ABSTRACT
This article is written by Kalpana Kumari of 3rd Semester of National University of Study And Research in Law, Ranchi
This paper aims to explain the deed of gift. What are the provisions of gift deed in the Transfer of Property Act, 1882 and their explanation? The author intends to articulate the necessary steps that must be followed for the gift giving or receiving and avoid such steps which can invalidate the deed of gift making them voidable at the option of the donor or void.
The article is divided into 3 categories including the introduction of the paper, the main theme of the article and t conclusion to provide a clear picture to the readers about the article and to understand it in a better way.
An introduction is the first category of the article in which the author has tried to present the general idea of a gift deed, its definition, its objective and its scope.
The Second category contains the main theme which the author has tried to explain the essentials of the deed of gift, types of gift deed, whether can it be revoked or not; if revoked then, in what conditions, registration, procedure of registration etc. the author has also cited some case laws to make it understand it more easily.
The third category covers the conclusion part where the author has provided the summary of the article so that after reading the article, readers have an overview of the contents and they can understand the whole paper in a better way.
The author has read the provisions of bare acts, read the explanation from various websites, read some case laws and cited them to make this paper easy to understand.
Keywords – deed of gift, essentials of gift, revocation of gift, income tax on gift
INTRODUCTION
A gift is anything which is given by one person to another out of love, compassion and gratitude. It should be without any consideration of monetary value or compensation. It is the transfer of ownership from the person who is transferring to the person to whom it is transferred. It may be transferred by the parents to children, brother to sister, husband to wife, between colleagues etc. The transfer must be voluntary, without any coercion or force. It is freely offered to someone without getting anything.
Section 122 of the Transfer of Property Act, of 1882 defines gifts. The person who delivers the gift is a donor and the person to whom it is delivered is the donee. There must be a transfer of the gift, the property must be existing, and the donee must accept it. If these essentials are not fulfilled, the gift deed may be revoked by the recession. It can also be revoked if both parties have already agreed to a condition.
Essentials of gift deed, revocation, registration, the procedure of registration, tax on gifts etc are discussed in detail in this article.
GIFT
The gift is defined under Section 122 of the Transfer of Property Act, 1882 which says that gift is the transfer of certain existing moveable or immovable property made voluntarily and without consideration, by one person who is called as the donor, to another, who is called as the donee, and accepted by or on behalf of the donee[1].
It means that a gift is the transfer of any property which may be either movable or immovable, and it must be transferred without any coercion or force, rather it must be done voluntarily without any consideration, from the donor (one who transfers) to the donee (to whom it is transferred).
Section 122 of the Transfer of Property Act, of 1882, also says that the acceptance of the property must be done during the lifetime of the donor and till the time he is capable of transferring. If the donee does not accept the property during his lifetime, the contract is void.
Madras High Court in R. Jamuna Bai v. M. A. Anusuya and 3 others held that acceptance must be given while the donor is alive and capable of giving.[2]
Hence for the completion of the gift deed, there must be an offer, acceptance and the transfer of the property.
OFFER + ACCEPTANCE + TRANSFER = COMPLETE GIFT.
ESSENTIALS OF DEED OF GIFT:
- There must be two parties – the Donor and the Donee
The donor is someone who transfers the property to the other person known as the Donee. The donor must be competent to make the contract which means he must have the capacity to enter into the contract at the time contract is being formed or the gift is being transferred.
He must be of the age of majority to the law which he may be subjected to, he should be mentally stable and he must not be restrained from forming any contract. A gift by a minor or by a person with an unsound mind results in the gift being void.
The Punjab – Haryana High Court in Gujrant Singh v. Surjit Singh held that if the grandfather had transferred the property in favour of the minor grandsons and it is duly thumbed by the father of the minor, it would be a valid gift deed.[3]
The donor must have the right to transfer the ownership of the property which means that he must be the real owner of the property at the time of transfer of the gift.
The donee is someone who receives the gift or who asks someone to accept the gift on behalf of the donee. Donee need not be competent to make the contract. He may be a minor or may be of unsound mind, but he must have a legal guardian, who, on his behalf makes the contract and accepts the gift on behalf of the minor. A child in the mother’s womb is also competent to accept the deed of gift. But the gift cannot be made to the general public, it is invalid.
