Marital Agreements In India

In the Indian society, divorce is still seen as the last resort; and divorce disputes can be extremely unpleasant and traumatizing

When two individuals enter into a Marital Agreement, they are essentially saying, “I love you enough to plan for the unexpected.”

With the Supreme Court of India recently deciding on the all-important aspect of whether same sex-couples can enter into a wedlock, marriages (and whether the right to marry is a fundamental right) has become a hot topic for discussion. Interestingly, one of the arguments made before the Indian Supreme Court towards not legalising same-sex marriage was that same-sex couples were not capable of a ‘real’ marriage – implying that unions between couples belonging to the same sex are not on the same pedestal as those belonging to the opposite sexes. This begs the question – what then, is a ‘real’ marriage? If ‘real’ marriages are ones that last forever, then heterosexual marriages most certainly do not fall into that ambit. Nevertheless, while the Indian Supreme Court has ruled against same-sex marriages, it is safe to say that Indian courts try their best to protect the bond of marriage between a man and a woman.

In the Indian society, divorce is still seen as the last resort; and divorce disputes can be extremely unpleasant and traumatizing. It is for this reason that many couples in today’s day and ageare looking towards an arrangement to ensure that, at least, the legal burden of separation is eased. The legal position in India surrounding the enforceability of such arrangements is uncemented. This article aims to shed some light on the validity and enforceability of such agreements in India, which would, henceforth be referred to as ‘Marital Agreements’.

Marital Agreements: A Global Overview

United Kingdom (“UK”): Historically, Marital Agreements were not fully recognized under English law and by the English Courts, but they were rather considered (and enforced) on a case-by-case basis.¹ The significance of such agreements was limited – since asset distribution was governed by statutory formulas² rather than by contractual terms.³ However, in recent years, English courts have accorded greater recognition to Marital Agreements, increasing their importance.

While not automatically binding, these agreements are upheld if certain formalities are met. Then again, the exception of public policy still applies, and therefore, the Marital Agreement must not be opposed to public policy. A landmark UK Supreme Court judgment⁴ clarified the position of Marital Agreements and largely established that a Marital Agreement would only have effect in the absence of circumstances that would make it ‘unfair’. While Marital Agreements carry decisive weight, in most cases, such an agreement does not prevent a party from asking the Court to intervene and decide on how the assets of the parties should be divided. Regarding the public policy position, UK Courts have held that Marital Agreements do not clash with the concept of public policy so long as they are willingly agreed upon and do not result in unfairness to either party.

United States of America (“USA”): In the USA, Marital Agreements are generally enforceable in all states, subject to varying nature and procedural requirements. The agreements require full and fair disclosure of assets, voluntary consent, absence of unconscionability, access to independent legal consultation, execution well before the wedding, and compliance with public policy. Challenges can be made based on fairness, duress, or deceit.

Canada: In Canada, Marital Agreements are not legally required but can be considered as factors in divorce proceedings, especially for child and spousal support. Canadian Courts tend to honour agreements related to property division between spouses, but they may interfere if an agreement substantially contradicts the objectives of the Divorce Act⁵.⁶ In matters pertaining to child custody in the event of divorce, Canadian Courts tend to approve Marital Agreements as long as it is for the benefit of the child.

Various other countries, including Australia, Brazil, China, France, Portugal, Russia, Spain and Thailand, have made Marital Agreements enforceable in accordance with their respective legal systems.

Shifting the Lens Back to India

Hindu Marriage: Hindu marriage is governed by the Hindu Marriage Act 1955 (“HMA”). Under Hindu law (which also applies to Hindus, Buddhists, Jains and Sikhs), marriages are viewed as a sacrament and are treated as impregnable. While it is true that the manner in which these marriage ceremonies are performed might vary depending upon the community, the common thread between such diversity is the holiness with which marriages are perceived. While Hindus are free to conduct a sacramental form of marriage governed by the HMA, they can also contract to a civil marriage under the Special Marriage Act 1954 (“SMA”).

Muslim Marriage: Under Muslim law, a marriage is typically referred to as a ‘nikah’. While the law surrounding the concept of nikah may vary between the Sunnis and the Shias –its justification remains the same. The nature of marriage under Muslim law is that of a civil contract and it is undertaken for legislating the terms of procreating. The essentials to enter into a nikah are: (i) the parties must be Muslims, who are of sound mind and who must have attained puberty; (ii) proposal and acceptance; (iii) witnesses; and (iv) determination of mahr amount.

