TPA Section 122-129 Gift

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GIFT

122. "GIFTS" DEFINED.

"Gift" is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. ,

Acceptance when to be made.—

Such acceptance may be made during the lifetime of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void.

GIFTS.-

Gift is gratuitous transfer of ownership i.e without consideration. A gratuitous transfer may take place between two living persons or, it may take place only after the death of the transferor.

Gift may, therefore, be either inter vivos or, testamentary. Gift inter vivos is gratuitous transfer of ownership between two living persons and is a transfer of property within the meaning of Section 5 of this Act. Gift testamentary is called a will which is transfer by operation of law and is out-side the scope of this Act.

A gift made during apprehension of death is called a gift mortis causa. Such gifts are also excluded from the Chapter (Under Muslim law a gift made in apprehension of death is called gift during marz-ul-maut and is interpreted as will.

Gift made by a Muslim is called Hiba. Both of these gifts are excluded from this Chapter by Section 129 of this Act.)

The provisions of this Act are applicable only to gifts inter vivos.

DONOR.-

Donor must be a competent person. For competency, the donor must have capacity as well as right to make the gift. If the donor has capacity to contract he is deemed to have capacity to make gift. Thus, at the time of gift, the donor must be of the age of majority and must have a sound mind. Gift by minor or insane person is void. Juristic persons, such as, registered societies or firms or institutions are also competent to make gift. Besides capacity, donor must also have right to make, gift. Gift being transfer of ownership, the donor must have ownership rights in the property at the tome of gift.

DONEE.—

Donee need not be competent to contract. Donee may be any person in existence at the date of making of gift. A gift made to minor or insane person or even in favour of a child in mother’s womb is valid provided it is lawfully accepted, by a competent person on his (her) behalf. Donee too may be a juristic person. Juristic persons, such as, firms, companies or institutions are deemed to be competent donee and gift made to them is valid.

However, donee must be ascertainable person. Gift made to public in general is void. If ascertainable, donee may be two or more persons.

ESSENTIAL ELEMENTS OF GIFT.

The essentials of valid gift are given below:

1. There must be transfer of ownership.

2. The property must existing property.

3. Transfer is without consideration.

4. The transfer is made voluntarily i.e. with free consent.

5. Gift must be accepted by transferee.

1. TRANSFER OF OWNERSHIP.—

Gift is transfer of ownership i.e. absolute interest. The transferor (donor) must divest himself of the absolute interest in the property and vest it in the transferee (donee). The donor must intend to pass on all the rights and liabilities in respect of property to donee. Nothing less than ownership may be transferred by way of gift. However, like other transfers, gift may also be made subject to certain conditions. But, conditional gift must not be against of the provisions laid down under Sections 10 to 34 of this Act.

2. EXISTING PROPERTY.—

The property, which is the subject matter of gift, may either be movable or immovable. It may be tangible or intangible. Actionable claims or mortgages are intangible properties and may be gifted. Property may be of any kind but two conditions are necessary.

Firstly, the property must be in existence at the date of making of the gift. Gift of future property is void.

Secondly, the property must be transferable within the meaning of Section 6 of this Act.

In Damodaran Kavirajan v. T.D. Rajappan^,

a mother settled her properties by way of gift in favour of a son for settling dispute between family only for consideration that the son relinquished his right to future shares in the properly left by her.

Kerala High Court held that the deed was not a gift because it purported to transfer a share to be received by son in future.

3.NO CONSIDERATION.—

An essential feature of a gift is that it must be gratuitous. Ownership must be transferred without any consideration. The value of consideration is immaterial.

The word consideration has the same meaning as given in Section 2 (d) of the Indian Contract Act. It must be a pecuniary consideration i.e must be valued in terms of money or property.

Mutual love and affection is not a pecuniary consideration.

A transfer of property made in lieu of ‘services’ rendered by donee is a gift.

A property transferred in consideration of donee undertaking the liability of donor is not gratuitous; therefore, it is not a gift because liabilities evolve pecuniary obligations.

