Shri Prabhat Kamal Gupta vs Shri Ashok Kamal & Ors.

* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 04.05.2026
Pronounced on: 15.05.2026

+ FAO(OS) 8/2025, CM APPL. 4959/2025 & CM APPL. 29876/2026
ASHOK KAMAL DECEASED THR LRS & ORS.
.....Appellants
Through: Mr. Aayush Agarwala & Ms.
Utkarshani Srivastava, Advs.
versus
PRABHAT KAMAL GUPTA & ORS. .....Respondents
Through: Mr. Akshay Makhija, Sr. Adv. with
Ms. Seerat Deep Singh, Advs./R1

+ FAO(OS) 10/2025, CM APPL. 4349/2026, CM APPL. 5891/2026
SHRI PRABHAT KAMAL GUPTA .....Appellant
Through: Mr. Akshay Makhija, Sr. Adv. with
Ms. Seerat Deep Singh, Advs.
versus
SHRI ASHOK KAMAL DECEASED THROUGH LRS &
OTHERS .....Respondents
Through: Mr. Aayush Agarwala & Ms.
Utkarshani Srivastava, Advs.
CORAM:
HON'BLE MR. JUSTICE VIVEK CHAUDHARY
HON'BLE MS. JUSTICE RENU BHATNAGAR
J U D G M E N T
1. The present two appeals assail Judgment dated 18.11.2024 passed by
the learned Single Judge in I.A. No. 6709/2024 in CS(OS) 109/2016 and
the communication dated 04.10.2023 issued by the Registry of this Court
directing the parties to pay stamp duty for drawing up the decree in terms
of a Memorandum of family settlement dated 25.11.2018 (“Memorandum
of family settlement”). Since both appeals arise from the same impugned
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judgment and involve common issues, they are being decided by this
common judgment.
2. The dispute pertains to property bearing No. 10, Friends Colony
(West), Mathura Road, New Delhi (hereinafter referred to as “the
Property”), which was purchased in the year 1957 by late Sh. Om Prakash
Gupta and was treated as part of the Hindu Undivided Family comprising
of himself and his two sons, Mr. Prabhat Kamal Gupta and Mr. Ashok
Kamal Gupta. Upon his demise on 14.05.1994, under a Will dated
02.09.1993, his one-third share in the property, at its rear end, was
bequeathed to his daughter namely Smt. Amita Rani Gupta. The specific
portion of her share was acknowledged by the family and recorded in a
Deed of Declaration dated 22.07.2004. Rest of the property remained
jointly held by the two brothers, namely Mr. Prabhat Kamal Gupta and Mr.
Ashok Kamal Gupta. The brothers attempted for division of the property
but could not succeed and hence, CS(OS) 109/2016 for partition came to be
instituted.
3. The learned Single Judge on 20.10.2016 passed a preliminary decree
for partition and further on 08.05.2017 passed a final decree. He further
found that partition by metes and bounds was not possible and accordingly
directed for sale of the property and distribution of proceeds. At this stage
the parties arrived at an oral settlement inter se on 22.11.2018, agreeing to
effect partition by metes and bounds by accommodating each other. The
said oral settlement was thereafter recorded in a Memorandum of family
settlement.
4. A joint application by the parties was filed seeking modification of
the final decree dated 08.05.2017 in terms of the said Memorandum of
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family settlement and v ide Order and Decree dated 18.12.2018, the final
decree was modified and a final decree for partition of the property by
metes and bound was directed to be drawn in terms of the family
settlement.
5. The Registry of this Court, at the stage of drawing of final decree
vide communication dated 04.10.2023 raised a demand of
₹1,81,49,571.86/- towards stamp duty from the parties. The said demand
was disputed by the parties and I.A. No. 6709/2024 was filed, which came
to be dismissed by the learned Single Judge vide the impugned Order dated
18.11.2024 on the ground that the Memorandum of family settlement is not
bonafide as the same is executed to save stamp duty. Aggrieved thereby,
the present appeals have been preferred.
6. Before this Court, CM APPL. 29876/2026, has been filed that since
the parties have already bifurcated their shares and taken physical
possession on their respective share as per the family settlement, therefore,
instead of decree of partition, a decree of declaration may be passed. There
is no objection to this application by any party .
7. We have heard learned counsel for the parties and have perused
record. The issues that arise for consideration are whether, in the given
facts and circumstances, the Memorandum of family settlement recording
an earlier oral settlement dated 22.11.2018 is exigible to stamp duty or not;
and whether the same is bonafide.
8. The facts of the case reveal that the learned Single Judge found that
the shares of the parties in the property could not be divided by metes and
bounds and directed for sale of the same and to distribute the proceeds as
per the shares. It appears that the parties, having affection to the ancestral
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property accommodated each other and orally partitioned the property,
mutually adjusting the shares and thereafter recorded the same in writing
by Memorandum of family settlement. The Memorandum does not itself
affect any partition, but merely records the oral arrangement already
concluded by exchange of possession effected between the parties. Even
the learned Single Judge, in the impugned Order dated 18.11.2024, has
noted this position, and the same is not in dispute.
9. The legal position with regard to liability of such a recording in
writing of an earlier oral settlement is no longer res integra . In Madho Das
v. Mukand Ram , (1955) 1 SCC 344, the Supreme Court held: -
“46… It is well settled that a compromise or family arrangement is based
on the assumption that there is an antecedent title of some sort in the
parties and the agreement acknowledges and defines what that title is,
each party relinquishing all claims to property other than that falling to
his share and recognising the right of the others, as they had previously
asserted it, to the portions allotted to them respectively. That explains
