Conditionality and Revocation of Gifts under Section 126, Transfer of Property Act 1882

Conditionality and Revocation of Gifts under Section 126 of the Transfer of Property Act, 1882: A Doctrinal and Jurisprudential Analysis

1. Introduction

Section 126 of the Transfer of Property Act, 1882 (“TPA”) occupies a delicate intersection between the donor’s freedom to dispose of property and the legal system’s insistence on stability of title. Although gifts are normally irrevocable once completed, the statute carves out a narrowly-tailored space for suspension or revocation when parties contractually stipulate a condition subsequent that is independent of the donor’s will. Recent litigation—often involving unilateral cancellation deeds—has rekindled academic debate on the scope of this provision, its relationship with cognate sections such as Sections 10, 31 and 42 TPA, and its distinction from other conditional conveyances, most notably mortgage by conditional sale under Section 58(c). This article offers a comprehensive analysis of Section 126, synthesising statutory text, policy objectives and case law, with particular attention to the authorities set out in the reference materials.

2. Statutory Framework

2.1 Textual Features

Section 126 authorises the donor and donee to agree that a gift “shall be suspended or revoked” upon the happening of a specified event not dependent on the donor’s volition.[1] The second paragraph imports contract law principles of rescission, while the concluding sentence renders gifts otherwise irrevocable. Key corollary provisions include:

  • Section 122: definition of “gift” as a voluntary, gratuitous transfer of property accepted by the donee.
  • Section 10: any condition absolutely restraining alienation is void.[2]
  • Section 31: creation of an interest determinable on a contingent event.
  • Section 42: exercise of a reserved power to revoke an earlier transfer.

2.2 Conceptual Boundaries

The statutory architecture balances party autonomy with policy imperatives against uncertain titles. Conditions that merely regulate ownership (e.g., revocation on non-maintenance) are generally valid if compliant with Section 126, whereas conditions that fetter alienability of the donee (absolute restraints) fall foul of Section 10. Distinguishing the two has proven contentious in practice.

3. Judicial Construction of Section 126

3.1 Absolute Restraints versus Valid Conditions

In Jagdeo Sharma v. Nandan Mahto, the Patna High Court condemned a clause prohibiting the donee and her heirs from alienating the gifted land, holding that Section 10 overrides Section 126 where the stipulated event effectively amounts to an absolute restraint on transfer.[3] The Court’s reasoning, echoing Mt. Brij Devi v. Shiva Nandan Prasad (Allahabad HC, 1939), underscores that a condition triggering revocation upon transfer is indistinguishable from a restraint on alienation and therefore void. Conversely, the Gauhati High Court in Purnia Kurmi v. Manindra Nath Mahanti validated a revocation clause contingent on the donee’s failure to maintain the donor, emphasising that the event lay wholly within the donee’s sphere and not the donor’s volition.[4]

3.2 Unilateral Cancellation Deeds and Administrative Refusals

A surge of deeds purporting to unilaterally cancel registered gifts prompted decisive judicial reaction. The Madras Full Bench in Sasikala v. Revenue Divisional Officer held that registrars lack statutory competence to register unilateral deeds of cancellation, save where the gift itself provides for revocation consonant with Section 126.[5] The ruling, reaffirmed in M. Vishnuram v. Inspector General of Registration, treats such cancellations as void ab initio and restores the primacy of judicial processes for challenging gifts.[6]

3.3 Irrevocability and Acceptance by Minors

The Supreme Court in K. Balakrishnan v. K. Kamalam clarified that minors are capable of accepting non-onerous gifts and that, once accepted (expressly or impliedly), the gift becomes irrevocable except in the limited circumstances under Section 126.[7] The Court’s discussion of Sections 122–126 illustrates the doctrinal unity of the gift provisions: completion of transfer (acceptance) and revocation are discrete inquiries, the latter governed strictly by the parties’ stipulation and statutory safeguards.

