Gifts and Exchanges in Property Law

Definition of a Gift Section 122 of the Transfer of Property Act 1882 defines a gift as: “Gift” is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the done, and accepted by or on behalf of the done” In other words, a gift is essentially A voluntary transfer of personal property without consideration. A parting by owner with property without pecuniary consideration. A voluntary conveyance of land, or transfer of goods, from one person to another, made gratuitously, and not upon any consideration of blood or money.

In gift, an existing property is transferred in favour of another person without consideration. A gift may be made between two living people or it may take place after the death of the transferor (testamentary). Essential Elements of Gift The essential elements of a legally valid Gift are: * There must be a transfer of ownership of property. This means that transference of merely possession doesn’t amount to a gift. In a gift, the whole interest of the interest of the person in a property is transferred in favour of the other person.

The donor in question should be competent to contract. i. e. he cannot be a minor or a mentally challenged person. * The property must be in existence. For a gift, it is necessary that the property must be in existence at the time of making the gift, although its conveyance must take place either in present or in future. Both types of properties, moveable and immoveable can be gifted. A gift of a future property is void. * The transfer must be voluntarily made and without consideration.

The gift must have been made by the donor voluntarily.i. e. with his free will and consent . In situations where the donor has been forced or coerced into entering into a gift deed, then the gift in question is not valid. * The property must be accepted by or on behalf of the person to whom it is transferred. Acceptance of the gift is important, just like how one has to accept a contract. Sometimes a donee wouldn’t want to accept an onerous gift (a gift which transfers burdens and obligations to the donee, like tax or mortgage). * The transfer must be effected in the manner prescribed by law.

This element is described in the coming section of this paper. Mode of Transfer of Gifts Section 123 describes the last element which constitutes a gift. This section in the Transfer of Property Act 1882 states that: “For the purpose of making a gift of immoveable 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 moveable property, the transfer may be effected by a registered instrument signed aforesaid or by such delivery.

Such delivery may be made in the same way as goods sold may be delivered. ” Oral Gifts In view of sec. 123 of Transfer of Property Act, a gift of immovable property, which is not registered, is bad in law and cannot pass any title to the donee. Any oral gift of immovable property cannot be made in view of the provisions of sec. 123. Mere delivery of possession without a written instrument cannot confer any title Recent Case-Law Relating To Oral Gift Deed: * Dr. Nathu Lal Vaishi & Anr. . vs G. S. Kamal Advocate & Anr on 12 January, 2010, Delhi High Court.

Recent Cases on Oral Gifts * Dr. Nathu Lal Vaishi & Anr vs G. S. Kamal Advocate & Anr * The appellants and the respondent no. 2 entered into an arbitration agreement dated 8th September, 1992. It is recorded therein that disputes and differences had arisen between the appellants (described in the agreement as first party) on the one hand and the respondent no. 2 (described in the agreement as second party) on the other hand regarding property no. 43, Silver Park, Chander Nagar, Delhi (Khasra No. 19/3, Khureji Khas), measuring 90′.

x120′; that the parties had agreed to refer to said disputes and differences to the arbitration of the respondent no. 1; that two questions framed in the agreement and referred to the arbitrator are as under:- * (i) Whether the first party is the exclusive and absolute owner of the property in dispute bearing no. 43, Silver Park, Chander Nagar, Delhi-110051 (Khasra No. 19/3, Khureji Khas), measuring 90’x 120′ better known and described in the annexed site plan in red colour, in lieu of the Oral Gift made on 1st June, 1990 by the Second Party.

* (ii) Whether the second party, Peer Abdul Majid, can revoke or cancel the oral gift made on 1st June, 1990 in favour of the first party in respect of the aforesaid property shown in the site plan bearing * 3. The arbitration record further reveals that respondent no. 1/arbitrator on 12th September, 1992 recorded the statements of appellants, one Mr. A. K. Arora, witness of the appellants and the respondent. In the said statements, parties admitted that the respondent no. 2 was the owner of the property aforesaid; that the respondent no. 2 on 1st June, 1990 made an oral gift of the said property in the presence of the aforesaid Mr.

A. K. Arora and in favour of the appellants and also handed over the proprietary possession of the said property to the appellants; that the appellants, at the time of making of the statements, were in possession of the property. The only dispute was that the respondent no. 2 wanted to cancel or revoke the said oral gift. While the respondent no. 2 claimed to be entitled to so revoke and cancel the gift, the same being oral and wanted back the possession of the property and custody of the title documents with respect thereto, the appellants denied his entitlement to do so.

