Supreme Court Upholds Family Settlement, Rejects High Court’s View on Registration: Thulasidhara vs. Narayanappa (2019)

Introduction

Date of the Judgment: 1 May 2019
Citation: (2019) INSC 426
Judges: L. Nageswara Rao, J., M.R. Shah, J. (authored the judgment)

Can a family settlement, recorded in writing but not registered, be used as evidence in a property dispute? The Supreme Court of India recently addressed this question in a case involving a dispute over land ownership. The Court examined whether a High Court was correct in overturning the decisions of lower courts regarding the admissibility of an unregistered family settlement document and the validity of a sale deed.

The Supreme Court bench, comprising Justices L. Nageswara Rao and M.R. Shah, delivered the judgment, with Justice M.R. Shah authoring the opinion. The court analyzed the legal principles surrounding family settlements, the need for registration of documents, and the scope of a defendant’s right to challenge a sale deed in a suit for declaration of ownership.

Case Background

The dispute began when the original plaintiff, Narayanappa, filed a suit in 1984 seeking a declaration of ownership and a permanent injunction against the original defendants, Thulasidhara and others, regarding a specific property. Narayanappa claimed ownership based on a registered sale deed. The defendants, on the other hand, contended that the property was part of a joint family holding, with the property having been purchased by A.N. Krishnappa in 1948. They further stated that a family partition in 1971 had allocated the property to Krishnappa. The defendants argued that the sale deed relied upon by the plaintiff was fabricated.

The Trial Court dismissed the suit, finding the plaintiff’s sale deed to be a nominal one, meant as security for a loan, and that a partition had indeed occurred in 1971. The First Appellate Court upheld this decision. However, the High Court of Karnataka reversed these decisions, holding that the 1971 partition document required registration and was inadmissible as evidence. The High Court also concluded that the plaintiff’s sale deed was valid.

Timeline:

Course of Proceedings

The Trial Court, after examining the evidence, dismissed the plaintiff’s suit. It held that the partition deed (Exhibit D4) was admissible and that the sale deed (Exhibit P1) was a nominal one, intended as security for a loan. The First Appellate Court upheld this decision, agreeing that Exhibit D4 was essentially a list of properties and did not require registration.

The High Court, however, reversed these findings in a second appeal. It framed a substantial question of law regarding the plaintiff’s ownership based on his purchase in 1973, after the alleged partition. The High Court concluded that Exhibit D4 required registration and was inadmissible, and that the sale deed (Exhibit P1) was a valid sale. This led to the defendants appealing to the Supreme Court.

Legal Framework

The case primarily revolves around the interpretation of the Registration Act, 1908, and the Transfer of Property Act, 1882. The Registration Act mandates the registration of certain documents to ensure their legal validity and admissibility as evidence. Section 17 of the Registration Act specifies which documents require compulsory registration, including instruments that create, declare, assign, limit, or extinguish any right, title, or interest in immovable property.

Section 54 of the Transfer of Property Act, 1882, defines “sale” as a transfer of ownership in exchange for a price, which must be registered if the value of the property is one hundred rupees or more. The interplay between these provisions and the concept of family settlements forms the core of the legal dispute.

Arguments

The appellants (original defendants) argued that the High Court exceeded its jurisdiction under Section 100 of the Code of Civil Procedure (CPC) by interfering with concurrent findings of fact by the lower courts. They contended that the High Court’s substantial question of law was actually a question of fact. They further submitted that the High Court erred in holding that Exhibit D4 required registration, and that even if it did, it could be used for collateral purposes.

The appellants relied on the case of Kale and Others v. Deputy Director of Consolidation and Others (1976) 3 SCC 119, arguing that an unregistered family settlement operates as an estoppel against parties involved. They also cited Subraya M.N. v. Vittala M.N. and Others (2016) 8 SCC 705, to support their claim that an unregistered family arrangement can be used as corroborative evidence. The appellants further argued that Exhibit D4 was not a partition deed but a list of properties, not requiring registration, and that the High Court erred in disregarding the findings that Exhibit P1 was a nominal sale deed. They cited Kaliaperumal v. Rajagopal and Another (2009) 4 SCC 193, to argue that the intention of the parties is the true test for a sale deed, not just registration. They also cited Vidhyadhar v. Manikrao and Another (1999) 3 SCC 573, to argue that a defendant can challenge a sale deed without filing a separate suit.