4. VOLUNTARILY.—

The donor must make the gift voluntarily. ‘Voluntarily’ here means that donor made the gift in exercise of his own free will and his consent is a free consent.

5. ACCEPTANCE OF GIFT.—

Gift must be accepted by the donee. Property cannot be given to a person even in gift against his (her) consent.

The acceptance may either be express or implied. Acceptance is implied if it is inferred from the conduct of the donee and the surrounding circumstances.

Where donee is incompetent to contract e.g. minor or insane, the gift must be accepted on his behalf by a competent person.

Where gift is accepted by guardian on behalf of minor, the minor on attaining majority may avoid the gift.

However, where the donee is minor but has attained the age of discretion (e.g. 16 or 17 years) and the donor is natural guardian, a silent acceptance by the donee is deemed to be an implied acceptance of the gift.

In K. Balakrishnan v. K. Kamalam

as a natural-guardian, a mother gifted certain property to her minor son a 16 years. The possession and right of enjoyment was, however; retained by her.

The Supreme Court held that gift is not revocable on account of non-acceptance of the gift by minor.

The Apex Court explained that, “ownership of property by minor can be presumed by silent acceptance, particularly when minor is an educated boy of 16 years; had knowledge of execution of gift.”

The Court further held that “non-delivery of possession of the gifted property, non-exercise of right of ownership over it and failure to get property mutated in his favour on attaining majority, are not circumstances negativing presumption of implied acceptance of gift by minor.”

Where donee is a juristic person, it must be accepted by a competent authority representing such legal person. Where gift is made to a deity, it may be accepted by it’s agent e.g. the priest or Manager of The Temple.

The second paragraph of Section 122 provides that acceptance must be made during the life-time of the donor and while he is still capable of giving.

Gift being bilateral transaction between two living persons, the acceptance of the (offer of) gift must be completed before the donor (offerer) dies or becomes incompetent. There is no acceptance if the acceptance comes after the death of the donor.

If the gift is accepted during the life of donor but the donor dies before registration and other formalities, the gift is deemed to have accepted and the gift is valid.

In S. Sumitra v. State, a land was endowed upon a ‘deity’ by way of gift. The gift was made to a religious endowment and was to be accepted by the State Government.

The Government ordered for the execution of the gift-deed but the donor died-before the official order could be issued and communicated to the donor.

Karnataka High Court held that the gift was validly accepted and the Govt. Order issued earlier for actual execution of gift was not invalidated by death of the donor. The last paragraph of this section provides that if donee dies before acceptance, the gift is void.

123. TRANSFER HOW EFFECTED.—

For the purposes of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses.

For the purpose of making a gift of movable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery.

Such delivery may be made in the same way as goods sold may be delivered.

MODES OF MAKING GIFT

This section deals with formalities necessary for completion of a gift. Unless these formalities are completed, the legal title does not pass on to the donee and the gift is not enforceable at law. Section 123 lays down two modes for effecting a gift depending on the nature of property. Registration is necessary for the gift of immovable properties. When it is movable, it may be effected by delivery of possession.

IMMOVABLE PROPERTIES

A gift of immovable property must be made only through a registered document. Irrespective of the valuation of property, registration is necessary for the gift of an immovable property.

Registration of a document including gift-deed, implies that the transaction is in writing, signed by the the executant (donor), attested by two competent persons and duly stamped before the registration formalities are officially completed.

In Gomtibai v. Muttulal the Supreme Court had held that in the absence of written instrument executed by donor, attestation by two witnesses, registration of this instrument, and acceptance thereof by the donee, the gift of immovable property is not complete.

The doctrine of part-performance is not applicable to gifts. Therefore, the donee who takes possession of a land under unregistered gift-deed cannot defend his possession on being evicted.

However following two points are important with regard to the requirement of registration

Although registration of gift of immovable property is must but, the gift is not suspended till registration. A gift may be registered and made enforceable at law even after the death of the donor provided the essential conditions are fulfilled.

i. Where the essential conditions for a valid gift are not fulfilled, registration shall not validate the gift.

