Banking entries may constitute valid gifts of movable property despite a low cash balance, if control passes to the donee.

Book entries debiting the donor's account and crediting the donees' current accounts can satisfy the delivery requirement for a gift of movable property where the parties treat the transfer as completed and the money is placed under the transferee's control. A small cash balance in a banking concern does not, by itself, show that delivery was impossible or invalidate the transfer, because cash in hand is not the only indicator of liquidity or ability to meet liabilities. On that basis, banking entries were treated as capable of operating as valid gifts despite the meagre cash balance.

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Issues: Whether book entries debiting the donor's account and crediting the donees' current accounts, made in a banking concern with only a small cash balance on hand, could constitute valid gifts in law.

Analysis: A gift of movable property may be made either by a registered instrument or by delivery. Delivery, in the case of goods or money, is satisfied where the parties treat the transfer as delivery and the goods or money are placed under the control of the transferee. The mere fact that the firm's cash balance on the relevant date was only Rs. 603 did not justify an inference that delivery was impossible. In the case of a banking concern, cash in hand is not a sure test of its ability to meet liabilities, because it may have other liquid resources, deposits, overdraft arrangements, or banking facilities. The facts were treated as analogous to prior decisions upholding gifts made through banking entries, and the insufficiency of cash balance alone was held not to invalidate the transfer.

Conclusion: The debit and credit entries could operate as valid gifts notwithstanding the meagre cash balance, and the first question was answered in the affirmative.

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