- There must be a transfer of ownership.
The donor must give up all his rights which he had against his property and transfer all those rights to the donee. He must transfer all his rights and liabilities to the new owner of the property i.e., the donee. For the transfer of the rights, he must be the owner of the property.
- Property must be existing.
The donor must have the property with him at the time of transferring the gift or giving the ownership. Though the transfer of the property may be at present or in the future a gift is only valid if the property was present at the time of the gift.
According to Section 124 of the Transfer of Property Act, 1882, a gift comprising both existing and future property is void as to the latter.[4]
- The transfer must be voluntary and made with free consent.
The donor must have agreed to transfer the property with his free consent under Section 14 of the ICA, 1872. Neither the will nor the consent may have been obtained by coercion, undue influence, fraud or misrepresentation. If the consent is not free the gift is void under Section 19 of the ICA, 1872.
The onus of proof that the gift was voluntarily given by the donor with his consent rests with the donee.
Himachal Pradesh High Court in Roshan Lal v. Kartar Chand held that if a person is 85 years old and he executed a gift deed in favour of someone and the witnesses are from the donee’s side does not establish the fact that there was undue influence or coercion on the part of the donee. [5]
- Transfer without consideration.
Property transferred in consideration out of love, compassion, and gratitude is a transfer which falls outside the scope of the consideration in terms of monetary value and hence it is considered as a gift. Consideration, according to Section 2(d) of the ICA, 1872 is pecuniary in nature, i.e., monetary terms. It must be gratuitous which means ownership must be transferred for no money or benefit. Any small amount for a big asset will also constitute a sale.
Illustration (b) of Section 25 of Indian Contract Act, 1872 – A, for natural love and affection, promises to give his son, B, Rs. 1000. A puts his promise to B into writing and registers it. This is a valid contract.
- There must be acceptance by the donee.
It means that the donee should accept the gift then only, it would be considered as a valid deed of gift. Unless donee accepts the gift without her consent, it is not valid. The donee may refuse the gift in case of Onerous gifts.[6]
The acceptance may be express or implied and it must be given during the lifetime of the donor.
Kerala High Court in Kesava Kurup Raghava Kurup v. Thomas Idicula & Anr held that acceptance is an essential factor of validity of a gift or proof of the gift made out by a person relying on it. [7]
The gift may be categorised into two – Movable property and immovable property.
Movable property can be completed by merely delivering the possession and ownership or it may be done through the transfer deed[8]. But if the property is a fixed asset, then registration of the deed is mandatory and if it is cash, then it must be moved from the donor to the donee. In the case of movable property, the written registration is not mandatory.
In the case of immovable property, the transfer must be affected by a registered instrument.[9] The registered instrument must be in written form, signed by the donor or on behalf of the donor and attested by at least two witnesses.
Under Section 17 of the Registration Act, 1908, registration of gift deeds is mandatory with District Sub-Registrar. If not registered, it would be considered an invalid gift deed.
Supreme Court in Gomtibai v. Mattulal held that the deed of gift is not complete until a written document has been signed by the donor, attested by the two witnesses, registered and accepted by the donee. [10]
It must be taken into consideration that the registration will not validate the gift if one of the necessary components of the gift deed is missing.[11]
Under Section 125 of TRANSFER OF PROPERTY ACT, 1882, it is said that if a deed of gift is transferred by a single donor to multiple donees and one of the donees refuses to accept it, the gift is void to the extent to the interest if the donee would have accepted it. The interest returns to the donor and other donee cannot claim it.
REVOCATION OF DEED OF GIFT
According to Section 126 of the Transfer of Property Act, 1882, the deed of gift may be revoked if the donor and the donee had agreed on the happening of any specified event which does not depend on the will of the donor[12]. But if parties may have agreed to revoke a gift merely on the will of the donor, it is void wholly or in part.
A gift may also be revoked if the contract of gift deed is rescinded.
So, Section 126 lays two conditions in which the gift deed may be revoked:
- By mutual consent of donor and donee
- By rescission of the contract.