The registration cannot validate a gift in the absence of any of the essential elements. On the other hand, without registration title cannot pass even if the essential ingredients are present.

Accordingly, although a gift of immovable property may be made by registered deed, yet, if it is not accepted by donee the gift is inoperative.

MOVABLE PROPERTIES.

Gift of movable properties may be completed by delivery of possession. Registration is optional; it is not compulsory. Accordingly, gift of a movable property effected by delivery of possession is valid irrespective of the valuation of property. The mode of delivering the property to donee depends upon the nature of property. All that is necessary is that donee gets title as well as possession of the gifted property.

Delivery of goods (movables) may be made by doing anything which the parties agree shall be treated as delivery or which has the affect of putting the property in possession of the transferee (donee).

ACTIONABLE CLAIMS.

Transfer of actionable claims is governed by Section 130 of this Act. It provides that actionable claims may be transferred (including by way of gift) by an instrument in writing signed by transferor (donor) or his duly authorised agent. Registration and delivery of possession is not necessary.

GIFT TO IDOL.

There is a conflict in the judicial decision regarding the mode of effecting gifts to an idol. According to Allahabad and Patna High Courts, gift to an idol must be made through a registered document. But; according to Madras High Court although an idol is recognised as a juristic person but since it is not strictly speaking a living person, a gift to an idol is outside the scope of this Act; therefore registration is not necessary

124. GIFT OF EXISTING AND FUTURE PROPERTY.—

A gift comprising both existing and future property is void as to the latter. This section makes it clear that gift of future property is void. Where a gift is made comprising two properties of which one is existing at the date of gift but the other is not, the whole gift is not void. Only that part of the gift is void which relates to future property. For instance, A has a house which is owned by him. A had contracted to purchase a piece of land adjacent to this house but sale in his favour is yet to be completed. A makes a gift of the properties to B. Gift of house is valid but the gift of piece of land is void even though the land was acquired subsequently by A. Gift of future property is merely a promise which cannot be enforced at law. Gift of future-income of a property before, it had accrued would also be void under this section.

125. GIFT TO SEVERAL, OF WHOM ONE DOES NOT ACCEPT.—

A gift of a thing to two or more donees, of whom one does not accept it, is void as to the interest which he would have taken had he accepted.

This section provides that where a gift is made to several donees of whom any one donee does not accept the gift, the gift on his part only, is void. Gift in favour of other donees stands valid. For instance, A makes a gift to B, C and D without specifying their shares in the property. Gift is accepted by B and C but there is no acceptance by D or his guardian (if D be incompetent). Since the respective shares have not been specified, the shares of each are equal i.e. one-third each. But, D has not accepted the gift, therefore, gift on his part (one-third) is void. This one-third of D ‘s share shall revert back to A. This share would not be added to the shares of B and C.

It may be noted that a gift is personal to the donee; therefore when a gift is made to two jointly of whom one does not accept it, the other donee cannot take the whole gift. But, gifts made to two donees jointly with the right, of survivorship is valid and upon death of one the surviving done takes the whole.

126. WHEN GIFT MAY BE SUSPENDED OR REVOKED.—

The donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked; but a gift which the parties agree shall be revocable wholly or in part, at the mere will of the donor, is void wholly or in part, as the case may be. 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.

Save as aforesaid, a gift cannot be revoked. Nothing contained in this section shall be deemed to affect the rights of transferees for consideration without notice.

ILLUSTRATIONS

a. A gives a field to B, reserving to himself, with B's assent, the right to take back the field in case B and his descendants die before A. B dies without descendants in A's lifetime. A may take back the field.

b. A gives a lakh of rupees to B, reserving to himself, with B's assent, the right to take back at pleasure Rs. 10,000, out of the lakh. The gift holds good as to Rs. 90,000 but is void as to Rs. 10,000 which continue to belong to A.

SUSPENSION OR REVOCATION OF GIFTS

Gift is transfer of ownership without consideration. Like other transfers, gift too can be made subject to certain conditions.

