The essence of the word gift means a voluntary or gratuitous transfer of ownership without any form of consideration from one person to another or a group of individuals. A gift may either be intervivos (between living persons), or gift testamentary ( i.e. will, operative only after the death of the donor). The Transfer of Property Act deals only with the former u/s 122 of the Act- “ Gift is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the done, and accepted by or on behalf of the done”.
Essentials of a Valid Gift:
- Transfer of Existing Movable or Immovable Property– There must be a transfer of existing property, movable or immovable between the donor and donee. Though the transfer may take place in future, the property which is the subject matter should be in existence at the date of the gift. The transfer of future property is void.
- Giftto be a Voluntary transfer without Consideration- The transfer of property i.e. the subject matter of the gift should be made without any undue influence or cohesion upon the donor. It should be a voluntary transfer out of love and affection. In cases of gifts by purdanashin ladies, it must be established that the lady understood the nature of the transaction and the transfer was a voluntary transaction.
In Kartari v Kewal Krishan (AIR 1972 H.P. 117) , the donor was sufficiently advanced in age and was illiterate, she was taken to the hospital on a pretext to get her signatures. It was held that it was a case where the done had exercised undue influence over the done and hence, the gift is void.
- Competency of the Donor- Gift in terms of transfer of property is a simple contract between the donor and done without any amount of consideration. Hence, the donor in this case should be a person competent to contract. A minor cannot make a gift of his properties.
- Acceptance by the Donee- A donee is a person who accepts the gift( a transferee), he/she should be an ascertainable person or persons. A gift cannot be made to a society at large but can be made to an idol. There is however no prohibition in the ‘donee’ being a no of persons. Where a gift is made to two or more persons, all of them take it as ‘tenants-in-common’.
The acceptance by the donee may be express or implied. However the acceptance of a gift must be made during the lifetime of the done, it being void otherwise.
In Rajamma v Biswajith [2002(1) CLJ 19], the fact that the gift was accepted by taking delivery of possession on the date of the execution of the same was not corroborated by independent evidence. It was held by the Supreme Court that by mere production of the document by the done, it is not safe to conclude that there was acceptance of the gift, In AshiaBeevi v Kochu Pillai (9 1958 KLT 37), it was held that the declaration in the gift-deed that possession was given is by itself sufficient to prove delivery of possession.
- Effective Transfer of Gift- The transfer of a gift to be a valid one, must be registered, signed by the donor and attested by at least two witnesses. Section 123 of the Transfer of Property Act states clearly that “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. Such delivery maybe made in the same way as goods sold may be delivered.”  Any oral gift of immovable property cannot be made in view of the provisions of Sec. 123. Mere delivery of possession without written instrument cannot confer any title( R. N Dawar v Ganga Saran Dhama AIR 1993 Del 1991).
Gift of Movable Property
The effective transfer of movable property as a Gift does not mandate ‘registration’, the other mode of transfer being ‘delivery of possession’. An ‘actionable claim is incorporeal movable property not capable of being transferred through delivery of possession. Thus, Sec 130 lays down that “the transfer of an actionable claim (whether with or without consideration) shall be effected only by the execution of an instrument in writing signed by the transferor (or his agent)”.
- A gift made for an unlawful purpose. A gift in consideration of past illicit cohabitation is immoral and invalid.
- A gift depending on a condition, the fulfilment of which is impossible, or forbidden by law.
- Where the done dies before acceptance.
- Gift by a person incompetent to contract e.g. a minor, a lunatic etc.
- “A gift comprising existing and future property is void as to the latter”(sec 124).
- “A gift of a thing to two or more persons, of whom one does not accept it, is void as to the interest which he would have taken had he accepted” (Sec 125).
- “A gift which, under an agreement ; between the parties, is revocable, wholly or in part, at the mere will of the donor, is void wholly or in part, as the case may be” (Sec 126).
The term ‘Onerous’ is legally defined as ‘having or involving obligations or responsibilities, especially legal ones, that outweigh the advantages. Thus, a Gift may not always be of a purely beneficial nature, it might come with a few obligations as in in the case of onerous gifts. Sec 127 of the Act lays down “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”.
Sec 127 further lays down : “ Where a gift is in the form of two or more separate and independent transfers to the same person of several things, the done is at liberty to accept one of them and refuse the others, although the former may be beneficial and the latter onerous”.
Sec 127 is analogous to the maxim“ Quisentitcommodum, debt et sentire onus, which means he who bears the fruit of the transaction, ought to bear the liabilities that comes forthwith. A gift by a person to his children with the condition of continuous enjoyment until his death is not invalid.
Onerous Gift to a Disqualified Donee
Sec 127 explains 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”.
This section explains the transfer to a disqualified done. If for instance, an onerous gift is made to a minor, he is not bound by his acceptance but if he accepts the same on attaining majority, he will be bound by the same.
The donor in this case cannot adhere by the same principle, once the gift is complete, the donor cannot claim the same unless the done voluntarily returns or rejects the same. If the done accepts the gift during his minority but dies before attaining majority, the gift will pass on to the heirs of the donee.
Sec 128 of the Act explains a Universal donee subject to the provisions of 127, “where a gift consists of the donor’s whole property, the donee is personally liable for all the debts due by [and liabilities of] the donor at the time of the gift to the extent of the property comprised therein”.
If any property, movable or immovable, is excluded by the donor from the operation of gift, the donee then does not qualify to be a universal done. Although the donee is personally liable for all the debts and liabilities over the gifted property, it is so only to the extent of the property received by him as ‘gift’ and none other.
