GIFT

Ss. 122 – 126

Semester B, 2015
Gift

Gratuitous transfers – out of natural love and affection

Voluntary without consideration
Through a Gift Deed

S. 17 (a) Registration Act - A deed which is intended to gift an immovable property requires compulsorily
registration. The same will be required to be registered with the sub-registrar.
Stamp Duty can vary from 1-8% for Gift Deed of an Immovable property, depending on the state in which the transfer
takes place. If you are gifting property to a non-relative, the stamp duty would be higher at 5-11%.
If gifts are made to certain relatives, no stamp duty has to be paid – exemptions – eg. Spouse or in case of HUF – any
member of that family
Eg. Bombay Stamp Act, 1958, article 34 of schedule 1 of the Act states that gifting a share in the flat to a family
member, stamp duty would be 2% of the market value of the property
Karnataka Stamp Act, section 28 of the Act - Gift-instrument - (a) Where the donee is not a family member of the
donor - for a market value equal to the market value of the property which is the subject matter of gift:
2[(b) Where the donee is a member of the family of the donor Rs. 1000/- Explanation: Family in relation to the donor
means husband, wife, son, daughter, daughter-in-law and grand children

Only an owner of the property can execute a gift deed

S. 122

S. 122. "Gift" defined

"Gift" is 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.
Acceptance when to be made - 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.

- If money involved it becomes sale or if something is given in return for receiving the property – exchange
- gift is – given by one person (donor) to another (donee) without any money or anything in return – by sheer
will of the donor (without undue influence, fraud, coercion)
- Essentials – existing movable and immovable – cannot be of future property – principle of S. 5
- donor has to be competent to contract – a minor cannot be a donor but can be a donee - anyone can be a donee as
long as the person can be determined/found out – gift cannot be made to public
- gift can be absolute or limited – absolutely transferred or create a life-interest i.e. you can enjoy the
property exclusively for yourself and after your death it shall revert to my heirs – but complete ownership passes
- could be termed as release deed – document to be looked at
- the donor is not to simply execute the gift deed but also possess the intention to gift
S. 122

- voluntary – free consent i.e. the deed was executed with the intention to transfer the property
Undue influence – using your position, exercising power or authority over the other – whether there is such relation
b/w the parties and is it mere influence or undue influence – burden of proof is on the donee to show he did not
exercise undue influence – undue influence make the gift deed ‘Voidable’
Fraud – deceive – lie about facts – this is void – invalid
- no money involved
- Father gifts his son a Ferrari for the services he rendered in his business – if the services are the
consideration then it is not a valid gift vs. son looked after the father in his old age and out of affection he gifted a
Ferrari to his son. What is the difference?
- the difference is that – in the first scenario the father (donor) was expecting something to be done
for him making it a sale and the second is a gift, provided the son accepted it during the lifetime of the
father
- bequeaths after the lifetime are governed by Wills
Acceptance is a must – can be gathered from the facts and circumstances – can be implied acceptance such as the
donee begins to collect rents from the property after the gift or a change of name in the register of Registrar or the gift
deed is physically delivered to the donee as long as done during the lifetime of the donor
- once a valid gift is made – accepted – no cancellation – unless it is a conditional gift
- on acceptance, the donee acquires absolute rights in the property depending on the rights created i.e. life
interest
S. 123 & 124

S. 123 - Transfer how effected

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.
For the purpose of making a gift of movable property, 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.

- oral gift of immovable property is void – registration does not make an invalid transfer, valid
- for execution and attestation the same rules of S. 3 will apply
- just because a GD is registered does not mean it is valid if it was not made voluntarily i.e. elements of fraud
or coercion were present
- movables – either registration or by delivery – handing over of goods – irrevocable after this

S. 124 - Gift of existing and future property

A gift comprising both existing and future property is void as to the latter.
- valid to the extent of existing property
Radhika gifts her brother, a house in Delhi and a flat in Gurgaon which will be built in 6 years. If she gets the GD
registered – it will be only valid for the house in Delhi and she will have to execute another one after 6 years.
S. 125 & 126

S. 125 - Gift to several of whom one does not accept

A gift of a thing to two or more donees, of whom one does not accept it, is void as to the interest which he would have taken
had he accepted.
- Acceptance is the essence
- if Divesh, owner of a bungalow which comprises of 4 floors, gifts a floor each to his sister, wife and daughter by
the same GD. The sister refuses to accept the gift. The GD is valid with respect to his wife and daughter and void with
respect to his sister.

S. 126 - When gift may be suspended or revoked

The donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor
a gift shall be suspended or revoked; but 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.
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.
Save as aforesaid, a gift cannot be revoked.
Nothing contained in this section shall be deemed to affect the rights of transferees for consideration without notice.

