Family settlement better option than approaching a court

Property disputes are a common occurrence in India. Since greed is a great leveller, wars over wealth take place across the strata, from low-income households to ultrarich families. Even an iron-clad will may be challenged by unhappy beneficiaries. The obvious solution for most squabbling relatives is to take the matter to the courts.

However, that is a time-consuming, tedious and expensive process, which in no way guarantees a satisfactory resolution. A far more amicable, and pocket-friendly, solution is to opt for a family settlement. Here is a ready reckoner.

property disputes

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In a nutshell, a family settlement is an agreement where family members mutually work out how a property should get distributed among themselves. All the parties should be related to each other and have a claim to a share of the disputed property. The latter need not be limited to real estate, but can also cover movable assets like jewellery or money in bank accounts. A family settlement is usually used to settle common property or joint property that the family owns as opposed to individual or self-acquired property.

Those who wish to avoid protracted, public and messy court battles will find that family settlements are a quicker, more harmonious way to resolve disputes. Of course, a family may not be able to reach a consensus, in which case the legal recourse is the only way out.

This is a conciliation process where a third person, usually a lawyer or a senior family member, helps the family arrive at a mutually acceptable solution to the property dispute. A family settlement need not strictly be a single document incorporating the distribution of assets. It may also be a series of documents spelling out the property rights of each family member.

Say, a family of two brothers and a sister are squabbling over a flat, an office and some ancestral jewellery. They could draw up a settlement agreement stating that the oldest brother gets the flat, the sister bags the jewellery and the office goes to the remaining sibling.

The most important thing to remember is that this instrument is neither treated as a gift nor as a transfer as per the Income Tax laws. So one would have to draw up separate transfer of property documents in addition to the family settlement agreement—to bring about an actual transfer. This is where instruments like gift and sales deeds come into play.
Says Sandeep Nerlekar, founder, Mumbai-based Terentia Consulting Group: “The tax factor must be considered when deciding on a transfer of property document. For instance, if you use a gift deed to transfer property to relatives, there is an income tax component.

Similarly, a sales deed may invite capital gains tax. However, so long as no transfer takes place, the parties to a family settlement won’t be subject to capital gains tax in respect of the profits derived from their share of the property.”

Merely reaching a consensus is not enough; there are a few legal formalities that must be completed to ensure that the agreement is valid. Firstly, the settlement document must be signed by all the family members involved. A missing signature can easily become ground for challenging the document in court at a later date. “In addition, as a safety measure, the document should be attested by two witnesses, though it is not mandatory,” says Ravi Goenka, advocate, Goenka Law Associates.

The next step is to register the agreement. According to Section 17 of the Indian Registration Act, a family settlement that purports to assign immovable property must be mandatorily registered or the deed would be invalid. A stamp duty is applicable on such deeds and the amount would depend on the value of the property involved.

While a duly executed family settlement cannot be revoked, except with a court decree, it can be challenged in a court of law. An agreement that is brought about by fraud or coercion is a case in point. Any misrepresentation of facts regarding the title of the disputed property, too, can lead to future altercations. Adds Goenka: “Another common ground on which it is challenged is improper execution.”

Paying heed to these common tripwires while drawing out an agreement will result in a foolproof, amicable and binding family settlement, which benefits everybody.

Amendments in Anti-Dowry Harassment Law

Plans are afoot to amend a criminal law that will allow compromise and settlement between
husband and wife at the onset of trial in dowry harassment cases, a move that comes after
frequent misuse of the provision to trouble men and their near relatives.

Under the proposal, Section 498A of the Indian Penal Code will be made a compoundable
offence with the permission of the courts as suggested by the Law Commission and Justice
Malimath Committee.

“A draft note for the Union Cabinet seeking to amend Section 498A of the IPC, making it
compoundable, has been sent to the Law Ministry for drawing up the draft bill,” a Home
Ministry official said.


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Now, the offence is non-compoundable and non-bailable which provides for immediate arrest
of the accused. Conciliatory effort by the warring sides is virtually impossible. A
husband or his family members are presumed to be guilty till they prove their innocence
in the court. The guilty is punishable with a jail term of up to three years. There have
been allegations that in many cases, husbands and their relatives are often charged with
false dowry harassment cases by their wives or her family members when some marital
problems arise. If the offence is made compoundable, misuse of the law may come down
hugely as there would be scope for initiating conciliation proceedings and out-of-court

