Gift under Transfer of Property Act and Essentials of Gift

What is gift under transfer of property act?

Meaning of Gift under Transfer of Property Act: – Gift under transfer of property act is defined as the transfer of certain existing moveable and 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 donee. The person who is transferring the property refers to as “donor” and to whom the property is transferred referred to as “donee”.

Gift under Transfer of Property Act

What are the essentials of gift under transfer of property act?

The essentials of gift under transfer of property act are as follows: –

  1. There should be Two Persons: – To make a gift there must be two persons i.e. the donor and the donee. The donor should be of sound mind, must be competent to make a gift, must attain the age of majority, and should not be disqualified by law.
  2. The Gift must be made Voluntarily: The gift should be made out of free wish and will and should not be under any undue influence, coercion, etc.
  3. Transfer of Ownership: – When a gift is to be given, the property is transferred along with the transfer of ownership with all rights and liabilities.
  4. Gifts must be Existing and Transferable: – Gifts cannot be made from uncertain assets or future assets. Assets must exist and be transferable.
  5. Donor and Donee must be living: – A gift is an inter vivos i.e. between two living persons. It is necessary that the donor and donee should be living at the time of transfer and acceptance. If Donne dies before acceptance, the gift is void.

Drafting a gift deed

As the gifting is a voluntary action, it must be mentioned in the gift deed that the deed is made voluntarily and without any force or coercion taken out of the donor’s own choice. The deed must also declare that the donor is solvent (not insolvent) and the gift is being made without consideration.

Acceptance of gift under transfer of property act

The next step is the acceptance of the gift under transfer of property act by the donee. And the acceptance of the donee will be recorded in the gift deed by the donee’s signature and is also substantiated by acceptance of possession of the gift. Another key element of this step is that the acceptance of gift must take place during the life of the donor. The gift may be rendered invalid otherwise

Void gifts under Transfer of Property act, 1882

Meaning of void gifts: – Void gifts are the gifts which are not enforceable by the law due to the incompetence of a person or both the persons i.e. donor or donee.

Void gifts can be: –

  • Donee died before acceptance of a gift.
  • When a gift is made for an illegal purpose.
  • When a condition that is imposed is forbidden by law or unlawful.
  • When a person is unable to make a gift i.e. minor or lunatic.

What are Universal donee?

The Universal Donee is defined under section 128 of the Transfer of Property Act, 1832, which means that when the transfer is made, the entire donor’s property along with all the debts and all of the debtor’s liabilities at the time of transfer will be transferred when the gift is made and the donee will be personally liable.

What is Onerous gift?

Meaning of Onerous Gift: – The onerous gift is defined under Section 127 of Transfer of Property Act which states a gift is in the form of one transfer, which are done to the same person with several things then in this situation the donee has the liberty to accept one of them or reject the others.

Principle on which onerous gift is based upon: – The maxim “Qui Sentit Commodum Sentire Debet Et Onus” defines onerous gift. It means that one who receives the benefit must bear the burden.

The onerous gift to the disqualified person: – When a donee is not competent to contract and accepted the property which is a burden on him and that time he is not bound by his obligation. But, as soon as he becomes competent to make a contract and being aware about his obligation, he can retain back his property and becomes bound of it.

Mode of creating a gift to make it effective

According to Section 123, the transfer of immovable property by way of gift shall be effective only by a registered instrument or signed on behalf of the donor, and must be verified by at least two witnesses. However, if the instrument is not registered, then the title of the immovable property may not pass.

However, the transfer of movable property will be effective either by the registered instrument or signed on behalf of the donor and attested by at least two of the witnesses or only delivery of possession will be sufficient. Such delivery will be in the same way as the goods sold can be delivered.

What are the grounds of revocation or suspension of gift?

Section 126 of Transfer of Property Act states that grounds on which a gift can be revoked or suspended: –

  1. A gift can be revoked or canceled if the consent of the donor has been obtained forcefully by coercion or undue influence.
  2. If the validity of the gift is dependent on a specified event, and such specified event is not dependent on the will of the donor, the gift may be suspended or revoked

Case laws of Gift under Transfer of Property Act

  1. Padma Chand vs. Laxmi Devi, 2010 (173) DLT 604

In this case, the court held that a gift is a voluntary transfer of property without any consideration and division by the owner of the property (related to money) without any pecuniary benefit.

  1. Vimala vs. Narayanaswamy, 1996 ALHC 4170 KAR

In this case, the court stated that where the deed is to be taken with immediate effect, the property to be transferred during the life of the executor, it will be a gift deed, not a will.

3. D.N.Dawar vs. Ganga ram Saran Dhama, AIR 1993 Del.P 19

In this case, the court held that in the case of a gift of an immovable property if the document is not registered then mere delivery of possession will not pass the title to the donee.

4. Shahdev vs. Sheikh Papa (1905) 29 Bom.

In this case, the court held that the gifts of immovable property are compulsory registerable and it amounts to notice for a subsequent transfer and not for transaction before registration.

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