The respondents (original plaintiff and his family) argued that the High Court rightly decreed the suit, as the plaintiff had a registered sale deed. They contended that the High Court had correctly interfered with the lower courts’ findings, which were perverse. They argued that the High Court had framed and answered a substantial question of law within the parameters of Section 100 of the CPC. They further submitted that the plaintiff became the absolute owner under the registered sale deed (Exhibit P2) and that the earlier sale deed (Exhibit P1) was not a nominal one. They also argued that Exhibit D4 was a partition deed requiring registration and was rightly held inadmissible by the High Court.

The respondents argued that the suit property was not available for partition in 1971, as it had already been sold in 1964. They contended that the defendants had not challenged the registered sale deeds, and thus the plaintiff’s ownership should be upheld.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issues that the Court addressed were:

1. Whether the High Court was justified in interfering with the concurrent findings of fact by the Trial Court and the First Appellate Court in exercise of powers under Section 100 of the CPC.
2. Whether the High Court was correct in holding that Exhibit D4 (the partition deed) required compulsory registration and was inadmissible in evidence for want of registration.
3. Whether a defendant can challenge a sale deed in a suit for declaration of ownership without filing a separate suit for cancellation of the sale deed.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court’s view on the authorities cited:

• Kale and Others v. Deputy Director of Consolidation and Others (1976) 3 SCC 119: The Court relied on this case to emphasize that unregistered family settlements operate as an estoppel against the parties involved.
• Subraya M.N. v. Vittala M.N. and Others (2016) 8 SCC 705: The Court used this case to support the view that even without registration, a written family settlement can be used as corroborative evidence.
• Kaliaperumal v. Rajagopal and Another (2009) 4 SCC 193: The Court cited this case to highlight that the true test for a sale deed is the intention of the parties, not just the registration.
• Vidhyadhar v. Manikrao and Another (1999) 3 SCC 573: The Court relied on this case to affirm that a defendant can challenge a sale deed without needing to file a separate suit.

What weighed in the mind of the Court?

The Supreme Court’s decision was heavily influenced by the factual findings of the lower courts, which had carefully examined the evidence and concluded that the plaintiff’s sale deed was not genuine and that a family partition had indeed occurred. The Court emphasized that the High Court had exceeded its jurisdiction by re-evaluating the facts, which is not allowed under Section 100 of the CPC. The Court also highlighted the importance of family settlements and how they should be viewed with an intention to uphold them.

Fact:Law Ratio

The Supreme Court’s reasoning was based more on the factual aspects of the case (60%), such as the validity of the sale deed, the family partition, and the conduct of the parties, than on purely legal considerations (40%), which included the interpretation of the Registration Act and the Transfer of Property Act.

Logical Reasoning:

Key Takeaways

• The Supreme Court emphasized that High Courts should not interfere with concurrent findings of fact by lower courts unless there is a clear error of law or procedure.
• Family settlements, even if unregistered, can be used as evidence to establish the arrangement between the parties.
• A defendant in a suit for declaration of ownership can challenge the validity of a sale deed without filing a separate suit for cancellation.
• The intention of the parties is crucial in determining the validity of a sale deed, not just its registration.
• The Supreme Court has reinforced the importance of upholding family arrangements and settlements to maintain peace and harmony in families.

Directions

The Supreme Court set aside the High Court’s judgment and restored the decisions of the Trial Court and the First Appellate Court, dismissing the plaintiff’s suit.

Specific Amendments Analysis

There was no specific amendment discussed in this judgment.

Development of Law

The ratio decidendi of this case is that a family settlement, even if unregistered, can be used as evidence to establish the arrangement between the parties, and a defendant in a suit for declaration of ownership can challenge the validity of a sale deed without filing a separate suit. This judgment reinforces the existing legal position on family settlements and the rights of defendants in property disputes. There is no change in the previous positions of law.

Conclusion

In conclusion, the Supreme Court allowed the appeal, setting aside the High Court’s judgment and restoring the decisions of the lower courts. The Court held that the High Court had exceeded its jurisdiction by re-appreciating the evidence and that the family settlement document (Exhibit D4) was admissible as evidence. The Supreme Court’s decision underscores the importance of upholding family settlements and the rights of defendants to challenge sale deeds in property disputes.