the Supreme Court has consistently held that if a family settlement is reduced to writing with the intent to create or extinguish property rights on the spot, it mandatorily requires registration under Section 17 of the Registration Act, 1908.un registered deed is not admissible in evidence 

2) however You can legally file a Suit for Specific Performance and present this unregistered document as evidence of the contract/agreement to sell. The court will accept it to establish that an agreement existed between the parties. 

3)  Since possession was physically handed over, you enjoy protection under Section 53A of the Transfer of Property Act (Part Performance). While Section 53A now expects an agreement to be registered, courts heavily factor in the combination of full payment, physical possession, and the presence of the mother as an independent witness to rule in equity.

1. Is it a family settlement..

No. a family settlement is meant to resolve family disputes or divide property peacefully. Here, you are simply buying property from your sister for cash. Calling it a family settlement does not change the fact that it is a sale. Courts look at the reality, not the label...

Will a suit for specific performance succeed?

Hard, but not impossible...

 The court can look at your paper as proof of an agreement. But the judge has the final power to say yes or no. Since your document is not registered and looks like a direct sale, the judge will likely be strict...

Chances are low unless you can strongly prove that this was truly a family dispute-settlement and not just an unregistered sale...

spcific performance would not fail as agreement has been signed by parties and mother is an independent witness . full consideration has been paid 

agreement betweeen parties is binding 

If the agreement involves transferring an exclusive property from one sibling to another strictly in exchange for financial consideration ("full payment"), courts typically treat it as an Agreement to Sell / Contract for Transfer, rather than a pure family settlement.

It can be recognized as a family settlement if the payment was made as an equalizer (owelty) to balance pre-existing joint/hereditary rights during a broader distribution of family estate.

If it creates/transfers title on the spot for money, it requires registration under Section 17 of the Registration Act.

As full payment was made, possession was transferred, and the mother witnessed it, the equitable doctrine of Estoppel applies—meaning the sister/brother cannot easily challenge the validity of the settlement after enjoying its financial benefits.

Even though an agreement transferring immovable property valued above ₹100 is compulsorily registrable, the Proviso to Section 49 of the Registration Act, 1908 explicitly grants an exception. It states that an unregistered document affecting immovable property can be received as evidence of a contract in a suit for specific performance.

The suit must be filed within 3 years (as per Article 54 of the Limitation Act) from the date fixed for performance, or from the date performance/execution of the formal sale deed was refused.

While lack of registration won't block the suit, the court may direct you to pay the requisite stamp duty plus a penalty to impound and validate the document for evidence.

If your suit for specific performance fails and the agreement/settlement is held unenforceable, the sister does not automatically get possession back directly through the judgment of your suit, unless specific procedures are followed.
To recover possession, she must either have to file a counter claim in the ongoing suit or file a separate suit for recovery of possession.
You can use it to block her from evicting you or taking back possession.
Whenever a suit for specific performance fails, the plaintiff is entitled to get a full refund of the consideration money paid, along with interest.
If the court orders the return of possession to the sister, it will usually make it conditional—ordering her to return the full payment with interest first before you hand back physical possession (under Section 55(6)(b) of the Transfer of Property Act, which creates a buyer's charge/lien on the property for the purchase money paid).

The Supreme Court principle you are referring to is that a party who has received full benefit under an agreement cannot blow hot and cold (the doctrine of estoppel/approbate and reprobate). Even if a document is unregistered or unenforceable as a sale deed, the underlying contract binds the parties in equity and contracts.

However, this binding nature translates differently depending on whether you are asserting ownership or defending possession.

If your suit for specific performance fails (e.g., due to procedural issues, technical defects in the paper, or discretionary grounds), the court cannot automatically order you to restore possession to the sister inside your suit, unless she has filed a formal Counter-Claim under Order VIII Rule 6A of the CPC asking for possession.

if Section 53A protects you. If the sister files a separate suit to evict you based on her legal title, you can use the Supreme Court’s ruling alongside Section 53A of the Transfer of Property Act (Part Performance.

If the court ultimately decides that the agreement cannot stand and orders you to return physical possession, it will apply the principles of Restitution and Equity.

The court will never allow the sister to keep both the property and the money. Under Section 22 and Section 33 of the Specific Relief Act, 1963, as well as Section 65 of the Indian Contract Act, 1872, any benefit received under an unenforceable/failed contract must be restored.

In your plaint for Specific Performance, you MUST explicitly add an alternative relief clause asking for a 100% refund of the purchase money along with market-rate interest and a statutory charge on the property. If this alternative prayer is missing, the court cannot grant you the money back.