COMPLETED GIFT

Definition of ‘gift’

The term ‘gift’ is defined under section 122 of the Transfer of Property Act, 1882.  The main requirements of a transfer of movable or immovable goods by way of deed are as follows-

• There shall be certain existing property either movable or immovable.
• The gift shall be made voluntarily.
• The gift shall be made without any consideration.
• The gift shall be accepted by the person to whom the goods are to be gifted.

The person who gives gift to another person is called as the ‘donor’ and the person who receives the goods is called the ‘donee’.

Effecting the transfer of gift

Section 123 of the Transfer of the Property Act, 1882 provides the procedure for effecting the transfer of gift. 

In respect of a immovable property the transfer must be effected by an instrument duly registered signed by the donor or on behalf of the donor.  The instrument shall be attested by at least two witnesses.

In respect of a movable property the transfer may be made-

• by means of a registered instrument signed by both the donor and the donee; or
• by delivery of the movable property by the donor to the done. (Such delivery may be made in the same way as the goods delivered by sale).

Gift when void?

• Section 124 of the Transfer of the Property Act, 1882 provides that a gift comprising both existing and future property is void as to the latter.
• Section 125 of the Transfer of the Property Act, 1882 provides that
• 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.

• Example - A gives a lakh of rupees to B, reserving to himself, with B's assent, the right to take back at pleasure ₹ 10,000 out of the lakh. The gift holds goods as to ₹ 90,000, but is void as to ₹ 10,000, which continue to belong to A

Suspension of revocation of a gift

Section 126 of the Transfer of the Property Act, 1882 provides that 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. 

Normally a gift cannot be revoked.

A gives a field to B, reserving to himself, with B's assent, the right to take back the field in case B and his descendants die before A. B dies without descendants in A's lifetime. A may take back the field.

Rescinding of a gift

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.

Complete gift

In ‘Naramadaben Maganlal Thakker v. Pranivandas Maganlal Thakker and Others’ - 1996 (9) TMI 618 - SUPREME COURT, the Supreme Court held that-

• gift means to transfer certain existing moveable or immoveable property voluntarily and without consideration by one person called the donor to another called the donee and accepted by or on behalf of the donee.
• It would be clear that the execution of a registered gift deed, acceptance of the gift and delivery of the property together make the gift complete.
• Thereafter, the donor is divested of his title and the donee becomes absolute owner of the property.
• A conditional gift with no recital of acceptance and no evidence in proof of acceptance, where possession remains with the donor as long as he is alive, does not become complete during lifetime of the donor. When a gift is incomplete and title remains with the donor the deed of gift might be cancelled.

In ‘Reninkuntla Rajamma Vs. K. Sarwanamma’ -  2014 (7) TMI 1284 - SUPREME COURT, a Hindu woman executed a registered gift deed of immovable property reserving to herself the right to retain possession and to receive rent of the property during her lifetime. The gift was accepted by the donee but later revoked.

The Supreme Court held that held that the fact that the donor had reserved the right to enjoy the property during her lifetime did not affect the validity of the deed. The Court held that a gift made by registered instrument duly executed by or on behalf of the donor and attested by at least two witnesses is valid, if the same is accepted by or on behalf of the donee. Such acceptance must, however, be made during the lifetime of the donor and while he is still capable of making an acceptance.

In ‘S. Sarojini Amma v. Velahuthan Pillai Sreekumar’ – 2018 (12) TMI 349 - SUPREME COURT, the  appellant is a childless widow aged 74 years whose husband expired on 06.06.2015. The respondent is the nephew of the appellant (brother’s son).  In the expectation that the respondent will look after the appellant and her husband and also for some consideration, the appellant executed a purported gift deed in favor of the respondent. The gift deed clearly stated that the gift would take effect after the death of the appellant and her husband.  The appellant during the year 2009 cancelled the gift deed.  The respondent filed a suit for declaration that the cancellation deed executed by the appellant is null and void and also for declaration of his right over the suit property being the subject matter of the purported deed of gift.  The appellant also filed a suit for permanent injunction restraining the respondent or his men from trespassing or committing waste or mischief in the suit property.  Both the suits are favored to the respondents for which the appellant filed an appeal before the District Court against the judgments of the Munsif Court in both the suits.  The District Court allowed the appeals of the appellants.

The respondent filed second appeal against the order of the District Court before the High Court.  The High Court allowed the appeal filed by the respondents on 03.04.2017.  Against this order the appellant filed the present civil appeal before the Supreme Court.  The appellant contended that the document styled as gift deed was to come into effect only after the death of the appellant and her husband.

The Supreme Court considered the question for this case as to whether a document in terms whereof the executant of the document retained possession and reserved her right over the property being the subject matter of the document could be a deed of gift or whether such a document was a document in the nature of a will.

The Supreme Court held that a conditional gift with no recital of acceptance and no evidence in proof of acceptance, where possession remains with the donor as long as he is alive, does not become complete during lifetime of the donor. When a gift is incomplete and title remains with the donor the deed of gift might be cancelled.   There is no provision in law that ownership in property cannot be gifted without transfer of possession of such property. However, the conditions precedent of a gift as defined in Section 122 of the Transfer of Property Act must be satisfied. A gift is transfer of property without consideration. Moreover, a conditional gift only becomes complete on compliance of the conditions in the deed.

In this case the deed of transfer was executed for consideration and was in any case conditional subject to the condition that the donee would look after the petitioner and her husband and subject to the condition that the gift would take effect after the death of the donor. The Supreme Court held that there was no completed gift of the property in question by the appellant to the respondent and the appellant was within her right in cancelling the deed.

The Supreme Court allowed the appeal filed by the appellant and set aside the judgment of the High Court.