Resignation whether conditional one or not ? = The application submitted by the respondent under the Scheme on 12.07.2002 was in the nature of an offer but we cannot accept the plea that vide letter dated 03.03.2003 there could be suspension of his resignation conditional on the deposit of provident fund dues which actually already were deposited (albeit a confusion over the credit to which it was named). The acceptance was also not conditional clearing of dues, including provident fund dues, as that was a consequence which would flow from the acceptance of the resignation. Thus, in pursuance of the offer and acceptance on 28.05.2003, the transaction was completed. Unlike the case in Shambhu Murari Sinha,17 this is not a case of a conditional offer with part offer being accepted, but rather, acceptance of the offer in the terms of the Scheme, with the consequences as envisaged under the Scheme of financial benefits flowing to the respondent on acceptance of the resignation.We are of the view that the resignation letter of the respondent stood accepted on 28.05.2003 andthe respondent is entitled to the benefits under the Scheme which have already been paid to the respondent albeit without prejudice to the rights and contentions of the respondent in the proceedings.

 REPORTABLE

 IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO._5685 OF 2021

M/s. NEW VICTORIA MILLS & ORS. … Appellants

Versus

SHRIKANT ARYA …Respondent

J U D G M E N T

SANJAY KISHAN KAUL, J.

1. National Textile Corporation Limited (for short ‘NTC’), is a public

sector undertaking constituted and registered under the Companies Act,

1956. Appellant No.2 before us is the National Textile Corporation

(Uttar Pradesh) Limited, Kanpur, a subsidiary of appellant No. 3 that has

set up several industrial establishments in the State of Uttar Pradesh.

M/s. New Victoria Mills, appellant No.1, is one such establishment set up

by appellant No.2 in Kanpur. Respondent was working as a Supervisor

(Maintenance) in appellant No.1 since 1991, having been so appointed on

transfer from M/s. Atherton Mills, another industrial unit set up by

1

appellant No.2.

2. The textile industry went through difficult times at the turn of the

century and accordingly, endeavours were made to examine the

feasibility of the continued existence of different textile mills. A question

mark over the existence of these mills in turn had ramifications for the

persons who were employed with these mills. In order to safeguard the

interests of these employees, a Modified Voluntary Retirement Scheme

(for short ‘MVRS/Scheme’) was propounded by appellant No.3 to

facilitate the voluntary retirement of employees and workers of appellant

No.1 and certain other mills operated by appellant No.2. It is of

significance to note that this MVRS was proposed pursuant to the

recommendations made by the Board for Industrial and Financial

Reconstruction (for short ‘BIFR’), with the objective of rationalising

surplus manpower and reducing the losses of appellant No.2. BIFR had

come into the picture as the production activities of appellant No.2 were

brought to a standstill and it had been declared a sick undertaking under

the Sick Industrial Companies (Special Provisions) Act, 1985. The

financial condition of appellant No.2 was so precarious that BIFR

recommended closure of nine out of eleven mills of appellant No.2,

2

including appellant No.1. While making this recommendation, in order

to secure the interests of the employees, BIFR imposed a condition that

the mills would only be closed if all employees working therein were

given the benefit of a voluntary retirement scheme. Thus, MVRS came

to be promulgated in supersession of the earlier revised voluntary

retirement scheme.

3. The Management reserved the right to refuse the MVRS

application without assigning any reasons in terms of Clause 1.6 of the

MVRS. Clauses 1.6 of the MVRS reads as under:

“1.6 The management reserves the right to refuse a MVRS

application without assigning any reasons further applications for

MVRS in respect of 1.6.1 & 1.6.2 may be put up before the Board

of Director for consideration.

1.6.1 Where disciplinary proceeding are either pending or are

contemplated against the employee concerned for imposition of

major penalty.

1.6.2 Where prosecution in a Criminal Court is contemplated

or may have already been launched in any Court of Law and

1.6.3 Employees who resign from the services of the company

in a normal manner are not entitled in MVRS.”

4. Further clause 4.0 of the MVRS provided for the benefits under

the MVRS, which reads as under:

“4.0 OTHER TERMINAL BENEFITS UNDER THE

3

SCHEME

4.1 Balance in the Provident Funds Accounts payable as per

Employees Provident Fund Act and rules made thereunder.

4.2 Cash equivalent of accumulated earned

leave/privilege/leave as per the rules of the mills/office, concerned.

4.3 Gratuity as per Payment of Gratuity Act or the Gratuity

Scheme, if any.”

5. The procedure for the MVRS was set out in Clause 5.0. Suffice to

produce some of its relevant sub-clauses, which have been referred to as

under:

“5.0PROCEDURE

5.1 An eligible employee may submit an application in the

prescribed form for voluntary retirement under the scheme by

tendering resignation from the post held and service in NTC to the

Competent Authority. The post falling vacant as a result of an

employee’s voluntary retirement under the scheme shall in all

cases stand abolished simultaneously while accepting resignation

and order to that effect issued simultaneously before disbursing

retirement benefits to employees under this scheme and no person

(Permanent/badly/substitute/temporary etc.) shall be engaged in

his/her place.”

.... .... .... .... .... ....

“5.10 Once an employee’s (sic) avails himself/herself of

voluntary retirement from a PSU, he/she shall not be allowed to

take up employment in any other PSU. If he/she desires to do so,

he/she shall have to return the VRS compensation received by

him/her to the PSU concerned where the compensation was paid

out of a Government grant, the PSU concerned shall remit the

4

refunded amount to the Government in case the PSU is already

closed/merged, the VRS compensation shall be returned directly to

the Government.”

A significant aspect of Clause 5.1 was that the post itself was to stand

abolished and fall vacant as a result of the employee’s voluntary

retirement, simultaneously with the acceptance of their resignation and

this was to be a prelude to the disbursement of retiral benefits to the

employee under the Scheme. The objective appears to be to ensure that

the Scheme was not utilised to see the exit of an employee and replace

him with someone else, something which would be contrary to the very

purpose of the Scheme.

6. The respondent sought to avail of the opportunity under the

Scheme and addressed a letter dated 12.07.2002. The relevant extract of

the same is as under:

“That in the context of information dated: 13.06.2002 &

04.07.2002 of the Mill under Amended Voluntary Retirement from

Service Scheme operated by National Rehabilitation Scheme,

applicant wants to submit his resignation.

It is, therefore, requested to accept resignation of the applicant by

making sure payment of all benefits of the service period of the

applicant.”

It is relevant to note that the resignation was sought to be brought

5

into force forthwith with the only request that payment of all benefits of

service be disbursed promptly.

7. An aspect which caused some anguish to the respondent was that

apparently there was a pre-existing dispute between appellant No.1 and

the respondent, relating to deposits to be made in the provident fund

account of the respondent. This is apparent from two letters addressed in

this regard dated 29.03.2000 and 23/24.04.2000, making a grievance that

the provident fund amount has not been deposited in his account since

1991. Even on submission of his letter dated 12.07.2002, it appears that

this issue was not resolved, consequently triggering a letter from the

respondent dated 03.03.2003 about the same. In this letter, respondent

made a request that since the issue was not resolved, his application

under the MVRS be kept suspended till the amount is deposited in his

provident fund account and the account regularised. The reason for this

request was also set out in the same letter immediately thereafter, that is,

“because after the acceptance of resignations, receipt of this amount will

not only be difficult, rather it will be impossible.”

8. A general information was issued about acceptance of letters of

resignation under the MVRS on 28.05.2003 in which the name of the

6

respondent figured at serial No.4. The four persons were to retire from

the services of the mill on 01.06.2003. However, a letter was issued by

appellant no. 1 on 02.06.2003, after the cut off date had already come

into effect from 01.06.2003;informing the respondent that the said date

be treated as cancelled and a new cut off date would be informed shortly.

The respondent was advised to attend to his duties.

9. In the aforesaid scenario, the respondent addressed a letter dated

01.07.2003 requesting that his letter dated 12.07.2002 under the MVRS

be treated as having been cancelled because he had changed his mind

about submitting his resignation under the MVRS, noticing that his

resignation letter had still not been accepted. However, vide letter

14.07.2003 the resignation submitted under the MVRS was accepted

intimating that the respondent was to retire from 16.07.2003.

10. It is the aforesaid letter which triggered off the litigation, with the

respondent filing Civil Miscellaneous Writ Petition No.16587/2004

before the High Court of Judicature at Allahabad under Article 226 of the

Constitution of India seeking the following prayers:

a. Quashing of the impugned order dated 14.07.2003;

b. A direction to allow the respondent to join his duties on the post

7

of Supervisor (Maintenance) and pay him all his emoluments as

entitled;

c. To pay him his back-wages since 16.07.2003 and permit him to

work on the post till the age of his superannuation when he

would be entitled to all his retiral benefits.

11. The writ petition was resisted on the ground that the resignation

already stood accepted and the postponement of the cut off date would

not in any way take away the validity of the acceptance. It may be

worthwhile to note that while responding to the petition, Appellant

explained their position qua the respondent’s grievance about the

provident fund contributions not being credited to his account. It was

stated that the entire provident fund contribution had been deposited with

the Office of the Regional Provident Fund Commissioner and it appears

that the same was credited to a wrong person with a similar name.This

was a mistake in the Office of the Regional Provident Fund

Commissioner, which was recommended to be corrected and had also

been corrected. In fact, the account number to which the amount was

credited was the correct account number.

12. The learned single Judge ruled in favour of the respondent in terms

8

of the judgment dated 22.08.2005. The judgment also noted that the

question of reinstatement in service could not arise as appellant No.1 had

been closed down pursuant to a notification of the Central Government

dated 09.03.2004 issued during the pendency of the writ petition.

However, the learned single Judge found that it was “not clear” that at

any point of time, the respondent had given an unconditional offer of

resignation under the MVRS. Rather, his resignation was conditional on

the payment of all dues, which included the provident fund dues which

should be first cleared and paid to him. We may note at this stage as a

matter of record on perusal of the letter dated 12.07.2002 that we do not

find it so. All that was stated in the letter was a request to accept the

resignation of the respondent by making sure payment of all benefits of

his service period. There was no prior condition put nor could have been

put under the MVRS as Clause 5.1 itself envisaged the simultaneous

acceptance of the resignation and abolishment of the post; and payment

being made thereafter. Pertinently, the resignation letter had been

submitted under the MVRS and hence was subject to Clause 5.1.

