The Concept of Gift Under Transfer of Property Act

Table of Contents

The Concept of Gift Under Transfer of Property Act

ABSTRACT

When an owner willingly transfers his ownership of a property without any compensation or consideration in monetary value is regarded as a Gift. It may be a moveable or an immoveable property. The parties may be two living people, or the transfer may take place after the death of the transferor. The transfer can be either inter vivos or testamentary depending upon the facts the facts the transfer is either being made between two living people or it takes place after the death of the transferor, respectively. Only inter vivos transfers are referred to as gifts under this Act as a testamentary transfer does not fall under the scope of Section 5 of the Transfer of Property Act.

The essential elements of the gift have to be implemented properly or it may become revoked or void by law. There are several provisions in concern to the gifts, for example, types of properties which may be gifted, modes of making such gift, competent transferor, suspension, revocation of gifts, etc. This article deals with all such provisions.

Keywords: Gift, movable, immovable, inter vivos, testamentary, void, revocation of gift.

INTRODUCTION

Section 122: Transfer of Property Act 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 donee, and accepted by or on behalf of the donee. Acceptance when to be made, such acceptance must be made during the lifetime of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void.

Hence, it postulates that a gif must have to essential characteristics-

It must be made voluntarily.
It should be without consideration.

PARTIES IN THE CONCEPT OF GIFT

Donor: A person who has the capacity as well as the right to make the gift, i.e., any competent person could be a donor. If he has the capacity to contract, then he is considered to have the capacity to make ta gift. This means that, at the time of making a gift, the donor must not be a minor and of unsound mind. Registered societies, firms, and institutions are also competent to make gifts as they are referred to as juristic persons. Gifts by a minor or an insane person is considered to be void. The right of a donor is determined by his ownership rights in the property at the time of making a gift so he must have the right to make a gift because it means to be the transfer of the ownership.
Donee: A donee can be anyone and he does not need to be competent to contract. He may be any person in existence. A gift made to a minor, or to a child existing in the mother’s womb or, an insane person is valid subject to its lawful acceptance by a competent person on his behalf. Juristic persons such as firms, institutions, or companies are considered as competent donee and gifts made to them is valid. However, the donee must be a person who is capable of being ascertained and gift made to any random person is void. There may be two or more donee.

ESSENTIAL ELEMENTS

The essentials for a valid gift are:

There must be transfer of ownership- There must be a transfer of all the rights in the property by a donor to a done. However, it may be noted that it is permissible to make conditional gifts and the only restriction is that the condition must be repugnant to any of the provisions of Sections 10 to 34 of the act.
The ownership must relate to a property in existence– There must a transfer of any property which is in existence and can be transferable within the meaning of section 6 of the act at the date of the gift whether present or in future. Otherwise, it will be declared void by section 124 of the act.
The transfer must be without consideration– A gift should be a gratuitous transfer out of natural love and affection and must be without consideration.
The transfer must be made voluntarily- The gift must be made voluntarily with free consent without any undue influence. And, if the transaction appears to be unconscionable then the burden of proof lies upon the person who was in a position to dominate the will of the other.
The donor must be a competent person- Any person competent to make a gift according to section 7 of the act can be a donor.
The transferee must accept the gift- The gift must be accepted by the donee or by someone on his behalf. A done must be ascertainable person or persons.

MODE OF TRANSFER

Section 123 of the Transfer of Property Act states the conditions when a transfer of gift is in effect.

Depending upon the nature of the property, it is decided how the transfer will be processed. Hence, they are:

Gift of immovable properties- In the case of Gomtibai v. Mattulal, the Supreme Court held that “…in the absence of written instrument executed by the donor, attestation by two witnesses, registration of the instrument and acceptance thereof by the donee, the gift of immovable property is incomplete”. Part performance is not applicable to gifts, therefore all the conditions must be fulfilled. A donee cannot defend his possession on being evicted if he takes possession of the land under unregistered gift-deed. The following must be kept in mind concerned to the requirement of registration:

The gift is not suspended until the immovable property is registered. A gift may also be registered and made enforceable by law even after the death of the donor if the essential elements of the gift are fulfilled.
If the essential elements of a valid gift are not present, the registration cannot validate the gift.

Gift of movable properties– In the case of movable properties, registration is not necessary, and it may be completed by the delivery of possession. The mode of delivery of the property depends upon the nature of the property. The transfer of the title and possession in favour of the done are the only things necessary.
Gift of actionable claims- Section 3 of the Transfer of Property Act defines Actionable claims. Section 130 of the act governs a gift of actionable claim which provides that transfer of an actionable claim (with or without consideration) shall be affected only by the execution of an instrument in writing signed by the transferor or his duly assigned agent. In this as well, registration is not necessary. Section 123 has rightly been made inapplicable in the gifts of actionable claim because although it is a movable property yet being intangible, it is not capable of being transferred through delivery of possession.
A gift of existing and future property- Section 124 states that as far as future property is concerned, a gift comprising both existing and future property is void because a gift of future property is a mere promise which can not be enforced is therefore void. Therefore, there can be no gift of future property.
A gift to several, of whom one does not accept- Section 125 of the Act states that if a property is gifted to two or more donees, one of whom does not accept, is void as to the interest which he would have taken hd he accepted, that means, those who accept the gift are not increased by the share of him who has refused. A gift made to two donees jointly with the right of survivorship is valid, and upon the death of one, the surviving donee takes the whole.
Onerous gifts- Section 127 states that when a gift is in the form of a single transfer to the same person of several things of which one is, and others are not, burdened by obligation, the done can take nothing by the gift unless he accepts it fully.
Universal donee- Subject to the provision of section 127, Section 128 states that when a gift consists of donor’s whole property, it is called a universal donee and he is personally liable for all the debts due by and liabilities of the donor at the time of the gift to the extent of the property comprised therein.

SUSPENSION AND REVOCATION OF GIFTS

Section 126 of the Act provides the legal provisions which must be followed by a donor while making a gift or it may be suspended or revoked. and there are two modes of revocation of gifts:

Revocation by mutual agreement- When the donor and the donee mutually decides that the gift shall be suspended or revoked upon the happening of an event, it is said to be a revocation by mutual agreement.
Revocation by the recession as in case of a contract- A gift may be revoked on the same grounds as a contract may be rescinded. The circumstances under which contract may be rescinded are contained in section 19 of the Indian Contract Act.

EXCEPTIONS

Section 129 of the Act provides the gifts which are exceptions to gifts. They are saving of donations mortis causa and Mohammedan Law. Nothing in this chapter relates to gifts of movable property made in contemplation of death or shall be deemed to affect any rule of Mohammedan Law.

CONCLUSION

To constitute a transfer of any movable or immovable property as a gift, one must follow the provisions of the Transfer of Property Act.

Author: APURVA .,
3rd Year, Fairfield Institute of Management and Technology, GGSIPU