GIFT (122-129) Flashcards
Gift” defined.
A gift is a gratuitous transfer i.e., without consideration.
In gift an existing property is transferred in favour of another person without consideration. A gift may be made between two living persons or it may take place after the death of the transferor
(testamentary).
Gift between living persons is inter vivos gift and it is a transfer of property within the meaning of section 5 of this Act.
Whereas testamentary gift is a transfer by operation of law and it does not come within the purview of this Act. A gift made in apprehension of death i.e., gift mortis causa also does not come within the scope of this Act.
Transfer of Ownership.
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A gift necessarily involves transfer of ownership. In this, the whole of the interest of the person in a property is transferred in favour of another person. The person transferring the interest is known as “donor” and the person to whom the interest is transferred in a property is known as the “donee”.
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The person making the gift is donor whereas person accepting the gift is donee. It is permissible to make conditional gifts of property also but the condition must not be repugnant to any of the provisions of sections 10 to 34 of the Act.
ESSENTIALS OF A GIFT
(1) Donor and the Donee
(2) Subject Matter of a Gift
(3) Interest Created by the Donor
(4) Gift Must be Made with Free and Voluntary Consent
(5) Acceptance of the Gift
(6) Without Consideration
Gift to an Idol or for Religious Purposes
Gifts to an idol, which though is a juristic person and capable of holding property, is not a gift within the meaning of section 122 as an idol is not a living person. A gift to an idol not yet instituted is
invalid, unless the transfer is to Pujaris on trust to establish an idol.
Subject Matter of a Gift
Gift must be made of existing movable or immovable property capable of being
transferred.
Future property cannot be transferred. The share obtained after partition of the joint family property can be gifted, but not where the coparceners are joint, as in that case their interests would be fluctuating.
Actionable claim is an existing property
and it can be gifted. A gift comprising of both the existing and future property, is void as to the future property.
A mortgaged or leased immovable property may be gifted.
Gift of a part of the joint family which fell to the share of the donor under the preliminary decree of partition was held to be valid. The court said that once a preliminary decree in a suit for partition is passed, it amounts to a severance of the status of joint family coparcenary. Parties are no coparceners.
They are then tenants in common in possession. The moment the coparcenary comes to an end, each coparcener is free to gift his share though still not physically divided. Their shares become definite under the decree.
Interest Created by the Donor
The donor is competent to create either an absolute interest in the property in favour of
the donee or even a limited interest. For example, A gifts his immovable property in favour of B and puts a condition that he would enjoy the property exclusively without any body else having any right over it. This interest created here is an absolute interest, but if the gift says that he must enjoy the property only for his life time and after his death, the property would revert back to A or his heirs, it would be the creation of a limited estate or a life estate in favour of B.
Gift Must be Made with Free and Voluntary Consent
The offer to make the gift must be voluntary. A gift therefore should be executed with the free consent of the donor. This consent should be untainted by force, fraud or undue influence.
Section 15 and section 16 of the Indian Contract Act, 1872 define coercion and undue influence
respectively. In coercion, the donor is forced to execute a gift deed by threat of committing any act punishable by the Indian Penal Code.
Mere relationship between the donor and donee is not a conclusive fact of the exercise of undue influence and it must be proved that the transaction is unconscionable.
For proving that the deed was executed with free and voluntary consent of the donor, it must be proved that the physical act of signing the deed coincided with the animus, or the mental act, i.e., an intention to execute the gift. If both the elements are present the gift would be executed with free and voluntary consent, and would be valid.
The gift must be made without consideration. The word “consideration” has been defined in section 2(d) of the Indian Contract Act, 1872, and it is used in the same sense under the Transfer of Property Act, 1882. It must be a pecuniary consideration,
valuable in terms of money. Even a small sum of money given in return of gift will make
it a sale.
Undue Influence
The term “undue” literally means “unwarranted, or unjustified, unnecessary or uncalled-for” and influence means “power, or pressure or authority”.
Undue influence therefore means an uncalled for or unjustified authority or pressure that a person may exercise over other, and by exercising that unjustified pressure obtains a benefit under a gift deed. If the allegation is that the gift is obtained after exercising undue influence, three stages of consideration of undue influence are important:
(i) Are the relations between the donor and donee such that the donee is in a position to dominate the will of the donor; upon this point, influence alone will be made out. Once this is established the second stage has to be reached, i.e.:
(ii) Has the donee used that position to obtain an unfair advantage over the donor? It is not mere influence, but undue influence that should be proved.
(iii) Upon the determination of the second issue, the third consideration that arises now is, who has the “onus probandi” or burden of proof? If the transaction appears to be unconscionable, then the burden of proving that it was not induced by undue influence is upon the person who was in a position to dominate the will of the other.
In such cases, the burden of proof shifts on the donee, and it is he who has to prove that the deed was read over and understood by the donor. Mere old age would not raise a presumption of the use of undue influence.
Where the executant was old and was undergoing intermittent hospitalisation during the period of execution, a gift executed by her would be valid and the burden does not shift on the donee to prove that it was free from vitiating factors more so as the executant was a law graduate and the evidence of the doctor showed that she was capable of taking care of herself at the time of execution.
