GIFT OF PROPERTY 

Transfer of Property Act, 1882

TANMOY MUKHERJEE INSTITUTE OF JURIDICAL SCIENCE

Dr. Tanmoy Mukherjee

[Advocate]

GIFT OF PROPERTY [Sections 122-129 of the Transfer of Property Act, 1882]-

Tanmoy Mukherjee

Advocate

Section 122 to 129 of the Transfer of Property Act, 1882 lays down the provisions relating to 'Gift of Property'. It refers to both immovable and movable properties. In other words, the subject matter is transfer of absolute interest in the property, immovable or movable. The notable point is there is no consideration for the transfer and the gift of a property is not valid and enforceable unless it is accepted by the donee (transferee).

Meaning-

- When a person transfers some property, movable or immovable to another voluntarily without consideration and the same is accepted, it is called Gift.

-It is a voluntary transfer of an absolute interest in the property, movable or immovable, without any consideration to another, and the same is accepted by the latter.

Definition (Section 122)-

- Section 122 of the T.P.Act defines 'Gift is the transfer of certain existing movable or immovable property made voluntarily and without consideration by one person to another and accepted by or on behalf of the latter (donee).

-The person who transfers the property is called 'Donor' and the person to whom it is transferred is called 'Donee'. It is very essential that the acceptance of the gift shall take place during the lifetime of the donee. Otherwise, it becomes void.

Essentials of Gift-

To constitute gift (Gift, to be valid), the following conditions are to be satisfied-

(1) There must be a transfer of certain existing property, movable or immovable.

(2) It must have been made voluntarily without any consideration.

(3) There should be a donor capable of transferring and the acceptance must be made by or on behalf of the donee during his/her lifetime.

(4) If the subject of Gift is an immovable property; it must be made by a registered instrument duly attested.

1. Transfer of an existing property-

 To constitute gift, there must be a transfer of certain property, which is in existence at the time of making the gift. There may be a condition precedent to Gift. But such condition should not be repugnant or contrary to the provisions of the Act.

2. Voluntarily and without consideration-

 The most essential ingredient of Gift is that the transfer must be made without consideration. It is no gift if there is any consideration. While the expression 'Voluntarily' signifies free consent. (Section 14, Indian Contract Act, 1872) i.e. consent given to make gift without employing coercion, undue influence, fraud etc. (Sections 15 to 20, Indian Contract. Act, 1872).

3. Donor and Donee-

 Donor means a person, who gives. Donee is a person, who accepts the gift. Any person, who is sui juris, can make a gift of his property. In other words, the person making the gift is called Donor and the person accepting the gift is called Donee. Both parties must be alive at the time of making the gift. The donor must be capable of making the gift, while the donee must be alive at the time of acceptance.

4. Registration and attestation-

 If the subject matter of gift is an immovable property, the transfer must be made by a registered instrument duly attested by two witnesses.

Gift how made and effected (Section 123)-

 Section 123 of the Act deals with the mode of making gift. For making gift of an immovable property, the transfer must be effected by a registered instrument signed by two witnesses. With regard to the gift of movable property, registration is not compulsory but optional. It may be effected by mere delivery.

Section 123 runs as follows-

-For the purpose 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.

Effect of Registration of Gift-

 As stated above, registration is compulsory in case of making gift of an immovable property and it is optional in case of movable property. Now the question is whether non-registration (of immovable property) renders the gift ineffective? Following case law would answer this question.

Reference Cases-

Kalyanasundaram Pillai vs. Karuppa Moopanar, 50 Mad. 193 PC 1927 PC 42 –

In this case, it was held that, when the instrument of gift has been handed over by the donor to the donee, and accepted by him, the former (donor) has done everything in his power to complete the donation and to make it effective. It was held that registration of deed is not a strict rule, but a formality. In simple words, it was held in this case that, registration of gift is not compulsory but optional.

