📖 Book 8 - Chapter 72

(.. 14 ..)

GIFT

(Ss. 122 to 129)

QUESTION BANK

Q.1 Define gift. Explain the modes of revocation of gift.

Q.2 Define gift. What are the essentials of a valid gift.

SHORT NOTES

1) Gift.

2) Universal Donee.

SYNOPSIS

Law of Gifts under the Transfer of Property Act, 1882

I. Statutory Definition of "Gift" (Section 122)    

Statutory Scope and Exemptions (Section 129)

  1. Gifts of Movable Property in Contemplation of Death:
  1. Rules of Islamic Personal Law:

II. The Five Strict Essentials of a Valid Gift    

1. Absolute Transfer of Ownership    

2. Subject Matter Must Be "Existing Property" (Section 124)    

a. The Bar on Future Property:

b. The Split Unity Rule:

3. Absolute Absence of Consideration    

    The "Love and Affection" Rule:

5. Mandatory Acceptance During the Donor's Lifetime

a. Temporal Limitation:

b. Competence Exception:

III. Specialized Statutory Frameworks

1. Gift to a Class of Multiple Donees (Section 125)    

2. The Doctrine of Onerous Gifts (Section 127)    

a. Single Transfer Rule:

b. Independent Separate Transfers Exception:

c. Onerous Gift to a Minor:

3. The Universal Donee (Section 128)    

a. The Universal Liability Rule:

b. The Statutory Cap:

V. Suspension and Revocation of Gifts (Section 126)    

1. Revocation by Express Agreement    

2. Revocation by Equitable Rescission    

Absolute Protection of the Bona Fide Purchaser

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Law of Gifts under the Transfer of Property Act, 1882

I. Statutory Definition of "Gift" (Section 122)

    Under Section 122 of the Act, a "gift" is defined as a 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 done.

Statutory Scope and Exemptions (Section 129)

    While Chapter VII establishes the uniform regulatory framework for standard gifts, Section 129 explicitly carving out two major statutory exemptions:

  1. Gifts of Movable Property in Contemplation of Death: Commonly known as Donatio Mortis Causa, these are governed independently under Section 191 of the Indian Succession Act, 1925.
  1. Rules of Islamic Personal Law: Gifts executed by Muslim individuals are completely immune to the provisions of this Chapter and continue to be governed strictly by the uncodified rules of the Muslim personal law of Hiba .

II. The Five Strict Essentials of a Valid Gift

    To ensure a gift is legally sustainable against a challenge in a court of law, five core ingredients must be established concurrently:

1. Absolute Transfer of Ownership

    A gift is an absolute mode of property conveyance. The donor must completely divest themselves of all their proprietary rights, titles, and interests in the property, and vest them permanently in the donee. The donor cannot reserve absolute ownership or execution controls to themselves after the gift is completed, though a valid conditional gift is contractually permissible.

2. Subject Matter Must Be "Existing Property" (Section 124)

    The subject matter must be certain, identifiable, and in physical or legal existence at the exact time the gift is executed. It can consist of tangible assets (land, buildings, currency) or intangible commercial assets (corporate shares, actionable claims).

a. The Bar on Future Property: Future properties or mere expectancies like Spes-Successionis (the chance of inheriting property in the future) cannot be gifted.

b. The Split Unity Rule: Under Section 124, a gift comprising both existing and future property is wholly void as to the future portion, but remains perfectly valid regarding the existing portion.

Example: If A executes a single gift deed transferring a plot currently registered in his name, along with an additional plot he hopes to buy next month, the gift is valid for the first plot but a legal nullity for the second.

3. Absolute Absence of Consideration

    The transfer must be entirely gratuitous. If there is any underlying consideration paid or promised in terms of money, the transaction transforms into a Sale (Section 54). If it is supported by consideration in kind (property for property), it constitutes an Exchange (Section 118).

    The "Love and Affection" Rule: Natural love and affection operate purely as the moral motive or spiritual basis for making a gift; they do not constitute legal "consideration" in the eyes of property law.

    The donor must act of their own free will. The donor's consent must be completely untainted by coercion, undue influence, fraud, misrepresentation, or mistake.

The Burden of Proof: If a gift is executed by a vulnerable individual, such as a Pardanashin Lady or an extremely elderly person suffering from physical infirmity, the legal presumption shifts. The donee bears the heavy burden of proving that the donor fully understood the nature of the deed and executed it voluntarily without any external manipulation.

5. Mandatory Acceptance During the Donor's Lifetime

A gift is a bilateral transaction; it is not complete until the donee accepts it.

a. Temporal Limitation: The acceptance must be made during the lifetime of the donor and while they are still capable of giving. If the donee dies before expressing acceptance, the gift is rendered legally void.

b. Competence Exception: While the donor must be fully competent to contract, the donee can be a legally disqualified person (such as a minor or a person of unsound mind). In such instances, a valid acceptance can be lawfully given on their behalf by their court-appointed or natural guardian.

