The Law on Cancellation of Gift Deeds in India: An Analytical Review

Introduction

A gift, or 'Hiba' in Muslim law, represents a voluntary transfer of ownership of property without consideration. In India, the transfer of property by way of gift is primarily governed by the Transfer of Property Act, 1882 (hereinafter "TPA, 1882"), particularly Sections 122 to 129, and principles of contract law where applicable. While a gift, once completed, is generally considered irrevocable, circumstances may arise where a donor seeks to cancel or revoke a gift deed. This article undertakes a comprehensive analysis of the legal principles surrounding the cancellation of gift deeds in India, drawing upon statutory provisions and judicial pronouncements. It examines the essentials of a valid gift, the grounds for revocation, the controversial issue of unilateral cancellation, and the specific nuances related to conditional gifts.

Essentials of a Valid Gift

Section 122 of the TPA, 1882 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. 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.

For a gift of immovable property to be valid, Section 123 of the TPA, 1882 mandates that it must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses. For movable property, transfer may be effected either by a registered instrument or by delivery.

The Supreme Court in Sonia Bhatia v. State Of U.P And Others (1981 SCC 2 585) emphasized the gratuitous nature of gifts, noting that the requirement of "adequate consideration" inherently excludes transfers made as gifts. A gift is, by definition, a transfer without consideration.

Acceptance by the donee is a cornerstone of a valid gift. The Supreme Court in Asokan v. Lakshmikutty And Others (2007 SCC 13 210) held that a mere averment of handing over possession within the deed of gift, combined with the manifest intention of the donors, suffices to establish a presumption of acceptance by the donee. The burden then shifts to the donors to disprove this presumption. The Court noted that "while explicit acceptance is beneficial, the legal framework accommodates various means of establishing acceptance, including the mere handing over of possession as recited in the deed."

Regarding gifts to minors, the Supreme Court in K. Balakrishnan v. K. Kamalam And Others (2004 SCC 1 581) clarified that minors possess the capacity to accept non-onerous gifts. Acceptance can be express or implied through conduct, and silence or the conduct of the minor and guardians can imply acceptance. Once a gift is accepted during minority, it becomes irrevocable.

The necessity of a registered instrument for a gift of land was highlighted in Gomtibai (Smt) (Dead) Through Lrs. And Others v. Mattulal (Dead) Through Lrs. (1996 SCC 11 681), where an intended gift failed because the deed was not executed as a registered instrument of gift and lacked acceptance by the donee, rendering the gift incomplete.

Irrevocability of a Completed Gift

A fundamental principle of gift law is that once a gift is complete – i.e., offered, accepted, and (for immovable property) effected by a registered and attested instrument – it becomes binding on the donor and generally cannot be revoked. This principle is encapsulated in the latter part of Section 126 of the TPA, 1882, which states, "Save as aforesaid, a gift cannot be revoked."

The Supreme Court in K. Balakrishnan v. K. Kamalam And Others (2004 SCC 1 581) reiterated that once a gift is accepted, it becomes irrevocable, protecting the donee's interest. The Kerala High Court in E.A.PAVITHRAN, v. ERAYI ARAKKALATH NEETHA (Kerala High Court, 2023), relying on Daulat Singh (dead) through LRS. v. State of Rajasthan ((2021) 3 SCC 459), affirmed that execution of a gift deed duly registered and attested, along with acceptance, makes the gift of immovable property complete, divesting the donor of title.

Grounds for Revocation under Section 126 of the Transfer of Property Act, 1882

Section 126 of the TPA, 1882 provides specific, limited circumstances under which a gift may be suspended or revoked:

Agreement between Donor and Donee

A gift may be suspended or revoked if the donor and donee agree that on the happening of any specified event, which does not depend on the will of the donor, the gift shall be suspended or revoked. However, a gift which the parties agree shall be revocable wholly or in part, at the mere will of the donor, is void wholly or in part, as the case may be. This underscores that unilateral power of revocation at will, if stipulated, renders the gift itself (or that part) void.

