An Analytical Exposition of the Law of Gifts under the Transfer of Property Act, 1882 in India

Introduction

The concept of 'gift' (Hiba in Muslim law, Daan in Hindu law) as a mode of gratuitous transfer of property has deep historical roots in India. The Transfer of Property Act, 1882 (hereinafter "TPA") codified the law relating to gifts, providing a secular framework applicable to most inter vivos transfers. Chapter VII of the TPA, encompassing Sections 122 to 129, delineates the essential requirements for a valid gift, the manner of its execution, and circumstances under which it may be suspended or revoked. This article undertakes a comprehensive analysis of the law governing gifts under the TPA, drawing significantly upon judicial pronouncements that have shaped its interpretation and application. The focus will be on the definition of a gift, the formalities requisite for its completion, and judicial perspectives on contentious issues such as acceptance, delivery of possession, and the donor's reservation of rights.

The Core Components of a Valid Gift: Section 122, TPA

Section 122 of the TPA defines a gift as "the transfer of certain existing movable or immovable 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." It further mandates that "Such acceptance must be made during the life-time of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void." (Firm Mukund Lal Veerkumar And Another v. Purushottam Singh And Others Etc., Supreme Court Of India, 1968; Commissioner Of Income Tax, Delhi v. Ms. Mayawati, Delhi High Court, 2011). The essential elements emerging from this definition are crucial for the validity of any gift transaction.

Voluntary Transfer

The transfer must be an act of free will on the part of the donor, devoid of coercion, undue influence, fraud, or misrepresentation. This voluntary nature underscores the gratuitous intent inherent in a gift. Challenges to a gift often revolve around allegations that the donor's volition was vitiated, as seen in the initial contentions in Renikuntla Rajamma (Dead) By Legal Representatives v. K. Sarwanamma (2014 SCC 9 445, Supreme Court Of India, 2014), although in that case, allegations of fraud and undue influence were dismissed by lower courts and not the primary focus of the Supreme Court's analysis.

Absence of Consideration

A defining characteristic of a gift is its lack of consideration. As articulated in Section 122, TPA, a gift must be "without consideration." The Supreme Court in Smt. Shakuntala And Ors. v. State Of Haryana (1979 SCC 3 226, Supreme Court Of India, 1969) clarified that "consideration" in the TPA carries the same meaning as in the Indian Contract Act, 1872, and thus excludes natural love and affection. If there is consideration, the transaction would likely be a sale or exchange, not a gift. This principle is echoed in Sonia Bhatia v. State Of U.P And Others (1981 SCC 2 585, Supreme Court Of India, 1981), which extensively reviewed legal definitions to emphasize that a gift is "absolutely gratuitous" and "without pecuniary consideration." Similarly, Fateh Mohammad v. District Judge (Allahabad High Court, 1978) reiterated that a gift, by its very definition under Section 122, TPA, is a transfer without consideration.

Existing Property

The subject matter of the gift must be "certain existing movable or immovable property." Section 124 of the TPA explicitly states that "A gift comprising both existing and future property is void as to the latter." (S. Sarojini Amma v. Velayudhan Pillai Sreekumar, 2018 SCC ONLINE SC 2200, Supreme Court Of India, 2018). This ensures that the donor has a subsisting title to the property being gifted at the time of the transfer.

Donor and Donee

There must be a clearly identifiable donor (the person making the gift) and a donee (the person receiving the gift). Both must be living persons, as a transfer of property under Section 5 of the TPA is an act by which a living person conveys property to another living person (Champa Bibi v. Panchiram Nahata Siva Bigraha And Others, Calcutta High Court, 1963, noting an exception for gifts to deities in specific contexts). The donor must be competent to contract, and the donee must be capable of holding property, which includes minors.

Acceptance by the Donee

Acceptance of the gift by or on behalf of the donee is indispensable. Such acceptance must occur during the lifetime of the donor and while the donor is still capable of giving. If the donee dies before acceptance, the gift is void (Section 122, TPA). The Supreme Court in K. Balakrishnan v. K. Kamalam And Others (2004 SCC 1 581, Supreme Court Of India, 2003) extensively discussed acceptance by a minor, holding that minors can accept non-onerous gifts, and such acceptance can be express or implied from conduct, including that of guardians. Silence or the conduct of the minor and guardians can imply acceptance. Furthermore, in Asokan v. Lakshmikutty And Others (2007 SCC 13 210, Supreme Court Of India, 2007), the Supreme Court affirmed that an averment in the deed of gift regarding the handing over of possession can suffice to establish a presumption of acceptance by the donee, shifting the burden to the donors to disprove this presumption. The lack of unequivocal acceptance was a factor in Naramadaben Maganlal Thakker v. Pranjivandas Maganlal Thakker And Others (1997 SCC 2 255, Supreme Court Of India, 1996), where a conditional gift was found to be incomplete partly due to lack of clear acceptance.