Permission from a court will be a guarantee against attempts where a wife may be
compelled into a compromise by her husband or in-laws, the Home Ministry official said.
Now, if a dowry harassment case is proved wrong or proved that the law is misused, only
Rs 1,000 penalty is slapped. But the amendment provides for a Rs 15,000 fine. Another new
section is expected to be inserted to allow an accused to escape jail by paying a
penalty. Opposing the move to dilute the anti-dowry provision of the law, senior Supreme
Court lawyer Indira Jaising said it is a law which gives relief and protection to
harassed woman and it should be continued. “Violence against women is a violation of
human rights. There is no compromise of that. I would disagree with the government move,”
Jaising said. The Supreme Court had in a judgement in 2010 said as it stood now, the law
had become a “weapon in the hands of disgruntled women”. It had also observed that
serious re-look of the entire provision is warranted by the Legislature. “It is a matter
of common knowledge that exaggerated versions of the incident are reflected in a large
number of complaints. The tendency of over-implication is also reflected in a very large
number of cases,” the apex court had said. Section 498A was introduced in early eighties
to protect married women from being subjected to cruelty by the husband or his relatives
involving newly-married brides. A spate of dowry deaths in Delhi and elsewhere led to a
campaign by some leading women members of Parliament pushing the government to bring the

A punishment involving imprisonment of up to three years is provided in the present law.
The expression ‘cruelty’has been defined in wide terms so as to include inflicting
physical or mental harm to the body or health of the woman and indulging in acts of
harassment with a view to coerce her or her relations to meet any unlawful demand for any
property or valuable security. The Law Commission recommended that the offence under
Section 498A should be made a compoundable offence with the permission of Court. Justice
Malimath Committee on Criminal Justice Reform also recommended that it should be made
compoundable as well as bailable.

Last year, the Home Ministry had asked all state governments to be judicious in slapping
Section 498A of IPC in matrimonial disputes as the provision may be used as “weapons
rather than shields by disgruntled wives”. In an advisory to the states and union
territories, the Ministry had asked them to instruct their police officers not to
automatically arrest a person when a case under Section 498-A of the IPC is registered
but to satisfy themselves about the necessity for arrest under the parameters laid down
flowing from Section 41, CrPC (When police may arrest without warrant).


Divorce by Mutual Consent is the simplest and easiest way of dissolving marriage. Procedure for Mutual Consent Divorce is laid down as under for easy understanding:-

> Both Parties ie Husband and Wife have to reach to Mutual understanding and agreement regarding terms and conditions for Divorce.

> On the basis of settlement and agreement, petition for Mutual Consent is drafted. Under Hindu Marriages, such Petition is filed under section 13 B of the Hindu Marriage Act. Under Christian Marriages, section 10 A of the Indian Divorce Act. Under secular or civil marriages, section 28 of the Special Marriage Act.

> Divorce Petition will be drafted which will include terms of settlement agreed between parties.

> Such Mutual Consent Divorce Petition shall be filed in the Court as court procedure.

> Matter will come up for hearing in the Court and generally parties have to be present before the Court and their statement is recorded.

> After recording of statements, First Motion will be passed.

> Court gives six months time to parties to reconsider their decision. This is called cooling period generally.

> Aforesaid steps shall be repeated. Statement of parties will be recorded again.

> After such recording of statement, Court will grant pass order and judgement, decree for divorce is granted.

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Some states allow statement of one party to be recorded through power of attorney.

Some Courts along with power of attorney also conduct video conferencing for Mutual Consent Divorce. This process is quite useful and advisable in case party or parties living outside India. Thus, for Divorce by Mutual Consent for NRI is possible without physical presence. It saves time, energy and money.

Six months Waiver in Mutual Consent Divorce:-

Law specifically provided six months gap or waiting period between First Motion and Second Motion. Prior to 2009, compliance of six months waiting was not mandatory. But, in 2009, Supreme Court made it mandatory and took away the power of the Family Court or the District Court to waive of period of six months. But, Supreme Court still has power to waive of the period of six months. Thus, Supreme Court is the only Court which has the power to dissolve the marriage in less than six months.

Maintainance is an integral part of all matrimonial proceedings. Application for maintenance can be moved by either of the spouse who does not have the sufficient means to maintain him/her self. Maintenance can also be classified in to two parts:

Interim Maintenance: Such maintenance is provided during the pendency of the case in the court. The underlying idea behind giving such maintenance is that one party should not loose and stand on a weaker footing at the time of contesting case. Quantum of such maintenance is dependant on variety of factor but most important aspect is the status of the parties prior to the filing of the case and the income/salary of the spouse against whom such maintenance is claimed. Court always tries to bring both the party at equal platform and footing.

Permanent Maintenance: It is awarded at the time when whole case is finally decided. It could be periodical or monthly depends upon the facts and circumstances of the case.