Introduction
Usually, a transfer of a property is done only for something in return, which is known as consideration. This consideration can be in any form: monetary consideration or any other consideration. Any transfer of ownership done without consideration is known as a ‘Gift.’ This transfer process is known as a gratuitous transfer.
A gift can be made over movable and immovable property. A gift can be given between two living persons, which is known as inter-vivos, or after the transferor’s death known as testamentary. However, the Transfer of Property Act deals with only the gifts given while the parties to the transfer are alive. Thus, this article will be dealing only with such gifts covered under the said Act.
Definition of Gift
According to Section 122 of the Transfer of Property Act (TPA)1, a transfer of movable or immovable property, which is already in existence, without consideration is a gift. Such a transfer should be made voluntarily by the transferor. The acceptance of the gift should be made by the person to whom the transfer is made or on behalf of him.
Parties
There parties to a gift are:
- Donor – The person who is donating or transferring his property in return for no consideration is a donor (transferor).
- Donee – The person for whom a donation or gift is made is a donee. In simple words, the receiver of the gift is the donee (Transferee).
Types of property
Section 122 of the TPA defines a gift as a transfer of ‘movable’ or ‘immovable’ property. Property thus can be divided into two categories: movable and; immovable. What is movable and immovable property?
1. Immovable property
As the name itself suggests, immovable property is a property that cannot be moved. Things like buildings, walls, walls, trees, land, benefits arising out of the land, and things attached to the land are immovable property. The water tank attached with the house, doors, and windows are all immovable property.
2. Movable property
Anything that doesn’t come under the category of ‘Immovable property’ is movable property. The name by itself defines the term: ‘movable,’ meaning that it can be moved.
Thus, anything which can be moved without damaging it is a movable property. Though the definition of movable property is not given in the TPA, section 3 of the said Act states a list of things that are movable properties. They are standing timber, growing crops or grass.
Though a tree is usually considered an immovable property, if it is grown for timber, it shall be considered a movable property as it can be cut down for other uses.
Modes of gifting
Gifting someone isn’t that easy. For a gift to be recognized and valid, specific procedures should be followed. These procedures may vary according to the nature of the property. For instance, an immovable property has to be registered upon its transfer. But this is not the case for movable property.
The modes of how a transfer should be made are mentioned under section 123 of TPA.
1. Immovable property
Gifting an immovable property should be made only by a registered instrument. This registered instrument should be signed by the donor himself or by any person signing on behalf of the donor. At Least two witnesses have to attest the instrument.
In the case of Thulasimani Ammal vs. Commissioner Of Income Tax & Anr.2 the court held that mere handing over possession or handing over documents would not constitute a valid gift. The transfer of gifts has to be registered.
R.N. Dawar v. Ganga Ram Saran Dhama3 – In this case, it was held that the title of the immovable property could not be passed on to another person unless it is registered. Mere possession cannot confer the title to another if such a gift isn’t registered.
2. Movable property
Gifting of a movable property doesn’t have to be made through a registered instrument. Thus, it is possible to make a gift of movable property with or without a registered instrument and through delivery.
In the case of Ms. Mayawati vs. Dy Commissioner Of Income-Tax4, it was held that mere gifting of the movable property voluntarily and delivering the possession of such property to the donee is enough for the gift to be valid.
Essential elements
Section 122 of TPA defines a gift as a voluntary transfer of property by one person to another without consideration. The donee should accept such gifts.
From the definition, we can conclude that the followings are the essential ingredients of gift:
1. A transfer of title or possession
First of all, there should be a transfer of ownership or title taking place. One person should do such a transfer to another person.
For immovable property, the transfer of title should be done with a registered instrument. Mere words stating that A’s land is gifted by A to B is not enough. The transfer of immovable property should be effected through a registered instrument.
However, for movable property, transferring the title through a registered instrument or by way of transferring the possession is enough.
Either way, a transfer should take place. It can be the transfer of possession (movable property) or of the title (immovable property). Such a transfer should be made with the intention to transfer all the rights and liabilities of such property.
