Under the Transfer of Property Act, 1882, there are 5 types of transfer of immovable property. Among those kinds of transfer, gift is an exceptional one. Chapter VII of the Act deals with the transfer of property through gifts. Sections 122 to 129 deals with the concept of gifts. All the sections (Section 122 to Section 129) are interrelated with each other and they have to be read conjointly to understand their effect.[i]
Definition of gift:
As defined under Section 122 of the Transfer of Property Act, 1882, gift is the transfer of any movable or immovable property which has been made by one person voluntarily and without any consideration to another person.
The person who makes the transfer is called as donor. The person to whom such transfer is made is called donee.
In reading the section, one could understand that the transfer made by the donor must be made voluntarily and such transfer must be made without any consideration to the donee and the gift will be valid only when it is accepted by or on behalf by the donee.
Nature of acceptance made:
The gift is irrefutable only when the donee accepts such gift during his lifetime. Any gift is not valid when the donee dies before acceptance.
Essentials of valid gift:
- The gift is transfer inter vivos (between living persons) of any movable or immovable property.
- The gift must be made voluntarily by the donor.
- The gift must not behold any consideration. [ii]
- The gift must be made by the donor to the donee.
- The gift of immovable property must be registered and the movable property can be made valid by delivery of possession or registered deed.[iii]
- The gift must be accepted by the donee and the acceptance must be during the lifetime of the donee and the acceptance must be given while the donee was still capable of giving.
- Any acceptance after the lifetime of the donee is void.
Love and affection- Essential for a gift to be valid:
The gift is a kind of transfer as under the Act. It stands to be unique among all kinds of transfers as it does not involve consideration to be an essential element. The transfer of property through gift must be made out of love and affection by one person to another.[iv] All the other transfers are in contracts in general and they require consideration. The term consideration has been mentioned under the Indian Contract Act[v] and not under the Transfer of Property Act. Gift is an exception to all the other kinds of transfer as mentioned under the Act. The element of consideration renders the gift to be void.
How can a transfer be effectuated?
Section 123 of the Transfer of Property Act, 1882 deals with the manner in which transfer can be made valid. According to the section, a transfer may be effectuated by following conditions:
- Transfer of movable property: The transfer of the movable property can be made valid either by registered instrument signed aforesaid by the delivery of the possession of the property.
- Transfer of an immovable property: By a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses, irrespective of the value of the property.
Unlike the gift of movable property, an immovable property cannot be validly be gifted to any person by delivery of possession alone. In Wing Commander, R.N Dawar V.Shri Ganga[vi] the court held that mere delivery of possession without instrument cannot confer any title to the done.
Gift deed and its requirements:
Deed means any legal instrument that has been signed and delivered, the grantor conveys the title to another person. The gift deed is the document that conveys the transfer of ownership of the property to another person without any consideration. As per the section 123 of the Transfer of Property Act, 1882, the title of any gift is not said to have been passed to the done unless the gift deed is registered.
Section 17 of the Registration Act, 1908 mandates certain documents to be registered. Under section 17(1) (a) the instruments of gift of immovable property are made compulsory to be registered.
For registration of the gift deed, the following conditions are needed to be fulfilled:
- It must be signed by the donor who is gifting the property
- It must be attested by at least 2 witnesses
- Requisite gift deed stamp duty must be paid
- Both the donor and the receiver must be present in the office of the Registrar
- The documents required for gift deed like PAN card, Aadhar card and necessary ID proofs must be submitted to the Registrar’s office.
Cancelling/ revoking the gift deed:
Under general circumstances, a gift of immovable property cannot be revoked or cancelled by the donor. Only specific provisions allow the donor to do so. Section 126 of the Transfer of Property Act, 1882, the gift deed may be revoked or suspended if the donor and donee agree that on the happening of specific event, the gift would be revoked.[vii]
Expenditure in drafting a gift deed:
The stamp duty is required to be paid for registering the gift deed. Stamp duty varies from state to state. The cost incurred for stamp duty and registration fees varies depending on the value of the property. It is advised to carry on the proceedings with the help of a lawyer. The fees to such lawyer may vary from case to case.
In Mallo vs. Bhaktawari[viii], the court held that the attestation is meant to ensure that the executant was a free agent and or was under pressure to do so.
In M.C. De’Suza and others vs. R. Fernandis and Others[ix], the court held that for a valid gift deed there is requirement of minimum of two attesting witnesses and where there is no such proof for attestation, the gift deed is illegal.
In Maqbool Alam vs. Khadaija[x], the court held that a gift is valid provided that the donor either obtains and gives possession of the donee or does everything that he can do to put it within the power of the donee to obtain possession.
Gift is a transfer of property that has been gratuitously given to any person without any consideration. This condition is an exception to Section 25 of the Indian Contract Act, 1872. Under that section it states that any contract or agreement entered into without any consideration is considered to be void. But gift under the Transfer of Property Act turns void when there is any consideration. Thus Gift is given out of affection by one person to another and there must not involve any consideration.
Edited by Pragash Boopal
Approved & Published – Sakshi Raje
[i] B.Balakrishnan V K.Kamalam , (2004) 1 SCC 581( 588)
[ii] Padam Chand V Lakshmi Devi, 2010 (173) DLT 604 (Delhi)
[iii] Commissioner of Income Tax V Mayawati, 2011 (183) 617
[iv] KDA Enterprises Pvt.Ltd., Mumbai V. Department of Income Tax – https://indiankanoon.org/doc/69423697/
[v] Section 2 (h) of the Indian Contract Act, 1872
[vi] AIR 1993 Del 19
[vii] Section 126 of the Transfer of Property Act, 1882
[viii] AIR 1985 All.160
[ix] AIR 1988 Ker. 280
[x] AIR 1966 SC 1194