Oct 18, 2017
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Gift deed Property Act

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What is the meaning of ”Gift Deed” under Property Act?

The provisions relating to “Gift” (gift deed) are stipulated under Sections 122 to 128 of the  Transfer of Property Act.

Section 122 of the Transfer of Property Act defines “gift” as follows:

”Gift” – The transfer of certain existing moveable or immoveable property made voluntarily and without consideration by one person called the ‘donor’, to another person called the ‘donee’ and accepted by or on behalf of the donee.
The gift must be accepted during the liftime of the donor and the donor should be capable of giving. However, if the donee dies before the acceptance, the gift becomes void.

Who can make a Gift deed? 

Essentials of a valid gift deed:

1. There must be a transfer of ownership.
2. The subject matter of gift must be a certain whether existing movable or immovable property.
3. The transfer must be voluntarily done.
4. It must be done without consideration.
5. There must be acceptance by or on behalf of the donee, and such acceptance must be made during the lifetime of the donor and while he is capable of giving.

There are two parties to the gift: donor and donee.

The donor must be a person competent to transfer; whereas the donee may be any person.

The gift can be made to any one, to an incompetent person or even to a juridical person. Gratuitous transfer is the essence of a gift transfer.

Registration of Gift deed:

According to Section 123, a gift of immoveable property must be made by a registered instrument signed by
or on behalf of the donor and attested by at least two witnesses.

Where a gift in favour of someone is registered but it is not accepted by the donee, the gift is incomplete. Suppose, a document is executed by the donor making a gift of immoveable property and the deeds are delivered to the donee, and the donee accepts the gift but the document is not registered? The Courts held the gift as valid in the eyes of law.

While registration is a necessary formality for the enforcement of a gift of immoveable property, it does not suspend the gift until registration actually takes place. The donee in such a case can ask the donor to complete the gift by registration. Thus, the most essential thing for the validity of a gift is its acceptance. If the gift is accepted but not registred it is a valid gift.

Caselaw: The Privy Council in Kalyan Sundram v. Kumarappa, A.I.R. 1925 P.C. 42, decided that after acceptance of the deed of gift and before registration, the donor cannot revoke the gift. The gift which is accepted by the donee, will take effect from the date of the execution of the document by the donor, even though it is registered at a later date.

Revocation of gift deed:

If the deed of gift is executed but never communicated to the intended donee and remains in the possession
of the donor undelivered, it cannot be compulsory registered at the instance of the donee. The reason is that
Lesson 6 Law Relating to Transfer of Property 321, the donee did not accept the gift, the donor can at any time before such acceptance revoke the gift. But once a gift is accepted by the donee, the donor cannot revoke it.

A gift may, however, be revoked if it is brought about by a fraud or misrepresentation or undue influence.
The other essential characteristic of a gift is that it cannot be revoked at the will and pleasure of the grantor.
A revocable gift is one which may be revoked by the donor at any time. Its revocation would depend upon the mere will or pleasure of the donor. Such a gift is void. But on the other hand, if the condition is one which does not depend on the will or pleasure of the donor, the gift can be revoked on the happening of such condition.

Illustration:

(a) A gives a field to B, reserving to himself, with B’s assent, the rights to take back the field in case B
and his descendents die before A, B dies without descendents during 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 leisure
Rs. 10,000 out of one lakh. The gift holds goods as to Rs. 90,000 but is void as to Rs. 10,000 which
continues to belong to A.

A gift which comes into existence on the fulfilment of a condition, that is to say, a gift which is subject to a
condition precedent is also valid. A condition precedent, as already explained in this study dealing with
vested interest and contingent interest, is one which must be fulfilled before the transfer takes effect. But the
condition attached to the gift should not be illegal or immoral. For instance, a gift to A on condition that he
murders B is not valid.

‘Gifts’ comprising both of existing property and future property is void as to the latter. For example, A makes a
gift of his house and also makes a gift of the additions that he is likely to make in future. Here the gift of the
house is valid but the gift of the additions that are yet to be made is invalid.

Onerous gift:

Lastly reference may also be made to what is known as an onerous gifts. It may be that several
things are transferred as gifts by single transaction. Whereas some of them are really beneficial the others
convey burdensome obligations. The result is that the benefit which it confers is more than counter balanced
by the burden it places.

For instance, A makes gifts of shares in the companies X and Y. X is prosperous
but heavy calls are expected in respect of shares in Y company. The gifts are onerous.The rule as laid down in
Section 127 is that the donee takes nothing by the gift unless he accepts it fully. Where the gift is in the form
of two or more independent transfers to the same person of several things, the donee is at liberty to accept one of them and refuse the other.

The rules pertaining to gifts in the Transfer of Property Act do not apply to the gifts by Mohammedans. A gift made by a Mohammedan, its validity has to be judged according to Muslim law and not according to the Transfer of Property Act.

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