The Kerala High Court has clarified that a settlement deed must fulfill the same legal conditions as a gift deed under the Transfer of Property Act, 1882. The Court emphasized that even though there are minor differences between gift and settlement deeds, the essential legal requirements, particularly those under Section 122 and Section 123, are equally applicable.
“Even though Ext.A1 is a settlement deed, the essentials to complete the gift as mandated under Section 122 of the Transfer of Property Act, 1882 would apply in cases of settlement deeds also…”
— Kerala High Court
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This ruling was given by Justice A. Badharudheen while deciding a civil appeal against a trial court order. The case, RFA No. 491 of 2005-B, involved a dispute over property ownership where the plaintiff relied on a settlement deed to claim title and possession.
Background of the Case
The plaintiff filed a suit seeking a declaration of ownership over the property mentioned in the plaint and also demanded recovery of possession from the defendants who had allegedly trespassed. The claim was based on a settlement deed executed by one Ramachandran, who was the husband of Defendant 3 and father of Defendant 4.
Defendants 1 and 2 argued that they were bona fide purchasers who acquired the title from Defendants 3 and 4 after Ramachandran’s death. However, the trial court, relying on the testimony of the plaintiff and a document writer (PW3), ruled in favor of the plaintiff and issued an injunction against the defendants.
The High Court examined whether the trial court was correct in accepting the settlement deed as valid and whether the defendants could be considered bona fide purchasers.
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Referring to the earlier decision in Gopinath K.I.V. v. K.I.V. Vimala, the Court held that under Section 123 of the TP Act and Section 68 of the Evidence Act, a settlement deed requires attestation and acceptance, just like a gift deed.
“Acceptance must be made during the lifetime of the donor while he is still capable of giving; if the donee dies before acceptance, the gift is void.”
— Section 123, Transfer of Property Act
The Court also cited the Supreme Court’s judgment in Naresh Kumari v. Chameli, stating that physical possession is not mandatory if other essential conditions, such as acceptance, are fulfilled.
Defendants Not Bona Fide Purchasers
On the issue of whether Defendants 1 and 2 were genuine buyers, the Court held that they failed to act with due diligence, as they did not even check the encumbrance certificate to identify liabilities or claims on the property.
“The defendants were not vigilant enough to obtain an encumbrance certificate before purchasing the property.”
— Kerala High Court
The Kerala High Court upheld the trial court’s ruling in favor of the plaintiff, confirming that all legal requirements applicable to gift deeds also extend to settlement deeds. The appeal was accordingly dismissed.
Case Title: Abraham, S/o Chacko and others v. Ajitha Jayakumar and others
Appellants' Counsel: A.A. Mohammed Nazir, Denizen Komath, S. Santhosh Kumar
Respondents' Counsel: M.V.S. Nampoothiry