13. The second aspect which weighed with the learned single Judge

was that the respondent continued to work till 14.07.2003, after his

9

resignation was accepted by appellant No. 1; despite the fact that he had

already withdrawn his resignation prior to that date on 01.07.2003. In

fact, the reasoning is predicated on what is stated to be “better footing” as

the offer made by the respondent under the MVRS was only conditional

and that condition had admittedly not been fulfilled, which is something

that we are unable to agree on a plain reading of the letter dated

12.07.2003. A reference was also made to the letter dated 03.03.2003

seeking to keep the letter dated 12.07.2002 in abeyance (not that the

resignation letter was recalled till that stage). Another significant aspect

which has weighed with the learned single Judge is the continued

working of the respondent, due to which the jural relationship of

employer and employee continued even though the circular notifying the

acceptance of the respondent’s resignation letter was issued on

28.05.2003,. The subsequent letter dated 02.07.2003 was taken into

account as having cancelled the earlier cut off date communicated on

28.05.2003, while informing that a new cut off date would be provided.

The new cut off date was then only intimated vide letter dated

14.07.2003, to be effective from 16.07.2003. Prior to that date, on

01.07.2003, the respondent had already asked for recall/cancellation of

10

his resignation.

14. The appellants aggrieved by the same preferred an appeal before

the Division Bench of the Allahabad High Court, being Special Appeal

No.1188/2005. An aspect which is greatly emphasised by the counsel for

the respondent was the manner in which this appeal was prosecuted.

Apparently, no endeavour was made by the appellants to get their appeal

listed for almost six years, until the matter was finally listed on

10.10.2011 - which is when the appeal was admitted and notice was

issued. Further, an interim order was passed staying the operation of the

order of the learned single Judge. The respondent was given liberty to

collect the entire money which he was to get on acceptance of his

resignation without prejudice to his rights and subject to the final

decision in the appeal. It is the say of the respondent that during this

period of six years, the respondent did not receive the money and

encashed the amount only after the aforesaid interim order was passed.

Suffice to say that the cheque for Rs.5,47,267/- was issued by appellant

No.1 to the respondent on 22.10.2011, which was duly encashed by the

respondent in terms of the impugned order dated 10.10.2011. It does not

really come out of the record as to what steps may have been taken

11

during this period of time to enforce the judgment of the learned single

Judge. The Contempt Petition No.2967/2006 was apparently filed by the

respondent seeking enforcement, but that also appears not to have been

pursued with much rigour. We also note that the appeal against the single

judge’s order was dismissed for non-prosecution thrice and restored!

15. The Division Bench finally bestowed its consideration on the

appeal on 12.03.2019, and upheld the order of the learned single Judge.

A reference was also made to Clause 1.6 of the MVRS extracted

aforesaid, which gave authority to appellant No.1 to refuse a resignation

application without assigning any reasons. Thus, it was opined that the

acceptance of the request for voluntary retirement was a condition

precedent to such a retirement. On the issue of abolishing the post as per

Clause 5.1 of the MVRS, it was opined that since appellant No.1 had

cancelled the original cut off date of 01.06.2003 and had asked the

respondent to join his duties once again, the post must have continued

and, thus, Clause 5.1 had not come into operation.

16. The aforesaid order of the Division Bench has been assailed by

filing a Special Leave Petition before this Court. Vide order dated

17.02.2020, notice was issued and the operation of the impugned order

12

was stayed. Leave was granted on 07.09.2021 when the matter was

heard finally and judgment reserved.

17. We have examined the principles governing the case of voluntary

retirement under the Scheme in the given factual scenario and in the

conspectus of the submissions of the counsel for the rival parties.

18. In a nutshell the submission of the appellants before us was that

the respondent had not even challenged the letters dated 28.05.2003 or

02.06.2003, which effectively accepted the respondent’s resignation

request under the MVRS. This would imply that the acceptance of

resignation by appellant No. 1 was complete. What the respondent had

sought to challenge was only the revised cut off date by assailing the

letter dated 14.07.2003, which sought to relieve the respondent from

16.07.2003. Once such a resignation was accepted, and not even

assailed, there could be no question of the respondent being permitted to

resign post acceptance of the resignation. It was only a postponement of

the cut off date for administrative reasons, which merely delayed the

relieving of the respondent and did not defer the acceptance of the

resignation.

19. Learned counsel for the appellants sought to rely upon the

13

judgment of this Court in Air India Express Limited &Ors. v. Captain

Gurdarshan Kaur Sandhu1

 to support the plea that mere delay in

relieving someone from their duties does not impact the acceptance of

their resignation. In fact, a prior judgment of this Court in Raj Kumar v.

Union of India2

, which was referred to in Air India Express Limited

&Ors.3

, involves a scenario where the State Government had

recommended that the resignation of an IAS officer be accepted and the

Government of India had requested the Chief Secretary of the State to

intimate the date on which he would be relieved of his duties so that a

formal notification could be issued. However, before the date could be

informed and a formal notification be issued, the officer withdrew his

resignation letter. On an order accepting his resignation being issued

subsequently, a challenge was raised and it was opined by this Court that

there was no indication in the correspondence between the parties that

the resignation was not to become effective until the acceptance was

intimated. In fact, the officer had forwarded his resignation letter for

early acceptance and thus, on a plain reading of the letter, the resignation

became effective as soon as it was accepted by the appointing authority.

1 (2019) 17 SCC 129.

2 (1968) 3 SCR 857

3 (supra)

14

20. On a contra position, the judgment of this Court in Union of India

v. Gopal Chandra Misra4

 was referred to, where the resignation letter by

a sitting Judge of the Allahabad High Court was found to have been

validly withdrawn. The resignation letter began with the statement that

the Judge was resigning from office but that was not a standalone

statement. Had it been so, the resignation would have been in praesenti

involving immediate relinquishment of the office and termination of his

tenure as a Judge. There was really no requirement of acceptance of a

resignation letter of a Judge, but it was not so. The first sentence was

followed by two more sentences which intimated a subsequent date for

the resignation to be effective and since the letter of resignation was

withdrawn before that date, it was held to have been validly withdrawn.

21. We may note that the significance of the aforesaid is that

ultimately, the wordings of the letter would be material and in the present

case since it is under scheme it would be MVRS.

22. Learned counsel for the appellants sought to refer to the aspects of

(a) the respondent’s acceptance of the cheque (but that was under interim

directions of the Court); (b) abolishment of the post as New Victoria

Mills was shut by a notification dated 09.03.2004 (but in that eventuality

4 (1978) 2 SCC 301

15

if the respondent succeeds, he would still be in employment with all

consequences); (c) superannuation of the respondent in 2018 (which

would only mean that his benefits would be only till that time). The only

other aspect of significance is that had the respondent not opted for

voluntary retirement under the MVRS, he could have been retrenched

under the Industrial Disputes Act, 1947.Learned counsel for the

appellants clarified during arguments that the amount paid to such

persons was lower than the amount paid to employees opting for

resignation under the MVRS. If one may say, that was the very incentive

for an employee to accept the MVRS.

23. On the other hand, learned counsel for the respondent sought to

rely on judgments of this Court in J.N. Srivastava v. Union of India

&Anr.5

 and Shambhu Murari Sinha v. Project & Development India

&Anr.6

 to canvas a proposition that an employee has a right to withdraw

his application for voluntary retirement even after its acceptance, if such

withdrawal is done prior to the date of the employee’s actual retirement.

Learned counsel for the respondent submitted that the jural relationship

of employer and employee between appellant No.1 and respondent

5 (1998) 9 SCC 559

6 (2000) 5 SCC 621

16

continued till 16.07.2003 and thus, the respondent had locus poenitentiae

to withdraw his resignation on 01.07.2003.

24. On a closer reading of the aforesaid judgments, it would be

appropriate to notice the factual matrix in the context of the observations

therein. In J.N. Srivastava7

, the voluntary retirement notice was to

operate three months hence. The proposal was accepted before the

expiry of three months; but the employee withdrew the voluntary

retirement notice before the date on which the retirement was to be

operative. In Shambhu Murari Sinha8

, a resignation letter submitted

by the employee under a voluntary retirement scheme was accepted by

the management but the employee was not relieved from service and was

permitted to continue working, by postponing the cut off date. The

employee withdrew the offer of voluntary retirement in the meantime. A

number of judicial pronouncements were referred to by this Court for the

proposition that a resignation in spite of its acceptance could be

withdrawn before the effective date.

25. In Power Finance Corporation Limited v. Pramod Kumar

Bhatia9

; the Corporation withdrew a voluntary retirement scheme after

7 (supra)

8 (supra)

9 (1997) 4 SCC 280

17

an application made thereunder had been accepted. This Court held that

the acceptance of his offer to voluntarily retire was subject to adjustment

of the amount payable to him, and hence did not attain finality. Learned

counsel for the respondent did point out that though that was something

which was beneficial to the management, on the same principle, it should

equally apply to an employee.

26. Learned counsel for the respondent sought to emphasise that a

voluntary retirement scheme like the MVRS was in the nature of an

“invitation to offer” and would, thus, be governed by the principles of

contract law (Bank of India v. O.P. Swarnakar10; HEC Voluntary Retd.

Emps. Welfare Soc. & Anr. v. Heavy Engineering Corporation Ltd.

&Ors.11). Thus, the application submitted by the respondent under the

Scheme on 12.07.2002 was in the nature of an offer. The respondent

suspended his resignation vide letter dated 03.03.2003 till such time as

appellant No.1 deposited respondent’s provident fund dues and, thus, the

offer of the respondent stood revoked. On the same principle it was

urged that the application of the respondent under the MVRS was preconditioned on appellant No.1 clearing respondent’s dues, particularly his

10 (2003) 2 SCC 721

11 (2006) 3 SCC 708

18

provident fund dues. Appellant No.1 did not comply with the attached

condition relating to the provident fund dues. Learned counsel for the

respondent also relied upon the judgment in Food Corporation of India

& Anr. v. Ram Kesh Yadav &Anr.12 opining that in case of a conditional

offer, the offeree cannot accept a part of the offer which results in

performance by the offeror and then reject the condition subject to which

the offer is made.

