Judgement

The plaintiffs, two in number, who are both minors represented by their next friend and mother, along with the defendants 3 and 4 are the appellants in this second appeal. The suit out of which this second appeal arises was for recovery of possession of the plaint schedule properties from 1st defendant. According to the plaint, the defendants 2 and 3 are also entitled along with the plaintiffs to the joint possession of the properties and as they had not joined as plaintiffs, they were made defendants.

2. The case of the plaintiffs is that the 1st defendant executed and registered a gift deed in favour of themselves, defendants 2 and 3 and another Palur Ramayya on 10-4-1945 which he purported to revoke by another registered deed on 8-5-1945. The plaintiffs claim that the 1st defendant had no right to revoke the gift deed. The main defence of the 1st defendant was that there was no acceptance of the gift by the plaintiffs or the other donees and that therefore he was not entitled to revoke it.

The trial Court found that there was proof of acceptance by the donees and since according to the terms of the gift deed the 1st defendant was entitled to continue in possession of the property during his life time, it held that the plaintiffs could obtain only a declaration that the gift deed in their favour was valid but not to recovery of possession. The decree made by the trial Court however contained a declaration not only in favour of the plaintiffs but also in favour of the defendants 2 and 3.

The 1st defendant appealed to the District Court against the decision of the trial Court. The defendants 2 and 3 also filed a memorandum of cross-objections thereto and claimed that they ought to have been given a declaration in their favour as well. The learned District Judge allowed the appeal of the 1st defendant taking the view that there was no proof of acceptance of the gift deed by the donees. Further, he dismissed the memorandum of cross-objections.

He seems to have thought that apart from the merits of the dispute, the memorandum of cross-objections was not sustainable as the decree made by the trial Court contained a declaration in favour of the defendants 2 and 8. The learned District Judge was right in stating that the decree of the trial Court contained such a declaration. But he over-looked the fact that the trial Court in paragraph 15 of its judgment only said that

"there will therefore be a declaration that the gift under Ex. B-1 in favour of the plaintiffs is valid."

The decree drawn up was beyond the terms of the judgment.

3. The present appeal, as already stated, is by the plaintiffs and the defendants 2 and 3. The only question therefore that arises for determination is whether the 1st defendant was, in the circumstances of the case, entitled to revoke Ex. B-1, the gift deed in dispute. Before discussing this question, it is necessary to bear in mind the relationship of the parties. The appellants are the sons of one Seetharamayya, a sisters son of the 1st defendant.

Defendants 2 and 3 are the brothers of Seetharamayya. Palur Ramayya the other donee is the son of another sister of the 1st defendant. The mother of the plaintiff is also stated to be related to the 1st defendant otherwise than as the wife of his nephew. According to her, she had lost her mother when she was very young and that she had been brought up by the 1st defendant who is a cousin of hers.

The undisputed facts are that the 1st defendant was deeply attached to his nephews and the plaintiffs, and he having no children himself and having therefore decided to make an adoption wanted to settle some properties on his nephews and the plaintiffs before his power of disposition of the properties in his hands is affected by the adoption.

The 1st defendants case is that he had executed Ex. B-1 secretly, that neither the plaintiffs mother nor any of the other donees knew about it until after it was registered, that they were dissatisfied with and not only did they not accept the gift they became aware of it but they refused to do so because it fell far short of their expectations and that as they made a great row about it he decided to cancel it and actually cancelled it by Ex. B-3.

On the other hand, the case of the plaintiffs and the other donees is that the mother of the plaintiffs and the other donees were aware of the gift, that in fact it was made only at their request, that the mother of the plaintiffs was present at the time of its execution and registration and that in the circumstance acceptance is to be implied. The trial Court found as a fact that the donees had asked for the gift, that the gift deed was actually accepted and that 1st defendants version as to the refusal by the donees is false.

The lower appellate Court, however, while holding that "it might be true that P. W. 1 and his nephews even made a request to give them some properties and Ex. B-1 was executed in compliance with the request", still held that "anterior negotiations or talks about the transfer of property by way of gift would not amount to acceptance of the transfer of the property by gift", that there was no proof of subsequent acceptance and that the 1st defendant could cancel the gift.