The Modalities of Effecting a Gift: Section 123, TPA

Section 123 of the TPA prescribes the specific formalities for effectuating a gift, distinguishing between immovable and movable property.

Gifts of Immovable Property

Section 123 stipulates: "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." (Firm Mukund Lal Veerkumar, 1968; Commissioner Of Income Tax, Delhi v. Ms. Mayawati, 2011). This requirement is mandatory. The Supreme Court in Commissioner Of Income Tax, Jaipur v. Sirehmal Nawalakha (2001 SCC 6 641, Supreme Court Of India, 2001) reiterated that for a transfer of immovable property by way of gift as contemplated by the TPA, there must be a registered document. The Madras High Court in Thulasimani Ammal v. Commissioner Of Income Tax & Anr. (Madras High Court, 1999) also emphasized that mere delivery of immovable property does not satisfy Section 123; a registered instrument is essential. The lack of a registered instrument was fatal to the intended gift in Gomtibai (Smt) (Dead) Through Lrs. And Others v. Mattulal (Dead) Through Lrs. (1996 SCC 11 681, Supreme Court Of India, 1996).

Gifts of Movable Property

For movable property, Section 123 provides flexibility: "the transfer may be effected either by a registered instrument signed as aforesaid or by delivery. Such delivery may be made in the same way as goods sold may be delivered." (Firm Mukund Lal Veerkumar, 1968; Vasudev Ramchandra Shelat v. Pranlal Jayanand Thakar And Others, Supreme Court Of India, 1974). Thus, for movables, either registration or actual/constructive delivery suffices.

The Role of Registration and Attestation

Registration of the gift deed for immovable property is not merely a procedural formality but a substantive requirement for the completion of the gift. Attestation by at least two witnesses is also mandatory. The interplay between execution and registration was discussed in Atmaram Sakharam Kalkye v. Vaman Janardhan Kashelikar (Bombay High Court, 1924), considering whether a donor could revoke a gift after execution but before registration. Section 47 of the Indian Registration Act, 1908, states that a registered document operates from the time of its execution, not registration. However, as noted in Dr. V. Srinivasan v. Commissioner Of Gift-Tax (Madras High Court, 2004) citing Ram Saran Lall v. Domini Kuer (AIR 1961 SC 1747), registration itself is not complete until the document is copied into the records of the Registration Office, and a sale (and by analogy, a gift requiring registration) is not complete until such registration is effected.

Judicial Scrutiny and Interpretation of Gift Transactions

The judiciary has played a pivotal role in clarifying various aspects of gift transactions, particularly concerning the interpretation of the donor's intent, the nature of acceptance, and the effect of conditions or reservations in gift deeds.

Delivery of Possession and Donor's Reservation of Life Interest

A significant area of judicial discourse has been whether delivery of possession is essential for a valid gift of immovable property and the effect of the donor reserving certain rights. The Supreme Court in Renikuntla Rajamma (2014) delivered a landmark judgment clarifying this. It held that Section 123 of the TPA does not stipulate delivery of possession as a prerequisite for the validity of a gift of immovable property; the crucial requirement is a registered instrument, duly signed and attested. The Court further established that the retention of possession or usufruct (right to enjoy the benefits) by the donor during their lifetime does not invalidate an otherwise valid gift, provided the transfer of title is clear, absolute, and in compliance with Sections 122 and 123. This judgment reconciled conflicting interpretations, notably distinguishing and clarifying the position from Naramadaben Maganlal Thakker (1996), where a conditional gift reserving donor's rights to possession and mesne profits was considered incomplete. The Court in Renikuntla Rajamma emphasized that if the deed clearly conveys absolute ownership, subsequent reservations of life interest for the donor do not nullify the gift.

However, the construction of the deed remains paramount. In Baby Ammal v. Rajan Asari (1997 SCC 2 636, Supreme Court Of India, 1996), where the deed recited that "All the right to enjoy the property and the right to reside in the building will remain with me during my lifetime and Rajan Asari will derive the said rights with full freedom after my lifetime," the Supreme Court held it was not a valid gift as title and possession remained with the donor, and there was no acceptance of possession. This suggests that if the deed's wording indicates no present divestment of title, it may not constitute a valid gift. Similarly, S. Sarojini Amma v. Velayudhan Pillai Sreekumar (2018) explored whether a document where the executant retained possession and reserved rights, with the transfer to take effect after death, constituted a gift or a will, highlighting the importance of immediate divestiture of title for a gift.

