Prachurya Sahu | Symbiosis Law School, Pune

Introduction

The Transfer of Property Act, 1882 governs 5 different types of transactions within the meaning of a “transfer”, namely sale, mortgage, lease, exchange and gift. In general, a gift is an item which is willingly given to someone without any payment or thing in return. In law, gift is considered a gratuitous transfer, i.e. one for which there is no mutual consideration.

Gift is dealt with under Section 122 of the Transfer of Property Act. It defines gift as “…the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Such acceptance must be made during the lifetime of the donor and while he is still capable of giving, If the donee dies before acceptance, the gift is void.”

Therefore, in the process of gift, an existing property is transferred in favour of another person unilaterally without any consideration. Furthermore, as evident from the wording of the legislation, the Section is applicable to only inter vivos gift i.e. a gift between living persons. It doesn’t deal with inheritance or gifts mortis causa.

Essential Elements

• Transfer of existing movable or immovable property
• Voluntary transfer and without consideration
• Existence of donor and done
• Valid acceptance by or on behalf of the done

Transfer of property

For a valid gift, there must be transfer of property including movable or immovable property. The person transferring the interest is called the “donor” while the one accepting it is called the “donee.” A bequest under a will not be considered a transfer.[1] However, conditional transfers/gifts are permitted as long as such conditions are not repugnant to any of the provisions of the Act.

A deed of relinquishment will be considered a gift. For example, relinquishment of share by a tenant-in-common is favour of other amounts to a gift. [2] or a dan[3] (religious charity) would all be considered gifts and governed by the TPA.

Property must be in existence.

Section 124 deals with gifts of future property. It lays down that “ A gift comprising of both existing and future property is void as to the latter.”

This means the property to be gifted must be in existence at the time of making the gift, even if its transfer may be effected in the present of the future. Therefore, a gift of future property is void.[4] The main reasoning behind it is that a gift of future property is merely a promise, and any promise unsupported by consideration is invalid as a contract.[5]

Voluntary Transfer without Consideration

The whole purpose of a gift is gratuitous transfer. The word “voluntarily” denotes unfettered will. This voluntary nature as well as the lack of consideration or its contemplation is the key aspect of a gift.

For a gift deed to be valid, the intention of the executer must be clear with evidence supporting it.[6] It must be shown that during the physical act of signing the deed, there was a coinciding animus or mental act (i.e. the intention to execute the gift).[7] Furthermore, the principles present in the Indian Contract Act, 1872 relating to free consent apply in the consideration of voluntary nature of the gift. [8] Parties pleading fraud, undue influence or coercion carry the burden of proving that there was no free consent rather than the donee who accepts the gift. External factors such as old age[9], intimacy[10] etc do not allow for assumption of undue influence.

The word “consideration” is applied in the same sense as in the Indian Contract Act, 1872 and therefore excludes natural love and affection. Any transfer which has been made in exchange for a consideration of spiritual and moral benefit or love and affection, therefore is a gift.[11]

Valid Acceptance.

For a gift transfer to be complete, it must be accepted by the donee or on behalf of him/her. The words “on behalf” allows for gifts to be made for people who may not be able to convey acceptance or who are not competent to contract. Therefore, a minor[12] as well as a unborn child can be a donee, with another person accepting it on his behalf.

Furthermore, acceptance may be express or inferred.[13] Such inference may be derived from the donee’s possession of the property as well as oral evidence to show that the gift had been acted upon.[14] At times, silence may also be taken to indicate acceptance, as long as it is settled that the done knew of the gift.

Method of Transfer

According to Section 123 of the TPA, “For the purpose of making a gift of immoveable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses. For the purpose of making a gift of moveable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery.”

Therefore, while for the transfer of movable property, a registered instrument is not necessary, for transfer of immovable property, it is mandatory without consideration for the value of the property. Mere delivery of possession does not confer possession in case of immovable property as laid down in Wing Commander R.N. Dawar v. Shri Ganga.[15]

Onerous Gifts

Usually gifts are unilateral and such a transfer is said to be complete as soon as there is valid acceptance by the donee. Onerous gifts are those which are accompanied with a burden or obligation. It is derivative of the maxim qui sentit commodum, debetet et sentire onus which means he who derives a benefit ought also to bear a burden.