Acceptance of the Gift
The gift must be accepted by the donee himself. Acceptance must be of donee and not of donor. Acceptance can be validly given by a minor donee himself or by his mother or guardian or by an agent in case of a deity.
If the guardian gives the acceptance on behalf of the minor, the minor on attaining majority can either accept it or reject it.
Acceptance must be made during the life time of the donor and while he is capable of giving. According to section 122, if the donee dies before acceptance, the gift is void.
Law does not specify any specific mode of acceptance, but it should be clear and not ambiguous.
Unless there is acceptance there is no gift. Very slight evidence is required to prove acceptance, which would be presumed if there is no dissent. Acceptance need not be express and may be inferred or proved by oral evidence.
Where the donee is incompetent to contract i.e., he is minor or of unsound mind, the gift must be accepted on his behalf by a competent person.
The gift in favour of minor is not prohibited under the Transfer of Property Act, 1882. Minor though disqualified from entering into contract is capable of receiving property.
GIFT AND WILLS
In a gift, generally, there is an immediate transfer of ownership, while a Will takes effect from the death of the person who executes it.
Secondly, a Will by its very nature is revocable, while a gift can be revoked only when it is a conditional gift.
This is the only reliable test to find out whether it transferred any interest in present in favour of the setlees or it intended to transfer interest in favour of the settlors only on the death of the settlors. In
former case, it is a gift, while it is a Will in the latter case.
Immovable Property
Where immovable property is gifted, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses.
A gift of immovable property is invalid without a registered instrument even if the intended donee is put in possession. An oral gift is void in law, unless there is a specific statutory provision dispensing with the formalities for gifts as laid down in the Act.
Registration
Registration is necessary in all cases of gift of immovable properties and the title cannot pass without there being a registered deed of gift.
Any gift of immovable property cannot be made in violation of this rule, as mere delivery of possession without registered instrument cannot confer any title.
A gift is valid and complete on registration. Although a registered document carries with it a presumption that the gift was validly executed but a mere registration will not perfect an imperfect gift if any of the essential ingredients of a gift
is lacking. Proof of registration of document of gift of immovable property is not by itself proof of its genuineness.
While acceptance of the gift must be during the
lifetime of the donor, its registration need not be during his lifetime.
After the instrument of gift is handed by the donor to the donee and accepted by him, the donor cannot revoke the gift before registration, but can do so if it is not accepted by the donee.
Where a gift has been effected by a registered instrument duly attested and the gift has been acted upon by the donee, the title legally passes to the donee and cannot be defeated by any intention of the donor to the contrary.
In the case of gift of an immovable property, registration is compulsory but it is not necessary that it must be registered by the donor himself.
Registration of gift deed of immovable property is compulsory irrespective of its value.
MODE OF TRANSFER—MOVABLES
For the purpose of making a gift of movable property, the transfer may be effected either by a registered instrument signed by the transferor or by delivery of the subject matter of the gift.
Such delivery may be made in the same way as sold goods may be delivered. Till handing over of goods takes place, the gift is incomplete.
Gifts of immovable properties, corporeal or incorporeal, of value less than Rs 100 or more, must be signed by the donor or on his behalf someone else must have signed it, attested by at least two witnesses and must also be registered.
Where the donee has taken possession of the gifted immovable property without a registered gift deed, he would not be allowed to protect his possession under section 53A of this Act.
Gift to several of whom one does not accept.
The rule contained herein refers to gift made by a donor to two or more persons. As the gift is not valid till it is accepted, acceptance by all is necessary if the gift as a whole is to be treated as valid. If one out of several donees or more do not give the consent, the gift does not fail in its entirety and is valid with respect to the shares of those who have accepted it. It be void only to the extent of the shares of those who have not given the consent.
For example, A is the owner of three pieces of land, X, Y and Z. He gifts these three properties by the same document to B, C, and D respectively. B and C do not accept the gift but D gives his acceptance. The gift is valid to the extent of the shares of D and is void with respect to X and Y that were given to B and C.
However, where the gift is made to two persons jointly with the right of survivorship, then, upon
the death of one donee the surviving donee will take the whole gift.
CONDITIONAL GIFTS
A gift is primarily a contract and if both the parties agree that the gift would be revoked on the happening of an event the happening of which does not depend purely on the wishes of the donor, if that event happens, the gift will be revoked. This event may be certain or uncertain. It may happen or may not happen, but if the revocation of the gift is purely on the wishes of the donor, then the gift is void.
For instance, the donor and the donee agree, that if B’s son dies during the lifetime of the donor, the gift would be revoked. The gift would also be revoked if the son dies during the lifetime of the donor, as the death of a person is not dependent purely on the wishes of the donor. If the condition is that after six months from the date of the execution of the gift, the donor if he so wants may revoke it, this condition is void, as here the revocation is depended purely on the wishes of the donor.
The gifts can therefore validly be revoked, in two situations:
(i) The donor and donee may agree that on the happening of any specified event
which does not depend on the will of the donor a gift shall be suspended or
revoked;
(ii) The gift can be revoked, in case, if it was a contract it could have been
rescinded.