2. Existence of property
For a transfer of property to take place, there should be a property in existence. One cannot transfer a property that is not in his possession or ownership. Nor can he transfer a future property.
3. Voluntarily made
A gift is given without consideration. Thus, the beneficiary of such transfer is the donee. Thus a transfer of gift should be made voluntarily by the donor since he is the person who is at a loss.
The donor should have voluntarily made the gift without any coercion, fraud, misrepresentation, undue influence, or force. If a gift has been obtained through any one of the above-mentioned means, it can be said that such a gift has not been made voluntarily and hence declared void.
4. Without consideration
A gift is given out of love and concern. Thus it is given for free without any consideration. If such a transfer of property is made for any consideration, even for a corn piece, it shall be considered a transfer of property, sale, or exchange and not as gift. Thus a gift should be made purely without any consideration.
5. Acceptance
After the donor makes a gift to a donee, the transaction becomes complete only when the donee accepts it. If the donor doesn’t accept it, then it is treated as if the gift isn’t made.
Acceptance when to be made
Every gift which is gifted should be accepted by the donee for the transfer to become complete and valid. According to Section 122 of the Act, the acceptance of a gift should be made while the donor is still capable of giving the gift and during the donor’s lifetime. The donee should also accept the gift before he dies. If the donee dies before accepting such gift, then the gift becomes invalid (or void).
Is acceptance by donee essential for the validity of the gift?
Except in the case of Mohammedan law, the acceptance of a gift is essential for the validity of gift. A gift can be beneficial or a burden to a donee. Thus, a donee has to accept the gift for the gift to be valid.
The donee should accept the gift during the lifetime of the donor and while the donor is capable of giving it.
Where there are several gifts in several transactions, the donee can accept the ones with benefit and reject the ones with a burden. However, if all the gifts are given in a single transaction, he has to accept all or reject all. In either way, the donee’s acceptance is a must.
Future property-gift
A gift can be made only with an existing property. Section 124 of the TPA states that a gift of future property is void. Where a gift is made regarding an existing property and of future property, the existing property can be gifted but not the future / non-existing property. The property that is gifted or is to be gifted should be in existence on the day the transfer is made.
Gift to several donees
A donor can make a gift to a donee or several donees. According to section 125 of TPA, if a gift is made to several donees and one donee doesn’t accept it, it becomes void to the interest to which he would have taken if he had accepted it.
Example: If 10 lakh rupees is gifted by A to his daughters W, X, Y, and Z with 2.5 lakh each. Daughter Z refuses to accept it. In this case, the 2.5 lakh of daughter Z becomes void and goes back to father A. The remaining 7.5 lakh for the other three daughters becomes valid.
Revocation/suspension of gift
A gift is given by a person (donor) without any consideration. This doesn’t mean that he can take back or cancel such a gift and take it back whenever he wishes. If he does so, the donee will get affected. Thus, a gift once made cannot be revoked or canceled except under few circumstances.
A gift can be revoked/suspended only on the following grounds:
Where donor and donee have already agreed with the condition that the gift shall be revoked/suspended in the event of a specific event. However, such an event should not depend on the will of the donor. If the event is in the donor’s will, then this gift is void wholly or partly, depending on the case.
Example 1: X gives a house to Y with the condition that he might take it back if Y or his descendants die before X. and Y agrees to this condition. Y dies without any descendants. The gift can go back to X.
In the above example, the special event is the death of Y and his descendants before X. This specified event is not under the control or will of the donor. Thus it is a valid gift.
Example 2: X gives to Y three houses, house A, house B, and house C, upon a condition that X will take back house C whenever he wants. Here, the gift of house A and B is valid. However, the gift of house C is not valid.
In the example mentioned above, the special event is ‘taking back house C whenever X wants.’ The action is under the control of X. Thus, the gift of house A and B is valid but not the gift of house C.
