Gift under TPA

GIFT & ESSENTIALS

INTRODUCTION:

Transfer of ownership of a property represents ‘a Gift’. Where the sender voluntarily put forwarded into effect such transfer without any kind of compensation or consideration in pecuniary value. Gift can be in the form of movable as well as immovable property. The parties may be two living persons or the transfer may take place only after the death of the transferor.

When the transfer takes place between two living people it is called inter vivos. When it takes place after the death of the transferor it is known as testamentary. The Transfer of Property Act does not define the term testamentary. But the Act defines the term inter Vivos under section 5 of the Transfer of property act, which talks about “transfer of property “.

Section 122

Section 122 of the Act defines a gift as the transfer of an existing moveable or immovable property. The transfers come out voluntarily and without deliberation. The person who transfers the property (transferor) is to be termed as the donor and the person who receives the property (transferee) is to be termed as the donee. The gift is complete when donee accepts it. This Section defines a gift as an indefensible transfer of ownership in some property that already exists.

PARTIES TO A GIFT

Donor:

The donor should be a competent person, i.e., he must have the capability and the right to make the gift. In other words, we can say that the donor must attain the age of majority and must be of sound mind. Juristic persons are also competent to make gifts such as Registered societies, firms, and institutions.  will be treated as void if it is made by a minor or insane person. Other than the capacity, the donor must also have the right to make a gift. The right of the donor can be determined by his ownership rights over the property at the time of making the transfer because a gift means the transfer of the ownership.

Donee:

There is no need for the donee to be competent to contract. He may be any person in existence at the date of making the gift. A gift will be termed to be valid no matter it is made to an insane person, or a minor, or even to a child existing in the mother’s womb subject to its lawful acceptance by a competent person on his/her behalf.

Juristic persons such as firms, institutions, or companies are deemed as competent donee and gift made to them are valid. The only point to be kept in mind is that the donee must be an ascertainable person. The ascertainable donee maybe two or more than two persons. The gift will be termed to be void if it is made to the general public.

Essential elements for gift:

  1. Transfer of ownership
  2. Existing property
  3. Transfer without consideration
  4. Voluntary transfer with free consent
  5. Acceptance of the gift

1.     Transfer of ownership:

Transfer of absolute interests indicates the transfer of all the rights and liabilities in terms of the property. To make it affect full, the donor must have the right to ownership over the said property. Nothing less than ownership may be transferred by way of gift, subject to certain conditions.

2.     Existing property

The property, which is the subject matter of the gift may be of any kind, movable, immovable, tangible, or intangible, but it must be in existence at the time of making a gift, and it must be transferable within the meaning of Section 5 of the Transfer of Property Act.

A gift of any kind of future property is deemed void. And the gift of spessuccessionis (expectation of succession) or mere chance of inheriting property or mere right to sue is also void.

3.     Transfer without consideration

A gift must be gratuitous, i.e., the ownership must be transferred without any consideration. Consideration, for the purpose of the gift, will have the same meaning as prescribed under Section 2(d) of the Indian Contract Act. The consideration is monetary in nature. Mutual affection and love are not monetary considerations and thus, property transferred in consideration of affection and love is a transfer without consideration and hence termed to be a gift. A property transferred in consideration of donee undertaking the liability of the donor is not gratuitous, hence, it is not a gift because liabilities include monetary obligations.

4.     Voluntary transfer with free consent

The donor must make the gift in the exercise of his own free will and free consent. Free consent is when the donor has the complete freedom to make the gift without any force, fraud coercion, and undue influence. The burden of proof lies on the donee.

5.     Acceptance of the gift

The donee must accept the gift. The donee may reject the gift by his choice. Acceptance of the gift may be either express or implied. Implied acceptance may be detected by the conduct of the donee and the circumstances. When the donee comes in the possession of the property, then it will be treated as the acceptance of the gift.

Where the donee is minor or insane, the gift can be accepted by a guardian or parent on behalf of their child. In such a case, the minor, on attaining majority, may reject the gift.

In terms of a juristic person, competent authority represent the legal person. Where the gift is made to a deity, it may be accepted by its agent, i.e., the priest or manager of the temple.

CONCLUSION

Hence, to originate a transfer as a gift it must accompany by the provisions of the Transfer of Property Act. The donor must be competent to make such a transfer but the donee may be any person.

The acceptance that comes after the death or incompetence of the donor is no acceptance. If the donee accepts the gift during the life of the donor but the donor dies before the registration and other formalities, the gift is deemed to have been accepted and the gift is valid.

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