What are Marital Agreements?

Marital Agreement (which includes within its ambit pre-nuptial / post-nuptial agreements)is an arrangement between spouses that outlines their financial rights and obligations during the marriage, as well as in the event of separation, or the death of one of the spouses. These agreements serve to protect individual interests and provide clarity in matters of asset division, alimony, child custody and other financial aspects.

While there is a common misconception that Marital Agreements anticipate a separation or divorce, in reality the objective of such agreements is to promote and encourage the marriage. Typically, the parties to the agreement clearly set out that while they hope that the marriage will continue and endure for the rest of their joint lives, if their hopes are not fulfilled and the marriage breaks down, the Marital Agreement, which clearly sets out the joint and separate assets of the parties, should govern and resolve any financial claims they may have against one another. To draw a parallel, it is common practice to have an arbitration agreement, for instance, in a contract– while neither party intends for there to be a breach, in case there is one which results in a dispute, the parties would resolve it in the manner that has already been agreed upon. Such arrangements save time, money and the anxieties surrounding resolving conflict.

While all Marital Agreements are unique in one aspect or the other, the following are the key ingredients of a Marital Agreement:

• An agreement in writing, mutually agreed upon and acknowledged by the parties;

• Consent to the agreement by the parties should be free of undue influence, fraud, misrepresentation or coercion – failure to disclose the assets would most likely invalidate the Marital Agreement or render it impossible to fulfil;

• Both parties must sign the contract with proper legal representatives and witnesses. A notary would also be preferred; and

• Such agreement should contain reasonable clauses with no asymmetry of benefit between the contracting parties.

The Union of India and Marital Agreements

There is no express provision in Indian law in relation to Marital Agreements, barring the exception of the Portuguese Civil Code 1867 (“PCC”) which operates in Goa. The PCC allows for Marital Agreements to be entered into for the division of assets. The Supreme Court of India has held that in Goa, married couples jointly hold the ownership of all the assets (either before marriage or acquired after marriage) owned by each spouse under the PCC – therefore, in the event of a divorce, each spouse is entitled to half-share of the assets. In fact, the PCC also permits couples to enter into Marital Agreements which may envisage a different system for division of assets.⁷ As for the rest of India, to test its validity and enforceability, a Marital Agreement would have to be examined through the lens of the Indian Contract Act 1872 (“ICA”) and the prism of ‘equity’ and ‘reasonableness’.

Relevance of the ICA in Marital Agreements

A contract under the ICA is an agreement enforceable by law if such an agreement satisfies the following conditions: (i) free consent of the parties, (ii) competency of the parties to contract, (iii) lawful consideration, (iv) lawful object⁸, and (v) not deemed to be void under the provisions of the ICA.

Consent

An agreement may be enforced only upon those persons who have consented to and are parties to such Marital Agreement. Hence, both the husband and wife are required to be made parties to the Martial Agreement and their consent to the same is required to be free from any fraud, duress, undue influence, and/or coercion.

Consideration

Consideration in the case of Marital Agreements may not be monetary and can merely be a set of reciprocal promises. For instance, the parties may agree to not disclose or publish any confidential information and/or secrets of the parties and their respective families– which may have been disclosed to each other during and post marriage. Such reciprocal promises are valid and are enforced by Indian Courts by way of grant of an injunction.⁹ However, reciprocal promises prohibiting a person from exercising a statutory right would be unlawful, eg, promises whereby parties waive their right to maintenance. On the other hand, the Calcutta High Court has held that a promise to grant an additional sum of money as maintenance in case of divorce was lawful.¹⁰

Object

Illegal and/or immoral objects (including objects against public policy) make a contract void and unenforceable in India in accordance with the ICA. Courts have, based on the facts of the case, drawn a thin line of difference as to what constitutes an immoral object and what constitutes a lawful object. This has been specifically demonstrated in cases involving Marital Agreements – which, in the view of the Courts, appear to promote separation or seek to alter the tenets of personal law on the matter of marriage.

