Supreme Court Sets Aside Gift Deed After Finding That Property Share Was Relinquished Under Earlier Family Settlement

The Supreme Court has set aside a gift deed executed by a man in respect of properties over which he had already relinquished his claim under an earlier family compromise. The Court held that the Telangana High Court and the trial court had failed to properly consider the effect of the family settlement and the subsequent compromise decree while upholding the gift deed.

A Bench comprising Justice Sanjay Kumar and Justice Sanjeev Sachdeva allowed the appeal filed by the legal representatives of the original plaintiffs in B. Anasuyamma (Died) per LR & Anr. v. B. Madhusudhan Reddy (Died) per LRs & Ors., setting aside the judgments of the courts below and decreeing the suit. <Cite refs={["turn680485news0","turn680485search1"]}/>

Dispute Over Ancestral Properties

The dispute originated from a family settlement dated April 19, 1959, under which ancestral properties were divided among family members. Madhusudhan Reddy received certain properties, while specified lands in Karkalpahad village were allotted to his mother, Manikyamma.

During subsequent litigation concerning the family properties, Madhusudhan Reddy entered into a compromise with Anasuyamma and her adopted son, Venkatraji Reddy, on February 24, 1986.

Under the compromise, Madhusudhan Reddy relinquished his claim to a share in the properties allotted to his mother under the 1959 family settlement. In exchange, he secured absolute rights over a house property situated at Himayatnagar, Hyderabad.

The High Court recorded the compromise and allowed the appeal in terms of the settlement in September 1990. <Cite refs={["turn680485news0","turn680485search1"]}/>

Gift Deed Executed in 2007

Despite the earlier compromise, Madhusudhan Reddy executed a registered gift deed in April 2007 in favour of Siddhartha Reddy, transferring several parcels of land in Karkalpahad village.

The appellants contended that the properties covered by the gift deed were among those over which Madhusudhan Reddy had already relinquished his claims under the 1986 compromise.

Anasuyamma, Venkatraji Reddy and another family member subsequently instituted a suit seeking a declaration of title, a declaration that the gift deed was null and void, correction of revenue records and a permanent injunction.

The trial court dismissed the suit in 2012. The Telangana High Court upheld that decision in 2022, prompting the appellants to approach the Supreme Court. <Cite refs={["turn680485news0","turn680485search1"]}/>

Supreme Court Finds Errors in Earlier Judgments

The Supreme Court found that the trial court and the High Court had failed to draw the correct conclusions from the 1959 family settlement and the 1986 compromise.

The judgment, authored by Justice Sanjay Kumar, emphasised that Madhusudhan Reddy had expressly given up his claim to the properties allotted to his mother under the earlier settlement in return for full rights over the Himayatnagar house.

The Court observed that the lower courts had overlooked the legal effect of these documents while deciding the validity of the subsequent gift deed.

It held that the findings of the High Court and the trial court could not be sustained because they were founded on fundamental errors in appreciating the family settlement and compromise.

Supreme Court Allows Appeal

Setting aside the judgments of both the trial court and the Telangana High Court, the Supreme Court allowed the appeal and decreed the suit.

The decision underscores the importance of examining the terms and legal effect of an earlier family settlement and a compromise decree when determining whether a party retains rights to transfer disputed property.

A person who has relinquished a claim to property under a binding family compromise cannot execute a subsequent gift deed over that property on the assumption that the relinquished rights remain available for transfer.

Case Title: B. Anasuyamma (Died) per LR & Anr. v. B. Madhusudhan Reddy (Died) per LRs & Ors.*
Citation: 2026 INSC 1126
Court: Supreme Court of India
Bench: Justice Sanjay Kumar and Justice Sanjeev Sachdeva