In holding that

"anterior negotiations or talks about the transfer of property before the deed was executed could not be taken into account"

in deciding the question of acceptance, the learned District Judge followed the observations of Satyanarayana Rao, J. in Chennupati Venkatasubbamma v. Nelluri Narayanaswami, 1954-1 Mad LJ 194 : ( AIR 1954 Mad 215) (A). The relevant observations are as follows :

"If there was no delivery of the deed and possession of the property to the donee it may be open to the donee to prove by cogent evidence that there were other modes of acceptance for example a letter written immediately after the execution of the document. But what the law requires in my opinion is acceptance of the gift after its execution though the deed may not be registered.

Anterior negotiations or talks about the transfer of property by way of gift, would not amount to acceptance of the transfer of the property by gift..............I have adverted to this aspect in such detail for the reason that the learned Judge seems to think that even antecedent talks before the execution of the deed would be sufficient to constitute acceptance of the gift."

In that case, there was no finding of the lower appellate Court that the gift which was subsequently revoked was preceded by a request from the donees. These observations therefore, entitled to the highest respect as they are, are mere obiter and not binding on me. I therefore propose to consider the matter on principle.

4Before I do so, it is necessary to quote Ss. 122 and 123 of the Transfer of Property Act in so far as they are material for the present purpose :

"122. "Gift" is the transfer of certain existing moveable or immoveable 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.

123. For the purpose of making a gift of immoveable 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.

5. It has been held by the Privy Council in Kalyanasundaram Pillai v. Karuppa Mooppanar, ILR 50 Mad 193 : (AIR 1927 PC 42) (B), affirming the view taken by a Full Bench of the Madras High Court in Venkatiramareddi v. Rama Reddi, ILR 40 Mad 204 : (AIR 1917 Mad 27) (FB) (C), and that of the majority of a Full Bench of the Bombay High Court in Atmaram Sakharam v. Vaman Janardhan, ILR 49 Bom 388 : (AIR 1925 Bom 210) (FB) (D), that there is nothing in S. 123 of the Transfer of Property Act which requires the donor to have the deed registered and that all that is required is that he should have executed the deed and that there could be acceptance of the deed after the execution and delivery of the deed and before registration. They pointed out that they were

"unable to see how the provision of S. 123 of the Transfer of Property Act can be reconciled with S. 47 of the Registration Act, except upon the view that, while registration is a necessary solemnity in order to the enforcement of a gift of immoveable property, it does not suspend the gift until registration actually takes place"

and observed as follows :

"When the instrument of gift has been handed by the donor to the donee and accepted by him, the former has done every thing in his power to complete the donation and to make it effective. Registration does not depend upon his consent but is the act of an officer appointed by law for the purpose, who if the deed is executed by or on behalf of the donor and is attested by at least two witnesses, must register it if it is presented by a person having the necessary interest within the prescribed period. Neither death, nor the express revocation by the donor, is a ground for refusing registration, if the other conditions are complied with."

In his dissenting judgment in ILR 49 Bom 388 : (AIR 1925 Bom 210) (FB) (D), Mulla J., remarked

"that a gift cannot be said to be "effected" unless the transfer which constitutes the gift is itself "effected" in the manner prescribed by S. 123 (i.e., by a registered instrument) and that acceptance before it was so effected does not avail to make it enforceable." This view, however, must be deemed to have been overruled. It would thus appear that a gift can be said to have been voluntarily made within the meaning of that word in S. 122 of the Transfer of Property Act even though the deed evidencing it is, after due execution, registered against the wishes of the donor.

6. Now it seems to me that S. 25 (1) of the Indian Contract Act has a bearing upon the present discussion and I shall therefore read it.

"25. An agreement made without consideration is void unless

1. It is expressed in writing and registered under the law for the time being in force for the registration of (documents), and is made on account of natural love and affection between parties standing in a near relation to each other."

7. It is to be noticed that natural love and affection are not treated by this section as equivalent to consideration. The agreement is dealt with as one without consideration but still enforceable. Let us suppose a case where pursuant to a promise to make a gift of immoveable property in favour of a near relation expressed in a registered agreement in writing, the promisor executes a deed of gift.

Could it be still said that the deed required subsequent acceptance by the donee? Even when an agreement precedes the gift, the resulting transfer of property is one falling under S. 122 of the Transfer of Property Act and the requirement as to acceptance will apply. Is not that requirement satisfied by proof of the prior agreement? I am clear that the answer must be in the affirmative.

If we suppose a case where a gift of immoveable property is obtained by enforcing (and I see no reason why it would not be enforced) a registered agreement to make it, the answer to a similar question in such a case will admit of no doubt. A gift that is so enforced does not obviously need subsequent acceptance by the person seeking its enforcement.