27. On the terms and conditions of the MVRS, learned counsel for the

respondent drew our attention to Clause 5.1 which required that on

acceptance of the respondent’s resignation, he would not only retire but

simultaneously the post would also be abolished. This would only

happen on 16.07.2003. How could the respondent have been asked to

carry on if the post stood abolished?

28. The last aspect, which was brought to our attention was an RTI

reply received on 07.12.2010, which clarified that three employees had

taken back their resignations. This was not the only scenario, as there

were five other employees/officers, who had been transferred to mills in

other States. These facts were only to show that the closure of appellant

No. 1 could not deprive the respondent of the benefit of employment in

12(2007) 9 SCC 531

19

some other mill, though now the question of employment no more

remains alive as he would have retired in 2018 but would still be entitled

to financial benefits. We may, at this stage, also note that a response to

an RTI query of the respondent clarified that there was no scheme for

absorption of the employees of the mills in other States.

29. We have examined the factual contours of the current controversy

in the conspectus of the legal position set forth aforesaid. In fact, if one

looks to the different judgments cited from both sides, there are actually

factual nuances which have led to one result or the other. The factual

nuances have to be most importantly examined in the context of the

scheme which applies, as the present case is not one of resignation per se

but that of exercising an option available under the MVRS.

30. The respondent before us filed the application under the Scheme.

If we look closely at the letter dated 12.07.2002, the intent of the

respondent was clear, i.e., to submit his resignation. It is not a

resignation operative from a future date but one which would operate as

per the Scheme. It is also not a conditional resignation as was sought to

be canvassed by the respondent. The mere assertion that all benefits

arising out of the service period of the applicant would be paid to him is

20

a natural corollary of their resignation. We do believe that such a

resignation can hardly be called conditional.

31. The aforesaid being the position; if we look at this resignation

letter under the Scheme, no doubt in terms of Clause 1.6 of the MVRS,

the option lay with the management to decline an application without

assigning any reasons. That again, to our mind, will not make the

resignation conditional. In a contractual context, it would be an offer

made by an employee under the Scheme which may or may not be

accepted by the appellant-management. Once the acceptance takes place,

the contract stands concluded. No doubt such acceptance has to be in

terms of the Scheme. Thus, the crucial question is whether the

subsequent communications of the respondent could give the resignation

letter a colour of a conditional resignation and whether the withdrawal

was prior to its acceptance.

32. The MVRS, more specifically Clause 4.0, provides for terminal

benefits payable under the Scheme. Clause 4.1 requires the balance in

the provident fund account to be paid as per the Employees Provident

Fund Act. Thus, the right of a person whose resignation has been

accepted is to receive inter alia the benefit of the provident fund amount

21

as one of the terminal benefits under the Scheme. The fact that there was

some discrepancy on account of the description of the name in the

account for which there was some prior communication itself, will not

imply that any delay in disbursement of the provident fund amount

would entitle the respondent to withdraw his resignation. If there is any

unreasonable delay, the amount may carry interest. In the given facts of

the case, it appears that the account was credited to an account number

where it ought to have been credited, but there was some problem in the

name/description of the beneficiary which had caused some

confusion/delay. No doubt the appellant-management ought to have

taken better care of this but then the appellant had pointed out that the

problem arose on account of the management by the concerned authority

of the provident fund account, and not the appellant.

33. Another significant aspect which we must take note of is the terms

of the Scheme as per Clause 5.0. Clause 5.1 required the post to be

abolished simultaneously with the request of voluntary retirement being

accepted. This had to be done before disbursing retirement benefits to

the employee under the Scheme. There was a specific stipulation that no

person would be engaged in his/her place. The objective was clear, that

22

it should not be that on the one hand, manpower is reduced by giving the

benefit of MVRS to an employee and on the other, some other person is

deployed in the post. That would be, in a sense, destructive of the very

objective of why the Scheme was propounded, i.e., on account of the

precarious financial condition of appellant No.1.

34. The next communication addressed by the respondent is the letter

dated 03.03.2003. The respondent did not withdraw his resignation,

which he could have done at that stage. He seeks to refer to the aspect of

the non-correction of the provident fund account and inaction with

respect to his earlier communications, which were almost three years old.

The respondent seeks to attribute negligence and error to the concerned

departments under appellant No. 1, an aspect which has been specifically

denied by appellant No.1. The respondent stated that non-deposit of the

amount in the provident fund account despite regular deduction from

salary is on account of some grievous conspiracy. Actually, the amount

was deposited in the relevant account but, as observed aforesaid, there

was some confusion about the beneficiary of the account, which was

clearly to be the respondent. All that the respondent’s letter states is that

his resignation be “kept suspended” till the amount is deposited in his

23

provident fund account. The rationale for the same is set out in the very

next sentence, i.e., if the resignation is accepted the receipt of the amount

will not only be difficult but rather it will be impossible.

35. The aforesaid allegation is apparently arising out of some element

of frustration which the respondent may have felt due to non-correction

of the provident fund account as the acceptance of resignation and

disbursement of the amount are not interlinked aspects, except to the

extent that the amount under the provident fund account had to be paid to

the respondent under the Scheme. In that, there was no impediment,

except the factual correction which was required in the description of the

account as explained by the appellants, which was also not attributable to

any fault on their part.

36. It is in the aforesaid situation that on 28.05.2003, a letter was

issued by appellant No.1 accepting the resignation of four persons

including the respondent. Once the resignation letter had been accepted,

the chapter was over. The respondent was to retire from the services with

effect from 01.06.2003 in terms of the said letter.

37. The respondent, however, seeks to take advantage of the letter

dated 02.06.2003 of appellant No.1, which extended the cut off date

24

already fixed for 01.06.2003. The respondent, thus, seeks to plead that

once the date from which he was to be relieved was extended, it would

amount to non-acceptance of his resignation. This plea is supported by

the fact that since the acceptance of resignation and the abolition of the

post were simultaneous exercises, how could the respondent be asked to

continue to work, as there would be no post against which the respondent

could so work. The respondent, taking advantage of the aforesaid,

addressed a letter on 01.07.2003 claiming that his resignation had not

been accepted till that date, and his letter of resignation under the MVRS

dated 12.07.2002 may be treated as cancelled.

38. Appellant No.1 refused to act on the same as in their view the

resignation letter already stood accepted on 28.05.2003. The respondent

was relieved w.e.f. 16.07.2003.

39. We have no doubt that the acceptance of resignation and the

abolition of the post were simultaneous exercises as that is part of Clause

5.1 of the Scheme, the objective of which we have already set forth

above. Clause 5.1 also prevents appellant No.1 from appointing anyone

else to that post. Thus, in our view, once the letter of resignation was

accepted on 28.05.2003, the post stood abolished. We have already

25

mentioned that the letter dated 03.03.2003 cannot be construed as a letter

of withdrawal of resignation. The postponement of the cut off date and

the consequent payment which would have to be made to the respondent

for those few days is really a matter of financial exercise for appellant

No.1, with which the respondent cannot concern himself as long as his

resignation is accepted. In order to test the proposition, one can state that

were the appellant to cancel the acceptance of the resignation after

28.05.2003, it would not have been permissible for them to do so because

they had already accepted the respondent’s resignation on this date. In

contractual terms, appellant No. 1’s acceptance of the respondent’s offer

of resignation as available under the MVRS was completed on

28.05.2003. The respondent cannot be permitted to take advantage of the

postponement of the cut off date by a few days, during which time the

respondent was asked to attend to office, albeit against no sanctioned

post.

40. We have to keep in mind the background in which the Scheme

came to be propounded. Appellant No.1 amongst other mills faced such

financial difficulties that their financial feasibility did not permit them to

carry on business. The competent authority to deal with the issue of

26

financial feasibility at that time was BIFR, which came to the conclusion

that nine out of eleven textile mills in the State of Uttar Pradesh were not

viable and could not be rehabilitated and, thus, recommended their

closure. The Central Government exercising powers under Section 25(o)

of the Industrial Disputes Act, 1947 granted permission for closure of the

nine textile mills on 09.03.2004, including that of appellant No.1. In

order to safeguard the interests of the employees, BIFR imposed the

condition while recommending closure, that all employees working in

the said mills would be given the benefit of voluntary retirement and only

then would the mills be closed. The appellants being State and public

entities, it appears that BIFR took greater care to safeguard the interests

of the employees working therein. It is in this context that the appellants

also placed before us, which can really not be disputed, the financial

consequence for persons who did not accept the MVRS. Such persons

would be retrenched according to the Industrial Disputes Act, 1947 and

the financial benefits accruing to them would be far lesser than that under

the MVRS. Thus, the MVRS was undisputedly beneficial to the

employees who availed of the same. That would be natural, since only

then would an employee have any incentive to avail of the Scheme.

27

41. We can also not lose sight of the fact that appellant No.1 had, in

fact, closed down and this was taken note of by the learned single Judge.

The mere fact that some staff continued to work after the closure of the

Mill, or the fact that some people may have been deployed in other mills

cannot help the respondent’s case for reinstatement. Importantly, the

latter aspect has also been disputed by appellant No.1.

42. An analysis of the MVRS including Clause 5.1 belies the

respondent’s contention that there was any requirement of making the

payments in advance. The wordings of the Scheme are clear that

acceptance of resignation has to simultaneously happen with the

abolition of the post and thereafter, the payments have to be disbursed.

43. We have endeavoured to appreciate the contention of the

appellants about non-challenge of the letter dated 28.05.2003 and

02.06.2003 with only the revised cut off date of 16.07.2003 being

assailed. This does seem to have an element of infirmity in the manner in

which the respondent sought to vent his grievance, but in view of larger

consideration we are not required to look into the aspect of whether this

is fatal to his claim. The construction we have given to the MVRS is as

per its clauses and the action of the parties under the Scheme, which

28

result in the conclusion that the resignation had already been accepted on

28.05.2003 before the respondent endeavoured to withdraw the same on

01.06.2003. It has, thus, rightly been contended by the appellants that

the mere delay in relieving the respondent from duties would not impact

the acceptance of his resignation, as observed in Air India Express

Limited & Ors.13. A different scenario would have arisen, if the

resignation letter was not in praesenti and had fixed a future date for its

operation, and before that date the resignation letter was withdrawn.

44. We have referred to the judicial pronouncements cited by the

respondent aforesaid on the plea that the respondent has locus

poenitentiae to withdraw the resignation letter as the jural relationship

between the parties continued till the actual date of his resignation. (J.N.