(a) Anuj gifts a house to Bina, keeping to himself, with Bina's assent, the right to cancel the GD and take back the house if Bina
dies before Anuj. Bina dies during Anuj's lifetime. Anuj may take back the house.
(b) Anuj gifts a farm to Bina, reserving to himself, with Bina's assent, the right to take 50% of the farm back when he (Anuj)
marries. This is a void gift. Marriage is purely the will of the Donor.
S. 126

Applying the same principle as (b) The gift holds goods as to 50% of the farm but is void as to the other 50% which continues to belong to
Anuj.
(c) Anuj gives a lakh of rupees to Bina, reserving to himself, with Bina's assent, the right to take back at pleasure Rs. 10,000 out of the
lakh. The gift holds good as to Rs. 90,000/-, but is vvoid as to Rs. 10,000/- which continue to belong to Anuj.
Condition for revocation has to be an event which is not under the control of the donor
- may, may not happen – certain – uncertain
- A condition such as – I will revoke it whenever I wish – invalid
A gift may also be revoked in any of the cases in which, if it were a contract, it might be rescinded – CONDITIONAL GIFTS –
where a condition had to be fulfilled and it has not been- the gift in invalid – since gift is a contract between the two parties
Conditions such as – house gifted to you cannot be transferred in favor of your adopted son. It shall be transferred only to your biological
son – if the house is transferred to the adopted son – it can be revoked
The farmhouse is gifted to you with the condition that it should not be leased – revoked if it is leased
- Difference between Para 1 & 2 of S. 126?
- Para 1 deals rescission as per Donor’s will, whereas, Para 2 deals with rescission if the conditions are not satisfied by the donee
Conditional gift v. absolute gift – conditions cannot be immoral or illegal – S. 10 (cannot restraint the right to alienate
absolutely) + S. 11 - gift is valid condition becomes void
GD should contain the clause - Condition has to be made at the time of making the gift – he cannot later add conditions
Subhas Chandra v Ganga Prasad, AIR 1967 SC 878

Facts;
The plaintiff's father, Prasanna Kumar, who died in 1948 at the age of 90 years, owned certain lands with high value.
Prasanna had two sons, Ganga Prosad, the plaintiff, and Balaram, the second defendant and Balaram’s son
(Prasanna’s grandson), Subhas Chandra, first defendant. Balaram always lived with his father and looked after
Prasanna’s properties. The father executed a will in favor of Subhas, the grandson. The plaintiff contested the deed as
fraudulent, collusive and invalid and asked for cancellation of the document.
High Court stated that on the basis that in the circumstances of the case and in view of the relationship of the parties
the trial court should have presumed that the donee had influence over the donor and should have asked for proof
from the respondents that the gift was the spontaneous act of the donor exercising an independent will and which
would justify the court in holding that the gift was the result of a free exercise of the donor's will. HC further
presumed that with age of the donor his intelligence or understanding must have deteriorated with advancing years
and consequently it was for the court to presume that he was under the influence of his younger son at the date of
the gift.
The suit was filed in 1952, more than eight years after the date of the transaction and more than four years after the
death of Prasanna. There is a considerable body of evidence that in between 1944 and 1948 a number of settlements
had been effected by Balaram acting as the natural guardian of Subhas Chandra and in all of them the terms had
been recited and in each case Prasanna had signed as an attesting witness. These settlements were made jointly with
the other co-sharers of Prasanna. In 1947 the Municipal Commissioners of Bankura filed a suit against Prasanna for
recovery of arrears of taxes. Prasanna filed his written statement in that suit stating that he had no interest in the
property. After Prasanna's death the Municipal Commissioners did not serve the plaintiff with a writ of summons in
the suit but obtained a decree only against Balaram ex parte. It is the case of the plaintiff that Balaram exercised
undue influence on his father, as Plaintiff was unaware of this transaction.
Issue; Would this amount to undue influence on Prasanna?
Subhas Chandra v Ganga Prasad, AIR 1967 SC 878

Held;
Under s. 16(1) of the Indian Contract Act, a contract is said to be induced by undue influence where the relations subsisting
between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain
an unfair advantage over the other. This shows that the court trying a case of undue influence must consider two things to start
with, namely, (1) are the relations between the donor and the donee such that the donee is in a position to dominate the will of the
donor and (2) has the donee used that position to obtain an unfair advantage over the donor ? Sub-section (2) of the section is
illustrative as to when a person is to considered to be in a position to dominate the will of another. These are inter alia (a) where
the donee holds a real or apparent authority over the donor or where he stands in a fiduciary relation to the donor or (b) where he
makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental
or bodily distress. Sub-section (3) of the section throws the burden of proving that a contract was not induced by undue influence
on the person benefiting by it when two factors are found against him, namely that he is in a position to dominate the will of
another and the transaction appears on the face of it or on the evidence adduced to be unconscionable.
The three stages for consideration of a case of undue influence were expounded in the case of Ragunath Prasad v. Sarju Prasad in
the following words :-
"In the first place the relations between the parties to each other must be such that one is in a position to dominate the will of the
other. Once that position is substantiated the second stage has been reached - namely, the issue whether the contract has been
induced by undue influence. Upon the determination of this issue a third point emerges, which is that of the onus probandi. If the
transaction appears to be unconscionable, then the burden of proving that the contract was not induced by undue influence is to lie
upon the person who was in a position to dominate the will of the other. Error is almost sure to arise if the order of these
propositions be changed. The unconscionableness of the bargain is not the first thing to be considered. The first thing to be
considered is the relations of these parties. Were they such as to put one in a position to dominate the will of the other ?”
It must also be noted that merely because the parties were nearly related to each other no presumption of undue influence can
arise. As was pointed out in Poosathurai v. Kappanna Chettiar and others; 
Subhas Chandra v Ganga Prasad, AIR 1967 SC 878