3.4 Transactional Form and Revocation: Distinguishing from Conditional Sales

Although Section 58(c) concerns mortgages rather than gifts, jurisprudence on mortgage by conditional sale offers analytical guidance on identifying genuine conditionality. In Pandit Chunchun Jha v. Sheikh Ebadat Ali the Supreme Court stressed that intention, textual integration of conditions, and the existence of a debtor-creditor relationship are determinative.[8] Analogously, where a gift instrument embeds a contingent event (e.g., non-maintenance) and the clause is consonant with Section 126, courts have upheld revocation. Meanwhile, the principle “once a mortgage, always a mortgage” articulated in Seth Ganga Dhar v. Shankar Lal exposes the policy aversion to clogs on redemption; by parity of reasoning, “once a completed gift, always a gift” unless Section 126 applies, preserving certainty of title.[9]

3.5 Procedural Limits: Limitation and Third-Party Rights

Where revocation is statutorily impermissible yet effected de facto, aggrieved donees must act promptly. Courts have invoked Article 59 of the Limitation Act (three years) to bar belated challenges to cancellation deeds.[10] Simultaneously, bona fide purchasers for value from donors asserting wrongful revocation face possible defeat of title, reflecting the registries’ obligation to refuse unilateral cancellations post-Sasikala.

4. Interplay with Sections 31 and 42: Condition Subsequent versus Power of Revocation

Sections 31 and 42 TPA recognise two doctrinal devices akin to Section 126: (i) a determinable interest that ceases on an uncertain event, and (ii) an express reservation of power to revoke. Whether a clause is analysed under Section 31 (determinable fee) or Section 126 (revocable gift) affects third-party protection under Section 42, which validates subsequent transfers for consideration by the holder of a reserved power. In Balai Chandra Parui v. Durga Bala Dasi the Calcutta High Court enforced a subsequent transfer by the donor who had reserved an explicit power of revocation, illustrating the practical reach of Section 42.[11]

5. Comparative Insight: Rule against Perpetuities and Pre-emption Covenants

Conditional gifts can collide with the rule against perpetuities if they postpone vesting beyond the statutory period. The Supreme Court’s decision in Ram Baran Prasad v. Ram Mohit Hazra, though centred on a pre-emption clause, clarifies that personal covenants with no proprietary fetter evade the rule.[12] By analogy, a Section 126 clause framed as a personal obligation (e.g., maintenance) revoking the gift upon breach does not offend perpetuity limits because title vests immediately and indefeasibly, subject only to a resolutive condition.

6. Critical Evaluation

  • Predictability versus Equity: Judicial insistence on explicit contractual foundations for revocation promotes title certainty but may disadvantage vulnerable donors who rely on moral undertakings. Legislative clarification—perhaps authorising statutory implied terms of maintenance in specified relationships—could mitigate hardship without unsettling conveyancing practice.
  • Administrative Safeguards: The Sasikala doctrine rightly shields registries from becoming de facto adjudicators of revocation. However, state rules could mandate electronic flagging of instruments containing Section 126 clauses to alert subsequent purchasers.
  • Harmonisation with Section 10: The Patna approach in Jagdeo Sharma usefully subordinates Section 126 to Section 10 where revocation is triggered by alienation. Yet a nuanced reading should distinguish between (i) absolute restraints (void) and (ii) forfeiture clauses that, while deterring alienation, do not technically restrain it. Future Supreme Court guidance would aid uniformity.

7. Conclusion

Section 126 TPA exemplifies the legislature’s calibrated respect for individual autonomy tempered by the need for transactional stability. Jurisprudence demonstrates a consistent—if occasionally restrictive—tendency to limit revocation to (a) express, donor-neutral contingencies and (b) scenarios squarely within contract-law rescission principles. Attempts at unilateral cancellation outside these confines are uniformly struck down, reinforcing the sanctity of completed gifts. Nevertheless, divergent High Court positions on the interface with Section 10 and the practicalities of administrative refusal suggest an emergent agenda for doctrinal refinement and possible statutory amendment.

References

  1. Transfer of Property Act, 1882, s. 126.
  2. Transfer of Property Act, 1882, s. 10.
  3. Jagdeo Sharma v. Nandan Mahto, 1981 (Patna HC).
  4. Purnia Kurmi v. Manindra Nath Mahanti, 1968 AIR Gau 50.
  5. Sasikala v. Revenue Divisional Officer, 2022 SCC OnLine Mad 4343.
  6. M. Vishnuram v. Inspector General of Registration, 2024 (Madras HC).
  7. K. Balakrishnan v. K. Kamalam, (2004) 1 SCC 581.
  8. Pandit Chunchun Jha v. Sheikh Ebadat Ali, AIR 1954 SC 345.
  9. Seth Ganga Dhar v. Shankar Lal, AIR 1958 SC 770.
  10. Limitation Act, 1963, Art. 59; see also Kali Naicker v. Jaganathan, 2011 SCC OnLine Mad 1539.
  11. Balai Chandra Parui v. Durga Bala Dasi, 2004 Cal HC.
  12. Ram Baran Prasad v. Ram Mohit Hazra, AIR 1967 SC 744.