Rescission as per Contract Law

A gift may also be revoked in any of the cases (save want or failure of consideration) in which, if it were a contract, it might be rescinded. These grounds typically include fraud, coercion, misrepresentation, or undue influence, as per the Indian Contract Act, 1872. The Karnataka High Court in Narayanamma v. Papanna (Karnataka High Court, 1987) observed that a gift can be revoked on grounds like coercion, fraud, misrepresentation, or undue influence, but this must be done "through a Court of Law" and not unilaterally. The Himachal Pradesh High Court in Parveen Kumar v. Sarojni Devi And Another (Himachal Pradesh High Court, 2014) held that a gift not based on fraud, undue influence, or misrepresentation cannot be validly cancelled.

Unilateral Cancellation of Gift Deeds

A significant area of litigation concerns the unilateral cancellation of a completed and registered gift deed by the donor, often by executing another registered deed of cancellation. The preponderant judicial view is that such unilateral cancellation is impermissible once title has vested in the donee.

The Full Bench of the Madras High Court in Sasikala v. Revenue Divisional Officer And Another (Madras High Court, 2022) authoritatively held that "the Sub-Registrar namely, the Registering Authority has no power to accept the deed of cancellation to nullify the deed of conveyance made earlier." Specifically regarding gifts, it stated, "With regard to unilateral cancellation of gift deed, which is not revokable and does not come under the purview of Section 126 of the Transfer of Property Act, the Registrar has no power to accept the deed of cancellation to nullify the registered settlement deed." This position was reiterated by the Madras High Court in Dr.Makudamudi v. The Secretary to Government (Madras High Court, 2023).

Earlier, in D. Mohan v. Sub Registrar (Madras High Court, 2012), it was held that the registration of a cancellation of an unconditional and irrevocable gift deed is against public policy, and the aggrieved party must approach the Civil Court. The Court observed, "once the gift deed was incapable of being revoked, it was not open to the Sub Registrar to register the cancellation deed." Similarly, in V. Devika Rani And Others v. R. Varadarajulu And Others (Madras High Court, 2019), it was affirmed that a complete and absolute gift can be cancelled at the instance of the transferor only by taking recourse to the Civil Court.

The Andhra Pradesh High Court in Kapuganti Jagannadha Gupta v. District Registrar (2012 SCC ONLINE AP 61) stated, "Once the gift is made in accordance with law and is accepted by the donee, it becomes irrevocable. In case the donor feels that the transaction is tainted with any factors such as fraud, coercion or misrepresentation, the only remedy available to him is to file a suit for cancellation of the document."

The Kerala High Court in JOOSA v. SIMON (DIED) (Kerala High Court, 2024) held that "When the gift as per Ext.A1 is accepted by the donee, the donor can cancel the same only by a document signed by both the donor and donee or by setting aside the same through the Court of law. A Gift cannot be cancelled unilaterally by the donor." This was echoed in MUHAMMED SHAREEF v. RAJILA (Kerala High Court, 2022), stating, "Once the property is vested absolutely with the donee by way of gift deed, the donor has no right to unilaterally execute the deed to cancel such gift deed... In the absence of any such right reserved to the donor, the donor cannot unilaterally execute the deed." The Karnataka High Court in Patel Thippeswamy v. Smt. Gangamma And Others (Karnataka High Court, 2002) also held that a registered gift deed cannot be unilaterally cancelled, and the remedy is to file a suit.

The case of Sudhakara Reddy v. Lakshmamma (2014 SCC ONLINE HYD 1243, Andhra Pradesh High Court) mentioned that "donor is entitled to cancel a registered gift deed by executing another registered document." However, this statement must be understood in its specific context, possibly relating to voidable gifts or situations where the gift was not complete, or where cancellation was by mutual consent or through court intervention as the judgment also refers to Section 31 of the Specific Relief Act, 1963, which pertains to suits for cancellation of instruments. It does not appear to lay down a general principle for unilateral cancellation of absolute, accepted gifts in contravention of the established line of authorities.

Conditional Gifts and Their Cancellation

The legal position can be different for conditional gifts, particularly where the conditions are not fulfilled, and the donor has retained certain rights or possession.

