Gift under transfer of property

 Gift under trasfer of property 

Written by - Shalini bishi

Introduction

A Gift is generally regarded as a transfer of ownership of a property where the sender willingly brings into effect such transfer without any compensation or consideration in monetary value. It may be in the form of moveable or immoveable property and the parties may be two living persons or the transfer may take place only after the death of the transferor. When the transfer takes place between two living people it is called inter vivos, and when it takes place after the death of the transferor it is known as testamentary. Testamentary transfers do not fall under the scope of Section 5 of the Transfer of Property Act, and thus, only inter vivos transfers are referred to as gifts under this Act.

If the essential elements of the gift are not implemented properly it may become revoked or void by law. There are many provisions pertaining to the gifts. All such provisions, for example, types of property which may be gifted, modes of making such gift, competent transferor, suspension and revocation of gift, etc. are discussed in this article.

What may be referred to as a gift
Gift

Section 122 of Transfer of Property Act defines a gift as the transfer of an existing moveable or immovable property. Such transfers must be made voluntarily and without consideration. The transferor is known as the donor and the transferee is called the donee. The gift must be accepted by the donee. This Section defines a gift as a gratuitous transfer of ownership in some property that is already existing. The definition includes the transfer of both immovable and moveable property.
revoked by virtue of Section 126 if such property is alienated had been raised in the Supreme Court once again for which the court had to adjudicate the matter. In this case one Shri Muniswamappa, great grandfather of the plaintiffs and grandfather of defendant No.1, was the absolute owner of the suit schedule property who executed gift deeds in favour of the defendants with the same condition that the property should not be alienated and if such property was to be alienated, then the gift deed stands invalid. The defendants on the other hand had sold the property which they had received as a gift to which the plaintiffs’ alleged that such a transfer was invalid as the gift deed specifically stated that the mentioned property is not to be alienated and the plaintiffs demanded the property to be transferred to them back.

insane person, or a minor, or even to a child existing in the mother’s womb is valid subject to its lawful acceptance by a competent person on his/her behalf. Juristic persons such as firms, institutions, or companies are deemed as competent donee and gift made to them is valid. However, the donee must be an ascertainable person. The gift made to the general public is void. If ascertainable, the donee may be two or more persons.

Where the donee is incompetent to contract, e.g., minor or insane, the gift must be accepted on his behalf by a competent person. The gift may be accepted by a guardian on behalf of his ward or by a parent on behalf of their child. In such a case, the minor, on attaining majority, may reject the gift.

Where the donee is a juristic person, the gift must be accepted by a competent authority representing such legal person. Where the gift is made to a deity, it may be accepted by its agent, i.e., the priest or manager of the temple.

Section 122 provides that the acceptance must be made during the lifetime of the donor and while he is still capable of giving. The acceptance that comes after the death or incompetence of the donor is no acceptance. If the gift is accepted during the life of the donor but the donor dies before the registration and other formalities, the gift is deemed to have been accepted and the gift is valid.

heirs of the donor may sue for revocation of such contract after the death of the donor.

The limitation for revoking a gift on the grounds of fraud, misrepresentation, etc, is three years from the date on which such facts come to the knowledge of the plaintiff (donor).

The right to revoke the gift on the abovementioned grounds is lost when the donor ratifies the gift either expressly or by his conduct.

Bonafide purchaser

The last paragraph of Section 126 of the Act protects the right of a bonafide purchaser. A bonafide purchaser is a person who has purchased the gifted property in good faith and with consideration. When such a purchaser is unfamiliar with the condition attached to the property which was a subject of a conditional gift then no provision of revocation or suspension of such gift shall apply.

Exceptions

Section 129 of the Act provides the gifts which are treated as exceptions to the whole chapter of gifts under the Act. These are:

Donations mortis causa
These are gifts made in contemplation of death.

Muslim-gifts (Hiba)

These are governed by the rules of Muslim Personal Law. The only essential requirements are declaration, acceptance and delivery of possession. Registration is not necessary irrespective of the value of the gift. In case of a gift of immovable property worth more than Rupees 100, Registration under Section 17 of the Indian Registration Act is must, as it is applicable to Muslims as well. For a gift to be Hiba only the donor is required to be Muslim, the religion of the donee is irrelevant.

 
Conclusion

To constitute a transfer as a gift it must follow the provisions of the Transfer of Property Act. This Act extensively defines the gift itself and the circumstances of the transfer of such a gift. The gift, being a transfer of the ownership rights, must be in possession and ownership of the transferee and must be existing at the time of making the transfer. The transferor must be competent to make such transfer but the transferee may be any person. In case the transferee is incompetent to contract, the acceptance of gift must be ratified by a competent person on his/her behalf. Gift of future property is void. Partial acceptance of prosperous gifts and rejection of onerous gifts is not valid either. The acceptance of a gift entails the acceptance of the benefits as well as the liabilities coupled with such a gift. A gift may be revoked only by a mutual agreement on a condition by the donor and the donee, or by rescinding the contract pertaining to such gift. The Donations mortis causa and Hiba are the only two kinds of gifts which do not follow the provisions of the Transfer of Property Act.