What Is A Gift Deed
Gift deeds are covered under Chapter VII of the Transfer of Property Act, 1882.
A gift is defined under section 122 of said Act as the transfer of certain existing movable or immovable property made voluntarily and without consideration from one person, known as the donor, to another, known as the donee, with acceptance by or on behalf of the donee.
It is essential for a gift deed to be accepted during the lifetime of the donor, and such acceptance of the gift must be done while the donee is capable of giving. The gift is void, however, if the donee dies before acceptance. A gift deed is considered complete when all 3 conditions are met, namely, the registration of the gift deed, acceptance of the gift, and delivery of the gifted property.
It is pertinent to note that the meaning of “property to be gifted” includes tangible property that can be transferable within the purview of Section 6 of the said Act.
Who Can Execute A Gift Deed?
- As per the provisions under the Indian Contracts Act, 1872, and the Transfer of Property Act, 1882, any person who is of sound mind and has attained majority is eligible to execute a gift deed. But in order to execute a valid gift deed, the prerequisite is free consent, as the lack of free consent renders the gift void.
- If the donor is a minor, the gift deed is void ab initio. However, if the donee is a minor, a natural guardian can accept the gift on behalf of the minor.
- In the exceptional case of Ponnuchami Servai V. Balasubramanian, 1982, a father executed a gift deed in favour of his minor son when both the father and son were residing together. Even after the execution of the
In the exceptional case of Ponnuchami Servai V. Balasubramanian, 1982, a father executed a gift deed in favour of his minor son when both the father and son were residing together. Even after the execution of the said gift deed, both continued to live together, where the father was the natural guardian of the son. Hence, with the enforcement of the Hindu Minority and Guardianship Act, 1956, the father became both the guardian of the minor as well as of the property. Here, the question that was raised was one of presumption about the acceptance of a gift. It was thus held that the acceptance can only be made by the father as a guardian of the minor, and when he executes the document, the acceptance can be presumed.
- If the donor is an elderly person, section 23 of the Maintenance and Welfare of Parents and Senior Citizens Act of 2007 would also apply. The Ministry of Social Justice and Empowerment of the Government of India enacted the Act to protect the interests of senior citizens executing a gift deed. The sole purpose of this section is to provide for the elderly parents to reclaim their assets after the execution of the gift deed. It enables senior citizens to revoke a gift deed if a specified condition is not met. This condition is defined within section 23 of the said Act as covering the basic amenities and physical needs required for the welfare of senior citizens. Thus, the section states that if no care is taken of the elderly, the gift deed may be revoked by filing an application with the tribunal.
Validity Of A Gift
A gift must be valid in order for it to bear any legal consequence. Through numerous rulings, the Indian judiciary has elaborated on what would constitute a valid gift.
- In KunjiKuttiamma V. KunjiKuttiamma, 2001, the Kerala High Court was of the opinion that by joint reading of Sections 122 and 123 of the Transfer of Property Act, 1882, in order to execute a valid gift, the following elements are to be proved:
- It must be a voluntary transfer.
- The gift must be accepted by the donor during the lifetime of the donee.
- The gift must be effected by a registered document and it must be attested by two attestants.
- In Sanjukta Ray V. Bimelendu Mohanty, 1996, the High Court of Orissa observed that while considering whether there was a valid gift, the intention of the donor, the execution of the deed, and the acceptance of the same are pivotal features.
Registration Of A Gift
The section 123 of the Transfer of Property Act, 1882 makes it mandatory for a gift deed of an immovable property to be registered in accordance with Section 17(a) of the Registration Act, 1908. A failure to do so renders the aforementioned gift void and without any legal effect. The registration of such documents must be done in presence of two witnesses. The registration of a gift deed for movable property is, however, optional.
Stamp Duty On A Gift Deed For An Immovable Property
Stamp duty is a tax on assets, such as a property transfer. The stamp duty applicable to an immovable property, such as a residential property, is based on that of the houses in the same locality and, in the case of a co-operative society, the adjacent rooms within the society. The Maharashtra Stamp Act of 1958 makes it compulsory for the payment of stamp duty on property transfers. Item No. 34 under Schedule I of the said Act specifies the stamp duty applicable on the transfer of an immovable property via gift deed. It states that the stamp duty applicable on a gift deed of a residential or agricultural property to a husband, wife, son, daughter, grandson, granddaughter, or the wife of deceased son is two hundred rupees, irrespective of the value of the property. [Note: the stamp duty may differ from state to state.]
Revocation Of A Gift
Section 126 of the Transfer of Property Act, 1882, provides for conditional gifts, where a gift can be revoked if any specified condition is not fulfilled, or due to the happening of a certain specified event. These terms for revocation of the gift must be agreed upon by the donee at the time of acceptance for it to be applicable. Additionally, the donor may revoke a gift if it was obtained through undue influence.
The following judgments can be relied upon to understand when a gift cannot be revoked:
- In Loyola Public School Society V/s P. Anil Kumar (2007), it was held that a gift once executed unless it is a conditional one, cannot be revoked in view of section 126 of the Transfer of Property Act.
- In Perumal V. Rajamanickam (2003), it was held that once a property has been gifted to the donee, specifying that it is irrevocable, then the donor has no right to revoke the same.