Donor may make a gift subject to a condition of its being revoked. But gifts would then be governed by those provisions of this Act which regulate conditional transfers. Accordingly, if a gift is made subject to condition of its being revoked in future the condition must be valid and enforceable under those provisions.

Section 126 provides as to how a gift may be suspended or revoked. It lays down two modes of revocation of gift:

(i) revocation by mutual agreement of donor and donee and, (ii) revocation as in the case of contracts.

REVOCATION BY MUTUAL AGREEMENT.—

Donor and donee may agree that gift shall be suspended or revoked upon the happening of an event not dependent on the will of the donor. The condition revoking the gift must be express; it should not be merely in the form of a wish or desire. In other words, the condition on the non-fulfilment of which the donor may revoke the gift must be expressly laid down in the deed. Where a condition has not been expressly laid down in the gift-deed, might be treated simply as the wish or desire of the donor and is not a condition upon the breach of which gift could be made revocable by donor.

However, even though a condition is not laid down in the gift-deed itself, and has been provided under a mutual agreement separately forms part of the transaction of gift, the condition would be valid and enforceable.

The condition upon which a gift is to be revoked must not depend solely on he will of the donor. A gift revocable at the pleasure of donor is no gift at all. The condition or stipulation providing for revocation must have been mutually agreed upon at the time of gift. If such agreement is made after completion of gift, since the gift has already become absolute, it cannot be revoked. However it is not necessary that stipulation for revocation is given in the deed of gift itself. What is necessary is that stipulation and gift both are made at the same time. They might be in two separate document but must form part of the same transaction. That is to say, the stipulation must relate to the same gift which is to be revoked.

The condition for revocation of gift is a condition subsequent. It must be valid under the provisions of law given for conditional transfers. The condition totally prohibiting the alienation of property is void under Section 10 of this Act. Therefore, if the gift is made revocable with such condition, the condition itself being void, the gift is not revoked.

It is also necessary that the condition upon which the gift is agreed to be revoked must be a condition subsequent the fulfilment of which is not dependent on the will or desire of donor. The condition subsequent must be in the nature of future event beyond the control of donor.

Where the stipulation provide for revocation of gift at the will or pleasure of donor the stipulation is void and gift is not revoked although such stipulation is mutually agreed upon by donor and donee. Gift revocable at the will of donor is void. For instance A makes a gift of one lakh of rupees to B reserving to himself with B’s assent the right to take back at his (A’s) pleasure Rs. 10,000/- out of this amount. The gift as to Rs. 90,000/- is valid but as regards Rs. 10,000/- the gift is void i.e. it shall continue to belong to A. Law shall consider that no transfer of Rs. 10,000 was made at all.

REVOCATION BY RESCISSION AS CONTRACTS.—

Gift is gratuitous transfer of ownership made voluntary. If it could be proved that the gift was not made voluntarily i.e. the consent of the donor was not free, the gift must be revoked. Gift is always preceded by an express or implied contract; offer by donor and acceptance by donee. If the preceding contract itself is rescinded or revoked there is no question of taking place of transfer (gift) made under it.

Accordingly, under Section 126 a gift is revoked also on any of the grounds on which it might be rescinded had it been a contract. Section 19 of the Indian Contract Act provides that “Where consent to an agreement is caused by coercion influence, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so obtained”. Thus, where the gift is not made voluntarily because” of any of the factors mentioned above, the gift may be revoked by the donor. It is to be noted that this section deals with revocation which means rescission or repudiation of gift; it does not deal with cases where gift is void e.g. for want of donor’s tide. So, where the donor’s consent has been obtained by coercion, undue influence, fraud or misrepresentation the donor has option to repudiate or revoke the gift. If he does not exercise this option, the gift is not revoked. Gift may be revoked on the above-mentioned grounds only by donor; he cannot assign this right to any other person. However after donor’s death, his legal heirs may sue for the revocation of gift on any of these grounds.

The period of limitation for the revocation of gifts on the ground of fraud, coercion, misrepresentation or undue influence is three years from the date on which such facts are known to the plaintiff (donor).

