Supreme Court Upholds Settlement Deed in Property Dispute: Ramachandra Reddy vs. Ramulu Ammal (2024)

Date of the Judgment: 14 November 2024
Citation: 2024 INSC 868
Judges: C.T. Ravikumar, J., Sanjay Karol, J.

Can a property transfer within a family be considered a gift, or is it a settlement with legal implications? The Supreme Court of India recently addressed this question in a case involving a dispute over a property deed. The core issue revolved around whether a deed executed in 1963, transferring property to a family member, was a gift or a settlement deed, which significantly impacts the property rights of the involved parties. The judgment was delivered by a bench comprising Justices C.T. Ravikumar and Sanjay Karol, with Justice Sanjay Karol authoring the opinion.

Case Background

The case involves a property dispute within a family. Balu Reddy had three sons: Venkatarama Reddy, Venkata Reddy (also known as Pakki Reddy), and Chenga Reddy. These three brothers jointly owned a property. Venkatarama Reddy passed away, leaving behind his son Markandeya Reddy. Venkata Reddy (Pakki Reddy) died, leaving his daughter Govindammal as his heir. Chenga Reddy died without any children. Each brother initially held a 1/3rd share in the property.

In 1963, Chenga Reddy transferred his share of the property to Govindammal through a settlement deed. This deed was given to Markandeya Reddy in 1986 to update the official records to reflect Govindammal’s 2/3rd share. However, the records were not updated, and the deed was not returned to Govindammal. Consequently, a suit for partition was filed on 30th March 1995.

The plaintiffs, legal heirs of Govindammal, sought a partition and separate possession of 2/3rd of the suit properties. The defendants, legal heirs of Markandeya Reddy, contended that a partition had already occurred in 1984, and they were entitled to half the property. They also disputed the inclusion of certain survey numbers in the plaintiff’s claim.

Timeline

Course of Proceedings

The Trial Court framed issues including the correctness of property markings, ownership, the validity of the 1963 settlement deed, and the entitlement to partition. The Trial Court concluded that the plaintiffs were entitled to a 2/3rd share of the property.

The First Appellate Court upheld the Trial Court’s decision, affirming the validity of the settlement deed and the plaintiffs’ entitlement to a 2/3rd share. The court also rejected the defendant’s claim of an oral partition in 1964.

The High Court of Judicature at Madras, in a second appeal, modified the lower court’s decision. It held that the 1963 deed was a gift deed, not a settlement deed, and awarded each side a half share in the property. The High Court also stated that the evidence was insufficient to prove oral partition.

Legal Framework

The case primarily revolves around the interpretation of a ‘gift’ and a ‘settlement’ deed under Indian law. The Transfer of Property Act, 1882 (TPA) defines a gift in Section 122 as:

“Gift” is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee.

The Indian Stamp Act, 1899, defines a ‘settlement’ in Section 2(24) as:

“Settlement” means any non -testamentary disposition, in writing, of movable or immovable property made — (a) in consideration of marriage, (b) for the purpose of distributing property of the settlor among his family or those for whom he desires to provide, or for the purpose of providing for some person dependent on him, or (c) for any religious or charitable purpose;

The term ‘disposition’ means a mode by which property can pass, whether by act of parties or by an act of law, and includes transfer and charge of property.

Arguments

Appellants’ (Plaintiffs’) Arguments:

• The lower courts correctly rejected the defense of oral partition.
• The rights under the 1963 settlement deed were not given up and are enforceable.
• The High Court erred in holding the deed to be a gift deed instead of a settlement deed.
• The settlement deed was executed because Govindammal had been taking care of her father and uncle and would continue to do so, and also perform charitable work. Such documents have been repeatedly held to be settlement deeds and not gift deeds.
• The High Court should not disturb concurrent findings of fact.

Respondents’ (Defendants’) Arguments:

• The nomenclature of the document does not matter; the contents determine its nature. The deed, though called a settlement deed, was actually a gift deed.
• There was no reservation of power of life estate or vesting rights.
• The appellants never questioned that the document was not a gift deed. The term ‘settlement’ was used in terms of settling a dispute.
• There is no element of consideration in the settlement deed, and love and affection are not elements of consideration under the law.
• Documentary evidence such as separate pattas, kist receipts, and adangals indicate an oral partition.

[TABLE] of Submissions

Issues Framed by the Supreme Court

The Supreme Court framed the following issues:

1. Whether the High Court was justified in overturning the concurrent findings of the Trial and First Appellate Courts.
2. Whether the deed executed, which gave rise to the present property dispute, was a gift deed or a deed of settlement.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

Cases and Books Relied Upon by the Court:

