Validity of Settlement Deed and Bona Fide Purchaser Defence

Factual Background and Procedural History

The dispute centered on a property in Pathanamthitta, Kerala. The plaintiff, Ajitha Jayakumar, filed O.S. No. 126 of 1995 seeking a declaration of title and recovery of possession based on a registered settlement deed (Ext.A1) executed in her favor by Ramachandran in 1986.

She alleged that in December 1994, the defendants trespassed onto the property, relying on a partition deed (Ext.A3) and subsequent sale deeds (Exts.A4 & A5) executed by Ramachandran’s alleged legal heirs. The trial court ruled in her favor, declaring her title and granting possession, along with mesne profits and an injunction.

The defendants appealed in RFA No. 491 of 2005. During the appeal, the original appellants (defendants 1 and 2) passed away, and their legal heirs were impleaded.

Identification of Legal Issues

The High Court framed and addressed the following key legal questions:

1. Whether Ext.A1 settlement deed was valid and properly executed, thereby vesting title in the plaintiff?
2. Whether the plaintiff proved acceptance and possession under Ext.A1?
3. Whether defendants 3 and 4, as legal heirs of Ramachandran, had title to the property?
4. Whether defendants 1 and 2 could claim protection as bona fide purchasers for value without notice?
5. Whether the trial court’s decree warranted interference?

Arguments of the Parties

Plaintiff (Respondent):

• Relied on Ext.A1, a registered settlement deed, claiming that she received title and possession from Ramachandran.
• Argued that the execution and acceptance of the gift were properly proven through oral and documentary evidence.
• Pointed out that possession of one portion of the property (item No.2) under the same deed was not disputed by defendants.

Appellants (Defendants 1 & 2):

• Denied the validity of Ext.A1, calling it a forged document.
• Claimed that Ramachandran’s widow and son (defendants 3 and 4) validly sold the property to them under Exts.A4 and A5.
• Asserted status as bona fide purchasers, unaware of any prior conveyance to the plaintiff.

Court’s Analysis and Reasoning

a) Proof and Validity of Ext.A1 Settlement Deed

The Court upheld the finding that the registered settlement deed was validly executed. The plaintiff (PW1) and the document writer (PW3) were examined. Though attesting witnesses had died, the Court noted:

• Under the proviso to Section 68 of the Evidence Act, examination of attesting witnesses is not mandatory for registered non-will documents, unless execution is specifically denied.
• Citing Gopinath K.I.V. v. K.I.V. Vimala [2025 KHC 281], the Court emphasized that in absence of specific denial, production and explanation by the document writer suffices.

b) Essentials of Gift under Transfer of Property Act

Citing Asokan v. Lakshmikutty [(2007) 13 SCC 210] and Renikuntla Rajamma v. K. Sarwanamma [(2014) 9 SCC 445], the Court reiterated that:

• A gift requires no consideration, must be accepted, and need not involve delivery of possession, particularly under Section 123 of the Transfer of Property Act.
• The plaintiff’s production of the original deed and uncontested possession over one part (item No.2) established valid acceptance.

c) No Title Remained with Defendants 3 & 4

Once Ext.A1 was proven, Ramachandran had divested his ownership in 1986. Hence, his alleged heirs (defendants 3 & 4) had no title to partition or sell the property in 1994.

d) Rejection of Bona Fide Purchaser Defence

The Court found that defendants 1 and 2:

• Either failed to obtain an encumbrance certificate or ignored it.
• Would have discovered Ext.A1 had they conducted proper due diligence.

Thus, they could not claim protection as bona fide purchasers, as they had constructive notice of the existing conveyance.

Final Conclusion and Holding

• The Court dismissed the appeal, affirming the trial court’s decree.
• Declared the plaintiff to have valid title and possession under Ext.A1.
• Rejected the bona fide purchaser defence.
• Directed recovery of possession and mesne profits to the plaintiff.
• Ordered the appellants to pay costs of the appeal.

FAQs:

1. Is it mandatory to examine attesting witnesses to prove a registered gift or settlement deed?

No. If a deed is registered and its execution is not specifically denied, Section 68 of the Evidence Act does not require attesting witnesses to be examined.

2. What makes a gift under the Transfer of Property Act valid?

A valid gift requires no consideration, must be executed through a registered deed, and must be accepted by the donee. Possession is not essential under Section 123.

3. Can legal heirs sell property after a registered gift deed has already been executed?

No. Once a valid gift deed is executed and accepted, the donor’s ownership ends. Legal heirs have no title left to transfer.

4. Who qualifies as a bona fide purchaser in property law?

A bona fide purchaser is someone who buys property for value without notice of prior claims. Failure to check encumbrance records may disqualify this status.

5. Can courts uphold settlement deeds if attesting witnesses are deceased?

Yes. If the document writer or other credible evidence proves execution, and there is no specific denial, courts may uphold such deeds even without attesting witnesses.

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