* The arbitration award is made rule of the Court save with the modification that the appellant would be entitled to get the property mutated in their name subject to what has been observed herein above. Decree sheet in terms of the award and with the modification aforesaid be drawn up. No order as to costs. Gifts under Mohammedan Law The essential requirements of a valid gift under Mohammedan Law are as follows: * A declaration of gift by the donor * Acceptance of the gift by the Donee * Delivery of possession, if possible.

A registered instrument is not necessary to validate a gift of immovable property under Mohammedan Law as Section 123 doesn’t apply to Mohammedan Law. Mohammedan Law | Gift (English Law)| i) As to a valid gift, under Mohammedan law, three essentials conditions are required: (i) declaration of gift by the donor (ii) an acceptance of the gift, express or implied, by or on behalf of the donee, and (iii) delivery of possession of the subject of gift. | i) As to rights in property, under The English law, is classified by a division on the basis of immoveable and moveable property.

The essential conditions of a valid gift are (i) The absence of consideration; (ii) the donor; (c) the donee ;(iii) the subject-matter; (iv) the transfer; and the acceptance| Revocation of gift deed under Mohammedan Law: under the circumstances mentioned infra, A Mohammedan can revoke a gift even after delivery of possession: i) When the gift is made by a husband to his wife or by a wife to her husband; ii) when the donee is related to the donor within the prohibited degrees; iii) when the gift is Sadaka (i. e. made to a charity or for any religious purpose). iv) when the donee is dead;

v) when the thing given has passed out of the donee’s possession by sale, gift or otherwise; vi) when the thing given is lost or destroyed; vii) when the thing given has increased in value, whatever be the cause of the increase; viii) when the thing given is so changed that it cannot be identified, as when wheat is converted into flour by grinding; and ix) when the donor has received something in exchange for the gift Except in those cases, a gift may be revoked at the mere will of the donor, whether he has or has not reserved to himself the power to revoke it, but the revocation must be by a decree of court.

Important conditions of a valid gift in Hindu Law What are the important conditions of a valid gift Hindu Law ? i)Relinquishment of one’s proprietory right in the property. Yet it should be without any consideration. ii)Merely registering the gift deed does not afford to pass the title of the property. iii) Creation of right of any person must be completed by acceptance. iv) A gift is totally different from a surrender by a Hindu widow where she does not in fact or in law purport to transfer any interest in the property surrenders.

v)In addition to that in the case of Karunamoyee vs Maya Moyi , it was observed that the widow simply withdraws herself from the estate and the reversioner steps into the inheritance as a matter of law. ” vi) Yet, in the case of Narbada Bai vs Mahadeo, it was held that in case of transfer of the whole estate, the reversioner takes the same subject to the liability for her maintenance. It is thus vividly known that the reversioner is responsible for her debts, if she relinquishes the same. vii) Where delivery of possession is enough to complete the transaction of a gift, is abrogated under section 123 of the Transfer of Property Act.

However, the restrictions on power to enter into the transaction of gift under personal law exist without any change. Gift of Existing and Future Property Section 124 of the Transfer of Property Act 1882 states that: “A gift comprising both existing and future property is void as to the latter” Essentially this section states that a gift deed can only be made of a property which is in existence and a gift deed of a future property is void. A property which is not in existence cannot be gifted. A gift of a property not in existence is a promise to be performed in future and since it is without consideration, it is void and unforceable.

Gift to more than one person Section 125 of the Transfer of Property Act 1882 states that: “A gift of a thing to two or more donees, of whom one does not accept it, is void as to the interest which he would have taken had he accepted” A gift may be given to two or more persons jointly. For the validity of the gift it is essential that it must be accepted by all donees. Even if one of the intended donees doesn’t accept the gift, the gift is void only for his part of interest which he would have taken, had he accepted the gift. Suspension or Revocation of a Gift.

Section 126 of the Transfer of Property provides for conditions where a gift may be revoked. The following are those conditions- (1) That the donor and donee must have agreed that the gift shall be suspended or revoked on the happening of a specified event; (2) such event must be one which does not depend upon the donor’s will; (3) the donor and donee must have agreed to the condition at the time of accepting the gift; and (4) the condition should not be illegal, or immoral and should not be repugnant to the estate created under the gift. Section 126 is controlled by sec. 10.

