The central legal point established in the judgment is the permissibility and validity of family settlements, emphasizing that they do not result in the creation of an interest and are not against public policy.

ANIL KSHETARPAL, J.

1. The correctness of the judgment and decree passed by the First Appellate Court is challenged by defendants no. 1 and 2 in this Regular Second Appeal. In fact, the plaintiffs’ suit for grant of decree of declaration to the effect that they are owners in possession of the suit property was dismissed by the trial court, which, in appeal, has been reversed by the First Appellate Court.

2. After having heard the learned counsel representing the parties at length, the following question arises for consideration:-

i) Whether a consent decree, passed by the civil court between nephews and their father’s sister (aunt) acknowledging the family settlement is required to be set aside on the ground that neither the family settlement is legally permissible nor, due to the absence of registration, such decree results in transfer of ownership of an immovable property valued at more than Rs.100/-?”

Facts:-

3. The plaintiffs are children of Smt.Mam Kaur (sister of late Sh.Bujan). Sh. Bujan was owner in possession of 194 kanals and 1 marla land. He died issueless in 1950s, leaving behind his widow; Smt.Shiv Kauri. Defendant no.3 is son of another sister of Sh.Bujan. Defendant no.1 and 2 (appellants) are the two sons of Smt. Shiv Kauri’s brother. In substance, on the one hand, the plaintiffs are children of Sh.Bujan’s sister’s sons whereas the defendants are Smt.Shiv Kauri’s brother’s children. On the death of Sh.Bujan, Smt. Shiv Kauri became the absolute owner of 194 kanals and 1 marla land. During her lifetime, on 06.04.1981, she suffered a consent decree of the entire land as well as two residential houses, in favour of her nephews (defendants no.1 and 2). The plaintiffs filed a suit for declaration challenging the correctness of the aforesaid judgment and decree dated 06.04.1981. The plaintiffs also sought a decree for permanent injunction restraining the defendants no. 1 and 2 from interfering into their peaceful possession. In the evidence, the copy of the plaint in the previous suit was produced and proved as Ex.PA whereas the copy of the written statement filed by Smt. Shiv Kauri was produced and proved as Ex.PB. The judgment and decree passed by the Court in the year 1981 were produced and proved as Ex.PC and PD.

4. The trial court, on the appreciation of evidence, held that the judgment and decree dated 06.04.1981, is valid and the plaintiffs are not entitled to the decree of declaration. However, the court held that it is the plaintiffs, who are in possession of the property and they can be dispossessed by the defendant no.1 and 2 in accordance with law. However, the First Appellate Court has reversed the judgment and decree passed by the trial court, primarily on the following grounds:-

i) The suit property was never jointly owned by Smt.Shiv Kauri alongwith Sh. Ram Kumar and Sh. Ram Mehar and therefore, they have no legal right in the property. Thus, no family settlement is possible between Sh. Ram Kumar and Sh. Ram Mehar on one side and Smt. Shiv Kauri on the other side.

ii)Sh. Ram Kumar and Sh. Ram Mehar have no pre-existing right in the property.

iii)Compromise decree between Sh. Ram Kumar and Sh. Ram Mehar on one side and Smt. Shiv Kauri on the other side is against the public policy.

iv)The decree is alleged to have been suffered by Smt. Shiv Kauri in lieu of the services rendered by the plaintiffs; Sh. Ram Kumar and Sh. Ram Mehar, while taking care of her and therefore, it amounts to gift, which cannot be bestowed without a registered document.

v)The court further held that the judgment and decree dated 06.04.1981 are collusive.

5. The present appeal was admitted for final hearing and now it has come up for final disposal.

6. Heard the learned counsel representing the parties at length and with their able assistance perused the paperbook alongwith the requisitioned record. The learned counsel representing the appellants has also filed a written note of his submissions, which was permitted to be taken on record, while