TaxTMI 
TaxTMI 
2009 (2) TMI 884
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.... 2 daughters by name Mrs. Uma Devi and Mrs. Madhuram Lakshman. 3. Mrs. Parvatham Muthiah executed a Will on 8.5.1997 registered as Document No. 63/1997, in the office of the Sub-Registrar, T. Nagar, bequeathing the said property in entirety, to her 2 sons M. Gnanasambandam and M. Raja Appar. Mrs. Parvatham subsequently died on 6.12.2003. One of the daughters namely Uma Devi also died on 4.4.2005 leaving behind her surviving, her husband and 2 daughters. 4. After the death of Mrs. Parvatham, a Memorandum of Understanding was allegedly entered into between her 2 sons, her daughter Madhuram Lakshman and the legal heirs of the pre deceased daughter Uma Devi. Under the said Memorandum of Understanding dated 24.9.2005, the parties are said to have agreed to give the aforesaid property to a builder for joint development and take the constructed area that would fall to the share of the owners, in the ratio of ¼ share each to the 2 sons and the surviving daughter of Mrs. Parvatham and ¼ share to the legal heirs of Mrs. Uma Devi. 5. In pursuance of the Memorandum of Understanding, the parties claim to have identified a buyer and formally settled the terms of the joint ....
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....e up with the present Application seeking rejection of Plaint on the short ground that there is no cause of action for the Suit and that the Suit is barred by law in view of the provisions of the Specific Relief Act, 1963. Before getting into details, it is relevant to note that the sole defendant in the Suit namely, M. Gnanasambandam died and his legal heirs have been brought on record as the defendants in the Suit as well as the applicants in the present Application. 10. As seen from the prayer in the Suit (extracted in paragraph-7 above), the Suit is one for specific performance of a Memorandum of Understanding dated 24.9.2005. It is not a Suit for partition, but is one for a direction to the defendant to sell his ¼ share in the suit property. The Suit is also valued as a Suit for specific performance only and court-fee is paid accordingly. Therefore it is necessary to see if the suit is maintainable in law, in view of the objections raised. 11. Before we get into the law on the point, it is necessary to look into the operative portion of the Memorandum of Understanding. Hence it extracted as follows: Now THIS Memorandum of Understanding WITNESSETH: ....
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....ning with the builder based on the present market value of the property to get reasonable share in the built up area; and (iii) that it will be open to any one of the parties to opt for money consideration in lieu of their share in the built up area. 13. Thus, the only point in respect of which, there was certainty in the Memorandum of Understanding, was the undivided share to which each party was entitled. In contrast, there was total uncertainty in respect of (i) the method of choosing the builder (ii) the bargain to be had with the builder (iii) the nature of the deal or joint development agreement to be entered into with the builder (iv) the share of constructed area that each of the parties will get, and (v) the consideration to be paid to the party who opts to take money in lieu of the constructed area. 14. Since the Suit is one for specific performance of the aforesaid Memorandum of Understanding, we have to see if the same can be specifically enforced, in the light of so many uncertainties inherent in the Memorandum of Understanding. This has to be done both with reference to the provisions of the Specific Relief Act, 1963 and with reference to Section 29 of the India....
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.... 2 sons at the instance of their mother, cannot be taken to be a contract, as there was no consideration for the same and that therefore the contract was void under Section 25. But such a contention was repelled by the Supreme Court on the ground that it was a family settlement or family arrangement and that therefore Section 25 of the Contract Act would not hit it. 18. The next decision relied upon by the learned Senior Counsel is the one in Vigneswara Cooperative Housing Society Ltd v. K. Balachandramouli, 2005 (13) SCC 506. This decision arose out of a Suit for specific performance. The rejection of the plaint was sought for, on the ground that the land was notified to be acquired and that no relief for refund or damages was made. But the Supreme Court held that they may be grounds for dismissing the Suit ultimately, but they may not be grounds for rejecting the Plaint. 19. In the next decision Hari Shankar Singhania and others v. Gaur Hari Singhania and others, 2006 (2) CTC 597, an Arbitration Suit was dismissed on the ground of limitation by a Single Judge of the Bombay High Court and the same was confirmed by the Division Bench. When the matter was taken up on appeal to....