8. It would also seem that upon the view of the Privy Council as to the scope of registration even an agreement in writing to make a gift under S. 25 (1) of the Contract Act could be compulsorily registered by the promisee. Indeed, discussing the scope of illustration (b) to this section which is in these terms:

"A, for natural love and affection, promises to give his son, B, Rs. 1000/-. A puts his promise to B into writing and registers it. This is a contract."

Fawcett J., in ILR 49 Bom 388 at p. 430 : (AIR 1925 Bom 210 at p. 223) (FB) (D), remarked as follows :

"To my mind, the words of Cl. (1) of S. 25 equally apply to a case like that before us, and the illustration might be altered by substituting for the words "and registers it the words "and hands the document to B, who gets it registered under the provisions of the law in force for the registration of documents". It begs the whole question to assume that, unless A himself registers the document or assents to its registration there is no valid contract."

This would posit the existence of a valid contract to make a gift when it is put into writing and when the document is handed over to the intended donee. In that view, the agreement could be registered even against the will of the promisor by the promisee and enforced against him just like a contract supported by consideration. When a person enforces such an agreement and obtains a deed of gift it would be absurd to say that he should affirm his acceptance of the gift deed that follows the enforcement.

I am, therefore, of opinion that acceptance is not something which has necessarily to take place only after the transfer is completed or effected. If a near relation seeks a gift and a gilt deed is drawn up because of that request, it would be open to the Court to hold on the basis of that antecedent request - at any rate in the light of the surrounding circumstances - that the intended transfer of property was accepted. In my view the law does not require that there should be proof that there was acceptance only after the deed was executed. There can surely be cases where it would be possible to draw an inference as to the acceptance of a gift even from acts anterior to the execution of a deed of gift.

9. In the present case, there is evidence which is believed by the trial Court and not disbelieved by the lower appellate Court, as indicated by the passage above-cited, that the donees, who undoubtedly are near relations of the donor, requested him to make a gift. As the finding of the lower appellate court that the gift was not accepted is based upon a refusal to consider the anterior request of the donees as evidencing the establishment of the fact of acceptance, I propose to address myself to the proper conclusion to be drawn from the several circumstances established in the case.

10. The story of the donor that he kept the deed a secret and that the donees never knew even of its execution or registration until after it was registered has not been accepted by either Court. The deed itself mentions the close relationship between the donor and the donees and recites that the gift is being made at the request of the donees. The donor reserves his right to possession and management of the property and therefore not much point can be made of the fact that the property was not registered in Government accounts in the names of the donees.

The recitals in Ex. B-3 the cancellation deed, as the trial Court points out, are altogether artificial and unacceptable. There is first a recital that the document was executed secretly a version which both the Courts have discredited; then, there is the recital that the donees have not conducted themselves in accordance with the terms thereof if they were unaware of it; thirdly, a reference is made to misunderstandings between the donor and the donees as justifying revocation while the version of the 1st defendant in the witness box is that they were dissatisfied with the quantum of the gift and would not accept.

As D. W. 1 the 1st defendant has stated that the defendants 2 and 3 have been on bad terms with him ever since the execution of Ex. B-3. The trial Court remarked that such a statement clearly indicated that the cause of enmity between P. W. 1 and defendants 2 and 3 was the cancellation of Ex. B-1. This remark is followed by these observations of the learned Subordinate Judge in his judgment:

"If it is so, it looks to me that it was against the wishes of P. W. 1 (mother of the minor plaintiffs) and defendants 2 and 3 that the cancellation deed was executed. This probabilises the version that the gift was accepted.

It is quite clear from the recitals in Ex. B-3 that D. W. 1 is trying to invent some reasons for the cancellation of Ex. B-1. If Ex. B-1 had been kept a secret, how can he expect that the donees would act according to the conditions not made known to them......I therefore accept the evidence of P. W. 1 that the gift was accepted."

There is no reason in this view why the evidence of P. W. 3 that the gift deed was accepted by the donees should also not be believed. The learned District Judge has not discussed the evidence of P. W. 3 as regards the acceptance. In all the circumstances of the case, therefore, the proper inference it seems to me is that there was acceptance of the gift deed by the donees and that it was not open to the 1st defendant to revoke it under S. 126 of the Transfer of Property Act.

11. In this view, the decree of trial Court must be restored with costs here and in the lower appellate Court. Leave granted.

Appeal allowed.