III. Specialized Statutory Frameworks

1. Gift to a Class of Multiple Donees (Section 125)

    Under Section 125, if a single thing or property is gifted collectively to two or more joint donees, and one of them refuses or fails to accept it, the gift is rendered void strictly to the extent of that non-accepting person's share. The remaining share does not automatically lapse for the others; it simply reverts back to the donor's estate.

2. The Doctrine of Onerous Gifts (Section 127)

    An onerous gift is a transaction where the property transferred is explicitly burdened with financial obligations, debts, or liabilities. Section 127 codifies the equitable principle that a donee cannot choose to take only the lucrative benefits of an agreement while rejecting its corresponding burdens .

The Equitable Maxim: quad it "Qui sentit commodum sentire debet et onus"

(He who enjoys the benefit must also bear the burden.)

a. Single Transfer Rule: If a single transaction conveys several properties, some of which are highly beneficial and others are heavily burdened with debt, the donee is faced with a strict choice: they must accept the entire transaction or reject it in its entirety. They cannot selectively accept the profitable assets and leave the debts behind.

b. Independent Separate Transfers Exception: If the donor transfers the properties through two or more separate, independent deeds, the donee is at complete liberty to accept the profitable gift deed and comfortably reject the onerous one.

c. Onerous Gift to a Minor: If a minor accepts an onerous gift through their guardian, the minor is not bound by that obligation during their minority. Upon attaining the age of majority, the minor is given a statutory Right of Election. If they choose to retain the property after being made aware of the underlying debt, they become personally liable for the attached obligations.

3. The Universal Donee (Section 128)

    A Universal Donee is an individual who receives the entirety of the donor's movable and immovable estate through a gift, leaving the donor with no assets.

a. The Universal Liability Rule: Because the donor has stripped themselves of all means to pay their creditors, Section 128 dictates that the universal donee is personally liable for all debts and liabilities of the donor existing at the time the gift was made.

b. The Statutory Cap: To prevent hardship, the universal donee's financial liability is strictly capped; it is limited to the extent of the actual market value of the property comprised within the gift. If a donee receives assets worth ₹1,00,000, they cannot be forced to pay off a pre-existing debt of ₹2,00,000.

    Section 123 provides a strict, formal procedure for effecting a gift, drawing a sharp boundary based on the nature of the property:

Nature of Property

Mandatory Legal Mode of Transfer

Registration Requirement

Immovable Property

Must be effected through a written Instrument of Conveyance, signed directly by or on behalf of the donor, and explicitly attested by at least two witnesses.

Compulsory Registration is required under the law, completely irrespective of the market valuation of the land or building.

Movable Property

Can be completed either through a registered written instrument or simply through the physical or constructive delivery of possession.

Optional. Delivery of possession mirrors the standard rules of the Sale of Goods Act, 1930 .

V. Suspension and Revocation of Gifts (Section 126)

    As a general legal baseline, a completed gift represents an absolute transfer of title and is completely irrevocable. However, Section 126 outlines exactly two narrow statutory pathways through which a gift may be lawfully suspended or revoked:

1. Revocation by Express Agreement

    The donor and donee can mutually agree at the time of the transfer that upon the happening of a specified certain event, the gift shall be suspended or revoked.

The Rule of External Control: To be legally valid, the happening of this specified event must not depend solely on the arbitrary will or pleasure of the donor. A clause stating that the donor can take back the property whenever they feel like it is a legal nullity, rendering that specific portion void.

Illustrations:

Valid Contingent Revocation: A gifts a field to B, reserving to himself, with B’s formal assent, the right to recall the field if B and all his lineal descendants die before A. B dies without leaving any children during A’s lifetime. A can lawfully exercise the clause and take back the field.

Void Will-Based Revocation: A transfers ₹1,00,000 to B, reserving to himself, with B’s assent, the right to take back ₹10,000 out of the sum at his own pleasure. The gift holds good absolutely as to ₹90,000, but is void as to the ₹10,000 clause, which remains the absolute property of A from the start.

2. Revocation by Equitable Rescission

    A gift can be revoked in any case where, if it were a standard commercial contract, it might be lawfully rescinded or set aside under contract law.

Therefore, if the donor's consent was obtained through the use of coercion, undue influence, fraud, or misrepresentation, the donor can approach a civil court to have the gift deed declared voidable and cancelled under Section 19 of the Indian Contract Act, 1872.

Absolute Protection of the Bona Fide Purchaser

    The final paragraph of Section 126 creates an absolute equitable shield for subsequent buyers. No conditional revocation or rescission can affect or damage the property rights of a subsequent transferee who purchases the asset for valuable consideration from the donee without any notice of the conditional defect or fraud.

In Renikuntla Rajamma v. K. Sarwanamma (2014) 9 SCC 445

The Supreme Court ruled that once a gift deed over an immovable property is validly executed, accepted by the donee, and registered, the donor loses all proprietary rights. The donor cannot subsequently execute a unilateral "Cancellation Deed" to revoke the transfer, unless they establish a valid ground for rescission (like fraud or undue influence) before a competent civil court under Section 126.

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