As such, a clause in the gift deed totally prohibiting alienation is void in view of the provisions contained in sec. 10. A gift, which was not based on fraud, undue influence or misrepresentation nor was an onerous one, cannot be cancelled unilaterally. Such a gift deed can be cancelled only by resorting to legal remedy in a competent court of law. A gift can be revoked in all cases where any contract can be revoked except for lack of consideration. In other words, in all cases where a contract can be avoided or revoked under the Indian Contract Act, 1872, a gift can be revoked by the donor on these grounds.

In most cases, it is done only on the grounds of undue influence and fraud committed on the donor to make the gift. In this regard, the term `undue influence’ means that the influence over the donor by another person is of a coercive nature which forces the donor to act against his own will and willingness in making gifts. `Fraud,’ on the other hand, suggests concealment of facts, misrepresentation of facts and some other camouflage to obtain certain benefits. The charge of undue influence and/or fraud is in the nature of criminal charge which must be pleaded clearly and proved by cogent and reliable evidence.

Except in the above cases, a gift once made cannot be revoked. However, where a gift is made irrevocable by specific recitals in the Deed of Gift itself, such a gift cannot be revoked by the donor under any circumstances. When a gifted property transferred to a third person for consideration is revoked without any notice of revocation, the transferee (the present purchaser) shall not be affected by the same and his rights acquired for consideration shall be valid (Section 126). Different kinds of Gifts.

There are two kinds of gifts apart from the general one as discussed in this paper so far. These are: * Void Gifts * Onerous Gifts 1) Void Gifts have the following sub categories: * Gifts depending on unlawful purposes * Gifts made upon a condition, the fulfilment of which is impossible or forbidden by law * Gifts by a person incompetent to contract * Where the Donee of the gift dies before acceptance * A gift regarding future property or property which is not in existence in the present 2) Onerous Gifts are dealt with in Section 127 of the Transfer Of Property Act 1882.

* ‘Onerous gift’ is a gift made subject to certain charges imposed by the donor on the donee. ” * The rule is based on equity, which speaks the person who accepts the benefit of a transaction must also accept the burden of the same. * It applies equally to Hindus and Mahomedans. * ‘Onerous gift’ is a gift made subject to certain charges imposed by the donor on the donee. The principle behind this is that he who accepts the benefit of a transaction must also accept the burden of the same.

This section, being an embodiment of a rule of equity, applies equally to Hindus and Mahomedans. For acceptance of an onerous gift, acceptance of the gift itself is sufficient; there need not be any separate and express acceptance of the onerous condition also at the same time. The acceptance of the gift will carry with it the acceptance of the onerous condition also, even though at the time of the gift the donee was not aware of such condition, specially where the onerous condition is of a trifling nature (payment of Rs. 5 as monthly maintenance to a certain person for life).

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. Universal Donee The essential condition to constitute a universal donee is that the gift must consist of the donor’s whole property. If any portion of the donor’s property, no matter whether it is moveable or immovable, is excluded from the operation of the gift or the endowment, the donee is not a universal donee.

This concept is embodied in section 128 of the Transfer of property Act. Where a Mahomedan made a gift of the whole of his estate to his son and directed him to pay his debts, the son was a universal donee and he was liable to pay all debts of the donor. There is no rule of Mahomedan law which conflicts with the provisions of this section. Conclusion This paper seeks to analyse the concept of Gifts in the Transfer of Property Act 1882, as well as to a certain extent compare Hindu and Mohameddan Law and see the parallels and disparities.

The reason why I chose this topic is that it is fascinating to see that a concept as simple as gifts, can be thought about on such a large scale in terms of law and its various aspects. [ 1 ]. http://www. legalservicesindia. com/forum/topic54-dr-nathu-lal-vaishi-anr-vs-gskamal-advocate-anr. html [ 2 ]. articlesonlaw. files. wordpress. com/2011/03/gift_deed. doc [ 3 ]. Brindaban v. Oudh Bihari, AIR 1947 All 179: 1946 All WR (HC) 421. [ 4 ]. http://www. legalserviceindia. com/articles/transfer. htm [ 5 ]. http://www. legalserviceindia. com/articles/transfer. htm.