Section 127 of the Act governs onerous gifts and embodies the above maxim. It lays down that “where a gift is in the form of a single transfer to the same person of several things of which one is, and the others are not, burdened by an obligation, the done can take nothing by the gift unless he accepts it fully.”

This means to say that either a person must accept the whole gift along with whatever obligation attached to it, or decline the gift in its entirety. A person cannot partially accept only the gifts which are beneficial while refusing the ones which place a burden on him.

Further Section 127 also lays down that “a donee not competent to contract and accepting property burdened by any obligation is not bound by his acceptance. But if, after becoming competent to contract and being aware of the obligation, he retains the property given, he becomes so bound.”

Section 127 is interpreted to refer to minor done by the Supreme Court. It lays down that in cases where an onerous gift is accepted by a minor, subsequent to his attaining majority, if he assents to be bound by such a gift, he will be bound by the obligation attached to it.[16]

Revocation of Gifts

A gift which has already been executed by the donor, accepted by the donee and registered by the registering authority if need be, usually cannot be revoked. However, there are certain conditions in which a gift deed can be revoked if certain mandatory requirements are met.[17] These conditions are laid down in Section 126 of the Transfer of Property Act: –

“The donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked; but a gift which the parties agree shall be revocable wholly or in part, at the mere will of the donor, is void wholly or in part, as the case may be.

A gift may also be revoked in any of the cases (save want or failure of consideration) in which, if it were a contract, it might be rescinded.

Save as aforesaid, a gift cannot be revoked.”

Therefore, the only cases where revocation is possible is when the parties have mutually agreed for suspension of gift[18] or when the gift deed is executed in the absence of free consent due operation of fraud or undue influence.[19]

Revocation in the first case, depends on the mutual agreement between the doner and the donee on a condition subsequent which would be grounds for cancellation of the gift. Such a condition must be made at the time of making the gift and not after the gift has become absolute. Once a gift has become absolute, the only other method of cancellation of such gift is if the doner can prove before a court of law that such a gift was made without free consent.

[1] N Ramaiah v Nagaraj, AIR 2001 Kant. 395 

[2] State of Uttar Pradesh v Shanti, AIR 1979 All 305)

[3] Debi Sharan v Nanlal Chaubey, AIR 1929 Pat. 591

[4] Brindabini Behari v Oudh Behari, AIR 1947 All 179 .

[5] Section 25, Indian Contract Act, 1872

[6] Vathsala Manickavasagam v N Ganesan, (2013) 9 SCC 152

[7] R Kuppayye v Raja Gounder, AIR 2004 SC 1248 

[8] Subhas Chandra v Ganga Prosad, AIR 1967 SC 878 

[9] Roshan Lal v Kartar Chand, AIR 2002 HP 131

[10] Subhash Chandra Das Mushib v Ganga Prosad Das Mushib, AIR 1967 SC 878

[11] Tulsidas Kilachand v CIT, AIR 1961 SC 1023

[12] K Balakrishnan v K Kamalam, AIR 2004 SC 1257

[13] Shakuntla Devi v Amar Devi, AIR, 1985 HP 109, p 111.

[14] Gauranga Sahu v Maguni Dev, AIR 1991 Ori. 151, p 155.

[15] Wing Commander R.N. Dawar v. Shri Ganga, AIR 1993 Del 19

[16] K Balakrishnan v K Kamalam, AIR 2004 SC 1257

[17] Kamalakanta Mohapatra v Pratap Chandra Mohapatra, AIR 2010 Ori. 13 

[18] Garagaboyina Radhakrishna v District Registrar, Vishakhapatnam, AIR 2012 AP 190

[19] Balai Chandra Parui v Durga Bala Dasi, AIR 2004 Cal 276