Conditional Gifts and Revocation (Section 126, TPA)

Section 126 of the TPA allows for the suspension or revocation of a gift under specific circumstances: (i) by agreement between donor and donee on the happening of a specified event not dependent on the donor's will, or (ii) in cases where a contract might be rescinded (e.g., fraud, undue influence), save for want or failure of consideration. A gift revocable at the mere will of the donor is void. The case of Naramadaben Maganlal Thakker (1996) dealt with a conditional gift which the donor subsequently cancelled. The Supreme Court upheld the cancellation, finding the gift incomplete due to its conditional nature and lack of proper acceptance and transfer of possession. However, as clarified by Renikuntla Rajamma (2014), reservation of life interest by the donor is not necessarily a condition that makes the gift revocable at will or incomplete, if title has been absolutely transferred.

The Imperative of a Completed Gift: Intention versus Execution

A mere intention to gift is insufficient; the legal formalities must be complied with. In Gomtibai (Smt) v. Mattulal (1996), the Supreme Court held that a partition deed expressing an intention to gift land to a cousin sister, without a registered instrument of gift and acceptance by the donee, did not constitute a valid gift. The gift remained incomplete in the eyes of the law.

Characterisation of Transactions: Release and Renunciation as Gifts

Courts have also considered whether other forms of property transfer can constitute a gift. In State Of U.P. v. Smt. Shanti And Others (Allahabad High Court, 1979), it was held that a registered instrument releasing right, title, and interest without consideration may operate as a gift if the requirements of Section 123 TPA (signed, attested) are met. This was reaffirmed in SHARDABEN D/O DAWALBHAI MAGANBHAI PATEL W/O NALINBHAI NAROTTAMBHAI PATEL v. LH OF NATVARBHAI DAWALBHAI PATEL (Gujarat High Court, 2023), stating that renunciation without consideration is a gift and must comply with Section 123 TPA.

Gifts to Non-Standard Donees

The TPA primarily envisages transfers between living persons. In Champa Bibi v. Panchiram Nahata Siva Bigraha And Others (Calcutta High Court, 1963), it was discussed that a gift to a deity (God Almighty) might not be a gift to a "living person" within the strict meaning of Sections 5 and 123 of the TPA, potentially exempting it from the TPA's registration requirements. However, this interpretation is often context-specific and may not universally apply to all religious or charitable endowments, many of which are governed by specific endowment laws or principles of Hindu and Muslim law where applicable (though Section 129 TPA limits the overriding effect of such personal laws concerning gifts).

The Transfer of Property Act Framework vis-à-vis the Gift Tax Act

It is pertinent to note that the definition and requirements of a "gift" under the TPA are distinct from, though often related to, the concept of "gift" under fiscal statutes like the (now abolished) Gift Tax Act, 1958. As observed in Commissioner Of Income Tax, Jaipur v. Sirehmal Nawalakha (2001 SC) and Thulasimani Ammal (1999 Madras HC), the Gift Tax Act had a wider definition and could include transactions deemed to be gifts for taxation purposes (e.g., transfers for inadequate consideration under Section 4 of the Gift Tax Act) which might not strictly qualify as gifts under Section 122 of the TPA. The Rajasthan High Court in Sirehmal Nawalkha v. Commissioner Of Income-Tax (1985) also noted that the Gift Tax Act was a self-contained code and its concept of gift could be much wider. However, for a transfer of immovable property to be recognized even for Gift Tax Act purposes, compliance with TPA formalities like registration was often considered essential, as held in Thulasimani Ammal (1999). Smt. Laxmibai Narayana Rao Nerlekar v. Commissioner of Gift-tax (Income Tax Appellate Tribunal, 1967) also compared the definitions, noting that prima facie, there was no difference in the core concept of a voluntary transfer without consideration, though the Gift Tax Act included deemed gifts.

Conclusion

The law of gifts under the Transfer of Property Act, 1882, provides a structured framework for the gratuitous transfer of property. The essential elements – voluntariness, absence of consideration, existing property, identifiable donor and donee, and acceptance by the donee – coupled with the mandatory procedural requirements of Section 123 (registration and attestation for immovable property; registration or delivery for movable property) are critical for the validity of a gift. Judicial interpretations, particularly the Supreme Court's ruling in Renikuntla Rajamma, have significantly clarified that absolute divestiture of title by the donor is the cornerstone of a gift, and mere retention of life interest or usufruct by the donor does not invalidate a gift if title has been unequivocally transferred through a duly registered and attested instrument. The distinction between a present transfer of title (gift) and a future disposition (testamentary) remains a key area of judicial scrutiny, emphasizing the need for precise drafting of gift deeds. Adherence to these statutory provisions and judicially evolved principles is paramount to ensure the legal efficacy and irrevocability of gift transactions in India.