By- Ritesh Raj
The failure to include family arrangements as a sub-section under Section 10 has resulted in three major issues. The most notable of these is the inconsistency with which the courts apply the section. While some did not use the section, others did, with varying justifications.
INCONSISTENCIES
Since independence, there have been four cases where the section was held to be not applicable at all.[1] Though, the number might seem small, what is interesting to note is that three of these cases applied the same reasoning of family arrangements not being a transfer.[2] In fact, Khusmanben Bankulal and Ors. v Babubhai Rangildas and Ors cited a Supreme Court decision to hold that partition is not a transfer under Section 10. In Gummanna Shetty and Ors v Nagaveniamma, the Supreme Court provided a different reason for not applying the section to family arrangements. It said the question is whether the deed affected an outright partition or merely a division for convenience of enjoyment. This means that even an absolute restraint on alienation is valid if the family arrangement is a division for convenience. Contrary to the general principles of law, this prohibits the circulation of property outside the family. Thus, it was inconsistent with the settled application of Section 10 principles.
None of these decisions are overruled and can be relied upon in holding absolute restraints valid. However, not applying the section (or its principles) is not the only problem. While even applying it, the courts have given incorrect reasons or have over-applied it. In K Muniswamy v K Venkataswamy, for instance, there was a partition deed between the children and the parents. The deed had a clause that after the parent’s death, their property shall devolve into equal shares to the children (an after-death clause). The court applied Section 10 principles based on public policy and held that the restraint was invalid. However, it overlooked the fact that TPA only applies to transfer inter vivos. Also, in Kumaran Nair v Mohammed Haneefa, the court has held that it is excessive to apply Section 10 principles to family arrangements having after-death clauses (like will) even based on equity.
It could be argued that this statement merely means that agreements containing after-death clauses do not constitute transfers under Section 5, which is already the case with family arrangements in general (in which case the courts still apply Section 10 principles on general principles of law). However, they cannot apply the same logic to after-death clauses. This is due to a minor distinction between the two. Agreements having after-death clauses are governed by Indian Succession Act, of 1925. No such act exists for family arrangements. Thus, the courts have no option but to apply Section 10 principles.
However, even the Muniswamy case has not been consistently applied. In Chamu Jinnappa Sheri v Savitri Yeshwantrao Changule, where the facts were similar and the same issue was involved. The court held that as per the terms of the partition deed, after the respondent’s death, the property held by her would devolve among other members. So, in one case the court applied Section 10 and held the restraint to be invalid. In another, the court decided solely on the basis of the terms of the partition deed.
BRAINSTORMING AND TIME LOSSES
While applying Section 10 to family arrangements, the courts have to consider two issues. First, whether Section 10 principles apply based on general principles. Though its application is well accepted, the courts, nonetheless, have to consider it because of some inconsistent precedents. So, the courts have to adjudicate this issue repeatedly. If the court answers to above question positively, the second question is whether the restraint is partial or absolute.
Not considering the first issue at all can save a lot of time. Also, deciding on general principles of law can be difficult because it requires a lot of research and analysis to determine how these principles apply to a specific case (family arrangements in this case). Even on the grounds of public policy, society the Supreme Court has advised limiting its heads in the interest of the stability of society. Applying Section 10 principles on the basis of public policy is definitely a new head creation.
CONCLUSION
In this context, the recommendation made in the 70th LCI report is relevant. It recommended adding ‘family arrangements’ (not including after-death clauses) as a sub-section under Section 10. This should not be understood as the application of the whole Act to family arrangements but only Section 10. The application of other sections would have to be considered by the legislature.
Adding it as a sub-section will solve most of the issues faced in its application. First, there would be clarity on where the section is to be applied (like partitions) and where not (like after-death clauses). Also, the exception created by the SC in Gummanna Shetty which validated absolute restraints if the partition is for convenience of enjoyment, would not hold strong in front of this sub-section. Second, the rule would be more precise than the present application based on general principles. Third, the only issue before the court would be whether it is a partial or absolute restraint. No time would be lost in adjudicating its applicability.
To conclude, this piece argued that family arrangements deserve legal recognition and protection under Section 10 of the TPA. To that end, it first demonstrated how courts construed ‘applying general principles’ to family arrangements as ‘applying Section 10 principles’. Second, it elaborated on three issues caused by its absence as a sub-section; inconsistency, brainstorming, and time losses. And finally, it suggested adding it as a sub-section under Section 10.
[1] Gurdit Singh and Ors. v. Babu and Ors., AIR 1953 P&H 282; Balak Ram v. Surat Ram and Ors., AIR 1958 HP 5; Gummanna Shetty and Ors. v. Nagaveniamma, AIR 1967 SC 1595; Khusmanben Bankulal and Ors. v. Babubhai Rangildas and Ors., AIR 1979 Guj 25.
[2] Gurdit Singh; Balak Ram; Khusmanben Bankulal (n 21).
(Ritesh Raj is a law undergraduate at National Law School of India University. The author may be contacted via email at ritesh.raj@nls.ac.in).
Cite as: Ritesh Raj, Over Application of Section 10: The Case of Family Arrangement in India, 2023, 15 August 2023) <https://rmlnlulawreview.com/2023/08/15/over-application-of-section-10-the-case-of-family-arrangement-in-india-part-ii/> date of access.
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