The right to revoke the gift on the above-mentioned grounds is lost when the donor ratifies the gift either expressly or by his conduct.

No revocation on any other ground.— Except on the ground (a) condition subsequent not depending on the pleasure of donor and (b) on the grounds justifying of a contract, a gift cannot be revoked on any other ground.

BONA FIDE PURCHASER.

The last paragraph of this section protects the interest of a bona fide transferee for value without notice of donor’s right of revocation. For example, A makes a gift of his house to B with a condition that he shall revoke the gift if B’s son does not take up the studies of law after graduation. B sells the house to C. C has no notice of any such condition. After graduation B’s son does not join the law course.

A cannot revoke the gift because C’s interest shall be affected. If has notice of such, condition or that C was a gratuitous transferee, A could revoked the gift.

127. ONEROUS GIFTS.—

When 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 donee can take nothing by the gift unless he accepts it fully.

Where a gift is in the form of two or more separate and independent transfers to the same person of several things, the donee is at liberty to accept one of them and refuse the others, although the former may be beneficial and the latter onerous.

ONEROUS GIFT TO DISQUALIFIED PERSON.—

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.

ILLUSTRATIONS

a. A has shares in X, a prosperous joint stock company, and also shares in Y, a joint stock company in difficulties. Heavy calls are expected in respect of the shares in Y. A gives B all his shares in joint stock companies. B refuses to accept the shares in Y. He cannot take the shares in X.

b. A, having a lease for a term of years of a house at a rent which he and his representatives are bound to pay during the term, and which is more than the house can be let for, gives to B the lease, and also, as a separate and independent transaction, a sum of money. B refuses to accept the lease. He does not by this refusal forfeit the money.

ONEROUS GIFTS

Onerous means ‘burdened’. Onerous gift is a gift of such property which is burdened with liabilities. It is a gift of non-beneficial property. If the market value of a house is say, Rs. 10,000, but the taxes, other public charges or dues on it are worth Rs. 15,000, the house is an onerous property. Gift of this house would be liability for the donee rather than any asset.

It is obvious, therefore, that he would not accept the gif But, if in one gift some property is onerous while the rest is beneficial the donee would like to accept beneficial part of gift and would reject it onerous part.

Section 127 provides that where a single gift consist of several properties some of which are onerous and the others are beneficial, the donee must accept the whole gift, he cannot be allowed to accept beneficial part of gift and reject the onerous one.

The principle underlying this rule is based on the maxim; quisensit commodum debet et sentire onus which means that “one who accepts the benefit of a transaction must also accept the burden of it”.

This rule is similar to the doctrine of election. When two properties, one onerous and the other prosperous, are given in gift to a donee in the same transaction, the donee is put to election. He may accept the gift together with onerous property or reject it totally. If he elects to accept the beneficial part of gift, he is bound to accept the other which is burden some.

However, for application of this section it is necessary that there must be a single transfer of both such properties. That is to say, onerous and beneficial properties are transferred by way of a single (one) gift.

If a gift is made in the form of two or more independent gifts to the same person, the donee is at liberty to accept the beneficial and refuse the onerous property. Since the gift are independent of each other i.e. do not form part of the same transaction, the donee in such cases is not bound to accept both the gifts.

DISQUALIFIED DONEE

Where an onerous gift is made to a disqualified done e.g. minor and such donee accepts the gift, he has a right to repudiate the gift on attaining the age of majority. An onerous gift made to a minor donee and accepted by him does not become binding on him unless on attaining majority he ratifies the acceptance. On attaining majority he may accept or reject the whole gift. If on attaining majority he retains the properties, it is implied acceptance of the gift and in this situation he would be bound by it.

However, as regards donor, the gift is complete as against the minor donee as soon as the minor accepts the gift. Donor cannot take back the property unless the minor on attaining majority rejects the gift at his option. If the donee dies during his minority, the property shall pass on to the legal heirs of the donee, the donor cannot revoke the gift as being incomplete.

