Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Del) 742

IN THE HIGH COURT OF DELHI AT NEW DELHI
VIVEK CHAUDHARY, RENU BHATNAGAR, JJ.

Ashok Kamal Deceased Thr Lrs & Ors. – Appellants
Versus
Prabhat Kamal Gupta & Ors. – Respondents
FAO(OS) 8 of 2025, CM APPL. 4959 of 2025 & CM APPL. 29876 of 2026, FAO(OS) 10 of 2025, CM APPL. 4349 of 2026, CM APPL. 5891 of 2026
Decided On : 15-05-2026

Advocates Appeared:
For the Appellants : Mr. Aayush Agarwala & Ms. Utkarshani Srivastava, Advs.
For the Respondents: Mr. Akshay Makhija, Sr. Adv. with Ms. Seerat Deep Singh, Advs.

A memorandum of family settlement that merely records a previously concluded oral partition, without creating or extinguishing new rights in property, is not liable to stamp duty or compulsory registration, as it acknowledges the pre-existing antecedent titles of the parties involved.

Headnote:(A) Registration Act, 1908 - Section 17 - Indian Stamp Act, 1899 - Family arrangement - Memorandum recording oral settlement - Liability to stamp duty and registration - When an oral family partition of immovable property has already taken place based on antecedent title, subsequent reduction of the terms into writing in a memorandum does not create or extinguish any rights in the property - Such a memorandum is not compulsorily registrable and is not subject to stamp duty as it merely evidences a pre-existing arrangement - Legal right to manage affairs to minimize tax liability is permissible provided the transaction is not a sham or colourable device - Courts should affirm such arrangements which resolve family disputes and avoid litigation. (Paras 9, 10, 11, 12, 13).

Facts of the case:
The dispute involved the partition of ancestral property among family members. After initial litigation, parties reached an oral settlement, agreeing to divide the property by metes and bounds. A memorandum was subsequently drafted to record this oral understanding. Authorities demanded significant stamp duty upon the filing of this document in court, contending it constituted a transfer of property requiring heavy duty.

Findings of Court:
The court noted that the document in question did not bring about the partition but merely recorded an oral settlement already acted upon through the exchange of possession. The principles of family arrangements recognize that such documents define pre-existing titles rather than creating new ones.

Issues: The primary issues were whether a memorandum of family settlement recording an earlier oral partition is exigible to stamp duty and registration, and whether such an arrangement, if intended to minimize tax liability, is considered bona fide.

Ratio Decidendi: A memorandum acknowledging an earlier, completed oral family arrangement does not require registration or stamp duty as it does not constitute a conveyance. Parties are entitled to arrange their affairs to minimize tax liabilities, provided such arrangements are rooted in genuine family settlements and are not colourable devices.

Result: Appeals allowed.

Table of Content
1. historical context and procedural history of property partition disputes. (Para 1 , 2 , 3 , 4 , 5 , 6)
2. family settlements and stamp duty liability for recorded oral partitions. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13)
3. final adjudication, setting aside of impugned order, and grant of declaratory relief. (Para 14 , 15 , 16 , 17)

JUDGMENT :

1. The present two appeals assail Judgment dated 18.11.2024 passed by the learned Single Judge in I.A. No. 6709/2024 in CS(OS) 109/2016 and the communication dated 04.10.2023 issued by the Registry of this Court directing the parties to pay stamp duty for drawing up the decree in terms of a Memorandum of family settlement dated 25.11.2018 (“Memorandum of family settlement”). Since both appeals arise from the same impugned judgment and involve common issues, they are being decided by this common judgment.

2. The dispute pertains to property bearing No. 10, Friends Colony (West), Mathura Road, New Delhi (hereinafter referred to as “the Property”), which was purchased in the year 1957 by late Sh. Om Prakash Gupta and was treated as part of the Hindu Undivided Family comprising of himself and his two sons, Mr. Prabhat Kamal Gupta and Mr. Ashok Kamal Gupta. Upon his demise on 14.05.1994, under a Will dated 02.09.1993, his one-third share in the property, at its rear end, was bequeathed to his daughter namely Smt. Amita Rani Gupta. The specific portion of her share was acknowledged by the family and recorded in a Deed of Declaration dated 22.07.2004. Rest of the property remained jointly held by the two brothers, namely Mr. Prabhat Kamal Gupta and Mr. Ashok Kamal Gupta. The brothers attempted for division of the property but could not succeed and hence, CS(OS) 109/2016 for partition came to be instituted.

3. The learned Single Judge on 20.10.2016 passed a preliminary decree for partition and further on 08.05.2017 passed a final decree. He further found that partition by metes and bounds was not possible and accordingly directed for sale of the property and distribution of proceeds. At this stage the parties arrived at an oral settlement inter se on 22.11.2018, agreeing to effect partition by metes and bounds by accommodating each other. The said oral settlement was thereafter recorded in a Memorandum of family settlement.

4. A joint application by the parties was filed seeking modification of the final decree dated 08.05.2017 in terms of the said Memorandum of family settlement and vide Order and Decree dated 18.12.2018, the final decree was modified and a final decree for partition of the property by metes and bound was directed to be drawn in terms of the family settlement.

5. The Registry of this Court, at the stage of drawing of final decree vide communication dated 04.10.2023 raised a demand of Rs.1,81,49,571.86/- towards stamp duty from the parties. The said demand was disputed by the parties and I.A. No. 6709/2024 was filed, which came to be dismissed by the learned Single Judge vide the impugned Order dated 18.11.2024 on the ground that the Memorandum of family settlement is not bonafide as the same is executed to save stamp duty. Aggrieved thereby, the present appeals have been preferred.

6. Before this Court, CM APPL. 29876/2026, has been filed that since the parties have already bifurcated their shares and taken physical possession on their respective share as per the family settlement, therefore, instead of decree of partition, a decree of declaration may be passed. There is no objection to this application by any party.

7. We have heard learned counsel for the parties and have perused record. The issues that arise for consideration are whether, in the given facts and circumstances, the Memorandum of family settlement recording an earlier oral settlement dated 22.11.2018 is exigible to stamp duty or not; and whether the same is bonafide.

8. The facts of the case reveal that the learned Single Judge found that the shares of the parties in the property could not be divided by met

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2026 Supreme(Del) 742

A memorandum of family settlement that merely records a previously concluded oral partition, without creating or extinguishing new rights in property, is not liable to stamp duty or compulsory registration, as it acknowledges the pre-existing antecedent titles of the parties involved.

Cases Referred (1)