Then again, the sacrosanctity with which marriages are viewed in India comes into play. What constitutes a contravention of public policy has always been up for debate in India. That which is in contravention today might not necessarily be that way tomorrow¹¹ – public policy, therefore, is nebulous and a victim of impermanence. Nonetheless, it is understood that the doctrine of public policy should only be invoked in “clear cases in which the harm to the public is substantially incontestable and does not depend upon inferences of a few judicial minds.”¹²

The ‘Public Policy’ debate | A study of judicial pronouncements

Public policy has been a recurring and ostensibly the most prominent concern of the Indian Courts in refusing to give effect to Marital Agreements. The implementation of the public policy argument in invalidating Marital Agreements has ostensibly taken shape in two distinct ways. Firstly, Marital Agreements with clauses seeking to override rights and entitlements provided under personal laws and tradition have been struck down on public policy grounds. Secondly, Marital Agreements with clauses which are perceived by the Courts as having the potential to encourage future separation of the married couple have also been interpreted as being against public policy. Key judicial pronouncements setting out the manner in which Indian Courts perceive and rule on Marital Agreements are set out below:

1. Ram Sumran Prasad v. Govind Das: The Patna High Court held that an agreement to pay money to the parents or guardians of a bride in consideration for their consent to the betrothal is not necessarily immoral or opposed to public policy. However, in a case where the parents / guardians of the bride are not seeking for her welfare but are rather accepting such as consideration for their consent to the betrothal (where the groom is otherwise ineligible) in order to secure a benefit to themselves was held to be immoral and against public policy.¹³

2. Rao Rani v. Gulab Rani: The Allahabad High Court held that an agreement wherein the widow agreed to forfeit her right to the property of her deceased husband if she remarries is valid in law. Such an agreement was not in restraint of marriage as there was no direct prohibition to remarry under the agreement.¹⁴

3. U Ga Zan v. Hari Pru: In this case, the father of the bride agreed to bear the expenses for the education of the bride groom on the condition that the bride groom and his father would repay the money in case the bride groom marries another woman during the lifetime of the bride. The Court held that the burden of repaying the money acted as a restraint on the bride groom from marrying another woman.¹⁵

4. Thirumal Naidu v. Rajammal Alias Rajalakshmi: The couple, prior to their marriage, agreed to live separately post their marriage. While granting the wife’s plea for restitution of conjugal rights, the Court held that an agreement made before or at the time of marriage – controlling the rights of the parties which the law confers upon them after the marriage and which, if enforced, might make the marriage itself invalid, is bad in law and opposed to public policy.¹⁶

5. Commissioner of Income Tax v. Mansukhrai More: The Calcutta High Court held that a Marital Agreement requiring the husband to transfer the property to a trust for the sole benefit of the children that he and his wife may have after the marriage was valid in law.¹⁷

6. Tekait Mon Mohini Jemadai v. Basanta Kumar Singh: The Calcutta High Court held that permanently restraining one spouse to reside in a particular place was against public policy on account of restraining the statutory rights of the person (which in the Court’s opinion would instigate a separation).¹⁸

7. Bai Appibai v. Khimji Cooverji: The Bombay High Court held that a Marital Agreement which stipulated that the couple would reside in a particular city after marriage was valid in law and was not against public policy, owing to the fact that it did not restrict either spouse to reside in that city permanently.¹⁹

Final Remarks

Courts in India are not recognising Marital Agreements as valid on their own. Instead, the Courts have adopted two methods to interpret Marital Agreements being legally binding — firstly, by enforcing the terms of the Marital Agreement alongside other legal principles, such as those pertaining to property law, and secondly, by creating exceptions within the broader framework of judicial precedents which have viewed Marital Agreements as invalid due to their conflict with public policy. In light of the same, it is advisable to incorporate a severability clause in such agreements so that invalid clauses, if any, do not make the entire agreement void and unenforceable. Apart from this, parties would also benefit from other mechanisms, such as the creation of family trusts, family arrangements, a tiered holding structure of family assets or a hybrid of these structures, in addition to Marital Agreements to protect the family assets.

Furthermore, Marital Agreements with oppressive or conflicting terms particularly related to religion, or ones that potentially promote separation of the couple, have been deemed to be against public policy and have thereby been invalidated. Such treatment of Marital Agreements in Indian jurisprudence is a manifestation of legal realism in today’s world as there is more to the way Indian Courts treat Marital Agreements than just formal black-letter law.

Tying this back to the prevalent discourse on same-sex marriage, it is to be seen how the concept of marriages (and thereby Marital Agreements) evolves over time. The waltz between legal and social reform is never-ending, and one moves with the other. What this particular song at this time will do for Marital Agreements remains to be seen.

Disclaimer – The views expressed in this article are the personal views of the authors and are purely informative in nature.