Srivastava14 and Shambhu Murari Sinha15).

45. As noticed in para 3 aforesaid in J.N. Srivastava16, the resignation

was to operate prospectively from a specified date and was withdrawn

before that date, despite being accepted – which is a different factual

scenario. We are also not in disagreement with the legal principle

13 (supra)

14 (supra)

15 (supra)

16 (supra)

29

propounded by the respondent that a scheme like the MVRS was an

“invitation to offer.” The application submitted by the respondent under

the Scheme on 12.07.2002 was in the nature of an offer but we cannot

accept the plea that vide letter dated 03.03.2003 there could be

suspension of his resignation conditional on the deposit of provident fund

dues which actually already were deposited (albeit a confusion over the

credit to which it was named). The acceptance was also not conditional

clearing of dues, including provident fund dues, as that was a

consequence which would flow from the acceptance of the resignation.

Thus, in pursuance of the offer and acceptance on 28.05.2003, the

transaction was completed. Unlike the case in Shambhu Murari

Sinha,17 this is not a case of a conditional offer with part offer being

accepted, but rather, acceptance of the offer in the terms of the Scheme,

with the consequences as envisaged under the Scheme of financial

benefits flowing to the respondent on acceptance of the resignation.

46. The result of the aforesaid is that we are unable to persuade

ourselves to agree with the conclusions arrived at by the learned single

Judge as affirmed by the learned Division Bench. We are of the view that

the resignation letter of the respondent stood accepted on 28.05.2003 and

17 (supra)

30

the respondent is entitled to the benefits under the Scheme which have

already been paid to the respondent albeit without prejudice to the rights

and contentions of the respondent in the proceedings.

47. The impugned order is set aside. The appeal is accordingly

allowed leaving the parties to bear their own costs.

...……………………………J.

[Sanjay Kishan Kaul]

...……………………………J.

[M.M. Sundresh]

New Delhi.

September 27, 2021.

31

after the auction was so undertaken - he preferred the application under Order IX Rule 13 of the Code - not vigilent .=Even after the passing of the ex-parte decree, the report filed by the process server on 04.04.2000 clearly indicated that notice was served upon Respondent No.1 which was duly acknowledged by him by putting signature on the copy of the notice. Despite such knowledge, Respondent No.1 allowedthe property to be put to auction in the month of December, 2000. It was only after the auction was so undertaken, that he preferred the application under Order IX Rule 13 of the Code. The High Court, therefore, rightly observed in its order dated 21.04.2006 that Respondent No.1 was not vigilant. Yet, the High Court proceeded to grant relief in favour of Respondent No.1.

1

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs. OF 2021

(Arising out of Special Leave Petition (Civil)Nos……..…………………...of 2021)

(Arising out of Special Leave Petition (Civil)D.No.1855 of 2020)

VISHWABANDHU …Appellant

Versus

SRI KRISHNA AND ANR. …Respondents

J U D G M E N T

Uday Umesh Lalit, J.

1. Delay condoned.

2. Leave granted.

3. These appeals challenge: (i) the Judgment and order dated 21.04.2006

passed by the High Court1

in FAFO (First Appeal From Order) No.2473 of

2005; and (ii) the Order dated 18.10.2019 passed by the High Court in CMRA

(Civil Miscellaneous Recall Application) No. 107616 of 2009 preferred in

said FAFO No. 2473 of 2005.

1 High Court of Judicature at Allahabad

2

4. Respondent No.2 herein filed a Suit in the court of Civil Judge (Junior

Division), Mainpuri, Uttar Pradesh, for recovery of money along with interest

submitting inter alia that the defendant in the Suit i.e. Respondent No.1 herein

had failed to refund Rs.22,400/- received by him towards part sale

consideration for sale of property comprising of Gata No.1616/0.93 acres

situated at Nangle Rate, Village Panchayat Mainpuri Rural, Tehsil and

District Mainpuri. The Suit was filed on 25.05.1993 and as the summons sent

to Respondent No.1 by registered post was received back with postal

endorsement of ‘refusal’, the order dated 19.02.1997 passed by the Trial Court

was :-

“Case called out. On behalf of plaintiff her counsel is

present. Nobody present on behalf of defendant. The

registered notice which was sent to defendant, had

received with remark refusal. Notice is deemed to be

sufficient. No one is present on behalf of defendant, the

defendant is being proceed ex-party accordingly. Put

up for the ex-parte proceeding on 01.04.1997.”

The matter was thereafter adjourned on few dates and finally on

16.09.1997 an ex-parte decree was passed in favour of Respondent No.2 in

the sum of Rs.22,400/- along with interest @ 9%.

5. In the application filed by Respondent No.2 seeking execution of the

decree dated 16.09.1997, the property admeasuring 0.93 acres which was 

3

subject matter of the agreement to sell, was sought to be attached vide notice

of attachment dated 29.05.1999. Later, the property was attached vide order

dated 04.12.1999 on the basis of a report filed by the Ameen. The report

indicated that since the judgment debtor i.e. Respondent No.1 could not be

found on search, drum beats were carried out at the place of residence of

Respondent No.1.

6. On 29.01.2000 the following order was passed by the trial court:-

“Case presented today. Case called out. Decree Holder

with her counsel present. The report of attachment of

property is filed. The decree holder shall take steps for

notice under O XXI Rule 66 within 15 days.”

7. On 04.04.2000 a report was filed by the Process Server to the following

effect:-

“Today 02.04.2000 I came to Nagla Rate district

Mainpuri, and searched Sri Krishna, and served a notice

on him and the receipt of the same have been duly

acknowledged by him by putting him signature on the

copy of notice.”

8. In the aforesaid circumstances, the executing court issued warrant of

sale of property on 06.12.2000 whereunder the property was directed to be

auctioned on 16.12.2000 and the warrant was to be returned on or before

23.12.2000, duly executed. Accordingly, on 16.12.2000 the property was put

to auction in which the present appellant as the highest bidder with a bid of 

4

Rs.1,25,000/-. In accordance with the prescribed procedure, 1/4th of the

amount was deposited by the appellant.

9. On 19.12.2000 Respondent No.1, for the first time, appeared before the

court and filed an application under Order IX Rule 13 of Code of Civil

Procedure (‘the Code’, for short) praying that the ex-parte decree dated

16.09.1997 be set aside.

In the application it was asserted:-

“…The applicant executed an agreement to sale in

favour of plaintiff, and the applicant was always ready

to execute the same till today. Applicant have no

money. That the plaintiff by misleading the court and

got passed an ex-parte judgment on 16.09.1997 in her

favour and an execution petition filed before the

Hon’ble Court. That no summon or notice issued from

this executing court. That the plaintiff get the execution

proceeding transferred to the court of Civil Judge

(Senior Division) Mainpuri, which is pending there, by

which the applicant facing the irreparable loss and the

applicant had not defaulted intentionally and applicant

have no knowledge about suit as well as execution

proceeding. Due to ex-parte Judgment the applicant

facing irreparable loss and injury. In the interest of

justice the judgment and decree dated 16.09.1997 to be

set aside. The applicant got the knowledge of the suit

and execution proceeding from the information given

by plaintiff’s husband on 16.12.2000, so this application

is within time.”

10. The aforesaid application was dismissed on 05.07.2005 by the

Additional District Judge, Mainpuri with following observations:-

5

“It is also noted that after passing the ex-parte judgment

and decree the respondent initiated the execution

proceeding which was registered as 04/1998. In this

execution proceeding the summons were sufficiently

served on applicant. In spite of this the applicant filed

a restoration application on 19.12.2000. From the

knowledge of execution proceedings on 02.04.2000, the

present application is filed after more than 8 months

from the knowledge about the pendency of the

execution proceedings, indicates that in spite of having

specific knowledge of the same he has filed this

application after the period of limitation and the reason

which was shown in applications is totally false,

frivolous and baseless. That no evidence is produced to

deny the report of the process server dated 04.04.2000

in which he stated that on 02.04.2000 the summons was

duly served on applicant, nor the said report is to be

manipulated.”

11. Respondent No.1, being aggrieved, filed FAFO No. 2473 of 2005 in the

High Court challenging the order dated 05.07.2005. During the pendency of

said FAFO, sale certificate was issued in favour of the Appellant on

30.03.2006 by virtue of order dated 10.01.2006 passed by the concerned court

in Execution No.4 of 1998.

12. On 21.04.2006 FAFO No. 2473 of 2005 was allowed by the High Court

with following observations:-

“In the instant case, the appellant appears not to be

vigilant as he ought to have been, yet the conduct does

not on the whole warrant to castigate him as an

irresponsible litigant. Further, the inconvenience

caused to the plaintiff respondent on account of the

absence of appellant may be compensated by warding

appropriate cost. In the interest of justice and under the 

6

peculiar circumstances of the case, I set aside the

impugned judgment and decree.

In the result of this appeal is allowed with the costs of

Rs.1000/-. The trial court is directed to decide the case

on merits after affording opportunities to the parties.”

13. Thereafter, Respondent No.2 filed CMRA No. 107616 of 2009 seeking

recall inter alia on the ground that Respondent No.1 had full knowledge of

the proceedings since 17.02.1997 and had intentionally and deliberately

avoided to appear and contest the matter. The application was, however,

dismissed by the High Court by its order dated 18.10.2019 observing that after

the order dated 21.04.2006 passed by the High Court, the Suit was restored to

the file and the issues were already framed.

14. These two orders dated 21.04.2006 and 18.10.2019 are presently under

challenge.

15. While issuing notice in the instant appeals, by Order dated 20.02.2020

passed by this Court, further proceedings were stayed.

16. We heard Mr. Gopal Sankaranarayanan, learned Senior Advocate for

the appellant and Mr. Pradeep Kumar Yadav, learned Advocate for

Respondent No.1.

7

17. It was submitted by Mr. Sankaranarayanan, learned Senior Advocate

that Respondent No.1 was always aware of the proceedings and had

deliberately avoided to appear and contest the matter; that his stand in the

application under Order IX Rule 13 of the Code itself indicated that he was

ready to execute sale deed in favour of the original plaintiff and that he had

no money to repay the amount received by him way of part consideration. It

was submitted that as an auction purchaser the Appellant had complied with

all the legal requirements and sale certificate was also issued in his favour.

