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LEGAL CHAT
Family Arrangement – factors to reckon with
R.L. NARAYANAN
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An understanding of the nature of the document and the requirements of stamping and registration is necessary
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Photo: H. Vibhu
Have proper documentation: The purpose of entering into a “Family Arrangement” is to have a settlement of claims, possible claims, disputes, doubtful claims, differences, litigations and other burdens.
Frequently, one comes across a document termed as “Family Arrangement”. These documents are usually unregistered. However, the subject of these arrangements will be immovable properties of substantial value. Doubts may arise on the validity of these documents. Issues may also arise as to whether these documents need to be registered to be valid. Often, these documents are also made in such a manner that these documents will have to be duly stamped and registered. Hence, an understanding of the nature of family arrangement and the requirements of stamping and registration of such documents will be helpful.
The simplest definition of the word “Family” would mean a group of people who are related by blood or marriage. It could consist of parents and their children; those descended from a common ancestor; members of the family or a household. The word “Family” is used generally in an inclusive context, in the sense that so long as a claim can be made by a person to be a member of a “Family” and there is a basis for such claim, then such persons, for the purpose of a Family Arrangement, are likely to be recognised as such.
The word “Arrangement” can be stated to indicate something in the nature of an understanding between two or more persons. It is like a proposal. It involves a meeting of minds and usually involves a mutuality or mutual rights and obligations. There is also an idea to put something into order. An “Arrangement” is also in the nature of an Agreement. However, in the case of other agreements, adequacy of consideration is a factor which will have substantial weight. However, in the case of “Family Arrangements”, a slight consideration is normally sufficient to support the same.
Settlement of disputes
A “Family Arrangement” is usually made when there is a requirement of settlement of disputes. The interest of the whole family is to be taken into consideration. Broadly stated, the essentials of a “Family Arrangement” would be that there exists a situation where there is a necessity for preserving the family property or preserving the peace and security of the family or avoidance of litigations and proceedings. It could also be made for the purpose of protecting the honour of the family. The purpose of entering into a “Family Arrangement” is to have a settlement of claims, possible claims, disputes, doubtful claims, differences, litigations and other burdens. With respect to such claims or other factors, there must be an agreement or an arrangement amongst various members of the family. The nature of the agreement or arrangement is such that it is intended reasonably, for the benefit of the family. The object is to compromise disputes, differences, claims, rights, etc. It could also be for the preservation of the family property or the dignity or honour of the family. The consideration for the arrangement can even be the expectation that the arrangement will result in the objects being achieved.
It is absolutely essential that the existence of genuineness or bona fides is the essence of a valid Family Arrangement. The claims or differences or possible claims or other factors stated to be the basis for Family Arrangement should be bona fide. It should be made in good faith. It should not have been made for purposes like avoiding stamp duty or registration charges, if the same is in the form of a written document. A written document is not mandatory and oral family arrangements, if they otherwise meet the requirements of law, are valid and can be enforced.
Rearrangement
The Family Arrangement is not regarded as a transfer of property. The basis for this is that there is no conveyance by one party to another. It is made on the basis that one or more of claimants already has or have a title to the property. This title can be for the whole of the property or in part. This can be for a share in the property as well. The shares need not be equal.
The scheme of Family Arrangement does not rest on transfer of any right or property, but on a re-arrangement or recognition of claim and abandonment of rights in favour of the claimant pursuant to such recognition.
The parties to a Family Arrangement must be related in some way. They must have a claim or at least a semblance of a claim. This claim could arise by way of affection or otherwise. The object of the Family Arrangement should be to maintain peace and harmony, preserve and protect the properties or good name of the family. As already stated, the term “Family” has to be understood in a wider sense to include those who may have some claim. The arrangement can also be made in circumstances where otherwise, time, money or energy would be wasted. It is not mandatory that all parties should have a legal and clear title, but such title is often inferred, provided the arrangement is a bona fide arrangement.
A Family Arrangement can be made where there is a conflict of legal claims whether in present or in future. It can be made in settlement of disputes, whether present or possible. It can be made in circumstances even when some of the parties are ignorant of their rights and this ignorance itself can be the basis of the Family Arrangement.
As already stated, a Family Arrangement can be made orally. If made orally and there is no document, the question of payment of any stamp duty or registration charges does not arise. However, if the Family Arrangement is in the form of a document, then proper stamping and registration may or may not be necessary depending on the wordings employed in the document.
Duly stamped
If the document is very detailed and sets out the terms and conditions of a family settlement in an extensive manner or in matters where it is specifically mentioned that the parties have been members of Joint Hindu Family till the making of the document or where the document is made contemporaneous or immediately after the settlement of disputes or where rights are transferred or released under a document, then these documents may have to be duly stamped and registered. The nature of the document has to be determined based on the wordings and after taking into consideration the entire document. This cannot be decided on the basis of titles to the document given by the parties.
If the document is merely a recital containing a list or in the nature of a short memorandum recording a past transaction, then this may not require registration. Hence, the wordings employed in the documents and the attendant facts and circumstances are of paramount importance. Each and every document has to be separately considered on the basis of the wordings contained therein. All these matters will have to be taken into account in deciding whether the document in issue has to be stamped and registered or otherwise.
In the event that you are about to make a document in the nature of a Family Arrangement, please take suitable advise. This is not to state that it should always be made in a manner that does not require stamping or registration. The present stamp duty structure and the registration charges, at least in Tamil Nadu, is such that the same is nominal for documents of this nature. You can take advantage of this by having proper documentation. If a document had already been made, you can still consider the possibilities of regularising the same by execution of further or other documents, if required.
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