why no conveyance is required in these cases to pass the title from the
one in whom it resides to the person receiving it under the family
arrangement. It is assumed that the title claimed by the person receiving
the property under the arrangement had always resided in him or her so
far as the property falling to his or her share is concerned and therefore
no conveyance is necessary.”
10. In Kale v. Deputy Director of Consolidation , (1976) 3 SCC 119 , the
Supreme Court held: -
“10…
(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 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
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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;”
11. In view of the above settled law, an oral settlement of property
amongst family members jointly owning the same is permissible under law.
Recording of such an oral settlement in writing is also not liable to
registration or stamp duty as no right is created or extinguished by such a
document.
12. Now coming to the second issue of bonafide in the oral settlement
and thereafter recording the same in writing for submission to the Court is
concerned, suffice is to say, that, any person is well within his right to
manage his affairs in a manner which attracts minimum tax liability unless
the law restricts or curtails such right to choice . In C ommissioner of
Income Tax v. Shiv Raj Gupta , 2014 SCC OnLine Del 7305, the Co-
ordinate Bench of this Court held: -
“ 50. The assessee is well within his right to choose any one event
between two or more events and select an event to minimise or
reduce his tax liability. The Act, i.e., the Income-tax Act, 1961,
imposes and saddles tax liability on the chosen tax event. The Act per
se, unless a provision so stipulates, does not restrict or curtail the
right of choice . Tax is determined and gets crystallised on the tax
event adopted by the assessee. For example, in Vodafone's case
(supra), the assessee had several options and, therefore, right to
choose a particular tax event. As long as the choice is within the
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framework of law, the Assessing Officer cannot disturb the tax effect
or liability, which is the consequence of the event. The choice of the
assessee is not abrogated or invalidated. For example, a company has
several legal options and, therefore, right to choose how to dispose of
a capital asset, as in Vodafone's case (supra). Similarly, an assessee
can opt for and has multiple options for raising debt to finance
business expansion plans. The assessee may have several legally
permissible alternatives to effect and divide the assets on partition.
Such examples are numerous. The choice might result in mitigation of
tax liability but the tax effect would not classify or help us differentiate
between tax avoidance and abusive tax avoidance. Any attempt to
minimise or eliminate tax liability would not make the choice of the
taxpayer abusive tax avoidance. The foundation of the said principle
is that the tax code by its nature differentiates between different types
of actions, transactions, arrangements and activities and then
identifies and stipulates the consequences. The tax code, i.e., the
Income-tax Act, 1961, is rule based and complex. The Act is not
entirely principle based. The provisions are read and applied. The
principle of purposive interpretation both in favour of the Revenue or
the assessee can be applied but within the four corners of law. In fact,
in some cases, the assessee may find themselves taxed at a higher
liability for failure to choose a more tax friendly event. But the right of
choice is hedged with one significant condition. The event selected, as
noticed above and, subsequently, should be real and not a
colourable device, sham and deceit. ”
(emphasis added)
13. Thus, merely because the option availed by the parties, permissible
under law, reduces or nullifies the stamp liability, would by itself not make
the same malafide. Further, in the present case, the learned Single Judge
itself found that it was not possible to divide the property by metes and
bounds and directed for sale and division of sale proceeds as per the shares.
It was at this stage that the parties adjusted their claims/shares and settled
for partition by metes and bounds. In the given circumstances there is no
basis to presume any malafide on either count.
14. In view of CM APPL. 29876/2026 which is not opposed and
considering that the parties have already bifurcated their shares and taken
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physical possession of their respective share as per the family settlement,
this Court deems it appropriate to pass a decree of declaration instead of a
decree for partition, as prayed for.
15. Therefore, the present appeals are allowed. The impugned Order
dated 18.11.2024 is set aside and the communication dated 04.10.2023
issued by the Registry is quashed.
16. Accordingly, the Judgment and Decree dated 18.12.2018 passed in
CS(OS) 109/2016 stands modified and a decree of declaration is hereby
passed. It is declared, inter se between the parties to the present
proceedings and in terms of the family settlement, that the Appellants in
FAO (OS) 8/2025 namely Mr. Ashok Kamal, Mr. Avikshit Saras, Ms.
Manassvi Rani and Ms. Akshita Rani, collectively, shall be entitled to hold
and enjoy as exclusive owners the portion of the property shown as ABCD
in the site plan annexed with the family settlement, and the Respondents in
FAO (OS) 8/2025, namely Mr. Prabhat Kamal Gupta, Mr. Shiv Gupta and
Ms. Pratyusha Gupta, collectively, shall be entitled to hold and enjoy as
exclusive owners the portion shown as CDEF therein. The Memorandum of
family settlement along with the site plan shall form part of the decree.
17. Pending application(s), if any, also stand(s) disposed of.

VIVEK CHAUDHARY
(JUDGE)



RENU BHATNAGAR
(JUDGE)
MAY 15, 2026/ ht/nc
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