This view was also expressed in the case of-

Venkatarama Reddy vs. Pillati Rama Reddy, 40 Mad. F.B. 204 –

 It was held that gift becomes effective after execution of the document. It can be registered subsequently even after the death of the donee.

Therefore, it is clear from the above, that registration of gift is a mere formality.

Suspension & Revocation of Gift (Section 126)-

The general rule is gift once completed, cannot be suspended or revoked. However, Section 126 of the T.P. Act provides for the revocation of Gift under the following two circumstances-

(1) In such a case if it were a contract voidable at the option of donor (if gift is made by employing coercion, fraud etc.).

(2) If there is an-agreement (between Donor and Donee) to that effect.

-Even if the Gift is validly revoked in either of the cases stated above, the donor will not be able to recover the property-if-it is passed into the hands of a bonafide transferee for consideration without notice.

KINDS OF GIFT-

Gifts may be classified/categorized under the following heads-

1. Void Gifts (Sections 6, 122 and 124 to 127).

2. Onerous Gifts (Section 127).

3. Universal Donee (Section 128); and

4. Donatio Mortis Causa (Death Bed Gift).

1. Void Gifts-

 The following gifts are declared void:

(a) Gift made for an unlawful purpose (Section 6).

(b) Gift subject to condition, and the fulfillment of which is impossible (Section 6), then it becomes void.

(c) If Donee dies before acceptance (Section 122), it becomes void.

(d) Gift by a person incompetent to contract viz. Minor, lunatic etc. (Section 7) is void. (Section 11 of the Indian Contract Act 1872).

2. Onerous Gifts (Section 127)-

Section 127 deals with 'Onerous Gifts'. It reads as follows-

-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 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.

-Section 127 of the T.P.Act deals with 'Onerous Gifts'. Onerous Gift is one, which carries not only benefit but also an obligation/burden to the donee.

-A gift always may not be beneficial in character. It may also create an obligation/ burden to the donee. For instance 'A' has shares in Company 'X' which is prosperous and also in Company 'Y', which is in crisis (difficulties). Dividend is expected from the former, while heavy calls (call in arrear) from the latter. If 'A' wants to give in gift to 'B' the shares of both companies 'X' & 'Y', it is called 'Onerous Gift'. 'B' (donee) has to accept both or refuse the both. But, he ('B') cannot accept only the shares of 'X' company.

Underlying Principle-

 Section 127 (onerous Gift) is based on the maxim 'qui sensit commodum debt et sentire enus'. It means "he who receives the advantage must bear or suffer the burden also".

-If the gift is in the form of two transfers, one is beneficial and the other is obligatory, the donee can accept the former and refuse the latter.

Onerous Gift to disqualified person (Section 127)-

A person incompetent to, contract is said to be disqualified person. Such person may be a donee for Onerous Gift. But he cannot have obligation against himself i.e. he is not liable for burden. However, he is liable when the disqualification is removed. (E.g.: Minor becomes liable on attaining majority).

3. Universal Donee (Section 128)-

 Section 128 speaks about Universal Donee. It runs as follows-

-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 gift to the extent of the property comprised therein.

-A Universal Donee is one whom all the properties of donor have been given and is liable for all the debts and liabilities of the donor at the time of the gift.

-The property comprises of must be both movable and immovable. If it is only immovable, he is not a Universal Donee (as laid down in Anuradha vs. Lakshmi).

4. Donatio Mortis Causa (Death Bed Gift):

 When a gift is made by a donor, when he was in critical condition, likely to cause his death, it is called 'Donatio Mortis Causa'. It means donation made out of death, and hence it is called 'Death Bed Gift'.

-T.P.Act deals with this concept (Donatio Mortis Causa) in respect of immovable property only. (Section 191 of Indian Succession Act deals with this concept with regard to movable property).

-It is to be noted that Death Bed Gift is valid only when the donor dies. It has no effect before the death of the donor.