Can va­lid­ity of a gift be ques­tioned?

Un­der the Trans­fer of Property Act, any im­move­able property gifted will­ingly by some­one with­out de­liv­ery of pos­ses­sion is con­sid­ered to be right­fully owned by the donee

HT Estates - - HTESTATES - Su­nil Tyagi

Gift of a property is a vol­un­tary trans­fer of an im­move­able as­set which does not in­volve any ex­change of money or con­sid­er­a­tion. Le­gal pro­vi­sions re­lated to gift­ing of mov­able or im­move­able property have been given in The Trans­fer of Property Act, 1875, which per­sons giv­ing or re­ceiv­ing a gift of im­move­able or move­able property should take into ac­count. In a re­cent case, one in­ter­est­ing ques­tion that came up for con­sid­er­a­tion of the Supreme Court was whether de­liv­ery of pos­ses­sion was nec­es­sary for a valid gift of im­move­able property or not. In this case, a per­son had ex­e­cuted a gift deed duly reg­is­tered in favour of one party.

In the gift deed, the donor had re­served for her­self the right to use the property and to re­ceive rent dur­ing her life­time. There­after, the donor ex­e­cuted a re­vo­ca­tion deed to re­voke the gift deed ear­lier ex­e­cuted by her, al­leg­ing that the gift deed ex­e­cuted in favour of the donee was vi­ti­ated by fraud, mis­rep­re­sen­ta­tion and un­due in­flu­ence. The lower court ob­served that the said gift deed was duly reg­is­tered and had been validly made and ac­cepted by the donee. The fact that the donor had re­served the right to enjoy the property dur­ing her life­time did not af­fect the va­lid­ity of the gift deed. The same view was af­firmed by the ap­pel­lant court. The high court on ap­peal de­clined to in­ter­fere in the mat­ter. There­fore, ag­grieved by the de­ci­sion of the high court, the donor ap­proached the Supreme Court for con­sid­er­a­tion.

The main is­sue raised was whether the re­ten­tion of pos­ses­sion of this gifted property for en­joy­ment by the donor dur­ing her life­time and right to prof­its in gifted property af­fect the va­lid­ity of the gift. There was an ap­par­ent con­flict in two ear­lier de­ci­sions of Supreme Court which ne­ces­si­tated the ref­er­ence of this mat­ter to a larger Bench of the Apex Court for an au­thor­i­ta­tive pro­nounce­ment in this re­gard.

The donor re­lied on var­i­ous prece­dents and ar­gued that a con­di­tional gift made with­out trans­fer­ring the pos­ses­sion and right to deal with the property was in­valid as per the Act. On the other hand, the donee con­tended that gift of im­move­able property with­out de­liv­ery of pos­ses­sion was a valid gift un­der the Act.

The apex court ob­served that the ex­e­cu­tion of a reg­is­tered gift deed, its at­tes­ta­tion by two wit­nesses and ac­cep­tance by donee had al­ready been proved in the lower courts. It was also con­cur­rently held by all the three courts be­low that the donee had ac­cepted the gift. The recitals in the gift deed also proved the trans­fer of ab­so­lute ti­tle in the gifted property from the donor to the donee. What was re­tained was only the right to use the property dur­ing the life­time of the donor which did not in any way af­fect the trans­fer of own­er­ship in favour of the donee. It was held that ‘trans­fer of pos­ses­sion’ of the property was not an es­sen­tial con­di­tion, though it was a pre-req­ui­site un­der the Hindu law to con­sti­tute a valid gift.

The court on the ba­sis of prece­dents con­cluded that Sec­tion 123 of the Act did away with the ne­ces­sity for the de­liv­ery of pos­ses­sion.

The apex court opined that the in­ten­tion of the leg­is­la­ture to make de­liv­ery of pos­ses­sion an es­sen­tial con­di­tion was only for gift of move­able property. Thus, it con­cluded that for gift of im­move­able property, de­liv­ery of pos­ses­sion was not nec­es­sary.

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