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....rts have always placed family arrangements on a higher pedestal than the normal contracts. While contracts of the regular variety are generally commercial in nature, family arrangements would not normally have a commercial undercurrent. The objects of both are different and hence the rigours of the law of contracts may not apply to family arrangements. This is why Courts have always leaned in favour of enforcing family arrangements, with a view to preserve the family unity and honour, since family is the nucleus of the society. In "Leading Cases in Equity" by White and Tudor, the learned authors have remarked that The expression 'family arrangement' covers a multitude of agreements made between relatives and designed to preserve the harmony, to protect the property and to save the honour of the family. 22. But unfortunately, the anxiety to preserve family arrangements cannot throw over board, the essential requirements of an agreement enforceable by law. The basic requirements of consensus ad idem, the absence of fraud, misrepresentation, undue influence or coercion, etc. are not to be dispensed with, even in a family arrangement. In Cheshire and Fifoot's "Law of ....
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....hed by the parties with an unknown builder. This is not the kind of family arrangement, which the Supreme Court was dealing with, in Kale and others v. Deputy Director of Consolidation and others, 1976 (3) SCC 119. 24. In The Commissioner of Wealth Tax, Mysore v. Her Highness Vijayaba, 1979 (2) SCC 213, the parties to the family settlement were not questioning the validity of the same. It was the Revenue which was assailing the family settlement as void in terms of the provisions of the Contract Act. Therefore the Supreme Court held that such settlements cannot be upset. This is on the fundamental principle that a third party cannot assail a contract between two persons as hit by Section 25 of the Contract Act and on the principle that natural love and affection could be a valid consideration for a family arrangement between the members of a family. 25. In Hari Shankar Singhania and others v. Gaur Hari Singhania and others, 2006 (2) CTC 597, a partnership firm comprising of 3 brothers as partners was dissolved in 1987 and the deed of dissolution contained an arbitration clause. In February 1988, the parties nominated their representatives to work out an arrangement. Several l....
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....sing a decree in terms thereof. The same group simultaneously filed a suit, challenging the decision of the Arbitrator. The High Court held the decision of the Arbitrator to be not an award. At the same time, the Suit was also dismissed on the ground that it was a replica of the Arbitration Petition and hence an abuse of the process of law. It is in this context that the Supreme Court remarked (in paragraph-52) that a family settlement should not be lightly interfered with, especially when the settlement had already been acted upon by some members of the family. Therefore the said decision does not take the respondent/plaintiff anywhere. 27. Coming to the case on hand, it is seen from the Memorandum of Understanding extracted above, that the only issue on which there was certainty, was that each of the parties will be entitled to ¼ share in the suit schedule property. Beyond this, the MoU just contained several indeterminate factors such as - (i) identification of a builder who would provide the best bargain for the parties, (ii) negotiation with such a builder, (iii) the execution of agreements with him, and (iv) the sharing of the constructed area on mutually acceptable....
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....and conditions. The applicant/defendant is not a party to the alleged joint development agreement. Therefore, unilaterally, the respondents/plaintiffs have valued the money equivalent of the constructed area that could be allotted to the applicant/defendant and the respondents/plaintiffs have actually come up with a prayer for directing the applicant/defendant to take the money equivalent of the constructed area. They have valued the suit for specific performance in this fashion, since there is no clue in the MOU about the total constructed area permissible in the suit land and the ratio at which the builder and the parties would share the constructed area. Under such circumstances, the MoU cannot be specifically enforced. 31. Section 12(1) of the Specific Relief Act, 1963, places an embargo upon the right of parties to seek specific performance of a part of a contract. Section 12 of the Specific Relief Act, 1963, reads as follows: 72. Specific performance of part of contract.--(1) Except as otherwise hereinafter provided in this Section, the Court shall not direct the specific performance of a part of a contract. (2) Where a party to a contract is unable to pe....
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....considerable portion of the whole or does not admit of compensation in money. 33. In the present case, the only part of the contract, which could be performed, is a declaration of the undivided shares of each of the parties. The part which cannot be directed to be specifically performed are (i) the identification of a builder (ii) settlement of terms with the builder with regard to the proportionate share of constructed area to be allotted to the builder on the one hand and to be allotted to the parties on the other hand (iii) the determination of the constructed area to be allotted to each of the parties after completion of construction, and (iv) the fixation of monetary value in lieu of constructed area, if someone opts for the same. Thus the part of the contract to be left unperformed, forms a considerable portion of the whole of the contract and hence this MoU cannot be specifically enforced. Even if the case falls under Sub section (4) of Section 12, there can only be a preliminary decree for partition declaring the shares of each of the parties. But there is already a Suit for partition pending between the same parties in respect of the same subject matter. Therefore, ther....