Family Settlement Is Not a Deed of Partition—Registration Not Required When It Only Regulates Enjoyment of Property: Delhi High Court Affirms Possession and Mesne Profits

“Fraudulent Possession Cannot Override a Settled Arrangement Among Heirs”— In a firm and precedent-aligned ruling Delhi High Court dismissed an appeal by Suman Singh Virk and Sushma Choudhary, who had challenged the Single Judge’s decree directing them to hand over possession of a portion of the fourth floor in a South Extension property and pay mesne profits. The Division Bench of Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar upheld the validity and enforceability of an unregistered family settlement, declaring:

“The Memorandum of Family Settlement merely delineates the mode of enjoyment of the property and does not create or extinguish any new rights; hence, it does not require registration.”

The dispute pertained to property bearing no. L-1/8, South Extension Part-II, originally purchased by Jamna Dass who, through a registered Will, left the property equally to his daughter Santosh Prashar and son Nidhish Prashar. Upon Santosh’s demise, her daughters—Suman Singh Virk and Sushma Choudhary (Appellants)—and Nidhish Prashar (deceased husband of Respondent No.1 Deepika Prashar) became co-owners of the property.

On November 27, 2012, a Family Settlement was signed, allocating specific floors to each party. Notably, the second and fourth floors were earmarked for Nidhish, and the first floor was allotted to the Appellants, with the third floor to go to the builder. This arrangement was followed by a Builder’s Agreement on December 4, 2012, executed between all co-owners and a developer.

However, after reconstruction, the Appellants illegally occupied the entire fourth floor, including portions earmarked for the Respondents. This led to a partition suit by the Respondents, which was decreed by the Single Judge on October 4, 2024, directing handover of one-half of the fourth floor, along with mesne profits of ₹48,000/month from 07.01.2015, and filing of a complaint under Section 379 of the BNSS for making false claims.

Key Legal Issue: Does a Family Settlement Require Registration to Be Enforceable in Law?

The Appellants argued that the Family Settlement was inadmissible because:

• It amounted to a partition and thus required registration and stamping.

• It was superseded by the subsequent Builder’s Agreement which acknowledged Appellants’ 25% shares each, totaling 50%.

• They were in legitimate possession, so mesne profits were unwarranted.

The High Court unequivocally rejected these arguments. It ruled:

“The Memorandum of Family Settlement merely regulates the mode of enjoyment between co-owners. It does not partition the property by metes and bounds. It does not create any new right and hence, does not require registration.”

Citing the Supreme Court’s landmark ruling in Kale & Ors. v. Deputy Director of Consolidation (1976) 3 SCC 119, the Bench reiterated:

“Even if a Family Settlement suffers from a legal defect, once acted upon, the doctrine of estoppel applies to prevent a party from avoiding it.”

The Court also relied on Ravinder Kaur Grewal v. Manjit Kaur, reaffirming that:

“A Memorandum of Family Settlement delineating usage does not require registration because it does not transfer title—it only regulates enjoyment among family members.”

Builder’s Agreement Does Not Supersede Family Settlement

Rejecting the argument of novation under Section 62 of the Indian Contract Act, the Court found:

“The Builder’s Agreement was not between the same parties as the Family Settlement. It was a construction arrangement and did not modify the inter se rights between the co-owners.”

Further, the absence of reference to the Family Settlement in the Builder’s Agreement was held irrelevant, as:

“Builders had no concern with the internal division of ownership among the family.”

False Claims and Denial of Rights Justify Damages and Criminal Proceedings

The Appellants’ occupation of the entire fourth floor, including the Respondents’ share, was found to be deliberate and without legal entitlement. The Court noted:

“The Appellants forcibly entered and denied possession to the widow and son of their deceased brother. Their false claims regarding the Settlement being fabricated were also proven false.”

The Court upheld:

• Mesne profits of ₹48,000 per month from January 7, 2015, with 6% interest p.a.

• Direction to the Registrar General to initiate a criminal complaint under Section 379 BNSS (formerly Section 340 CrPC) for perjury and false claims.

The Appeal was dismissed, and the Single Judge’s decree upheld in full. The ruling sends a clear signal:

“Family Settlements are sacred instruments intended to preserve harmony. A party who enjoys the benefits of such a settlement cannot later deny its existence or enforceability.”

“Once a settlement has been acted upon, Courts will enforce it—even if it is unregistered—under the doctrine of estoppel.”

This case affirms the enforceability of oral or unregistered family settlements regulating enjoyment, and reiterates that fraudulent denial of rightful possession invites both civil and criminal consequences.

Date of Decision: August 18, 2025