Khushi Hetal Desai
For the division of property, partition deed is the most sought out – it will divide up the said property, thereby making each of the co-owners as the rightful owner of the property share. Upon the execution of the partition deed, each co-owner is entitled to transfer, gift or sell their share of property as per their will. But, the execution of a partition deed is a costly remedy as it requires both registration and payment of stamp duty, hence other options are now being sought out by people such as family agreement which is an amicable resolution for the above between the members of the same family. In this article we will look at Will and Family Agreement as the two instruments of division of property and their applicability in court.
Will Deed
A “Will” has been defined in Section 2 of the Succession Act as the legal declaration of the intention of the testator with respect to his property which he desires to be carried into effect after his death. The two characteristics of a will are that it must be intended to come into effect after the death of the testator, and, secondly it must be revocable.
Family Agreement
A family agreement or arrangement has not been defined statutorily under Indian laws, however, Halsbury's Laws of England defines it as “An agreement between members of the same family, intended to be generally and reasonably for the benefit of the family either by compromising doubtful or disputed rights or by preserving the family property or the peace and security of the family by avoiding litigation or by saving its honour.” The word “family” cannot be construed in a narrow sense so as to confine the parties to the family arrangement only to persons who have a legal title to the property.[1]
Will Deed vs. Family Agreement
While a will decides how a person wants his assets to be distributed after his death, the purpose of an agreement is to avoid disputes over inheritance through an amicable consensus among the family members. So an agreement often helps deal with contentious issues arising from a will. While there are more strict legal requirements for drawing up a will as compared to an agreement, the latter enjoys high sanctity and credence in courts.
On its own, neither a family agreement nor a will is superior or of greater legal character than the other. However, legal experts point out that it is the cast and terms of the family agreement that will determine if there are any bequeath able assets or titles that can become the subject of a will.
Ideal way to go about division of property within a family
A family should ideally consider a family agreement for the assets. The structure of the family agreement should envisage either a transfer of the property to the children during your parents’ lifetime (which would be optimal), or upon their demise (vide their respective Wills). One must ensure alignment with the Family Settlement Agreement, by simultaneously executing the respective Wills to record the intention as mentioned in the Family Agreement. Registering the executed Wills with the registrar may be useful. Given that the process of amending a registered Will can often be procedurally tedious, it may dissuade the testators from altering their Wills on an impulse later. In the event that their Wills record a contrary bequest in respect of the property, the executed Family Agreement (and the consideration transferred there under) will provide one strong grounds to challenge the validity of the bequest.
Dilemma of wills being made without the knowledge of the members of a family and a family agreement being executed thereafter
A recent phenomenon that has been observed during Covid 19 is that often wills are made by the testators unknown to the potential heirs and the potential heirs of the family hence, unknowing of the will together with amicable consent of all tend to enter into a family agreement, so what will happen in such cases? Will the will take preponderance or will it be the family agreement that will be applicable to the property in talks.
Indian courts seem to give greater legal sanctity to a family agreement. As in England so in India, courts have made every attempt to sustain a family arrangement rather than to avoid it, having regard to the broadest considerations of family peace and security.[2] The courts have, therefore, leaned in favor of upholding a family arrangement instead of disturbing the same on technical or trivial grounds. [3] Thus it would appear from a review of the decisions analyzed above that the courts have taken a very liberal and broad view of the validity of the family settlement and have always tried to uphold it and maintain it. The central idea in the approach made by the courts is that if by consent of parties a matter has been settled, it should not be allowed to be reopened by the parties to the agreement on frivolous or untenable grounds.[4] In sharp contrast, there are strict requirements under law for the making of a will and for its subsequent execution.
According to Kavil Ramachandran, Thomas Schmidheiny Chair Professor of Family Business and Wealth Management, Indian School of Business, to ensure the preponderance of a family agreement, the makers should specifically mention that it is superior to a will, says Ramachandran. His contention is that in the normal course, a legally signed family agreement should supersede a will, irrespective of whether the will was written prior to or after the family agreement.The same was later reiterated in Shroff vs. Shroff where it was held that the Family agreement supersedes will [5].
In Ram Nirunjun Singh v. Prayag Singh the court depending on Kerr on Fraud, p. 364 said that ‘The principles which apply to the case of ordinary compromise between strangers, do not equally apply to the case of compromises in the nature of family arrangements. Family arrangements are governed by a special equity peculiar to themselves, and will be enforced if honestly made, although they have not been meant as a compromise, but have proceeded from an error of all parties, originating in mistake or ignorance of fact as to what their rights actually are, or of the points on which their rights actually depend’.” [6]
Thus, implying that being honestly made is the only prerequisite to the family agreement even if it has originated from the error of all parties or ignorance of a fact. In the scenario present before us, the ignorance of a fact is being unaware of the will made by the parents beforehand. Hence, it can be established from the precedent above that the family agreement will be effectual in such scenarios.
It was also held in Sahu Madho Das v. Pandit Mukhand Ram that the family arrangement can as a matter of law be inferred from a long course of dealings between the parties. [7]Therefore, if the family agreement can be inferred from the actions of all parties at play it will further add to the credibility of the family agreement here.
[1] Kale v. Dy. Director of Consolidation, (1976) 3 SCC 119
[2] Maturi Pullaiah v. Maturi Narasimham, AIR 1966 SC 1836
[3] Kale v. Dy. Director of Consolidation, (1976) 3 SCC 119
[4] Kale v. Dy. Director of Consolidation, (1976) 3 SCC 119
[5] Dey, S., 2021. Family agreement vs will: Which one holds?. [online] Business-standard.com. Available at: <https://www.business-standard.com/article/companies/family-agreement-vs-will-which-one-holds-114121001101_1.html> [Accessed 20 December 2021].
[6] Ram Nirunjun Singh v. Prayag Singh [(1881) ILR 8 Cal 138, 142]
[7] Sahu Madho Das v. Pandit Mukhand Ram [AIR 1955 SC 481 : (1955) 2 SCR 22 : 1955 SCJ 417]
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