• CIT v. Ahmedabad Urban Development Authority, (2023) 4 SCC 561: The court referred to this case for the meaning of the term “consideration,” emphasizing that consideration need not always be in monetary terms.
• Chidambara Iyer & Ors. v. P.S. Renga Iyer, 1965 SCC OnLine SC 293: This case was cited to reinforce the understanding of consideration.
• Gurdev Kaur v. Kaki, (2007) 1 SCC 546: This case was used to highlight the limited jurisdiction of the High Court to interfere with concurrent findings of fact.
• V. Ramachandra Ayyar v. Ramalingam Chettiar, 1962 SCC OnLine SC 155: This case, followed in Nazir Mohammed v. J. Kamala, (2020) 19 SCC 57, was cited to emphasize that an erroneous finding of fact is different from an error in procedure and that there is no jurisdiction to entertain a second appeal on the ground of an erroneous finding of fact.
• Suresh Lataruji Ramteke v. Sau. Sumanbai Pandurang Petkar, 2023 SCC OnLine SC 1210: This case summarized the principles regarding the exercise of jurisdiction under Section 100 of the Code of Civil Procedure, 1908.
• Santosh Hazari v. Purushottam Tiwari, (2001) 3 SCC 179: This case was referred to in Suresh Lataruji Ramteke v. Sau. Sumanbai Pandurang Petkar, 2023 SCC OnLine SC 1210 to define a substantial question of law.

Legal Provisions Considered by the Court:

• Section 122, Transfer of Property Act, 1882: Definition of “gift.”
• Section 2(24), Indian Stamp Act, 1899: Definition of “settlement.”
• Section 2(d), Indian Contract Act, 1872: Definition of “consideration.”

[TABLE] of Authorities

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• CIT v. Ahmedabad Urban Development Authority, (2023) 4 SCC 561: The Court used this case to define the term “consideration” and establish that it need not always be monetary.
• Chidambara Iyer & Ors. v. P.S. Renga Iyer, 1965 SCC OnLine SC 293: This case was used to support the definition of “consideration.”
• Gurdev Kaur v. Kaki, (2007) 1 SCC 546: The Court relied on this case to highlight that the High Court should not interfere with concurrent findings of fact.
• V. Ramachandra Ayyar v. Ramalingam Chettiar, 1962 SCC OnLine SC 155: The Court used this case to emphasize that a second appeal cannot be based on an erroneous finding of fact.
• Suresh Lataruji Ramteke v. Sau. Sumanbai Pandurang Petkar, 2023 SCC OnLine SC 1210: This case was used to summarize the principles regarding the exercise of jurisdiction under Section 100 of the Code of Civil Procedure.
• Santosh Hazari v. Purushottam Tiwari, (2001) 3 SCC 179: The Court used this case to define a substantial question of law.

The Supreme Court held that the High Court had erred in reversing the concurrent findings of the lower courts. The Court found that the 1963 deed was a settlement deed, not a gift deed, because it was executed in consideration of Govindammal’s past and future care and charitable work. The Court emphasized that consideration does not always need to be monetary. The Court also reiterated that High Courts should not interfere with concurrent findings of fact unless there is a substantial question of law.

The Court stated, “In the present case, it is seen that the transfer of property in favour of Govindammal was in recognition of the fact that she had been taking care of the transferors and would continue to do so while also using the same to carry out charitable work.”

The Court also noted, “In that view of the matter, the High Court has erred in taking such a constricted view of ‘consideration ’, especially taking note of the fact that this settlement was between the members of a family.”

Furthermore, the Court observed, “The jurisdiction to interfere in findings where the Courts below have been ad idem , is limited and such limitation is well expounded.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Nature of the Deed: The Court emphasized that the deed was a settlement deed, not a gift deed, due to the consideration involved, which was Govindammal’s care and charitable work.
• Concurrent Findings: The Court highlighted that the High Court should not have overturned the concurrent findings of the lower courts without a substantial question of law.
• Definition of Consideration: The Court clarified that consideration need not always be monetary and can include care and charitable work.

[TABLE] of Sentiment Analysis of Reasons

Fact:Law Ratio Table

Logical Reasoning Flowchart:

Key Takeaways

• A deed transferring property within a family can be considered a settlement deed if it is executed in consideration of care, support, or other non-monetary benefits, not just monetary consideration.
• High Courts should not interfere with concurrent findings of fact by lower courts unless there is a substantial question of law.
• The term “consideration” under the law is broad and not limited to monetary terms. It can include care, support, and charitable work.
• The nature of a deed is determined by its contents and the circumstances of its execution, not just its nomenclature.

Directions

The Supreme Court set aside the High Court’s judgment and restored the findings of the lower courts.

Specific Amendments Analysis

Omitted as no specific amendment was discussed in the judgment.

Development of Law

The ratio decidendi of this case is that a transfer of property within a family can be considered a settlement deed if it is made in consideration of care, support, or charitable work, and not just monetary payment. This judgment clarifies that the definition of “consideration” is broad and not limited to monetary terms. It also reinforces the principle that High Courts should not interfere with concurrent findings of fact unless there is a substantial question of law. This case does not change the previous positions of law but reinforces the existing legal interpretations.

Conclusion

In conclusion, the Supreme Court’s judgment in Ramachandra Reddy vs. Ramulu Ammal upholds the validity of a settlement deed within a family, emphasizing that “consideration” can include non-monetary forms such as care and charitable work. The Court overturned the High Court’s decision, reinforcing the principle that High Courts should not interfere with concurrent findings of fact unless a substantial question of law is involved. This judgment provides clarity on the interpretation of settlement deeds and the scope of “consideration” under Indian law.