Introduction
Welcome to the official blog of the Law Offices of Kr. Vivek Tanwar Advocate and Associates, where we are dedicated to providing litigation support services for matters related to properties. In today’s blog post, we aim to shed light on the prevailing issues surrounding property, the legal framework in place for their protection, and the steps we can take as a society to combat these acts. Join us as we explore this critical subject and empower you with the knowledge to protect your rights and safety.
What Is A Gift?
A gift is the transfer of ownership of property without compensation or consideration. It can be between living individuals (inter vivos) or after the death of the transferor (testamentary). Only inter vivos transfers are governed by the Transfer of Property Act. If the essential elements of a gift are not properly implemented, it may be revoked or deemed void. The Act covers various provisions such as eligible properties for gifting, methods of making gifts, competent transferors, and rules for suspending or revoking gifts.
What May Be Referred To As A Gift?
A gift, as defined in Section 122 of the Transfer of Property Act, involves the voluntary transfer of existing movable or immovable property without consideration. The donor transfers ownership to the donee, who must accept the gift. A gift can include both types of property.
CASE : Mt. Brij Devi v. Shiva Nanda Prasad & Ors (1939)
In this case, the court ruled that a gift with a condition restricting alienation is invalid. The court referred to Section 10 of the Act, which declares an absolute restraint on the transferee as void. The court also cited Section 126, which allows for the revocation of a gift based on specified conditions. However, subsequent judgments have resulted in different interpretations of the law, leading to conflicting decisions. The placement and wording of Section 126 have contributed to these varying interpretations. It is essential to consider Section 10 as a general provision applicable to all chapters of the Act. The purpose of Section 10 is to prevent the accumulation of property and ensure its free market availability. Revoking a gift has implications for taxes and the principle of favouring alienation over accumulation.
Parties To A Gift Transfer
The parties involved in a gift transfer are:
- Donor: The person who voluntarily transfers ownership of the property to another person (donee) without any consideration or compensation.
- Donee: The recipient or the person who receives the gifted property from the donor.
These two parties, the donor and the donee, are the primary participants in a gift transaction. The donor initiates the gift by offering the property, and the donee accepts the gift. The process of making a gift typically involves legal documentation, such as a gift deed, to formalize the transfer and establish the donee’s ownership rights.
Essentials Of A Valid Gift
The following are the five essentials of a valid gift:
- Transfer of Ownership: There must be a complete transfer of ownership of the property from the donor to the donee. The donor should no longer have any control or rights over the gifted property.
- Existing Property: The gift must involve an existing property that is capable of being transferred. It cannot be a future property or a property that does not yet exist.
- Voluntary Transfer: The transfer of the property must be made voluntarily by the donor. It should not be done under any pressure, coercion, or undue influence.
- Absence of Consideration: The gift must be made without any consideration or compensation. It should be a gratuitous transfer, motivated by love, affection, or goodwill towards the donee.
- Acceptance of gift: The gift must be accepted by the donee. Acceptance can be expressed or implied, but it is essential to validate the transfer. Until the donee accepts the gift, the ownership does not pass to them.
Modes Of Making A Gift
Section 123 of the Transfer of Property Act provides guidelines for completing a gift, ensuring its enforceability under the law. The Act outlines two modes of making a gift based on the nature of the property involved. For immovable property, registration is necessary. On the other hand, movable property can be transferred by delivering possession. Let’s discuss the modes of transfer for different types of properties:
- Immovable Property: To transfer immovable property as a gift, registration is required. The gift deed must be properly executed, attested by witnesses, and registered according to the prescribed legal formalities. According to Section 123 of the Transfer of Property Act, for immovable gifts, delivery of possession is not required.
CASE : of Renikuntla Rajamma v. K. Sarwanamma
In this case, the courts ruled that even if the donor retains the right to use the property during their lifetime, it doesn’t affect the transfer of ownership to the donee as long as the gift is registered and accepted by the donee.
- Movable Property: Movable property can be gifted by delivering possession to the donee. Once the donor physically hands over the movable property to the donee, the gift is considered complete.
- Actionable claims, which include unsecured money debts and rights to claim movables not in possession of the claimant, are intangible movable properties. They can be transferred as a gift through a written instrument signed by the transferor or their authorized agent, without the need for registration or delivery of possession.
These essentials are necessary to ensure the validity of a gift and establish the legal rights and obligations of the donor and donee.
Key Points Regarding A Gift
- A gift of future property is considered void under Section 124 of the Transfer of Property Act, 1882. However, if a gift consists of both present and future property, only the part related to the future property is void.
2. When a property is gifted to multiple donees and one of them does not accept it, the gift becomes void to the extent of their interest, which reverts back to the transferor.
3. Onerous gifts refer to burdensome properties, and the donee has the right to reject them. Section 127 states that if a single gift consists of both onerous and prosperous properties, the donee must accept or reject them as a whole.
4. A universal donee is a person who receives all the properties of the donor under a gift. Section 128 holds the donee liable for the debts and liabilities of the donor existing at the time of the gift, limited to the value of the received property.
5. Gifts can be suspended or revoked under certain conditions specified in Section 126 of the Act. Revocation can occur by mutual agreement or by rescission of the contract. However, revocation is subject to the limitations and rights specified within the Act.
6. A bonafide purchaser, someone who acquires the gifted property in good faith and with consideration, is protected under the last paragraph of Section 126 and is not affected by the revocation or suspension of the gift.
Exceptions
Section 129 of the Transfer of Property Act outlines exceptions to the general rules of gifts. These exceptions include:
- Donations mortis causa: These are gifts made in anticipation of death.
- Muslim gifts (Hiba): Governed by Muslim Personal Law, these gifts require a declaration, acceptance, and delivery of possession. Registration is not necessary, except for immovable property worth more than Rupees 100, which requires registration under the Indian Registration Act. The religion of the donee is irrelevant, but the donor must be Muslim for the gift to be considered Hiba.
Conclusion
For a transfer to be considered a gift, it must adhere to the Transfer of Property Act, which defines the gift and its transfer circumstances. The transferee must have possession and ownership of the gift at the time of transfer, while the transferor must be competent to make the transfer. Future property gifts are void, and partial acceptance of prosperous gifts or rejection of onerous gifts is not valid. Accepting a gift also means accepting its benefits and liabilities. Revoking a gift requires mutual agreement or rescinding the gift contract. Donations mortis causa and Hiba are the only gift types exempt from the Transfer of Property Act.
We are a law firm in the name and style of Law Offices of Kr. Vivek Tanwar Advocate and Associates at Gurugram and Rewari. We are providing litigation support services for matters related to the Transfer of Property Act, 1882.