128. UNIVERSAL DONEE

Subject to the provisions of Section 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 gifts to the extent of the property comprised therein.

UNIVERSAL DONEE

Universal donee is a person who gets all the properties, movable or immovable, of the donor under a gift. Where donor makes gift of his whole property without retaining anything for himself, the donee is called an universal donee. To constitute a universal donee, it is necessary that gift to him must consist of donor’s whole property. If any property movable or immovable is left with the donor, the donee is not universal donee.

English Law does not recognise the concept of universal donee, under English Law, universal succession is possible only in the event of death or bankruptcy of a person.

Section 128 lays down that where a gift consist of donor’s whole property, the donee is personally liable for all the debts and liabilities of the donor due at the time of the gift. His liability is, however, only to the extent of the property comprised in the gift.

This section incorporates an equitable principle that one who gets certain benefits under a transaction must also bear the burden therein.

Two significant points in this regard are:

i. The donee is an universal donee. If some property, movable or immovable is excluded from the gift, the donee is not universal donee. Salaries of a person are not his transferable assets under Section 6 (f) of this Act. Therefore, if donor is earning some money by way of salaries but, has made gift of all of his movable an immovable properties, the donee is nevertheless universal donee.¹⁹

ii. Universal donee’s liabilities are limited to the extent of the property received by him in gift. If the liabilities or debts exceed the market value of the whole property, the universal donee is not liable for the excess part of it.

OBJECT OF SECTION 128.

The object of this section is to protect the interest of the creditors of the donor. In the absence of the rule laid down in this section the interest of the donor’s creditors would be defeated. This section entitles the donor’s creditor to follow the property in the hands of universal donee.

Section 53 of this Act also protects the interests of the creditors in case the debtor makes a transfer defraud his interest.

But, Section 128 is independent of Section 53. Under Section 53, the creditor is entitled to set aside a fraudulent transfer of immovable property. Under Section 128 the creditor is entitled to follow not only immovable but also movable properties which now are with the universal donee. Secondly, Section 128 provides a remedy to the creditor not only where the transfer is fraudlent but also where the donor made the gift with honest motive, e.g. for renouncing the world in search of spiritual gains.

This section is subject to the provisions of Section 127 (onerous gifts). Therefore, if the donee to whom donor’s whole property has been given in gift may out rightly refuse to accept the gift if he finds that most of the properties are onerous i.e. burden some. He becomes universal donee only where he accepts the whole gift.

However, as provided in Section 127, if the universal donee is minor is liable for the donor’s debts and dues unless he retains the properties after attaining the age of majority.

129. SAVING OF DONATION MORTIS CAUSA AND MOHAMMEDAN LAW.—

Nothing in this Chapter relates to gifts of movable property made in contemplation of death, or shall be deemed to affect any rule of Mohammedan Law.

This section exempts following two gifts from the operation of this chapter. Gifts of movable properties made in contemplation of death and Muslim-gifts (Hiba) i.e. where the donor is a Muslim,

Where donor is Muslim, the gift is called Hiba and is governed by the rules of Muslim Personal Law. For valid Muslim-gift, the only essential requirement is declaration, acceptance and delivery of possession.

Registration is neither necessary nor sufficient. Oral gift made a Muslim is valid irrespective of the value of the property gifted. But, if the property is immovable worth Rs. 100 or more and the gift is made in writing, it must be registered under Section 17 of the Indian Registration Act, which is applicable to Muslim.

In order to render a gift Hiba, the donor alone should be Muslim. Religion of the donee is immaterial. If a Muslim donor gift in favour of any non-Muslim e.g. Christian or Hindu, the gift is Hiba and is exempted from the operation of Transfer of Property Act.

Gift made by a donor in contemplation of his death is donatio mortis causa. Under Muslim Law such gift is called death-bed gift or, a gift during Murz-ul-Maut. Under Muslim Law, gifts of movable as well as of, immovable properties made in contemplation of death are interpreted as wills.

Section 129 exempts gifts made by non-Muslims in contemplation of death only of the movable properties from the operation of this Act.

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