Gift Under Transfer Of Property Act: Legal Provisions & Important Case Laws

Coverage of this Article

Key Takeaways

-Transfer of Property Act regulates property transfer in India.

Introduction

-The sale, mortgage, lease, exchange, and gift are the five main forms of transactions that are under the purview of the Transfer of Property Act, 1882.

Essential Elements To Constitute a Gift Valid

Ownership transfer is required

-Ownership is primarily transferred as part of a gift. During a gift, the entire owner’s interest in the property is transferred to the recipient.

The Property must exist

-Although the transfer of the property may occur in the present or in the future, it must exist at the moment the gift is made in order for it to be valid. According to Section 124, a gift cannot be made unless the property was actually there when it was given.

The transfer must be voluntary and made with free consent

-The donor must have given the gift of his or her own free will and consent, and neither the will nor the consent may have been obtained through coercion or undue influence. The donor is required to sign a gift deed under coercion in accordance with Sections 15 and 16 of the Indian Contract Act by the threat of committing an offence that is criminal under the Indian Penal Code.

The transfer must be accepted by the donee or on their behalf:

-It is necessary for the donee to accept the gift. In some circumstances, the recipient may decline to accept the gift.

Transfer without consideration

-A gift must be gratuitous, meaning that ownership of the item must be given away for no money or other benefit.

Onerous Gifts

-Gifts are typically made unilaterally, and when the donee formally accepts them, the transfer is considered to be finished.

Revocation of Gift

-A gift that has previously been agreed to by the giver, accepted by the donee, and, if necessary, registered by the registering body, is typically irrevocable.

Conclusion

-The concept of a gift, how it should be given, the parties’ obligations and rights, etc. are all covered under the Transfer of Property Act. 

Key Takeaways

• Transfer of Property Act regulates property transfer in India.
• Section 122 of TPA provides provisions relating to Gifts.
• Gifts can be revoked under certain specific conditions.

Introduction

The sale, mortgage, lease, exchange, and gift are the five main forms of transactions that are under the purview of the Transfer of Property Act, 1882. A gift is generally something that is freely offered to someone without expecting anything in return. A gift is regarded in law as a gratuitous transfer, meaning that there is no exchange of value.

Section 122 of the Transfer of Property Act governs gifts. It defines a gift as the voluntary and uncompensated transfer of specific existing movable or immovable property from one person, known as the donor, to another, known as the donee, and accepted by or on behalf of the donee. If the recipient dies before accepting, the gift is invalid. Such acceptance must be made while the donor is still alive and capable of giving.

As a result, when a gift is made, a property already owned by one person is unilaterally transferred to another without payment. Furthermore, the Section solely applies to inter vivos gifts, or gifts made between living people, as is clear from the legislation’s phrasing. Mortis causa gifts and inheritance are not covered.

Essential Elements To Constitute a Gift Valid

1. Ownership transfer is required

Ownership is primarily transferred as part of a gift. During a gift, the entire owner’s interest in the property is transferred to the recipient. The individual who transfers the interest is referred to as the “Donor,” whilst the person to whom the interest in the property is transferred is referred to as the “Donee.” It is acceptable to conditionally gift property, but the condition must not conflict with any of the rules in Sections 10-34 of this Act.

2. The Property must exist

Although the transfer of the property may occur in the present or in the future, it must exist at the moment the gift is made in order for it to be valid. According to Section 124, a gift cannot be made unless the property was actually there when it was given. The existing property is an actionable claim, and gifts containing both existing and future property are invalid as to the latter.

3. The transfer must be voluntary and made with free consent

The donor must have given the gift of his or her own free will and consent, and neither the will nor the consent may have been obtained through coercion or undue influence. The donor is required to sign a gift deed under coercion in accordance with Sections 15 and 16 of the Indian Contract Act by the threat of committing an offence that is criminal under the Indian Penal Code.

For instance, a gift deed that was signed by a woman and her son under her husband's threat that he would kill himself if they did not leave their property to his brother was declared invalid.

In Pratima Choudhury v. Kalpana Mukherjee [ (2014) 4 SCC 196], the court outlined criteria for evaluating legality as per the nature of the transaction in cases of undue influence where the consent of the gift donor is impacted. In such a circumstance, the code must ask two queries.

(A) Is one party in a position to control the other’s will, given the relationships between the parties?

(B) Has the position been utilized to exert excessive influence, i.e., has the position been used to control the will?

It was held in the case of Roshan Lal v. Kartar Chand[AIR 2002 HP 131] that the mere fact that the Donor was 85 years old and had already executed a will in favor of another person long ago or the fact that the witness attesting the gift deed was not from the party receiving the entire estate or that the Donor had previously executed a will in favor of another person would not establish fraud or undue influence.