- In Gaurju V. Tara Chand (1962), it was held that a gift, which is an unconditional gift and had been completed, cannot be revoked under the Hindu Law.
- In Gaurju V. Tara Chand (Supra), it was also observed that section 126 of the Transfer of Property Act, 1882 does not apply when there was no agreement between the parties that gift should be either suspended or revoked on the donee’s failure to maintain the donor.
However, contrary to the abovementioned rulings, in a judgement dated 13th March 2020, the Delhi High Court held that a senior citizen has the right to evict his children from the property, regardless of whether there has been any maltreatment committed against them and regardless of whether it is an ancestral property or a self-acquired property.
The section 23 of the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 also provides for the revocation of a gift deed by senior citizens. However, for the aforementioned provisions under Section 23 of the said Act to apply, the donor of the gift deed must be a senior citizen.
This idea is backed by the following judgements:
- Suranjan Chowdhury v. The State Of West Bengal & Ors.
The Calcutta High Court observed that an act of execution of the deed of gift must be made during the period when the complainant is a senior citizen.
- Jose Petitioner v. The Maintenance Appellate Tribunal
The Kerala High Court observed that the execution of the gift deed before the age of 60 will not confer the right of cancellation of the deed at the event of neglect by the person who received the gift and denying maintenance to the senior citizens.
- Transferring debt as a Gift
A property under mortgage can still be willed or gifted, provided that the donee must accept the burden of the mortgage along with the said property.
The Apex court has held that the essence of a gift should be without consideration of the nature defined in section 2 (d) of the Indian Contracts Act, 1872.
- The Difference between a Will and a Gift
It is evident that there are many similarities between a Will and a Gift. However, it is pertinent to note that there are some important distinctions
It is evident that there are many similarities between a Will and a Gift. However, it is pertinent to note that there are some important distinctions between the two, such as the time at which they will take effect. A Will takes effect only after the death of the testator, whereas a Gift deed takes effect immediately after the acceptance is made by the donee. The only reliable test for the purpose of finding out whether the document constitutes a Will or a Gift is to examine the nature of the disposition under the document, to see whether it had transferred any interests praesenti in favour of the beneficiary or whether it is intended to transfer interest in favour of the beneficiary only on the death of the executant.
Oral gift of immovable property
An oral gift of immovable property cannot be made in view of the provisions of section 123 of the Transfer of Property Act, 1882, which states that for the purpose of making a gift of immovable 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. Hence, mere delivery of possession without a written instrument cannot confer any title.
- Parties who can contest a Gift deed
- A third party who is not related to the family of the donor, the donee, or the property itself cannot contest a gift deed.
In the case of a widow executing a gift deed of self-acquired property, third persons who are not her heirs, cognates or agnates have no right to contest her gift deed.
In the event that an heir holds shares in the property, he can contest a gift deed. One heir may receive a gift of a father’s self-acquired property, but if another heir(s) have contributed money to the property, that person(s) may assert their legal claims. However, if that person(s) owns no shares in the property, he
- In the event that an heir holds shares in the property, he can contest a gift deed. One heir may receive a gift of a father’s self-acquired property, but if another heir(s) have contributed money to the property, that person(s) may assert their legal claims. However, if that person(s) owns no shares in the property, he cannot challenge the father’s gift deed of a self-acquired property. On the contrary, the same is not applicable for a gift deed of an ancestral property, as each member of the family would be coparceners.
Under Hindu Law, the term “coparcener” is used to indicate those male members of a Hindu family who have an “undivided interest” in the ancestral property by birth. With the Hindu Succession (Amendment) Act, 2005 the daughters and sons have the same rights on ancestral property as coparceners. Further, as per the Hindu Succession Act, ancestral property can be claimed only by coparcenary, up to four generations of a Hindu joint family who inherited it. As a result, it is only possible to contest a gift deed for ancestral property.
- If a property that is to be transferred as a gift is also designated in a will, it will not render the gift deed void since the transfer of property depends on which document takes effect first. A Will takes effect only after the death of its testator, whereas a gift deed takes effect immediately after acceptance by the donee or on behalf of the donee. Consequently, a person may execute a Gift deed for a property that has already been mentioned in a Will. However, the Gift deed must adhere to the general rule that it must be accepted while the donor is still capable of giving. In other words, a property mentioned in a Will may be gifted so long as it was self-acquired. In the case of a self-acquired property where the donor has a clear title to the property, he may transfer to anyone without opposition.
The Apex Court in C. N. Arunachala Mudaliar vs C. A. Muruganatha Mudaliar & Ors, 1953 observed that property gifted by a father to his son could not become ancestral property in the hands of the son simply by reason of the fact that he got it from his father. Furthermore, the court was of the opinion that in self-acquired property, the father has independent power as well as a predominant interest in the same. Hence, when the father obtains the grandfather’s property by way of gift, he receives it not because he is a son or has any legal right to such property, but because his father chose to bestow a favour on him which he could have bestowed on any other person as well.
- Does being merely in possession of a gifted property amount to acceptance of a gift deed?
There are cases where mere possession by or on behalf of the donee may amount to acceptance of the gift. But where there is evidence of both the donor and the donee residing in the same home jointly, and the subject matter of the gift deed is the homestead enjoyed jointly by the donor and the donee, in such circumstances, mere possession, which is an unequivocal factor, cannot be treated as an evidence of acceptance.