Father Gifting Daughter Property As Part Of Matrimonial Settlement Not Joint Family Property Without Proof: Madras High Court
The Madras High Court has held that a father gifting property to his daughter when she was a minor by way of a gift deed as part of matrimonial settlement proceedings, cannot be treated as part of joint family property unless it is proved to have been purchased from joint family fund.
A Division Bench of Justice N. Sathish Kumar and Justice M. Jothiraman was hearing a batch of appeals arising from a dispute over a property purchased in 1989 in the name of S Duraimanickam, father of Ilavarasi. S Duraimanickam's brother, SDS Selvam, later claimed that the property was actually purchased from the joint family nucleus and therefore could not have been settled by Duraimanickam in favour of his daughter.
“Merely because some dry lands were allotted in the partition deed, without establishing the nature of surplus income yielded from the property, one cannot assert that the other property (B-Schedule property) has been purchased only out of the surplus income derived from the A-Schedule property and therefore, it belongs to the joint family,” the Court observed. The Bench also noted that father of Duraimanickam and Selvam, late S.D. Somasundaram, who had served as a Cabinet Minister of Tamil Nadu, had not even filed Income Tax Returns declaring agricultural income.
The Court further noted that S Duraimanickam had been employed with Port Trust and TVS Company and observed that the possibility him purchasing the property from his personal income was more probable.
“When the very factum of surplus income and sufficient nucleus has not been established by the parties to the lis, the purchase in the name of an individual cannot be, at any stretch of imagination, held as one purchased out of the joint family nucleus,” the Court held.
Additionally, the Division Bench said that Duraimanickam had, in his matrimonial proceedings, asserted that he has executed the gift settlement deed in favour of his daughter.
“Once the settlement has been consciously executed in favour of his minor daughter through the guardian and the deed of settlement had also been handed over to the mother, which is also incorporated in the judgment in the divorce proceedings, now, it is highly improbable to contend that the document has not been acted upon,” the Court observed.
Rejecting the father's contention that the settlement has not been acted upon, the Court said, “Merely because the document had not been handed over immediately, it cannot be said that the settlement deed has not been acted upon.”
“It is relevant to note that settlement is a transfer in praesenti. Handing over possession is not sine qua non for valid gift under Section 123 of the Transfer of Property Act, 1977. What is required is only acceptance. The gift has been accepted on behalf of the minor by her guardian which is also evidenced from the judgment in divorce proceedings,” the Court said.
Settlement deed cannot be indirectly challenged decades later
The Bench held that the father, who had executed the settlement deed in 2002, could not challenge it decades later by alleging coercion or undue influence, particularly when he had not independently challenged the deed within the prescribed period. For context, under Article 59 of the Limitation Act, 1963, a suit to cancel or set aside an instrument has to be instituted within three years.
“It is relevant to note that, even assuming that the document is a result of any of the circumstances like coercion, undue influence or misrepresentation, etc., as stated by the executant, such document ought to have been challenged by the executant within a period of three years. Merely because a document is a result of any such circumstances, such document is not void ab initio, but is only voidable in nature. It has to be challenged by the executant within three years, which has not been done so,” the Court said.
The Court noted that the gift had been accepted on behalf of the minor by her guardian as evidenced from the judgment in divorce proceedings.
“Therefore, now, after many years, the appellant, being the executant of the document, cannot challenge the same indirectly in a suit filed by his brother for partition,” the Court held.
It further said that the father had not filed a counter claim in his daughter's suit challenging the settlement deed, and therefore the plea of undue influence or coercion or misrepresentation, now, has no significance in deciding the matter.
The Bench accordingly dismissed three appeals, and confirmed the trial court's decision declaring Ilavarasi, the absolute owner of the property and directing her father to hand over possession.
“Scheme of brothers” to defeat daughter's right
The Court found the admission of Selvam, who was a plaintiff in the partition suit, that he learnt about the settlement deed in 2004 or 2005, and filed the partition suit even later in 2009, improbable.
The Court said, “This also clearly indicates that the partition suit filed by the brother of the executant is nothing but a scheme of both the brothers together to somehow or other defeat the right of the daughter in whose favour the property was settled.”
The Court noted that despite the settlement in favour of the daughter, Duraimanickam had remarried and continued to hold the property.
“Therefore, we are of the view that, only for that purpose to continue to hold the property, the partition suit has been filed in collusion,” the Bench held.
The Bench called the contentions of Selvam in partition suit an “afterthought”, holding that they were levelled to non-suit the settlement deed validly executed by his brother S Duraimanickam.
Background
Ilavarasi had instituted a suit for declaration and recovery of possession over the property settled in her favour by her father, Duraimanickam, through a registered settlement deed dated March 21, 2002, when she was around 10 years old, during Duraimanickam's matrimonial proceedings.
After attaining majority, Ilavarasi instituted the suit seeking declaration of her title and possession.
Her paternal uncle, SDS Selvam, instituted a partition suit claiming that the said property was part of the joint family estate. According to him, the property had been purchased in Duraimanickam's name from joint family nucleus.
The trial court dismissed the partition suit and decreed the suit for declaration and recovery of possession filed by Ilavarasi.
Selvam and Duraimanickam challenged the trial court's order before the High Court.
The High Court found that the evidence did not establish that the joint family properties generated sufficient surplus income to purchase the said property.
The Court dismissed the appeals and confirmed the impugned judgment and decree of the trial Court.
Case: S.D.S.Selvam v D. Ilavarasi & others, A.S.Nos.332 of 2022
S.D.S.Selvam v Sakunthala (deceased), S.Duraimanickam & others, A.S.Nos.333 of 2022
S.Duraimanickam v D.Ilavarasi & others, A.S.Nos.433 of 2022