Revocation by mutual agreement:
Revocation by mutual agreement – Donor and donee may agree that the gift shall be revoked anytime on the happening or non-happening of an event which should not depend upon the will of the donor. The condition of revoking the deed of gift must be expressed and in written form, mere pleasure or wish of the parties cannot result in the revocation of the contract of gift deed. If that condition is not mentioned in the agreement of the gift deed but separately, then also, that agreement is valid.
But once the gift has been transferred and then the agreement is made, it cannot be revoked.
Illustration: A gives his field to B with the condition that if B and his legal heirs die during the lifetime of A, A may take back the field. B dies without any legal heirs during the lifetime of A; hence A may take back the field.
Here the condition was on uncertain future events and not on the will of A and this revocation is valid.
Revocation by the recession – a gift is a gratuitous transfer from the donor to the donee without any consideration and with free consent. Under Section 126 of the Transfer of Property Act, 1882 a gift can be revoked at any time if the consent has been taken from coercion, or undue influence, then the contract is voidable at the option of the donor, according to Section 19 of ICA, 1872 and if t donor agrees, then only the contract of the deed of gift is valid. The contract can be rescinded under Section 64 of ICA, 1872.
The Calcutta High Court in Balai Chandra Parul v. Durga Bala Dasi held that revocation is valid if a gift deed is completed without the free consent of the donor or due to fraud or undue influence.[13]
Under these two grounds, the deed of gift may be revoked. It can only be revoked by the donor himself and no other person assigned by him. After his death, his legal heirs, however, can revoke the contract if they show that the consent was not free and it was caused due to undue influence or coercion. But the period of limitation is 3 years from the date on which it came to the knowledge of the donor. If the donor himself has ratified the gift either expressly or impliedly, he cannot revoke the deed of gift later.
Deed of Gift is also of two types:
- Regular – which cannot be revoked
- Conditional – it can be revoked if there is a condition to which both parties have given their consent.
INCOME TAX ON GIFT DEED
Gifts within close relatives are exempted under Section 56(2) (vii) of the Income Tax Act, 1961. Under this Section, any gift exceeding the amount of 50,000 Rs received by the donee will be taxed under the head of ‘Income from other sources. According to this Section, a gift is not taxable if it is received or given to a person or Hindu family by any blood relation as an inheritance, a wedding present, or while facing death.
In other cases, a gift will be taxable if the total amount of gifts received in a year cross Rs. 50 thousand.
REGISTRATION OF DEED OF GIFT
Under the Transfer of Property Act, of 1882, a gift deed is not valid if it is not registered. It can only be valid if it is registered and for registering, the gift deed would include the donor’s signature with donee and two other witnesses.
The only way, the gift deed will be enforced is if it is officially recorded with the registrar’s office which involves a registration fee and stamp duty. The needed clauses must be listed on the stamp paper and the necessary stamp duty must be paid to register a gift deed. Different states have different stamp duties with varying values. Also, the jurisdiction of the registrar’s office will depend upon the location of the donor if the gift is movable.
PROCEDURE OF REGISTRATION
The following procedures must be followed to register a gift deed by the Registration Act, of 1908:
- The deed of a gift must be signed by both the donor and the donee in the presence of at least two witnesses before being submitted to the District Sub-Registrar within the jurisdiction of the gifted property. The property to be gifted must first be valued by an authorised valuation expert at the office of the Sub-Registrar.
- Afterward, the gift deed must be submitted to the district sub-registrar, whose authority includes the bestowed property;
- Hire a lawyer to compute the registration fees, which must take stamp duty and other fees into account.
- Pay the valuation-based stamp duty and other registration fees;
- Get the gift deed attested, then.
As commonly understood, an unregistered gift cannot be used as proof and cannot transfer ownership to the recipient. The cost of the stamp duty to register might differ from state to state, and in some areas, it is somewhat less for women.
In the case of Atmaram Sakharam Kalkye v. Vaman Janardhan Kashelikar[14], the Bombay High Court held that gifts can only be “affected” by a registered instrument under Section 128 of the Transfer of Property Act, 1882. If the gift has been transferred without registration and before registration, the donor declares his intention not to be bound by it then, he may repudiate it.