18. On the other hand, Mr. Pradeep Kumar Yadav, learned Advocate

submitted that the orders passed by the High Court did not call for any

interference and that the Suit having been restored to the file, the matter be

allowed to be taken to the logical conclusion.

19. The summons issued by registered post was received back with postal

endorsement of refusal, as would be clear from the order dated 19.02.1997.

Sub-Rule (5) of Order V Rule 9 of the Code states inter alia that if the

defendant or his agent had refused to take delivery of the postal article

containing the summons, the court issuing the summons shall declare that the

summons had been duly served on the defendant. The order dated 19.02.1997

was thus completely in conformity with the legal requirements. In a slightly 

8

different context, while considering the effect of Section 27 of the General

Clauses Act, 1897, a Bench of three Judges of this Court in C.C. Alavi Haji

vs. Palapetty Muhammed and Anr2 made following observations:-

“14. Section 27 gives rise to a presumption that service

of notice has been effected when it is sent to the correct

address by registered post. In view of the said

presumption, when stating that a notice has been sent by

registered post to the address of the drawer, it is

unnecessary to further aver in the complaint that in spite

of the return of the notice unserved, it is deemed to have

been served or that the addressee is deemed to have

knowledge of the notice. Unless and until the contrary

is proved by the addressee, service of notice is deemed

to have been effected at the time at which the letter

would have been delivered in the ordinary course of

business. This Court has already held that when a notice

is sent by registered post and is returned with a postal

endorsement “refused” or “not available in the house”

or “house locked” or “shop closed” or “addressee not in

station”, due service has to be presumed. [Vide Jagdish

Singh v. Natthu Singh3

: State of M.P. vs. Hiralal &

Ors.4

and V. Raja Kumari vs. P. Subbarama Naidu &

Anr.5

]. … ….”

20. Even after the passing of the ex-parte decree, the report filed by the

process server on 04.04.2000 clearly indicated that notice was served upon

Respondent No.1 which was duly acknowledged by him by putting signature

on the copy of the notice. Despite such knowledge, Respondent No.1 allowed

2 AIR 2007 SC (Supp) 1705

3 AIR 1992 SC 1604

4

(1996) 7 SCC 523

5

(2004) 8 SCC 774

9

the property to be put to auction in the month of December, 2000. It was only

after the auction was so undertaken, that he preferred the application under

Order IX Rule 13 of the Code. The High Court, therefore, rightly observed in

its order dated 21.04.2006 that Respondent No.1 was not vigilant. Yet, the

High Court proceeded to grant relief in favour of Respondent No.1.

21. In the light of the features indicated above and the fact that the auction

was allowed to be undertaken, Respondent No. 1 was disentitled from

claiming any relief as was prayed for. Further, after completion of

proceedings in auction, sale certificate was also issued in favour of the

Appellant.

22. We, therefore, allow these Appeals, set aside the orders dated

21.04.2006 and 18.10.2019 passed by the High Court and dismiss the

application preferred by Respondent No.1 under Order IX Rule 13 of the

Code. No costs.

……………………………..J.

[Uday Umesh Lalit]

……………………………..J.

[S. Ravindra Bhat]

New Delhi;

September 29, 2021.

whether the unregistered family settlement “Khararunama” and receipt of Rs. 2,00,000/- (Rupees two lakhs) by the respondent, were not admissible in evidence.=As far as stamp duty goes, on our finding regarding the nature of the document, viz., Khararunama, being record of the alleged transactions, it may not require to be stamped. We notice the following conclusion of the Division Bench of the Madras High Court in A.C. Lakshmipathy and others v. A.M. Chakrapani Reddiar and others15: “42. To sum up the legal position xxx xxx xxx (V) However, a document in the nature of a Memorandum, evidencing a family arrangement already entered into and had been prepared as a record of what had been agreed upon, in order that there are no hazy notions in future, it need not be stamped or registered.” 36. No doubt, when there has been a partition, then, there may be no scope for invoking the concept of antecedent right as such, which is inapposite after a disruption in the joint family status and what is more an outright partition by metes and bounds. In this regard, it is to be noticed that the appellants and the respondents, admittedly, partitioned their joint family properties. This is clear from the Khararunama 15 AIR 2001 Madras 135 36 wherein it is stated that they have divided the joint family properties. The properties, which are mentioned in the Khararunama, became the separate properties of the respondent. 37. Resultantly, the Appeal is allowed.

1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S).6141 OF 2021

(Arising out of SLP(C) NO(S).25745 OF 2016)

KORUKONDA CHALAPATHI RAO & ANR. ... APPELLANT(S)

VERSUS

KORUKONDA ANNAPURNA

SAMPATH KUMAR ...RESPONDENT(S)

J U D G M E N T

K.M. JOSEPH, J.

1. Leave granted.

2. By the impugned order the High Court has set aside

the order passed by the Trial Court by which latter

order, the Trial Court overruled the objections of the

respondent to the marking of Exhibits-B12 and B13 on

the score that they were documents which were

unregistered and unstamped and matter was posted for

the evidence of DW1 for marking the said document. The 

2

High court found that the documents which were the

unregistered family settlement “Khararunama” and

receipt of Rs. 2,00,000/- (Rupees two lakhs) by the

respondent, were not admissible in evidence.

3. The respondent is the younger brother of the

appellants. The respondent instituted the present Suit

(O.S. No.39 of 2001) seeking declaration of title over

the plaint schedule property and for eviction of the

appellants who are the defendants and consequential

perpetual injunction is also sought against the

appellants.

4. It is not in dispute that there was a partition

between the appellants, the respondent and their other

siblings. The partition list is marked as Exhbit-A8 in

the suit. It is dated 17.11.1980. The plaint schedule

properties are a part of F-Schedule in the Deed of

partition allotted to the respondent. The case of the

respondent is based on the said partition deed

allotting F-schedule to him. It is, inter alia, his

case in the suit as amended by order dated 19.12.2012

that he was in hospital as in patient for treatment of 

3

his liver ailment. The appellants allegedly obtained

his signatures on papers and made up the alleged

settlement dated 15.4.1986 and the alleged receipt

dated 08.12.1983 (The documents which are in

controversy). It is his further case that appellants

are in occupation of the property with his permission.

On refusal of the appellants to vacate and after

exchange of notices, the suit is filed seeking the

relief as noted. There are two plaint schedule items.

Item No.1 is the terrace house, ground floor and

upstairs. Item no.2 is half share nadava portion in

the boundaries in terms of F-Schedule of the partition

deed.

5. On the other hand, the case of the appellants is

that while partition list dated 17.11.1980 was executed

recording the fact of partition, which was already

effected, there were subsequent developments. The

respondent and his wife raised dispute before elders

complaining that the portion given to them was not

sufficient. At the intervention of the elders, it was

settled and agreed between the appellants and the

respondent that respondent should give away his portion 

4

to the second appellant and respondent should also give

away his one-third portion in Nadava margam to the

appellants and in consideration for the same the first

appellant was to give Rs.25,000/- and the second

appellant was to give Rs.75,000/- to the respondent.

The said amounts were paid. On the advice of the elders

the case of the appellants is that Khararunama dated

15.04.1986 was executed recording the facts. On the

pleading of respondent and his wife to permit them to

stay on, the respondent was permitted to occupy the

property. It is the further case of the appellants

that in December, 1993, respondent and his wife

informed the appellants that they would vacate the

portion in the second appellant’s house and leave the

same but defendants should pay some more money as they

intended to vacate the property. The elders settled

the matter and it is alleged that Second appellant had

to pay Rs.2,00,000/-. Out of affection towards the

respondent and to purchase peace, the second appellant

agreed to pay Rs.2,00,000/- (Rupees Two Lakhs).

Accordingly, Rs.2,00,000/- was paid on 08.12.1993 in

the presence of elders and the receipt dated 08.12.1993 

5

was issued by the respondent to the second appellant

and on the same day, respondent is alleged to have

vacated and left the portion in his occupation in the

house of the second appellant and shifted to a rented

portion.

6. After completion of the evidence on behalf of the

respondent, appellants filed the evidence affidavit and

sought to mark the Kharurunama and receipt dated

08.12.1993. As already noticed, the trial court

allowed the said documents to be marked. By the

impugned judgment the High Court has found that in the

absence of registration and not being stamped the

documents were inadmissible.

7. We heard the learned counsel for the parties. We

heard Shri M. Vijay Bhaskar, learned Counsel on behalf

of the appellants and also Shri Venkateshwar Rao,

learned Counsel on behalf of the respondent.

8. It is submitted by the appellants that the Family

settlement Khararunama dated 15.04.1986 was prepared

in triplicate. The respondent also obtained one of the

triplicate copies. In his examination the respondent 

6

admitted his signature in the said ‘Khararunama’ and

the same has been marked as B1 to B3. It is further

submitted that the respondent as PW1 has admitted his

signature on the receipt dated 08.12.1993 marked as

(B4). B9 to B11 are stated to be admission of signature

on the Khararunama dated 15.04.1986 upon the respondent

being confronted with the Khararunama. It is pointed

out that High Court erred in not considering the family

settlement Khararunama and receipt dated 08.12.1993 in

accordance with well-established principles relating

to the law of family settlement /family arrangement.

Reliance is placed on the judgment of this court

in Subraya M.N. v. Vittala M.N.1 to contend that there

can be an oral relinquishment of the share of the family

members in the family settlement and family

arrangement. If the terms of the said family

settlement is reduced into writing, and it is only a

memorandum executed subsequently recording the terms

of the oral family settlement, then, no registration

is needed, it is contended. The decision of this Court

1 (2016) 8 SCC 705

7

in Thulasidhara v. Narayanappa2 has also been relied

upon. It is lastly contended that even if the family

settlement Khararunama is required to be registered,

in view of the fact that without registration written

document of family settlement/arrangement could be used

as corroborative evidence as explaining the arrangement

made thereunder and the conduct of the parties, the

order of the High Court is infirm.

9. Per contra, apart from reiterating his case about

the appellants obtaining his signature on blank papers

and subsequently utilizing them for the family

settlement, it is contended that family settlement

Khararunama dated 15.04.1986 required registration

under section 17(1)(b) of the Registration Act, 1908.