The second ground for a gift to be revoked/suspended is in the cases where it is allowed in a regular contract. For example, undue influence, misrepresentation, fraud are the grounds for revocation/suspension present in a contract. This can be the grounds in the case of gifts too.
Onerous gift
The term ‘Onerous’ means ‘burdened with an obligation.’ When a donor gifts a donee with a property, this may not always benefit the donee. The said gift may also contain certain obligations, which may be a burden for a donee.
Section 127 of the TPA deals with onerous gifts. Where a donee gifts a donor with several things in a single transaction, and one of them is a burden to the donee where the rest are beneficial to the donee, the donee can accept all (including the burdened property) or reject them all (including the property with benefits). He cannot accept the gifts with benefit and reject the ones with a burden.
In the case where a donor is gifting several things in two or more separate and individual transactions, of which one individual transaction is of burden, the donee can accept the gifts with benefits and reject the one with a burden.
Example 1: X has shares in company A running in difficulty, and company B, which is functioning successfully. X gifts all of his shares from both the companies to Y. Y cannot take shares from company B and refuse to accept the shares from A. Here, Y can either accept shares from both the company or reject them all.
Example 2: X has shares in company A which is running in difficulty, and company B, which is functioning successfully. X gifts the shares from company A and B in two separate and individual transactions to Y. Here, Y can refuse the shares from company A. This doesn’t mean that he cannot accept the shares from company B. Y can refuse shares of A and get shares of B. This is because each transaction is done separately and individually.
To put it in simple words, if several things are gifted in a single transaction, the donee can either accept them all or reject them all. But if several things are given in several transactions, the donee can accept the ones that he likes and reject the ones that are a burden to him.
If a donee who is not competent to a contract accepts such gift with burden, he shall not be bound by his acceptance unless he becomes competent to contract and understands his burden and accepts it.
Universal Donee
Section 128 of TPA talks about universal donee. When a gift is gifted to a donee from a donor, and such gift consists of the donor’s whole property, the donee becomes a universal donee. As the donee is gifted with the donor’s whole property, the donee is liable to all the benefits and burdens that the donor holds. In this case, the donee is personally liable to pay all the debts and dues of the donor. This liability to pay back all the dues applies only to the extent of the property’s value and not more than that.
Example: A gifts to B all his properties. The value of A’s whole property is 10 million. However, if the debts and dues of A are 11 million, B is liable to pay only 10 million as the gift value is only 10 million. B doesn’t have to pay back the remaining 1 million from his personal property.
Exception
All the conditions of gifts contained in chapter VII of the TPA don’t affect any rule of the Muhammadan law. This also doesn’t relate to gifts in contemplation of death (death bed gifts).
Conclusion
A gift is given by a donor out of love and affection, without any expectation. A person who gifts without any consideration is said to have done a gratuitous transfer. There should be a property (which can be movable or immovable) that should be transferred by a donor voluntarily to a donee without consideration. Such gifts should be accepted by the donee to become valid.
A gift of immovable property can be done only through registered instruments with at least two witnesses. However, a gift of movable property can be done through a registered instrument or through the delivery of possession.
Acceptance of a gift by the donee is needed in the case of a gift. This is because a gift isn’t always beneficial to a transferee or donee. Sometimes a gift may be an onerous gift. And a universal donee is liable to the donor’s debts and dues only to the extent of his gift’s value. A donor can make a gift to several donees. A gift of several things through a single transfer/transaction can either be rejected fully or accepted fully and not partly. However, a gift of several things in several transactions can be rejected partly, and the remaining can be accepted. Thus, acceptance of the gift by the donee is very important when it comes to a gift.
The provisions contained in chapter VII of the Transfer of Property Act don’t affect any gift made in the death bed or any Mohammedan law.
- Transfer of Property Act, 1882
- (2000) 158 CTR Mad 5
- AIR 1993 Del 19
- (2008) 113 TTJ Delhi 178
This Article is Authored by Velvizhi V., LLB (HONS), School of Excellence in Law, Chennai