ONEROUS GIFTS
Onerous gifts are those that are more of a liability than an asset. ‘Onerous’ is a synonym for ‘burdened. As a result, a property is said to be burdensome when its responsibilities outweigh its benefits. It is referred to as an onerous gift, or a non-beneficial gift when such a property is given. Such gifts are subject to rejection by the donee.
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 done 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 done is at liberty to accept one of them and refuse the others, although the former may be beneficial and the latter onerous.[15]
This is based upon the maxim “qui senit commodum sentire debet et onus” which means that one who is benefitted from a transaction must also accept the burden of it. The donee is therefore required to make a choice when two properties, one burdensome and the other lucrative, are gifted to them in the same transaction. He has the option of accepting the gift and the burdensome property or completely rejecting it. He must accept the burdensome portion of the gift if he chooses to accept the advantageous portion. However, a single transfer is a crucial component of this Section. Only after both the burdensome and lucrative properties have been transferred in a single transaction do they demand a mutual acceptance or rejection of the duty.
A donee is not competent to contract and accept property burdened by any obligation and 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.[16]
Supreme Court of India in K Balakrishnan v. K Kamalam held that if a minor accepts the advantageous portion of the gift, he will be bound by the obligation of a burdensome portion of the gift as well if he consents to be bound by it.[17]
If the onerous gift is made to any minor or a person of unsound mind, and such donee accepts the gift, they have the right to retain the gift. If they become competent to contract and after gaining consciousness of such obligation, they may accept or reject the gift otherwise, they would be bound by such contract.
CONCLUSION:
A gift is something which means the transfer of ownership from one person to another without any consideration and with free will. It is given out of love, and gratitude. The gift is defined under Section 122 of the Transfer of Property Act, of 1882. There are some essentials for a valid gift such as there must be two parties, there must be a transfer of gift, the property must be existing, there should be free will, no consideration and the gift must be accepted by the donee. The gift can be classified into movable and immovable gifts. Movable gifts need not be registered and can be transferred merely by delivering the possession but in the case of immovable gifts, written registration is mandatory, otherwise, the gift would be considered invalid. Usually, the gift of deed is not revocable but if there is a mutual agreement between the parties or there is some condition on the deed of gift then it may be revoked but that condition should be based on the will of the donor. It may also be revoked through the recession. There is also tax levied on the gift received if the value of the gift received exceeds the value of Rs. 50,000/-. There must be the registration of the gift deed and there must be a stamp paper and stamp duty where all clauses will be mentioned.
[1] S. 122, the Transfer of Property Act, 1882
[2] R. Jamuna Bai v. M. A. Anusuya and 3 others, AIR 2001 Mad 392, (2001) 2 MLJ 355
[3] Gujrant Singh v. Surjit Singh, AIR 2004 P H 257, (2004) 138 PLR 469
[4] S. 124, Transfer of Property Act, 1882
[5] Roshan Lal v. Kartar Chand, AIR 2002 HP 131
[6] S. 127, Transfer of Property Act, 1882
[7] Kesava Kurup Raghava Kurup v. Thomas Idicula & Anr, AIR 1969 Ker 21
[8] S. 123 of the Transfer of Property Act, 1882
[9] S. 123 of the Transfer of Property Act, 1882
[10] Gomtibai v. Mattulal, Second Appeal No. 326/70 (Supreme Court of India, 7th March 1977)
[11] Concept of gift under the Transfer of Property act, 1882, iPleaders, available at https://blog.ipleaders.in/concept-of-gift-under-the-transfer-of-property-act-1882/#Immovable_properties , last seen at 04/06/2023
[12] S. 126 of the Transfer of Property Act, 1882
[13] Balai Chandra Parul v. Durga Bala Dasi, AIR 2004 Cal 276
[14] Atmaram Sakharam Kalkye v. Vaman Janardhan Kashelikar, (1925) 27 BOMLR 290
[15] S. 127, Transfer of Property Act, 1882
[16] S. 127 of the Transfer of Property Act, 1882
[17] K Balakrishnan v. K Kamalam, AIR 2004 SC 1257