Suspension or Revocation of Gift
A gift, though a voluntary transfer of property, once made becomes binding on both the parties, the ‘donor’ and the ‘donee’. It cannot be revoked or suspended at the pleasure of either party, except in the following two exceptions, as laid down in Sec 126 of the Act:
Revocation by an Agreement-
An agreement is when two parties agree to do a thing or an act based on similar interests. Similarly, a gift can be revoked or suspended if both the parties (the donor & the donee) agree to the same on the happening of a particular circumstance and under no other.
This section though acquires the exception, is also explanatory of the fact that the said exception is only valid in cases, where the donor and done have agreed to the particular circumstance prior to the gift being made and not anytime after that. For a gift which is complete at the time it is offered cannot be altered by a condition subsequently added.
In Jagdeo Sharma v NandanMahto (AIR 1982 Pat 32), the gift-deed contained a stipulation that the gifted land will be held by the donce and her heirs generation after generation but neither the donee nor her heirs will ever have the rights of alienating the same either by way of sale, exchange or mortgage, etc. Otherwise, the gift-deed will stand automaticallycancelled. Held that any stipulation completely restraining the donee from transferring the gifted property is void. Thus, the gift-deed cannot standcancelled due to the alienation of the gifted land.
In TilaBewa v Mana Bewa (AIR 1962 Ori 130), the gift-deed containedan alleged condition that the donee was to look after and serve the donor. The donee left the donor and remarried; the donor cancelled the gift. Thecourt held that to look after the donor was only the donor’s pious wishand not a condition, non-fulfilment of which could enable the donor to revoke or cancel the gift.
The court observed: A gift, subject to the condition that the done should maintain the donor (or meet his funeral expenses), cannot berevoked under Sec. 126 for failure of the donee to do so, firstly becausethere is no agreement between the parties that the gift could be revoked,secondly, this should not depend on the will of the donor; again, thefailure of the dance to maintain the donor is not a contingency whichshould defeat the gift; all that could be said is that the donee’s default inthat behalf amounts to want of consideration. Sec. 126, thus, providesagainst the revocation of a document of gift for failure of consideration.”
Sec. 126 further lays down thatgift, which the parties agree isrevocable wholly or in part, at the mere will of the donor, is void whollyor in part, as the case may be.
Revocation on the Grounds of Undue Influence, Fraud, etc.-
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 (eg when the gift is made under coercion, undue influence, fraud, etc.)
Undue influence is a common ground of revocation e.g a child to a parent, by a cestui que trust to a trustee, by a patient to his doctor or by a client to his solicitor.
The onus of proving the grounds of revocation lie on the party who wants to get the gift set aside. A gift is not liable to be set aside or revoked merely on the ground of mistake’, provided it is not vitiated by fraud, undue influence, etc. The donor cannot set aside the gift once made on the plea that he had made a mistake.
In Dinabandhu Mandal &Ors v Laxmi Rani Mondal & Ors (SA 596 2008 of 2019) it was held that “since the plaintiffs/respondents claimed that the deed of gift was manufactured with the help of some interested persons by the defendants and alternatively, it was created by practicing fraud upon the donor, burden of proof lies upon the plaintiffs to prove their case”.
Sec. 126 finally lays down: “Except in these two cases, the gift can never be revoked. The above rules do not, however, affect the rights of transferee for consideration without notice.” Thus, if before revocation, the donee has transferred the property to a third party, who takes it for consideration and without notice, the donor cannot exercise his power of revocation given to him by Sec. 126 to the prejudice of such third person.
The rule that a gift cannot be revoked except according to the provisions of Sec. 126 does not apply to an incomplete gift.
Illustrations of Gift under Transfer of Property Act
- A gives to his daughter, a gift of his bungalow (built in 1992), and also of a Maruti car which A was to buy in future. Here, the gift of the bungalow is valid as it is existing property but the car being a gift of future property is invalid.
- X has shares in a prosperous company (A) and also shares in a company in difficulties (B), and he gives all his shares to Z as an onerous gift. Z refuses to accept the shares in B. The gift is invalid.
- A gives a lakh of rupees to B, reserving to himself, with B’s consent, the right to take back at pleasure Rs. 10,000/-. The gift hold good as to Rs. 90,000/-, but is void as to Rs. 10,000/-, which continue to belong to A.
Frequently Asked Questions
1. Can an unregistered deed of Gift be used under the doctrine of part performance?
The doctrine of part- performance means the transfer of gift has been partially performed. It may be noted that a gift becomes irrevocable once the deed of gift is delivered to the done, even before it’s registration but an unregistered deed cannot be used for part performance.
2. Does delivery of possession by the done amount to acceptance of Gift?
In the case of movable property, the registration is optional but in case of immovable property registration of the transferred property and attestation by at least two witnesses is mandatory for it to be a valid gift.
3. Can a future gift be revoked or suspended?
A gift can be revoked if the done fails to adhere to the conditions laid down by the donor at the time of drawing up of the gift deed. A unilateral suspension or revocation of a valid gift deed is invalid.
4. Are there any specific relatives from which Gift can be received without any tax liability?
A gift is a voluntary transfer of movable or immovable property without consideration, from one individual to another or a group of persons. There is no such specific condition as to whether the donor and done are related or not.
5. Is there any Stamp duty levied on ‘Gift of property’?
The registration charges and stamp duty payable on a regular gift deed are the same. However, some states provide rebate in stamp duty on gifts between some specified close relatives.
6. Is oral transfer of property as Gift valid?
A transfer of property can be made without registration if it is not expressly required by law.
7. Is there any tax liability on monetary gifts received from overseas?
If the aggregate value of the monetary gift received by an individual or a group of individuals or HUF exceeds 50,000/- and is not covered by any exception, then there will be a tax liability whether the gift received is from India or overseas.
Edited by Shikhar Shrivastava
Approved & Published – Sakshi Raje