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

What the circular covers

Circular No.52666/C1/2018 of the Office of the Inspector General of Registration, Chennai, concerns cancellation deeds executed by a settlor without the participation of the settlee. It notes 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 explains that this practice had led to a presumption that the settlor could also register a cancellation alone, but the Madras High Court decisions reproduced in the circular reject that position in the circumstances considered.

Key legal position recorded

The Office of the Inspector General of Registration relies on several Madras High Court decisions concerning unilateral cancellation of settlement deeds. The main points recorded are:

• Once a settlement deed has taken effect and transferred rights to the settlee, the settlor cannot unilaterally take those rights back through a registered cancellation deed.
• An unconditional and irrevocable settlement deed cannot be cancelled merely by presenting a cancellation deed to the Sub-Registrar.
• Allegations such as fraud, misrepresentation, undue influence or coercion must be decided by a civil court.
• A registering officer is not competent to decide disputed facts or determine whether a claimed exception permitting revocation applies.
• In one case, the High Court directed removal of the cancellation entry from the register and held that a later settlement based on that cancellation was null and void.
• The High Court also quashed unilateral cancellations in several other cases listed in the circular.

When revocation may arise

Circular No.52666/C1/2018 reproduces section 126 of the Transfer of Property Act, 1882. It states that a donor and donee may agree that a gift will be suspended or revoked upon a specified event that does not depend on the donor's will. An agreement making a gift revocable merely at the donor's will is void, and except for the stated circumstances, a gift cannot be revoked.

Who may be affected

Circular No.52666/C1/2018 is relevant to settlors, settlees, registering officers and anyone claiming property through a cancellation or later transaction. A person relying on a title created after unilateral cancellation may be affected if a court removes the cancellation entry and invalidates the later transaction.