We all might have received or given gifts on several occasions, it’s a gesture of how much we care about the people close to us, but did you know that gift is one of the legally recognized modes of transfer of property? In this article, we will discuss the essential elements that need to be fulfilled for a gift to be considered legal and valid.
Transfer of property is not a new concept, it has always been an essential part of our civilization. To be concise, there are two types of transfer of property; one, when both the giver and receiver are alive known as ‘inter vivos, and secondly when the property is transferred after the death of the person giving also known as ‘testamentary' transfer. The testamentary transfer is not covered under section 5 of the transfer of property Act and thereby only inter vivos are considered as gifts. Also, the law relating to gift where both the parties are Muslims are dealt in accordance with the Muslim law and not as per the Transfer of Property Act.
Definition and essential elements of ‘gift’
The term gift is defined as “the transfer of an existing movable or immovable property voluntarily by a person called as the ‘donor’ to a person called as ‘donee’ and accepted by or on behalf of the donee without any consideration at the time when the donor is alive and still capable of giving it.”1
From the definition, we get the following essential elements of ‘gift’:
The transfer of ownership- The owner of the property while transferring the property to the donee must transfer all the rights in the said property. However, there can be conditional gifts provided that such conditions are not repugnant to the provisions laid down under section 10- 34 of the Act.
Existence of property- The property which the donor intends to transfer by way of gift must be in existence at the time of transfer. It can be either movable or immovable property. Section 124 of the Act says that the transfer must be of property in existence otherwise it will be void. At the same time, another point to be noted is with regard to the future property. The transfer of a future property by way of gift is void and in case of both existing and future property, the gift transfer is void as far as the future property is concerned. In case of a gift in relation to a joint family which fell to the donor by preliminary decree of the partition of coparcenary property is held as valid.2
The transfer must be without consideration and done voluntarily- This is the most important element in making a gift without which the whole of the purpose for which gift is made is defeated. The gift must be given by the donor with his full knowledge and consent. If obtained through coercion and undue influence as defined under sections 15 and 16 of the Indian Contract Act, 1872, the gift will be invalid. There are two tests laid down for the courts to ask in such situations; whether one party is in a position of dominance over the other and whether such a position has been used to dominate the will, i.e., has the person used undue influence over the other person.3 In the case of Mukhraj Devi v. Manoj Kumar Singh4, strange event of things happened when an illiterate woman had signed a gift- deed not attested by any villagers or relatives as witnesses and was said to be witnessed by a person outside the village. Here, the curt held the transfer to be invalid.
Donor must be a competent person- Donor is the person who intends to transfer the property by way of gift. Thereby, he must be a ‘sui generis’. He must have attained the age of majority, of sound mind and must not be disqualified in any way. Even section 7 of this Act states that transfer can be made only by a person of competency. Another essential point is that trustees cannot make any gifts of the property vested with them unless authorized to do so as per the Laws of England.
The transferee/ donee must accept the gift- Another pre-requisite for a valid gift is that the transferee must accept the gift. If before acceptance of the gift the donee dies, the transfer becomes void. Also, the acceptance must be made during the lifetime of the donor when he is capable of making a gift. The donee has the right to accept it expressly or impliedly. If he accepts the title- deed of the property gifted, it is an implied acceptance. Even though the transferor must be a major, the transferee can be a minor and he can accept it by himself or by his guardians and the minor on attaining the majority accept it or reject it. 5
Delivery of possession- As stated earlier, the property can be either movable or immovable. If it is an immovable property, it is not necessary to show that the property has been delivered. It is sufficient to showcase the acceptance by the donee. For effecting the gift of immovable property, section 123 says that it must be effected by a registered instrument signed by or on behalf of the donor in the presence of two witnesses and in case of movable property, it can be either done by a registered instrument or by delivery.
Types of gifts
Now, let’s understand the different types of transfers which are deemed to be a gift. The following are some of the kinds of gifts recognized by law:
Void gifts- Even though it is named as void ‘gift’ it is in fact not a valid gift. If any gift is mane for unlawful purposes (sec 6), if made upon a condition, the fulfillment of such a condition is either impossible or forbidden by law or; made by an incompetent person or if the transferee dies before acceptance or if the gift is for both existing and future property, the gift is void to the extent of future property.6 Thereby, it can rightly be stated that void gifts are an exception to clearly understand what all will be included under the concept of gift.
Onerous gifts- Section 127 deals with onerous gifts. These are those kinds of gifts which involves burden or obligation attached to the property. It is based on the principle “qui senti commode sentire debetet onus’ which means that the person who receives an advantage must bear the burden.7 To constitute an onerous gift there must be a single transfer of several properties, one of which is burdened with certain obligations and others not, then the transferee has to abide it to receive all the properties. In simple words, he cannot relieve himself from the burden and take the rest of the properties.
Lifetime gifts- These are the most common type of gift, where the gift is given by the donor for lifetime, mostly these are given at certain occasions like birthdays etc. For example, Mr. A gifts his son a laptop for his 21^st^ birthday is a lifetime gift.
Deathbed gifts- These are the gifts given by the donor during his lifetime with the condition that the said gift will be effective only after the donor’s death. This type of gift is also known as donations. For example, if A wants to sell a part of his property to an Orphanage ‘XYZ’ after his death, it is called as deathbed gifts.
The concept of gift is an age-old concept which gradually developed into a separate facet of property law.8 The Transfer of Property Act, 1872 is a comprehensive legislation which provides for the rules, regulations and procedures involved in the transfer of immovable properties. For the movable goods, the Sales of Goods Act is there but when it comes to transfer by way of gift as discussed in the article, the Transfer of Property Act comes into picture. This piece of legislation protects the right of a person to transfer the property out of care and affection. The gifts can be suspended or revoked in two circumstances; firstly by mutual consent and secondly by way of rescission as contracts. Also, registration is compulsory for transfer of immovable property by way of gift. Furthermore, we have come across several other topics while dealing with the concept of gift such as position with regard to future property, effect of transfer when done dies before acceptance etc.
Transfer of Property Act, 1882, Sec 122, Act no.4, Act of Parliament 1882 (India). ↩
Munni Lal Mahto v. Chandeshwar Mahto, AIR 2007 Pat 66. ↩
Pratima Choudhary v. Kalpana ukherjee, 2014 4 SCC 196. ↩
AIR 2002 Raj 152. ↩
Giano v. Puran, AIR 2006 P&H 160. ↩
Kanishta Naithani, Concept and Kinds of Gift; Transfer of Property Act, 1882, LEGAL BITES, (Apr 07, 2020, 8:35 PM), https://www.legalbites.in/concept-and-kinds-of-gift/. ↩