Memorandum Of Family Settlement Did Not Require Registration: Delhi High Court Dismisses Appeal U/S 34 Of Arbitration Act

Brief Facts:

The present appeal has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 seeks to assail the order passed by the Single Judge, wherein the Single Judge held that the findings of the learned Arbitrator to the effect that the Memorandum of Family Settlement dated (“MFS”), being an unregistered document, was invalid, were erroneous and unsustainable. Consequently, the Single Judge held that the MFS was valid and therefore, all the parties would be bound by the terms thereof MFS. The dispute vis-à-vis the business and properties of the late Shri. Amarnath Bajaj. After the death of Shri. Amarnath Bajaj, the parties executed a deed of retirement and a Memorandum of Settlement.

Although, the dispute between them was not resolved so, the parties invoked arbitration. Consequently, an award was passed by the Arbitrator, wherein the Arbitrator held that the MFS being an unregistered document, was invalid and directed that the property which the respondent no.1 was claiming to be divided equally among all the legal heirs of Shri. Amarnath Bajaj. Aggrieved by the award, the appellant also respondent no.1 filed an application under Section 34 of the act, but it was subsequently withdrawn by the appellants. However, respondent no.1 pursued their challenge which was allowed by the Single Judge under the impugned order. The Single Judge in the impugned order held that the MFS is valid, which was then assailed by the appellants in the present appeal under Section 34 of the act.

Observation of the court:

The court noted that the Single Judge, after taking into account the findings of fact arrived at by the Arbitrator, opined that the record itself showed that the MFS was the result of a continuing process of discussion and deliberation between the parties after the demise of their father. The Single Judge further found that from the findings arrived at by the Arbitrator, it was evident that the MFS was merely a record of various settlement/ partition effected between the parties over a long duration of time based on the wishes of their father including the Will and the deed of retirement executed by the appellants.

Therefore, the court held that the Single Judge has, without interfering with the factual findings arrived at by the learned Arbitrator, correctly applied the settled legal position to the MFS, by holding that the same being a record of prior oral partition of the properties between all the sons of late Mr. Amarnath Bajaj, was only a Memorandum regarding the existing settlement between the parties. Moreover, the court held that the MFS did not require registration.

Thereafter, the court relied on the judgment in Shakeel Ahmed v. Syed Akhlaq Hussain (2023), Kalathooru Raghavareddi v. Kalathooru Venkataredii & Ors (1967), and Veeneta v. Jyoti Gupta (2024), held that a document which is compulsorily registrable cannot be given effect to unless registered. But the factual findings arrived at, both by the Arbitrator as also by the Single Judge clearly show that the MFS was recording only the oral settlement already entered into between the parties. In this factual matrix, the decisions relied upon by the appellants are not applicable to the facts of the present case.

Then, the court noted that the appellants have themselves, by relying on the MFS, which they claim is invalid, sought mutation of properties in their favour by the DDA. It is also an admitted position that the Sale Deed entered into by the appellants with third parties on 05.01.2024 refers to the very same MFS. Therefore, the appellants having themselves relied on the MFS, cannot be now permitted to take a U-turn and claim that the same is invalid or could not be acted upon by the parties.

Finally, the court dismissed the appeal.

Case Title: SUBHASH CHANDER BAJAJ (SINCE DECEASED) THR LRS & ORS v. INDERJIT BAJAJ (SINCE DECEASED) THR LRS & ORS

Case Number: FAO(OS) 23/2019 & CM APPL. 49446/2024 –Addl. docs. (R-1(b)

Counsel for the Appellants: Mr.Sachin Chopra, Ms.Ashna Gupta & Ms.Yashika Kapoor, Advs.

Counsel for the Respondents: Mr.Manish Makhija & Ms.Simran Makhija, Advs. for R-1(b).

Date of Judgment: 16.12.2024

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