The Gift | Property Law - CLAT PG PDF Download

Meaning of Gift under the Transfer of Property Act, 1882

• A gift is the voluntary and gratuitous transfer of ownership in existing movable or immovable property from one person (the donor) to another (the donee) without any consideration.
• The transfer must be accepted by the donee or on their behalf.

Key Aspects of Gift

• The gift involves the transfer of ownership, not just possession.
• The property must be in existence at the time of the gift.
• The transfer should be without any monetary consideration.
• It must be made voluntarily by the donor.
• The donor must be competent to make the gift.
• The donee must accept the gift for it to be valid

Types of Gifts

• Gift Inter Vivos: A gift made during the lifetime of the donor and donee.
• Gift Testamentary: A gift made through a will, effective upon the donor's death.
• Gift Mortis Causa: A gift made in anticipation of death.
• Gifts between Muslim parties are governed by Islamic law, not the Transfer of Property Act.

Essentials of a Gift

• Transfer of Ownership: All rights in the property must be transferred from the donor to the donee. Conditional gifts are allowed as long as the conditions are not contrary to the law.
• Property in Existence: The gift must pertain to existing movable or immovable property. Future property cannot be gifted, but shares obtained after a family partition can be.
• Without Consideration: The transfer must be without any monetary consideration. Natural love and affection do not count as consideration. Even a nominal amount of money would convert a gift into a sale.
• Voluntary Action: The gift must be offered voluntarily, without any force, fraud, or undue influence. The relationship between the donor and donee does not automatically imply undue influence.
• Competence of the Donor: The donor must be legally capable of making the gift. This means being of legal age, of sound mind, and not disqualified by law. For instance, a minor cannot make a gift.
• Acceptance by the Transferee: The gift must be accepted by the donee. Acceptance can be made by the donee, their guardian, or an agent in the case of a deity. If a gift is made to multiple persons, and one cannot accept, the other will take the entire property. Acceptance must occur during the donor's lifetime and while they are capable of giving. If the donee dies before acceptance, the gift is void.

Registration of Gift Deed

• Gift of Immovable Property: According to Section 123 of the Transfer of Property Act, a gift of immovable property must be made through a registered instrument.
• Requirements: The instrument must be signed by the donor or on their behalf and attested by at least two witnesses.
• Acceptance: If a gift is registered in favor of someone but not accepted by the donee, the gift is incomplete.
• Validity: If the document is executed by the donor making a gift of immovable property and the deeds are delivered to the donee, and the donee accepts the gift but the document is not registered, the gift is still considered valid in the eyes of the law.
• Importance of Registration: While registration is necessary for the enforcement of a gift of immovable property, it does not suspend the gift until registration actually takes place. The donee can request the donor to complete the gift by registration.
• Effect of Acceptance: The gift takes effect from the date of execution of the document by the donor, even if it is registered at a later date. After acceptance of the deed of gift and before registration, the donor cannot revoke the gift.

Suspension or Revocation of Gift

• Section 126 of the Transfer of Property Act, 1882 addresses the circumstances under which a gift may be suspended or revoked.
• According to this section, the donor and donee can agree that a gift will be suspended or revoked upon the occurrence of a specified event that is not within the control of the donor.
• However, if the parties agree that the gift is revocable solely at the will of the donor, the gift is void in whole or in part, depending on the agreement.
• A gift can also be revoked in situations where it could be rescinded if it were a contract.
• Similar to contracts, certain grounds such as coercion, undue influence, fraud, or misrepresentation can lead to the revocation of a gift. However, gifts cannot be revoked on grounds that are not applicable to contracts.
• Gifts can be made subject to conditions of suspension or revocation, similar to other transfers. If a gift is made with a condition of future revocation, that condition must be valid and enforceable.
• Revocation of a gift can occur through mutual agreement between the donor and donee or through rescission as in the case of contracts.

Revocation by Mutual Agreement

• The donor and donee can mutually agree to suspend or revoke a gift upon the occurrence of a specified event that is not dependent on the donor's will.
• The condition for revocation must be explicitly stated and not merely a wish or desire.
• For example, if a gift of certain properties is made in exchange for past and future services rendered by the donee to the donor, the failure of the donee to provide these services can be a condition for revocation.
• The condition for revocation must be a condition subsequent, meaning it should not depend solely on the donor's will.
• If the condition for revocation is not specified in the gift deed but is agreed upon separately and is part of the transaction, it is valid and enforceable.
• Revocation of a gift at the donor's pleasure is not valid; the condition for revocation must be mutually agreed upon at the time of the gift.
• Even if the condition for revocation is not mentioned in the gift deed, as long as it is part of the transaction, it is enforceable.

