Band, Baajaa, ‘Bargain’: Legal Status of Pre-Nuptial Agreements in India

Article for Blog Post Writing Competition 2011 | by Divyanashi Chandra

June 6th, 20119:44 am

They say marriages are made in heaven, and fortunate are ye, who get united in holy matrimony. Considered to be the biggest event for the bride and groom, wedding is viewed as a sacred prelude to a journey of joy, bliss and love, until it is brutally disrupted by uneventful halts like dissolution, divorce and breakdown. All the tenderly nursed dreams for future seem to get shattered, and left behind is bitterness, mainly over emotional and financial matters. It is in this context, we must see how pre-nuptial agreements fit the bill.
A pre-nuptial agreement or prenup is a contract, entered into by couples about to get married, wherein they outline and finalize (i.e. duly sign and register) the distribution scheme of their assets (mainly financial) and liabilities upon the failure of their marriage, before the wedding  takes place. While still considered to be a trend popularized by the rich and famous in Hollywood, it is slowly catching up in the Indian society too.

Contrary to popular belief, a ‘well-drafted’ prenup is 50-60 pages long, and is designed as a multi-tiered document. This structure has several clauses, the most common ones covering issues like distribution of property acquired jointly, or individually during continuance of marriage, custody of child, division of liabilities with respect to care-taking of child, exclusion of certain properties from division upon breakdown (like acquired inheritance), setting up of an upper limit over alimony etc. Some recent advancements in this area include the ‘sunset’ clause which stipulates expiry of the prenup (either time-based or conditional) and the ‘infidelity’ clause which sets additional set of conditions (read additional liabilities) upon the spouse found ‘cheating’ on the other.

While a prenup does not have a fixed structure and could be tailored according to the will of the couple, there are certain requirements which have to be necessarily met; these requirements being the mutual voluntariness while signing the agreement (no coercion), full disclosure of financial assets and liabilities by both parties, equitable and fair scheme of distribution, realistic stipulations, negotiations under assistance of qualified lawyers etc.

While prenups are common in western countries, they are still not warmly welcomed in the Indian society. Since marriages have a sacred status ascribed to them, it becomes difficult for us to weigh them in contractual terms. Then, marriages are affairs of the heart and not of mind, so what better prenup than trust and love? Also, opting for such agreements invites social stigma that the couple shares low commitment, and anticipation of divorce even before marriage is both, bad omen and unromantic.

But, would turning a blind eye towards unfortunate events phase out their occurrence in future? Would avoiding the issue of prenups nullify the possibility of a breakdown? Hence, it is advised that couples must keep their emotional strings aside for a while and think practically. Though it may sound like a business deal, a prenup is a long-term investment. Here are a few reasons why one must opt for it:

  1. Majority of the alimony laws in the country support the female spouse, without even considering the financial status of the male spouse. But, since a prenup is based upon pre-determined stipulations which encourage ‘equitable’ flow of assets regardless of gender, it is gender-neutral in that sense.
  2. Since most of the financial issues are already outlined in a prenup, the couple is saved from legal hassles and bitter negotiations that go into sorting out monetary matters, post breakdown.
  3. None of the alimony laws in the country have a practical arithmetic formula to determine the sum of alimony, which may differ depending upon various factors (income of spouses, standard of living, conduct of applicant etc). The sum reflects the discretion of courts and usually results in being meager. On the contrary, a prenup strives for equitable distribution and allows both the spouses to have a say in the financial assets they would receive.
  4. In addition to the previous point, it can be argued that a pre-determined scheme of maintenance prevents the prevalent abuse of Section 498-A of IPC, wherein wives blackmail their ex-husbands to extort obnoxious sums out of them, under the garb of law.
  5. Prenups ensure that the spouses are relieved from carrying the burden of each-other’s financial obligations (like debts) post breakdown.
  6. In a society where female property-rights bite dust everyday, prenups are radical instruments for encouraging women to assert their proprietary rights, and sustain themselves rather than being left at the mercy of their ex-spouse.

vii. A full disclosure of financial status of both parties prevents possibility of marital frauds, wherein one party hides its ‘real’ financial background from the other, as commonly witnessed these days.

Against this backdrop, it becomes pertinent to understand the legal status of prenups in India. In absence of legislative endeavors and litigation in this field, there are four prevalent views. The first maintains that they are governed by contract laws and not matrimonial laws, and require the same conditions as for any other contract under Section 10 of Indian Contracts Act, 1872 (ICA).[1] The second view negates the first one by claiming that such agreements are against ‘public-policy’ and hence, void under Section 23 of ICA. While the third view rests its case by arguing that prenups are nothing more than Memoranda of Understanding (MoU) between the spouses and therefore, not overtly binding;[2] the fourth claims that under the Special Marriage Act, 1954, a prenup can be granted legally binding status, provided it is submitted along with the necessary documents as required under the Act for declaration of marriage and then, duly registered with the Registrar’s office.

However, the general view remains that they cannot be legally enforced, and merely indicate the intent of parties. Hence, the court can only use them as set of guidelines while pronouncing its verdict.

The legal status of prenups in England was also quite dicey, until recently, whereby they were accepted to be legally valid (in the landmark judgment of Radmacher v Granatino, [2010] UK SC 42). The courts redefined the phrase ‘public policy’ and mentioned that prenups do not hit the public-policy argument as long as they are mutually and voluntarily entered into by the couple. However, the determination of its fairness and legality shall still be upon the discretion of the court. Indian laws and legal system, being foster-children of English Common Law, must pay due attention to this radical verdict.

While the legal validity of prenups in India would be an issue for the courts to decide, it should not be a deterrent for those desiring to opt for them, to step back. In a society witnessing an ever-escalating divorce rate and rising instances of domestic violence, prenups ensure fair-play by setting the basic rules before the play begins. It could be understood better in analogy to an insurance policy- you take it not because you ‘know’ you would meet with an accident in future, but because you do not want to take the ‘risk’; you want to be insured against the unforeseen and uneventful- the same goes for a prenup.

So, the next time you find anyone going to be tied in the bonds of matrimony, go and encourage them to consider the ‘Bargain’ option, along with the merriment of the Band and the Baajaa.

[1] These requirements being free consent of parties, competence to contract, lawful consideration (which is the right to marry each-other, in context of a prenup), lawful object and fulfillment of registration and attestation related formalities.

[2] A Memorandum of Understanding is indicative of intention of parties and can be granted legally binding status only when the substance of the document and subsequent behaviour of the parties in relation to such document make it clear that the parties were willing to make it so.

Article  By-

Divyanashi Chandra

II Yr., B.A.LL.B. (Hons)

NALSAR University of Law, Hyderabad

[Submitted as an entry for the Blog Post Writing Competition, 2011]

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