Under the said settlement, appellants ought to pay

certain sum to the respondent. The document would come

into force after the receipt of the consideration. It

is contended that the High Court is right in finding

that unregistered family Khararunama, whereunder a past

transaction of relinquishment is recorded, was

2 (2019) 6 SCC 409

8

inadmissible for want of registration and deficiency

of stamp duty.

10. The Khararunama reads, inter alia, as follows:

“We, the three are brothers. We and our

brothers divided family properties and

executed partition list dated 17-11-1980. As

per the said partition list B schedule

property fallen to No.1 of us and E schedule

property fallen to No.2 of us and F schedule

property fallen to No. 3 of us and we are

enjoying those properties. While the matter

stood some constructions were undertaken to

the house. Nos. 2 and 3 of us have divided

the property which jointly fallen to them

and made some constructions and enjoying.

Nadava way is being enjoyed by all of us

jointly.

Even after 17-11-1980 by this date we are

having common dining though properties are

divided and little disputes are arising

among us and elders are interfered and

settled.

We have not reduced into writing the events

that took place among three of us subsequent

to 17-11-1980. We are enjoying the

properties as per the following changes as

per the advice of the elders.

The Nadava way which was originally fell

jointly to three of us is being enjoyed by

Nos.1 and 2 of us since no. 3 of us gave

away his undivided 1/3rd in favour of Nos. 1

and 2 of us. Likewise, Nos. 1 and 2 of us

have been enjoying said Nadava way with an

understanding to enjoy Nadava way likewise

if any further floors are raised over ground

floor. The undivided ½ share house portion 

9

which originally fallen to share of No. 3

of us which was subsequently mutually

divided among Nos. 2 and 3 of us was given

away by No.3 of us to No.2 of us and

accordingly No.2 of us has been in enjoyment

of the entire house portion. No.3 of us is

enjoying with absolute rights the shop room

which was fallen to his share with an

understanding that No.3 of us can raise

constructions over the said shop room within

the measurements of shop room. We have been

enjoying with an understanding that eastern

wall of above said shop shall be joint

between Nos.2 and 3 of us and western wall

shall be joint for all the three of us and

northern wall shall be joint between Nos.2

and 3 of us. We have been enjoying with an

understanding that none of us shall arrange

any door-ways, windows or ventilators to

said joint walls.

For the above adjustments No.1 of us has

already paid Rs.25,000/- (Rupees TwentyFive Thousand) to No. 3 of us previously and

No. 2 of us has already paid Rs. 75,000/-

(Rupees Seventy-Five Thousand) to No. 3 of

us previously.

We have agreed to arrange separate steps

from our respective ground floor portion as

and when further floors are constructed.

Nos. 1 to 3 of us have been enjoying the

properties as mentioned above with absolute

rights. We have been enjoying the remaining

properties fallen to us as per partition

list dated 17-11-1980 which are not

mentioned in this document.

This Kharurunama is executed for record

purpose and for remembrance purpose. All the

contents of this document are read over and

explained to all of us and we have willfully

agreed the contents on our volition. We will

not raise any disputes in future.” 

10

Parties 1 and 2 are the appellants. The 3

rd party

is the respondent.

11. As far as the receipt is concerned, it is signed

on a 20 paise revenue stamp. It is allegedly executed

by the respondent having received Rs.2,00,000/- (Rupees

two lakhs) on 08.12.1983 as per the advice of the elders

besides the amount of Rs.1,00,000/- (Rupees one lakh)

already paid to the respondent mentioned in the

Khararunama dated 15.04.1986 while vacating the house

portion mentioned in the Kharurunama excepting the shop

room which fell to the share of the respondent under

the Partition List 1980 purportedly signed by two

witnesses. It is executed in favour of the second

appellant.

12. Undoubtedly, Section 17(1)(b) makes ‘other nontestamentary instruments’, which purport or operate to

create, assign, limit or extinguish whether in present

or in future any right or interest whether vested or

contingent of the value of Rs.100/- and upwards in an

immovable property compulsorily registrable. Section

17(1)(c) reads as follows:

11

“17(1)(c) non-testamentary instruments

which acknowledge the receipt or payment of

any consideration on account of the

creation, declaration, assignment,

limitation or extinction of any such right,

title or interest; and”

13. Section 17 (2) provides nothing in Clauses

(b) and (c) of sub-Section(1) applies, inter alia, to

any instrument of partition made by the revenue

officer. Section 49 of the Registration Act reads as

follows:

“49. Effect of non-registration of

documents required to be registered.—No

document required by section 17 1[or by

any provision of the Transfer of Property

Act, 1882 (4 of 1882)], to be registered

shall—

(a) affect any immovable property

comprised therein, or

(b) confer any power to adopt, or

(c) be received as evidence of any

transaction affecting such property or

conferring such power, unless it has been

registered: 54 [Provided that an

unregistered document affecting

immovable property and required by this

Act or the Transfer of Property Act, 1882

(4 of 1882), to be registered may be

received as evidence of a contract in a

suit for specific performance under

Chapter II of the Specific Relief Act,

1877 (3 of 1877) 55,

56 [***] or as

evidence of any collateral transaction 

12

not required to be effected by registered

instrument.] ..”

14. There is a long line of judgments of this court

dealing with the question as to whether a family

arrangement is compulsorily registrable. We need

only refer to the case of Kale v. Dy. Director of

Consolidation3. This Court has summed up the

essentials of the family settlement in the following

proposition:

“10. In other words to put the binding

effect and the essentials of a family

settlement in a concretised form, the matter

may be reduced into the form of the

following propositions:

“(1) The family settlement must be a

bona fide one so as to resolve family

disputes and rival claims by a fair and

equitable division or allotment of

properties between the various members of

the family;

(2) The said settlement must be

voluntary and should not be induced by

fraud, coercion or undue influence;

(3) The family arrangement may be even

oral in which case no registration is

necessary;

(4) It is well settled that

registration would be necessary only if

3 AIR 1976 SC 807

13

the terms of the family arrangement are

reduced into writing. Here also, a

distinction should be made between a

document containing the terms and

recitals of a family arrangement

made under the document and a mere

memorandum prepared after the family

arrangement had already been made either

for the purpose of the record or for

information of the court for making

necessary mutation. In such a case the

memorandum itself does not create or

extinguish any rights in immovable

properties and therefore does not fall

within the mischief of Section 17(2) of

the Registration Act and is, therefore,

not compulsorily registrable;

(5) The members who may be parties to

the family arrangement must have some

antecedent title, claim or interest even

a possible claim in the property which is

acknowledged by the parties to the

settlement. Even if one of the parties to

the settlement has no title but under the

arrangement the other party relinquishes

all its claims or titles in favour of such

a person and acknowledges him to be the

sole owner, then the antecedent title

must be assumed and the family

arrangement will be upheld and the courts

will find no difficulty in giving assent

to the same;

(6) Even if bona fide disputes, present

or possible, which may not involve legal

claims are settled by a bona fide family

arrangement which is fair and equitable

the family arrangement is final and

binding on the parties to the

settlement.”

(Emphasis supplied)

14

15. In the facts of this case, the contention of

the appellants is that the Kharurunama dated

15.04.1986 merely sets out the arrangement arrived at

between the brothers which is the family arrangement

and it was a mere record of the past transaction and

therefore by itself it did not create or extinguish

any right over immovable property. Resultantly, the

document did not attract Section 17(1)(b) of the

Registration Act. In other words, it is contended

that even if there is relinquishment of rights by the

family member, since the document is only a record of

what had already happened in the past, the law did

not mandate registration.

16. It is to be noted that in this regard emphasis

is placed by the appellants on the decision of this

Court in Subraya M.N. v. Vittala M.N. (supra).

Therein, in regard to the dispute to plaint items 1

and 2 properties, there was D22 resolution passed by

the village panchayat signed by the Panchayatdar,

plaintiffs 3 and 4 and defendant. It was, inter alia,

mentioned therein that the defendant, in whose favour

the plaintiffs 3 and 4 relinquished the rights, had 

15

paid Rs.15,000/- each to the said plaintiffs. Dealing

with the impact of Section 17 and 49 of the

Registration Act this Court, inter alia, held:

“16. Even though recitals in Ext. D-22 are

to the effect of relinquishment of right in

Items 1 and 2, Ext. D-22 could be taken as

family arrangements/ settlements. There is

no provision of law requiring family

settlements to be reduced to writing and

registered, though when reduced to writing

the question of registration may arise.

Binding family arrangements dealing with

immovable property worth more than rupees

hundred can be made orally and when so made,

no question of registration arises. If,

however, it is reduced to the form of

writing with the purpose that the terms

should be evidenced by it, it required

registration and without registration it is

inadmissible; but the said family

arrangement can be used as corroborative

piece of evidence for showing or explaining

the conduct of the parties. In the present

case, Ext. D-22 panchayat resolution reduced

into writing, though not registered can be

used as a piece of evidence explaining the

settlement arrived at and the conduct of the

parties in receiving the money from the

defendant in lieu of relinquishing their

interest in Items 1 and 2.”

(Emphasis supplied)

16

17. This view has been also followed in

Thulasidhara v. Narayanappa4. Paragraph-9.5 reads as

below:

“9.5. As held by this Court in Subraya

M.N. [Subraya M.N. v. Vittala M.N., (2016)

8 SCC 705] even without registration a

written document of family

settlement/family arrangement can be used as

corroborative evidence as explaining the

arrangement made thereunder and conduct of

the parties. In the present case, as

observed hereinabove, even the plaintiff has

also categorically admitted that the oral

partition had taken place on 23-4-1971 and

he also admitted that 3 to 4 panchayat

people were also present. However, according

to him, the same was not reduced in writing.

Therefore, even accepting the case of the

plaintiff that there was an oral partition

on 23-4-1971, the document, Ext. D-4 dated

23-4-1971, to which he is also the signatory

and all other family members are signatory,

can be said to be a list of properties

partitioned. Everybody got right/share as

per the oral partition/partition.

Therefore, the same even can be used as

corroborative evidence as explaining the

arrangement made thereunder and conduct of

the parties. Therefore, in the facts and

circumstances of the case, the High Court

has committed a grave/manifest error in not

looking into and/or not considering the

document Ext. D-4 dated 23-4-1971.”

4 (2019) 6 SCC 409

17

18. In the said case plaintiff had admitted the

oral partition and the unregistered document dated

23.04.1971 to which he was the signatory, was accepted

as the list of properties in the partition.

