepared as a record of what had been agreed upon, in order that there are no hazy notions in future, it need not be stamped or registered.36. No doubt, when there has been a partition, then, there may be no scope for invoking the concept of antecedent right as such, which is inapposite after a disruption in the joint family status and what is more an outright partition by metes and bounds. In this regard, it is to be noticed that the appellants and the respondents, admittedly, partitioned their joint family properties. This is clear from the Khararunama wherein it is stated that they have divided the joint family properties. The properties, which are mentioned in the Khararunama, became the separate properties of the respondent.