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Corporate Entities Can Execute Settlement or Gift Deeds

In Dr. Abdul Rasheed v. State of Kerala, a company executed a settlement deed in favour of three children of its managing director. The Sub-Registrar impounded them since the instruments were insufficiently stamped. The District Registrar and Land Revenue Commissioner affirmed this order impounding the deeds. A single bench of the high court, before which the petitioner challenged these orders, refused to interfere.

Writ appeal was filed and one of the question before the Division Bench was whether an artificial person, say a company, execute a deed of settlement. The Registration Department contended that a settlement deed must have been executed in favour of the members of a family, while a company can execute a gift.

Referring to relevant articles of the Stamp Act, the bench said: “Settlement of property predominantly takes place among the members of a family, though it can be “for some person dependent” on the settlor. Unless we read down “some person dependent” to mean only a relative, a settlement can be between non-relatives, too............If the deed cannot be a settlement, we fail to understand how it can be a gift. Besides mentioning near relatives, both the Articles mention “in any other case”. This expression in either article permits both the settlement and gift to be a device for inter-vivos transfer beyond the family and, for that matter, covering even artificial personalities, such as corporate entities.”

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