Settlement Deed Excluding Legal Heirs From Intestate Succession Cannot Override Statutory Inheritance Rights: Madras High Court

Madras High Court, in a latest ruling, held that even where a property is settled in favor of a spouse, the settlor remains a legal heir entitled to a share in the property upon the spouse's intestate death, which subsequently devolves upon the settlor's own legal heirs.

A bench of Mr. Justice P. Dhanabal clarified that lower courts cannot ignore the principles of intestate succession when determining the shares of co-sharers in partition suits.

The plaintiffs (appellants) sought partition and separate possession of three items of family property, claiming they were ancestral. The defendants 1 and 2, children of the late Palani Gounder through his first wife Pavayee Ammal, contended that the property in items 1 and 2 was settled upon Pavayee Ammal via a 1948 Settlement Deed, making it her absolute property which they subsequently inherited and sold. The trial and first appellate courts dismissed the suit for items 1 and 2, holding that the property belonged exclusively to the defendants' predecessor.

The primary question before the court was whether the 1948 Settlement Deed (Ex.A.2) was void under Sections 122 and 123 of the Transfer of Property Act, 1882, or Section 16 of the Indian Contract Act, 1872. Additionally, the court examined whether the plaintiffs, as legal heirs of Palani Gounder, were entitled to a share in the settled property despite the death of the original settle (Pavayee Ammal) intestate.

Validity of the Settlement Deed

The court examined the validity of the 1948 Settlement Deed, rejecting claims that it violated the Transfer of Property Act. The judge noted that the deed was duly executed and registered, and remained unchallenged during the lifetime of the settlor, Palani Gounder. The court observed that the property involved in the settlement was not co-parcenary but rather common property derived from a partition, thereby placing it outside the scope of Section 16 of the Indian Contract Act.

Court Affirms Settlement Validity "The said Settlement Deed, Ex.A.2, was duly executed and attested by two witnesses and the same was accepted by Pavayee Ammal. Therefore, the Settlement Deed does not hit by Section 122 of the Transfer of Property Act."

Failure to Consider Intestate Succession

The court found the findings of the lower courts to be perverse for failing to account for the devolution of interest upon the death of Pavayee Ammal. Since Pavayee Ammal died intestate, her husband, Palani Gounder, was entitled to a 1/3 share of her estate as a Class I heir. Consequently, upon Palani Gounder’s subsequent death, his share should have been distributed among his own legal heirs, including the plaintiffs.

Right to Partition Against Third-Party Purchasers "Since the Plaintiffs are also co-sharers, the Sale Deed executed by the defendants 1 and 2 in favour of the defendants 3 and 4, will noway affect the share of the Plaintiffs."

Grant of Relief

The High Court held that the lower courts erred in denying the plaintiffs any share in the disputed properties. While upholding the validity of the Settlement Deed, the High Court recognized the plaintiffs' statutory right to inherit the share that devolved upon Palani Gounder from his first wife. The court accordingly allowed the appeal in part, granting the plaintiffs a 2/12 share in the property items 1 and 2 and confirming the partition decree for the third item.

Date of Decision: 09 September 2026