Circular No.52666/C1/2018, Cancellation of Settlement Deed, Unilateral Cancellation, 29 November 2018

What the circular covers

Circular No.52666/C1/2018 dated 29 November 2018, issued by the Office of the Inspector General of Registration, Chennai 28, addresses deeds presented for registration to cancel earlier settlement deeds. It explains that cancellation documents are generally executed by everyone who executed the principal document, although a principal may unilaterally cancel a power of attorney.

Settlement deeds are commonly signed only by the settlor. The circular notes that this practice had led to an assumption that the settlor could also register a cancellation alone, but the cited High Court decisions reject that approach in cases where the settlement has taken effect.

Legal position recorded

Circular No.52666/C1/2018 summarises several High Court rulings on unilateral cancellation. The main points are:

• Once a settlement deed transfers the property to the settlee, the settlor loses the right or title conveyed under that deed.
• A settlor who is aggrieved by a completed settlement must approach a civil court to have it set aside.
• A Sub-Registrar is not competent to register a unilateral cancellation by deciding disputed facts or whether a legal exception applies.
• Unilateral cancellation of an unconditional and irrevocable settlement deed has been held to be against public policy and without jurisdiction.
• Courts have quashed unilateral cancellation deeds, directed cancellation entries to be removed from the register, and invalidated later settlements made on the strength of such cancellation.

When revocation may be considered

Circular No.52666/C1/2018 reproduces the rule that a donor and donee may agree that a gift will be suspended or revoked when a specified event occurs, provided that event does not depend only on the donor's will. A gift cannot validly be made revocable merely at the donor's choice.

The cited decisions also state that cancellation may involve fraud, misrepresentation, undue influence or coercion. Whether such circumstances or an agreed exception exists is a matter for a civil court to determine, not the registering officer.

Who is affected

Circular No.52666/C1/2018 is relevant to settlors, settlees, registering officers and anyone dealing with property covered by a settlement deed. A person relying on a unilateral cancellation should note that the cited courts treated such cancellation, and some later transactions based on it, as invalid. One cited judgment also states that a settlement deed's declaration that possession was handed over is sufficient to conclude that the settlement was acted upon.