Punjab & Haryana High Court Holds Property Vested Under Occupancy Tenants Act Is Self-Acquired; Upholds Family Settlement and Restores Trial Court Decree

Case Name: Surja Ram (deceased) through LRs v. Prithvi Raj (deceased) through LRs and Others
Date of Judgment: 11 December 2025
Citation: RSA No. 1473 of 1994
Bench: Hon’ble Mr. Justice Deepak Gupta

Held: The Punjab and Haryana High Court allowed a Regular Second Appeal and restored the trial court’s judgment dismissing the suit for declaration. The Court held that land acquired by an occupancy tenant upon vesting of proprietary rights under the Punjab Occupancy Tenants (Vesting of Proprietary Rights) Act, 1952 is self-acquired property and not ancestral coparcenary property. Consequently, the father had full authority to deal with the land, and a family settlement acted upon by all parties could not be reopened. The First Appellate Court was found to have erred in treating the property as ancestral and in ignoring overwhelming evidence of a valid family settlement.

Summary: The dispute arose from a suit filed by one son seeking declaration that agricultural land standing in the name of his father was joint Hindu family property and that a consent decree suffered by the father in favour of another son was illegal and collusive. The plaintiff asserted that the property was ancestral coparcenary land and that the decree had been passed without legal necessity, thereby infringing his coparcenary rights.

The defendants contested the claim by asserting that the land was the self-acquired property of the father, having vested in him by operation of law under the Punjab Occupancy Tenants (Vesting of Proprietary Rights) Act, 1952. They further pleaded that a bona fide family settlement had already taken place, under which each son received a defined share, and that the plaintiff had accepted his portion, including by securing a sale deed without consideration, and had acted upon the settlement.

The trial court dismissed the suit after holding that although the land was originally held as occupancy tenancy, proprietary rights accrued to the father for the first time through statutory vesting, rendering the property self-acquired. It also found clear evidence of a family settlement that had been fully implemented. The First Appellate Court reversed this finding by treating the land as ancestral and declaring the decree invalid.

In second appeal, the High Court held that statutory vesting of ownership under the 1952 Act confers self-acquired property rights, and oral admissions or assumptions about ancestral character cannot override the legal effect of the statute. The Court found that the plaintiff had unequivocally accepted and benefited from the family settlement and was estopped from challenging it. Emphasising that family settlements are favoured in law and should be upheld when fairly arrived at and acted upon, the Court concluded that the consent decree merely gave effect to the settlement and was neither fraudulent nor illegal.

Decision: The Regular Second Appeal was allowed. The judgment of the First Appellate Court was set aside, and the trial court’s decree dismissing the suit was restored.