Verbal understanding in writing has no value, later she can refuse, ask your MIL to either execute release/relinquishment deed (same) or Execute WILL in your or wife favor.

1. When the mother is living the elder daughter and even your wife have no right whatsoever in the share of your mother in law

2. it is only after your MIL dies, that the two daughters can claim in her share as her legal heirs, provided the MIL has not disposed of her share in her lifetime or has made a Will by which she has bequeathed that share to some other person

3. thus, so long as your MIL is living, any writing taken from the elder daughter that she will not claim in her share, will be of no effect 

4. a release or relinquishment deed can be made only when the elder daughter gets a title over the MIL's share and not now. The elder daughter would get a title in a portion of MIL share only after her demise and not before.

5. your MIL can however make a Will in which she can bequeath her share in the flat in favour of your wife and exclude the elder daughter from claiming anything in it. The elder daughter can sign this Will as an attesting witness 

mother in law can execute will bequeathing property to your wife by will 

2) will should be attested by 2 witnesses . 

3) in alternative mother in law should execute gift deed for her share in property 

you can ask your MIL to execute registered transfer deed or WILL in favour of your wife.

relinquishment deed or release deed can't be done by her, 

the beneficiary (elder daughter) after the death of MIL has the right to execute release/relinquishment deed

Sir mother in law has to make a will so as to avoid any dispute no agreement or anything on written as such is valid so will from mother or gift in her life is only best option 

1.  "release deed or relinquishment deed or something else",  can be done only between co-owners and is not possible, since the second sister is not a co-owner, in the property.

2. IF MIL executes a registered WILL for her share ratio in the property in favor of younger sister, THEN this might serve some of your purposes.

Your mother in law can execute gift deed or registered will or execute relinquishment deed. 

Yes she needs to execute a registered relinquishment deed for the same relinquising her right in the property

As you want to take the said verbal arrangements in to legal terms you need to execute the relinquishment deed as you apprehend she will file a claim in the said property.  If you are so sure that she is not a co owner why you are worrying about the same and believe the verbal commitment and move forward

Dear sir 

There are two ways of getting this problem solved

One is get a relinquishment deed from your sister in law in name of your wife. 

And second is that make your mother in make a will stating that the share of her in this property will be transferred to you wife name after her death. And get the will registered.

This is my response to you:

1. Your mother in law can make a Will in favour of your wife;

2. This will give no share to Sita even after your mother-in-law's demise;

3. You can go for a relinquishment deed wherein your mother in law transfers her share to Geeta;

4. A Relinquishment deed will save a lot of money on stamp duty;

5. Consult a local lawyer and take steps.