A donor cannot gift property allotted to another and relinquished under a binding compromise.

A family settlement dated 19 April 1959 allotted separate properties to members of the family, including Manikyamma, Anasuyamma, Madhusudhan Reddy and Janardhan Reddy.

In 1986, Anasuyamma and her adopted son, Venkatraji Reddy, settled their dispute with Madhusudhan Reddy; the compromise was recorded under Order XXIII Rule 3 of the Code of Civil Procedure, 1908, and the High Court allowed the related appeal in 1990.

In 2007, Madhusudhan Reddy executed a gift deed in favour of Siddhartha Reddy over lands which, under the 1959 settlement, had not been allotted to him and which he had relinquished claims to under the 1986 compromise.

Anasuyamma, Venkatraji Reddy and Gunna Malinidevi sued for declaration of title, invalidation of the gift deed, mutation and injunction.

The Trial Court dismissed the suit, and the High Court dismissed the appeal.

They appealed to the Supreme Court.

1. Whether the Trial Court and High Court judgments dismissing the suit could stand despite the 1959 family settlement and the 1986 compromise recorded by the High Court.

2. Whether the gift deed could confer rights over lands that had not been allotted to Madhusudhan Reddy and in which he had relinquished his claim.

Order XXIII Rule 3 of the Code of Civil Procedure, 1908, permits a lawful compromise to be recorded by the court and the matter to be disposed of in accordance with it; here, the 1986 settlement was recorded under that provision and received the High Court’s approval.

The Court applied the terms of the 1959 family settlement and the 1986 compromise as governing the parties’ respective claims to the properties; it cited no separate precedent or statutory rule governing the gift deed.

The Supreme Court found that the lower courts failed to give effect to the property allocations under the 1959 settlement and the terms of the 1986 compromise.

Those documents showed that the disputed lands had not fallen to Madhusudhan Reddy’s share and that he had relinquished claims to the properties allotted to Manikyamma.

The High Court also erred in observing that execution of the gift deed was undisputed, despite the suit having specifically challenged it, and in rejecting the claim concerning Manikyamma’s properties without considering the settlement documents.

The resulting judgments could not be sustained.

There was no order as to costs.