19. In Ram charan v. Girja Nandini5, this Court

was dealing with a case of a compromise decree and

this Court went on to hold that it was a family

arrangement. It went on to hold as follows:

“.. For as the Privy Council pointed out in

Mst. Hiran Bibi’s case, AIR 1914 PC 44 in a

family settlement each party takes a share

in the property by virtue of the independent

title which is admitted to that extent by

the other parties. It is not necessary, as

would appear from the decision in Rangasami

Gounden v. Nachiappa Gounden 46 Ind App 72

(AIR 1918 PC 196), that every party taking

benefit under a family settlement must

necessarily be shown to have, under the law,

a claim to a share in the property. All

that is necessary is that the parties must

be related to one another in some way and

have a possible claim to the property or a

claim or even a semblance of a claim on some

other ground as, say affection.”

(Emphasis supplied)

5 AIR 1966 SC 292

18

20. This view has been reiterated in Krishna Beharilal

v. Gulabchand6. In Yellapu Uma Maheswari and Another v.

Buddha Jagadheeswararao and Others7, this Court found

that the relinquishment of the right was made through

the document. Hence, it was found that documents were

compulsorily registrable. This Court inter alia held

as follows:

“15. It is well settled that the

nomenclature given to the document is not

decisive factor but the nature and substance

of the transaction has to be determined with

reference to the terms of the documents and

that the admissibility of a document is

entirely dependent upon the recitals

contained in that document but not on the

basis of the pleadings set up by the party

who seeks to introduce the document in

question. A thorough reading of both Exts.

B-21 and B-22 makes it very clear that there

is relinquishment of right in respect of

immovable property through a document which

is compulsorily registrable document and if

the same is not registered, it becomes an

inadmissible document as envisaged under

Section 49 of the Registration Act. Hence,

Exts. B-21 and B-22 are the documents which

squarely fall within the ambit of Section

17(1)(b) of the Registration Act and hence

are compulsorily registrable documents and

the same are inadmissible in evidence for

the purpose of proving the factum of

partition between the parties. We are of the

6 AIR 1971 SC 1041

7(2015) 16 SCC 787

19

considered opinion that Exts. B-21 and B-22

are not admissible in evidence for the

purpose of proving primary purpose of

partition.”

(Emphasis supplied)

21. We may notice that in Sita Ram Bhama v. Ramvatar

Bhama8, wherein the appellant and respondent were

brothers, according to the appellant, a memorandum of

settlement as decided by their late father was recorded

in regard to his acquired property. The question arose

as to whether the settlement was admissible. It is

necessary to notice paragraph-10, which reads as under:

“10. The only question which needs to be

considered in the present case is as to

whether document dated 9-9-1994 could have

been accepted by the trial court in evidence

or the trial court has rightly held the said

document inadmissible. The plaintiff

claimed the document dated 9-9-1994 as

memorandum of family settlement. The

plaintiff's case is that earlier partition

took place in the lifetime of the father of

the parties on 25-10-1992 which was recorded

as memorandum of family settlement on 9-9-

1994. There are more than one reasons due

to which we are of the view that the document

dated 9-9-1994 was not mere memorandum of

family settlement, rather a family

settlement itself. Firstly, on 25-10-1992,

the father of the parties was himself owner

of both, the residence and shop being self8 (2018) 15 SCC 130

20

acquired properties of Devi Dutt Verma. The

High Court has rightly held that the said

document cannot be said to be a will, so

that the father could have made the will in

favour of his two sons, the plaintiff and

the defendant. Neither the plaintiff nor the

defendant had any share in the property on

the day when it is said to have been

partitioned by Devi Dutt Verma. Devi Dutt

Verma died on 10-9-1993. After his death,

the plaintiff, the defendant and their

mother as well as sisters become the legal

heirs under the Hindu Succession Act, 1956

inheriting the property being a Class I

heir. The document dated 9-9-1994 divided

the entire property between the plaintiff

and the defendant which document is also

claimed to be signed by their mother as well

as the sisters. In any view of the matter,

there is relinquishment of the rights of

other heirs of the properties, hence, the

courts below are right in their conclusion

that there being relinquishment, the

document dated 9-9-1994 was compulsorily

registrable under Section 17 of the

Registration Act.”

22. Thereafter, we may notice the view of this Court

in paragraph-13 as under:

“13. There is only one aspect of the matter

which needs consideration i.e. whether the

document dated 9-9-1994, which was

inadmissible in evidence, could have been

used for any collateral purpose. In a suit

for partition, an unregistered document can

be relied upon for collateral purpose i.e.

severancy of title, nature of possession of

various shares but not for the primary 

21

purpose i.e. division of joint properties

by metes and bounds…”

23. No doubt in the said case, the court has followed

the Judgment in Yellapu Uma Maheswari and

Another (supra). It found that the unregistered

memorandum could be used for collateral purpose within

the meaning of Section 49 of the Registration Act

subject to payment of penalty and stamp duty.

24. Order 13 Rule 3 of the Code of Civil Procedure,

1908 (hereinafter referred to as ‘the Code’, for short)

enables the Court to reject any document which is

considered irrelevant or otherwise inadmissible

recording the ground of such rejection. Order 13 Rule

4 of the Code provides for the procedure when a document

has been admitted in evidence. Section 49 deals with

the effect of non-registration of documents which are

compulsorily registrable under Section 17 of the

Registration Act and Transfer of Property Act. Section

49(a) of the Registration Act declares that an

unregistered document which is compulsorily

registrable cannot ‘affect’ any immovable property 

22

comprised therein. The expression ‘affect’ has been

explained by the full bench judgment of the Madras High

Court in Muruga Mudallar and Ors. v. Subba Reddiar9. We

may notice only the following discussion in the

judgment of Satyanarayana Rao,J.:

“As pointed out by Spencer J. in

Saraswathamma v. Paddayya, 46 Mad. 349 : (A.

I. R. 1923 Mad. 297) the verb "affect" in

Section 49 is only a compendious term

employed by the Legislature to express the

meaning of the longer phrase "purporting or

operating to create, declare, assign, limit

or extinguish, whether in present or in

future, any right, title or interest whether

vested or contingent to" (See also Kanjee &

Moolji Bros, v. Shanmugham Pillai, 56 Mad.

169 : (A. I. R. 1932 Mad. 734), where the

view of Spencer J. was accepted).”

25. Section 49(c) of Registration Act prohibits the

admitting of compulsorily registrable documents which

are unregistered as evidence of any transaction

affecting immovable property unless it has been

registered. In the very same Judgment, we notice the

following discussion:

“The other consequence of non-registration

is to prohibit the document from being

received not "in" evidence, but "as"

evidence of any transaction affecting such

9 AIR 1951 Madras 12

23

property. The emphasis on the word "as" was,

in my opinion, rightly laid by Venkatasubba

Rao J. in Saraswathamma v. Paddayya, 46 Mad.

349 : (A. I. R. 1923 Mad. 297), where the

learned Judge observed:

"What is prohibited by the section is

receiving a document as evidence of a

transaction, not merely receiving it in

evidence, i.e., as a piece of evidence

having a bearing on the question to be

ultimately decided."

In other words, the prohibition is to

prevent a person from establishing by the

use of the document in evidence a

"transaction, affecting Immovable

property". A person should not be permitted

to establish indirectly by use of the

document what he is prevented from doing

directly under Clause (a).”

(Emphasis supplied)

26. The proviso carves out two exceptions. We are only

concerned, in this case, with only one of them and that

is contained in the last limb of the proviso. The

unregistered document can be used as evidence of any

collateral transaction. This is however subject to the

condition that the said collateral transaction should

not itself be one which must be effected by a registered

document. It is this expression contained in the

proviso which leads us to ask the question as to what

would constitute a collateral transaction. If it were 

24

collateral transaction, then an unregistered document

can indeed be used as evidence to prove the same. Would

possession being enjoyed or the nature of the

possession on the basis of the unregistered document,

be a transaction and further would it be a collateral

transaction? We pose this question as the contention

of the appellants is that even if the Khararunama dated

15.4.1986 cannot be used as evidence to prove the

factum of relinquishment of right which took place in

the past, the Khararunama can be looked into to prove

the conduct of the parties and the nature of the

possession which was enjoyed by the parties.

27. In N. Varada Pillai v. Jeevarathnammal10, the

Privy Council Court took the view that though

unregistered, the document could be used to explain the

nature of the possession of a person. In the said

case, in fact, two widows, who were in possession of

the property in equal shares applied to the Collector

that they had given away the property as Stridhan to a

lady and that the orders may be issued for transferring

10 AIR 1919 P.C. 44

25

the property to her. The property was so transferred

on the basis of the petition. On the question whether

the transferee had obtained title by adverse possession

while finding the unregistered petition before the

Collector could not be admitted to prove a gift, the

fact that transferee was continuing as a donee and

owner was gleaned from the said petition to support the

case of adverse possession.

28. An attempt to derive support from the said judgment

was refused on a different set of facts by this court

in Kirpal Kaur v. Bachan Singh and Ors.11. In the said

case the court was dealing with the following facts.

The widow of a Hindu upon the death of her husband came

by possession of the plaint schedule properties. She

even got the property mutated. A gift was made by her.

The reversioners thereafter approached her and an

unregistered document was entered into with her wherein

she purported to acknowledge that she had only a life

estate. Thereafter the suit came to be filed. The

widow set up the case of adverse possession. On the

11 AIR 1958 SC 199

26

other hand, the plaintiffs placed reliance on the

unregistered document and relied upon the judgment of

the N. Varada Pillai (supra). This Court repelled the

case of the plaintiffs and held as follows in Kirpal

Kaur (supra):

“15. We cannot agree that on the authority

of Varatha Pillai’s case (1918) 46 I.A. 285,

the agreement of February 6, 1932, can be

admitted in evidence in the case in hand to

show the nature of Harnam Kaur’s possession

of the lands subsequent to its date. In

Varatha Pillai’s case (1918) 46 I.A. 285,

Duraisani had got into possession only after

the petition and claimed to retain

possession only under the gift mentioned in

it. The petition was therefore admissible

in evidence to show the nature of her

possession. In the present case Harnam Kaur

had been in possession before the date of

the document and to admit it in evidence to

show the nature of her possession subsequent

to it would be to treat it as operating to

destroy the nature of the previous

possession and to convert what had started

as adverse possession into a permissive

possession and, therefore, to give effect

to the agreement contained in it which

admittedly cannot be done for want of

registration. To admit it in evidence for

the purpose sought would really amount to

getting round the statutory bar imposed by

Section 49 of the Registration Act.”