4. The transfer must be accepted by the donee or on their behalf:

It is necessary for the donee to accept the gift. In some circumstances, the recipient may decline to accept the gift. For instance, if the present is burdensome or unhelpful to the donee, he will not take it. (Gift of such a property burdened with liabilities). It is possible to express or imply acceptance of the gift. When the donee receives the gift’s title deeds, this is an implied acceptance of the gift.

The court in the case of Urmila Devi v. State of Bihar [AIR 2015 NOC 859] ruled that if a person is unable to discharge a gift deed, it shall be regarded as legitimate. Simply because the donee’s address was incorrect in the deed, it cannot be claimed that the document is fraudulent or contrived. The court further noted that the situation could be resolved by signing a different document and that the document could not be considered falsified as long as the donor had possession of it. Given that the donee was the donor’s sister, it’s possible that he was in charge of maintaining the property.

5. Transfer without consideration

A gift must be gratuitous, meaning that ownership of the item must be given away for no money or other benefit. Even the smallest amount of insignificant property or cash provided by the transferee in exchange for the transfer of a very large asset might qualify as consideration for a sale or an exchange. The consideration is of a pecuniary, or monetary, nature. Mutual love and affection are not based on money.

In the case of Padma Chand v. Lakshmi Devi, [2010 (173) DLT 604], the court determined that a gift is an uncompensated, voluntary transfer of property by the owner of the property without receiving any financial gain.

Onerous Gifts

Gifts are typically made unilaterally, and when the donee formally accepts them, the transfer is considered to be finished. Those giftsthat come with a burden or obligation are referred to as onerous gifts. It is a derivation of the adage that benefits should also shoulder burdens, who sentitcommodum, debetet et sentire onus.

The Act's Section 127, which handles onerous gifts, exemplifies the aforementioned dictum. It states that the recipient cannot receive anything from the present unless he fully accepts it when a gift takes the form of a single transfer to the same person of numerous goods, where only one is subject to an obligation and the rest are not.

This means that a person must either accept the complete present and any conditions linked to it, or decline the gift entirely. A person cannot accept presents just to the extent that they are advantageous while rejecting gifts that will burden him.

Additionally, Section 127 states that a donee who accepts property that is burdened by an obligation but is not able to enter into a contract is not obligated by his acceptance. But if he keeps the supplied property after becoming competent to contract and realizing the duty, he is bound in that way.

The Supreme Court in the judgement of K Balakrishnan v K Kamalam, [AIR 2004 SC 1257] has construed Section 127 to refer to minor rulings. It states that if a minor accepts a burdensome present after reaching majority, he will be bound by the obligation associated with that gift if he consents to be bound by it.

Revocation of Gift

A gift that has previously been agreed to by the giver, accepted by the donee, and, if necessary, registered by the registering body, is typically irrevocable. A gift deed may, however, be revoked under certain circumstances if certain requirements are met as held in the judgement of Kamalakanta Mohapatra v Pratap Chandra Mohapatra, [ AIR 2010 Ori. 13].These circumstances are outlined in Section 126 of the Transfer of Property Act and include, that the donor and donee may agree that a gift will be stopped or revoked upon the occurrence of any specific event that is independent of the donor’s will; nevertheless, a gift that the parties agree will be revocable whole or in part at the donor’s sole discretion is null and void, as applicable.

A gift may also be cancelled in any circumstance where, if it were a contract, it may be (with the exception of want or absence of consideration).

Accordingly, the only circumstances in which revocation is permitted are those in which the parties have mutually decided to suspend the gift, as stated in the ruling of Garagaboyina Radhakrishna v. District Registrar, Vishakhapatnam, [AIR 2012 AP 190].

According to Balai Chandra Parui v. Durga Bala Dasi, [AIR 2004 Cal 276], revocation is also feasible when the gift deed is completed without the donor’s free permission as a result of fraud or undue influence.

Revocation in the first scenario depends on the parties’ shared understanding of a circumstance that would be sufficient justification for the gift to be revoked. Such a condition must be stated at the moment the gift is given, not after it has become unconditional. Once a donation has become irrevocable, the only way to revoke it is if the donor can demonstrate in court that the gift was made without their free agreement.

Conclusion

The concept of a gift, how it should be given, the parties’ obligations and rights, etc. are all covered under the Transfer of Property Act. It is crucial to complete a gift deed in accordance with the aforementioned guidelines because if you do not, you will not be able to claim ownership of the property. If the donation involves an immovable object, it must be registered for tax purposes and attested by a minimum of two witnesses. The gift deed must be written on stamp paper and registered at a sub registrar’s office. The registrar will certify the gift deed when the donor, donee, and witnesses have signed it. If there is ever a question or a dispute over your property, you can demonstrate your ownership by presenting the registered gift deed in court.