A family settlement documented in an unregistered memorandum can be valid and binding if it reflects prior oral agreements among parties, and does not require registration under the Act.

CORAM:

HON'BLE MS. JUSTICE REKHA PALLI HON'BLE MR. JUSTICE SAURABH BANERJEE REKHA PALLI, J(ORAL)

1. The present appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter “the Act”) seeks to assail the order dated 18.12.2018 passed by the learned Single Judge in O.M.P. No.306/2009. Vide the impugned order, the learned Single Judge has, while accepting the respondent no.1's (legal representatives of Shri.Inderjeet Bajaj) challenge to the arbitral award dated 27.03.2009 allowed their application under Section 34 of the Act. While allowing the respondent no.1's application, the learned Single Judge held that the findings of the learned Arbitrator to the effect that the Memorandum of Family Settlement dated 30.07.1997 (hereinafter “MFS”), being an unregistered document, was invalid, were erroneous and unsustainable. Consequently, the learned Single Judge held that the MFS was valid and therefore, all the parties would be bound by the terms thereof MFS dated 30.07.1997.

2. The brief factual matrix as necessary for adjudication of the present appeal may be noted at the outset.

3. The dispute between the parties pertains to businesses and properties, which were in the name of late Shri. Amarnath Bajaj, who expired on 30.01.1987 leaving behind four sons namely Shri.Inderjeet Bajaj, Shri Rajender Kumar Bajaj, Shri.Subhash Chander Bajaj and Shri Baldev Raj Bajaj. While the appellants are the legal heirs of Shri. Subhash Chandra Bajaj, the respondent nos.1 to 4 represent the other three sons of Shri. Amarnath Bajaj and their partnership concern, with respondent nos. 1 and 4 being the legal heirs of Shri. Inderjeet Bajaj and Shri. Baldev Raj Bajaj respectively.

4. Upon the death of Shri Amarnath Bajaj on 30.01.1987, disputes arose between the parties in respect of the Will dated 02.05.1983 left behind by him. After deliberations, a deed of retirement dated 01.04.1997 was executed by the appellants as also respondent no.4 qua the partnership concern i.e., respondent no.3/ M/s Jai Hind Timber Store. Soon thereafter, the parties also entered into a Memorandum of Settlement on 30.07.1997. However, since despite execution of these documents, the disputes between them were still not settled, the parties invoked arbitration and consequently, an award was passed by the learned sole Arbitrator on 27.03.2009. As per the learned Arbitrator, the aforesaid MFS entered into between the parties not only recorded the allocation and division of properties and businesses as per the Will of late Shri Amarnath Bajaj but also partitioned some joint properties which were not the subject of either the Will or the Retirement Deed. Resultantly, the learned Arbitrator opined that since no evidence had been led before him regarding any prior oral partition of the joint properties, which were subject matter of the MFS, the said Memorandum was required to be compulsorily registered. He, therefore, held that the MFS being an unregistered document, was invalid and consequently, directed that the property bearing no.1/57 B, Kirti Nagar, New Delhi, which the respondent no.1 was claiming as his exclusive property under the MFS, was also required to be divided equally among all the legal heirs of Shri. Amarnath Bajaj.

5. Being aggrieved, the appellants as also respondent no.1 preferred an application under Section 34 of the Act. While the appellants subsequently withdrew their challenge, the respondent no.1 pursued their challenge by way of OMP 306/2