"It is a mistake (of which there are a good many traces in these proceedings) to treat undue influence as having been established by
a proof of the relations of the parties having been such that the one naturally relied upon the other for advice, and the other was in
a position to dominate the will of the first in giving it. Up to that point "influence" alone has been made out. Such influence may be
used wisely, judiciously and helpfully. But whether by the law of India or the law of England, more than mere influence must be
proved so as to render influence, in the language of the law, "undue".
According to Halsbury's Laws of England, Third Edition, Vol. 17 p. 673, Art. 1298, "where there is no relationship shown to exist
from which undue influence is presumed, that influence must be proved". Article 1299, P. 674 of the same volume shows that
"there is no presumption of imposition or fraud merely because a donor is old or of weak character". The learned author notes at p.
679 that "there is no presumption of undue influence in the case of a gift to a son, grandson, or son-in-law, although made during
the donor's illness and a few days before his death". Generally speaking the relation of solicitor and client, trustee and trust,
spiritual adviser and devotee, medical attendant and patient, parent and child are those in which such a presumption arises.
Section 16(2) of the Contract Act shows that such a situation can arise wherever the donee stands in a fiduciary relationship to the
donor or holds a real or apparent authority over him.
Several witnesses were examined to prove that Prasanna was a person of unsound mind at the time when he executed the deed of
gift. The plaintiff's only statement in examination in chief was that his father was not of sound mind for 10 or 12 years from before
his death. Is it to be believed that he did not know about the deed until four years after the death of his father? This statement of
his can hardly be true because the deed does not stand by itself, but was given effect to in several deeds of settlement which came
out in evidence at the trial.
Subhas Chandra v Ganga Prasad, AIR 1967 SC 878

A case very similar to the instant one - Ismail Mussaiee Mookerdum v. Hafiz Boo 33 I.A. 88. There one Khaja Boo, a Mahomedan
woman, who died at the age of 90 years entered into the impugned transactions when she was nearly 80. At that time she had an
only son, the plaintiff in the suit, and the defendant respondent, her daughter. It came out in evidence that she was on terms of
bitter hostility with her son and much litigation had taken place between them. The daughter was a married woman whose
husband resided in Rangoon, but she herself was living with her mother at Rander. The result of the impugned transactions was
that the daughter Hafiz Boo became possessed of nearly the whole of her mother's Rangoon properties or their proceeds. The son
alleged in the paint that at the time of the occurrence the mother was suffering from dementia and was not in a fit state of mind to
execute contracts or to manage her affairs and was until July 1888 (she having died in the year 1900) residing with the daughter
and was completely under her domination and control. Before the learned Trial Judge a large mass of evidence was given directed
to the question of Khaja Boo's mental capacity in 1889. The learned Judge found that the plaintiff had failed to show that his
mother was of unsound mind in 1889. The Court of Appeal came to the same conclusion.  
"The mere relation of daughter to mother, of course, in itself suggests nothing in the way of special influence or control. The
evidence seems to their Lordships quite insufficient to establish any general case of domination on the part of the daughter, and
subjection of the mother, such as to lead to a presumption against any transaction between the two. With regard to the actual
transactions in question, there is no evidence whatever of undue influence brought to bear upon them.“
The same remarks may justly be made of the pleading and the evidence adduced in this case. There was practically no evidence
about the domination of Balaram over Prasanna at the time of the execution of the deed of gift or even thereafter. Prasanna,
according to the evidence, seems to have been a person who was taking an active interest in the management of the property even
shortly before his death. The plaintiff had no son. For a good many years before 1944 he had been making a living elsewhere.
According to his own admission in cross-examination, he owned a jungle in his own right (the area being given by the defendant
as 80 bighas) and was therefore possessed of separate property in which his brother or nephew had no interest. There were other
joint properties in the village of Parbatipur which were not the subject-matter of the deed of gift. The circumstance that a grand-
father made a gift of a portion of his properties to his only grandson a few years before his death is not on the face of it an
unconscionable transaction. Moreover, we cannot lose sight of the fact that if Balaram was exercising undue influence over his
father he did not go to the length of having the deed of gift in his own name.