Revocation by Rescission as Contracts

• Gift is a voluntary transfer of ownership. If it can be proven that the gift was not made voluntarily, such as through coercion, undue influence, fraud, or misrepresentation, the gift must be revoked.
• Gift is preceded by a contract, either express or implied, where the donor makes an offer and the donee accepts. If the contract is rescinded, the gift is also revoked.
• Section 126 allows for the revocation of a gift on the same grounds as a contract. For example, if the donor's consent was obtained through coercion or undue influence, the donor has the option to revoke the gift.
• The right to revoke the gift on these grounds is limited to the donor, who cannot transfer this right to anyone else. After the donor's death, the legal heirs can revoke the gift on these grounds.
• The time limit for revoking a gift on the basis of fraud, coercion, misrepresentation, or undue influence is three years from the date the donor becomes aware of these facts.
• If the donor ratifies the gift, either explicitly or through their actions, the right to revoke is lost.
• Illustrations:
• (a) If A gives a field to B with the condition that B and his descendants must die before A, and B dies without descendants during A's lifetime, A can take back the field.
• (b) If A gives B a lakh of rupees with the condition that A can take back Rs. 10,000 at his pleasure, the gift is valid for Rs. 90,000, but void for Rs. 10,000.
• Revocation on Any Other Ground:
• A gift cannot be revoked on any other ground except for the condition subsequent not depending on the donor's pleasure and the grounds justifying a contract.
• For example, a gift deed executed in favor of the donee cannot be unilaterally revoked by the donor without the donee's participation.
• Subsequent Conduct of Donee After Acceptance:
• The subsequent conduct of the donee after acceptance of the gift deed is not a valid ground for rescission.
• For instance, if a father executes a registered deed of gift in favor of his son out of love and affection, the donor cannot rescind the gift simply because the donee did not fulfill certain conditions later on.
• The validity of the gift deed remains intact, and the donor's subsequent actions or the donee's actions do not affect the gift.
• Transferee for Consideration without Notice:
• The last paragraph of Section 126 protects the interest of a bona fide transferee for consideration without notice of the donor's right of revocation.
• For example, if A makes a gift of his house to B with the condition that he can revoke the gift if B's son does not take up law studies after graduation, and B sells the house to C who has no notice of such condition, A cannot revoke the gift.

Suspension or Revocation of Gift under Mohammedan Law

A gift between two Muslims is regulated by Quranic Law(Mohammedan Law) rather than the Transfer of Property Act. However, a Mohammedan can revoke a gift even after possession has been transferred, except in certain cases:

Revocation Exceptions

• Gift from Husband to Wife or Vice Versa
• Gift to a Relative within Prohibited Degrees
• Gift for Charity or Religious Purpose (Sadaka)
• Gift to a Deceased Person

Additional Revocation Conditions

• When the Gifted Item is Sold, Gifted, or Otherwise Transferred from the Donee's Possession
• When the Gifted Item is Lost or Destroyed
• When the Gifted Item Increases in Value, Regardless of the Cause
• When the Gifted Item is Altered to the Point of Being Unidentifiable, Such as Wheat Being Ground into Flour
• When the Donor Receives Something in Exchange for the Gift

Outside of these exceptions, a gift can be revoked at the donor's discretion, regardless of whether they reserved the right to do so, but revocation must be carried out by a court decree.

Types of Gifts

1. Lifetime Gifts:

• Lifetime Gifts are given to the donee during the lifetime of the donor, typically on special occasions like birthdays or weddings.

2. Deathbed Gifts:

• Deathbed gifts are intended to be delivered to the donee after the donor's death, based on the donor's intention. These gifts are not effective until the donor passes away.

3. Onerous Gift:

• An onerous gift involves a burden or obligation imposed on the donee by the donor regarding immovable property. This type of gift is often illegal unless the donee is not obligated to bear the burden of the gifted object.
• For example, if Mr. Q wants to gift his mortgaged building to Mr. E, who must take on the burden of the mortgage loan, the gift may be valid. Section 127 of the Transfer of Property Act, 1882, deals with onerous gifts.

Effect of Onerous Gift

• The donee is liable for the total gifted property in their possession.
• If an onerous gift is made to a disqualified person, such as a minor, and they accept it, they are not bound by their acceptance. They can choose to accept the gift with the obligation or return it upon reaching adulthood.
• From the donor's perspective, the gift is complete, and they cannot reclaim the property unless the donee decides to return it after reaching the age of majority.
• The gift is considered complete as soon as it is accepted, regardless of whether the donee dies before turning 18.

Universal Donee

• Section 128 of the Transfer of Property Act deals with the concept of a universal donee, who receives the entire property of the donor and is liable for all the debts, dues, and liabilities of the donor at the time of the gift.
• The liability of the universal donee extends to the extent of the property in their hands, which includes both movable and immovable property. If a donor gifts only immovable property and not movables, the donee is not considered a universal donee.
• The universal donee is only liable for debts and liabilities of the donor incurred before the gift, not for those incurred after.
• The objective of Section 128 is similar to Section 53, aiming to protect the interests of creditors, especially in cases of fraudulent transfers.

In summary, a universal donee is responsible for all of the donor's debts and liabilities at the time of the gift, but only to the extent of the property received. The completeness of the gift is not affected by the donor retaining a small part of the property.