In Naramadaben Maganlal Thakker v. Pranjivandas Maganlal Thakker And Others (1997 SCC 2 255), the Supreme Court considered a case where a gift deed was executed, but the donor reserved life interest and possession. The deed was subsequently cancelled by the donor, citing non-fulfillment of oral conditions and non-acceptance of the conditional gift. The cancellation deed explicitly stated: "You had promised me to fulfil the oral conditions between us. But immediately after making the gift accordingly, you denied to fulfil the said conditions. The possession of the gifted property is not handed over to you. So in fact you have not accepted the conditional gift... Therefore, I hereby cancel the conditional gift deed..." The Supreme Court, reading the gift deed and cancellation deed harmoniously, upheld the cancellation, finding the gift was conditional and had not become absolute or fully operative.

Similarly, in N.P. SASEENDRAN v. N.P. PONNAMMA (Supreme Court Of India, 2025), the gift deed conferred only a limited right upon the donee, to become operative after the donor's death, with the donor retaining possession and enjoyment during his lifetime. The donor executed a cancellation deed stating the donee had "cheated him and he had not fulfilled the conditions subject to which there was an oral understanding." The Supreme Court observed that "the donor had executed a conditional gift deed and retained the possession and enjoyment of the property during his lifetime. The recitals in the cancellation deed is consistent with the recitals in the gift deed," and thus the cancellation of the conditional gift was upheld.

These cases indicate that where a gift is explicitly conditional, possession is retained by the donor, and the conditions are breached by the donee, a cancellation by the donor, particularly if such right is implicitly or explicitly reserved or if the gift was never truly perfected due to non-fulfillment of conditions, might be sustainable. This is distinct from an unconditional, absolute gift where title and often possession have passed to the donee.

Distinction from Other Concepts

It is important to distinguish a gift from other dispositions of property. In Rev. Fr. M.S Poulose v. Varghese And Others (1995 SUPP SCC 2 294), the Supreme Court construed a document as partly a gift and partly a will. Where the executants reserved rights during their lifetime, including the right to alienate or mortgage the property (except for a small portion gifted absolutely), the Court held they had not divested themselves completely of title to that portion, and that part of the document was to be read as a will, which is inherently revocable.

The case of Garib Das And Ors. v. Munshi Abdul Hamid And Ors. (1970 AIR SC 1035), though concerning a Wakf deed, illustrates the principle that once a valid dedication (akin to a transfer) is made and acted upon, subsequent attempts by the settlor to cancel it and alienate the property are invalid.

The reference material Dagadabai (Dead) By Legal Representatives v. Abbas Alias Gulab Rustum Pinjari (2017 SCC 13 705), while primarily dealing with inheritance under Muslim law and adverse possession, reinforces the importance of established legal principles in property disputes. It notes that under Muslim personal law, adoption is not recognized for inheritance, and adverse possession claims require strict proof, underscoring the judiciary's role in upholding rightful ownership based on applicable law.

Conclusion

The law governing the cancellation of gift deeds in India is anchored in the principle that a gift, once validly made and completed, is irrevocable. Section 126 of the Transfer of Property Act, 1882, provides limited grounds for revocation, primarily based on mutual agreement concerning a future event (not dependent on the donor's will) or on grounds that would justify the rescission of a contract, such as fraud or undue influence. Such revocation, especially on contractual grounds, generally requires judicial intervention.

The overwhelming judicial consensus, particularly from various High Courts and supported by Supreme Court principles, is that a donor cannot unilaterally cancel a completed and absolute gift deed by merely executing and registering a deed of cancellation. The Sub-Registrar generally lacks the authority to register such unilateral cancellations of irrevocable gift deeds, as this would be contrary to public policy and the vested rights of the donee. The appropriate remedy for a donor seeking to set aside a gift deed on valid grounds is to approach a competent Civil Court.

However, a distinction exists for conditional gifts, especially where the donor retains possession and enjoyment, and the conditions of the gift are not fulfilled by the donee. In such specific circumstances, as illustrated by cases like Naramadaben Maganlal Thakker and N.P. Saseendran, a cancellation by the donor may be upheld, particularly if the gift was never truly perfected or accepted unconditionally. Legal practitioners and parties involved in gift transactions must meticulously adhere to the requirements for a valid gift and be cognizant of the limited and specific circumstances under which a gift may be lawfully revoked or cancelled.