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April 5, 2022

Oral Family Settlements Placed in Writing Only for Information are exempt from stamp duty.

by CA Shivam Jaiswal in Legal Court Judgement

Oral Family Settlements Placed in Writing Only for Information are exempt from stamp duty.

Fact and Issue of the case

The present application has been filed on behalf of the Applicant/Decree-Holder-Ms. Himani Walia seeking waiver of payment of stamp duty in respect of the assets inherited by the various parties from the estate of Late Sh. S.S. Walia and his sister Dr. Urmila Walia. Further, the Applicant seeks cancellation of the notice dated 14th February, 2022 received from the Registry of the High Court of Delhi, as also notice dated 3rd March 2022 received from the Office of the Assistant Collector (Kalkaji), New Delhi.

The suit seeking partition and other reliefs, being CS (OS) No. 442/2018, was filed before this Court by the legal heirs of Late Sh. S.S. Walia who had passed away on 10th December, 2017. The deceased had a large number of moveable and immovable assets which included the business of a petrol station, export business, various immovable properties in prime localities in Delhi and Noida, fixed deposit receipts and bank accounts, paintings, antiques, artworks, shares in various companies and vehicles, etc. During the pendency of the suit itself, the three children and the wife of the deceased with the assistance of their Counsels had arrived at a settlement. Thereafter, the terms of settlement were incorporated into the ‘Memorandum of Family Settlement and Arrangement’ dated 16th October, 2018.

Thus, the settlement which was agreed upon by the parties had merely been put into writing in the said ‘Memorandum of Family Settlement and Arrangement’ dated 16th October, 2018. The said family settlement was approved and a decree in terms thereof was passed by this Court, vide order dated 16th October, 2018.

Observation of Court

It appears that in order to prepare the decree sheet, the Registry of this Court has directed furnishing of valuation reports of the assets for the purpose of calculating the stamp duty. Thus, the present application has been filed by the Applicant seeking waiver of payment of stamp duty and cancellation of the notices.

It is submitted by ld. Counsel for the parties that similar notices have been received by all the other legal heirs as well. In addition, various Collector’s offices have already issued notices in respect of the stamp duty payable.

It must be noted here that the legal heirs of the deceased persons became part owners of the assets belonging to the two deceased individuals i.e., Mr. S.S. Walia and Dr. Urmila Walia, immediately upon their demise. The said assets were not transferred to the legal heirs, but have been inherited by them upon the demise of Mr. S.S. Walia and Dr. Urmila Walia. The ‘Memorandum of Family Settlement and Arrangement’ dated 16th October, 2018, is merely a recordal of the oral agreement as to the mode and manner of partition. Therefore, it is in the nature of a family settlement which was arrived at between the parties. The partition had been agreed upon between the parties by way of oral agreement with the intervention of their counsels. The memorandum of settlement does not itself partition the properties, but only records the same as an aid of memory.

The issue of registration of family settlements is no longer res integra. If an understanding has been arrived at between the parties previously, and it is only written down in a document after the settlement has been arrived at, the same would not require registration. This is the settled position of law as is clear from Kale & Ors. v. Deputy Director of Consolidation & Ors. [3 (1976) 3 SCC 119].

The Division Bench of this Court has held in Nitin Jain v. Anuj Jain & Anr. [ILR (2007) II DELHI 271] that a memorandum recording an oral family settlement which has already taken place is not an instrument dividing or agreeing to divide property and is therefore, not required to be stamped.

Thus, it is clear that family settlements are not required to be compulsorily registered, and stamp duty is not required to be compulsorily paid in respect of the same, when the settlement has been arrived at initially as an oral partition and is thereafter put into writing for the purpose of information. Considering the said position, it is clarified that there is no requirement of valuation of the suit properties in the present case. The payment of stamp duty by the legal heirs of Late Sh. S.S. Walia and Dr. Urmila Walia shall stand waived. Notices issued by the various authorities shall also stand cancelled and withdrawn, without any further orders.

Conclusion

Thus Court ordered that notices issued by the various authorities shall also stand cancelled and withdrawn, without any further orders

Himani-Walia-Vs-Hemant-Walia-Ors-Delhi-High-Court-converted

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