(Emphasis supplied)

27

29. This is significant for the reason that the law is

not that in every case where a party sets up the plea

that the court may look into an unregistered documents

to show the nature of the possession that the court

would agree to it. The cardinal principle would be

whether by allowing the case of the party to consider

an unregistered document it would result in the breach

of the mandate of the Section 49 of the Registration

Act.

30. We may also usefully refer to the views expressed

by the Division Bench of the Madras High Court in K.

Panchapagesa Ayyar and Ors. v. K. Kalyanasundaram Ayyar

and Ors.12:

“25. To sum up it is well settled in a long

series of decisions which have since

received statutory recognition by the

Amending Act of 1929 (vide the concluding

words of the new proviso to Section 49 of

the Registration Act) that a compulsorily

registrable but an unregistered document is

admissible in evidence for a collateral

purpose that is to say, for any purpose

other than that of creating, declaring,

assigning, limiting or extinguishing a right

to immovable property.

12 AIR 1957 Madras 472

28

The expression "collateral purpose" is no

doubt a very vague one and the Court must

decide in each case whether the purpose for

which it is sought to use the unregistered

document is really a collateral one or is

to establish directly title to the immovable

property sought to be conveyed by the

document. But by the simple device of

calling, it a "collateral purpose" a party

cannot use the unregistered document in any

legal proceedings to bring about indirectly

the effect which it would have had if

registered.

To quote Sir George Lowndes in James R. R.

Skinner v. Robert Hercules Skinner ILR 51

All 771: MANU/PR/0091/1929 : AIR 1929 PC 269

(Z 22) the collateral purpose to which the

document is put should be nothing else than

an evasion of the statute and render almost

nugatory the hitherto well-established rule

relating to the limited uses to which an

unregistered partition deed can be put to.”

(Emphasis supplied)

31. In Roshan Singh and Others v. Zile Singh and

Others13, the question arose whether Exhibit P12 in the

said case was an instrument of partition and therefore

inadmissible for want of registration under Section 49

of the Registration Act or whether it was merely a

13 AIR 1988 SC 881

29

memorandum of family arrangement. This Court after

referring to the document held as follows:

“8. According to the plain terms of the

document Exh. P-12, it is obvious that it

was not an instrument of partition but

merely a memorandum recording the decision

arrived at between the parties as to the

manner in which the partition was to be

effected. The opening words of the document

Exh. P-12 are: 'Today after discussion it

has been mutually agreed and decided

that....' What follows is a list of

properties allotted to the respective

parties. From these words, it is quite

obvious that the document Exh. P-12 contains

the recital of past events and does not

itself embody the expression of will

necessary to effect the change in the legal

relation contemplated. So also the Panch

Faisla Exh. P-1 which confirmed the

arrangement so arrived at, opens with the

words 'Today on 31-1-1971 the following

persons assembled to effect a mutual

compromise between Chaudhary Puran Singh and

Chaudhary Zile Singh and unanimously decided

that....' The purport and effect of the

decision so arrived at is given thereafter.

One of the terms agreed upon was that the

gher marked B2 would remain in the share of

Zile Singh, representing the Plaintiffs.

9. It is well-settled that while an

instrument of partition which operates or

is intended to operate as a declared

volition constituting or severing ownership

and causes a change of legal relation to the

property divided amongst the parties to it,

requires registration under Section

17(1)(b) of the Act, a writing which merely 

30

recites that there has in time past been a

partition, is not a declaration of will, but

a mere statement of fact, and it does not

require registration. The essence of the

matter is whether the deed is a part of the

partition transaction or contains merely an

incidental recital of a previously completed

transaction. The use of the past tense does

not necessarily indicate that it is merely

a recital of a past transaction. It is

equally well-settled that a mere list of

properties allotted at a partition is not

an instrument of partition and does not

require registration. Section 17(1)(b) lays

down that a document for which registration

is compulsory should, by its own force,

operate or purport to operate to create or

declare some right in immovable property.

Therefore, a mere recital of what has

already taken place cannot be held to

declare any right and there would be no

necessity of registering such a document.

Two propositions must therefore flow: (1) A

partition may be effected orally; but if it

is subsequently reduced into a form of a

document and that document purports by

itself to effect a division and embodies all

the terms of bargain, it will be necessary

to register it. If it be not registered,

Section 49 of the Act will prevent its being

admitted in evidence. Secondly evidence of

the factum of partition will not be

admissible by reason of Section 91 of the

Evidence Act, 1872. (2) Partition lists

which are mere records of a previously

completed partition between the parties,

will be admitted in evidence even though

they are unregistered, to prove the fact of

partition: See Mulla's Registration Act, 8th

Edn., pp. 54-57.”

(Emphasis supplied)

31

Thereafter, the Court also approved of the use of

the said document for a collateral transaction and

observed as follows:

“11. Even otherwise, the document Exh. P 12

can be looked into under the proviso to

Section 49 which allows documents which

would otherwise be excluded, to be used as

evidence of 'any collateral transaction not

required to be effected by a registered

instrument'. In Varada Pillai v.

Jeevarathnammal, (1919) 46 Ind App 285 : AIR

1919 PC 44 the Judicial Committee of the

Privy Council allowed an unregistered deed

of gift which required registration, to be

used not to prove a gift 'because no legal

title passed' but to prove that the donee

thereafter held in her own right. We find

no reason why the same rule should not be

made applicable to a case like the present.”

32. In SMS Tea Estates (P) Ltd. v. Chandmari Tea Co.

Private Ltd.14, the question arose whether an

arbitration agreement contained in a compulsorily

registrable document which was not registered could be

used to prove the collateral transaction, namely, the

provision for arbitration. This court held as follows:

“11. Section 49 makes it clear that a

document which is compulsorily

registerable, if not registered, will not

14 (2011) 14 SCC 66

32

affect the immovable property comprised

therein in any manner. It will also not be

received as evidence of any transaction

affecting such property, except for two

limited purposes. First is as evidence of a

contract in a suit for specific performance.

Second is as evidence of any collateral

transaction which by itself is not required

to be effected by registered instrument. A

collateral transaction is not the

transaction affecting the immovable

property, but a transaction which is

incidentally connected with that

transaction. The question is whether a

provision for arbitration in an unregistered

document (which is compulsorily

registerable) is a collateral transaction,

in respect of which such unregistered

document can be received as evidence under

the proviso to Section 49 of the

Registration Act.

16. An arbitration agreement does not

require registration under the Registration

Act. Even if it is found as one of the

clauses in a contract or instrument, it is

an independent agreement to refer the

disputes to arbitration, which is

independent of the main contract or

instrument. Therefore having regard to the

proviso to Section 49 of the Registration

Act read with Section 16(1)(a) of the Act,

an arbitration agreement in an unregistered

but compulsorily registerable document can

be acted upon and enforced for the purpose

of dispute resolution by arbitration.”

(Emphasis supplied)

33

33. If we apply the test as to whether the Khararunama

in this case by itself ‘affects’, i.e., by itself

creates, declares, limits or extinguishes rights in the

immovable properties in question or whether it merely

refers to what the appellants alleged were past

transactions which have been entered into by the

parties, then, going by the words used in the document,

they indicate that the words are intended to refer to

the arrangements allegedly which the parties made in

the past. The document does not purport to by itself

create, declare, assign, extinguish or limit right in

properties. Thus, the Khararunama may not attract

Section 49(1)(a) of the Registration Act.

34. As far as Section 49(1)(c) of the Registration Act

is concerned, it provides for the other consequence of

a compulsorily registrable document not being so

registered. That is, under Section 49(1)(a), a

compulsorily registrable document, which is not

registered, cannot produce any effect on the rights in

immovable property by way of creation, declaration,

assignment, limiting or extinguishment. Section

49(1)(c) in effect, reinforces and safeguards against 

34

the dilution of the mandate of Section 49(1)(a). Thus,

it prevents an unregistered document being used ‘as’

evidence of the transaction, which ‘affects’ immovable

property. If the Khararunama by itself, does not

‘affect’ immovable property, as already explained,

being a record of the alleged past transaction, though

relating to immovable property, there would be no

breach of Section 49(1)(c), as it is not being used as

evidence of a transaction effecting such property.

However, being let in evidence, being different from

being used as evidence of the transaction is pertinent

[See Muruga Mudallar (supra)]. Thus, the transaction

or the past transactions cannot be proved by using the

Khararunama as evidence of the transaction. That is,

it is to be noted that, merely admitting the

Khararunama containing record of the alleged past

transaction, is not to be, however, understood as

meaning that if those past transactions require

registration, then, the mere admission, in evidence of

the Khararunama and the receipt would produce any legal

effect on the immovable properties in question.

35

35. As far as stamp duty goes, on our finding regarding

the nature of the document, viz., Khararunama, being

record of the alleged transactions, it may not require

to be stamped. We notice the following conclusion of

the Division Bench of the Madras High Court in A.C.

Lakshmipathy and others v. A.M. Chakrapani Reddiar and

others15:

“42. To sum up the legal position

xxx xxx xxx

(V) However, a document in the nature of a

Memorandum, evidencing a family arrangement

already entered into and had been prepared

as a record of what had been agreed upon,

in order that there are no hazy notions in

future, it need not be stamped or

registered.”

36. No doubt, when there has been a partition, then,

there may be no scope for invoking the concept of

antecedent right as such, which is inapposite after a

disruption in the joint family status and what is more

an outright partition by metes and bounds. In this

regard, it is to be noticed that the appellants and the

respondents, admittedly, partitioned their joint

family properties. This is clear from the Khararunama

15 AIR 2001 Madras 135

36

wherein it is stated that they have divided the joint

family properties. The properties, which are mentioned

in the Khararunama, became the separate properties of

the respondent.

37. Resultantly, the Appeal is allowed. The impugned

Judgment is set aside subject to the observations as

contained in this Judgment. There will be no Order as

to costs.

……………………………………………J.

 (K.M JOSEPH)

 …………………………………………J.

 (S. RAVINDRA BHAT)

NEW DELHI;

OCTOBER 1, 2021.