GIFT NOTES
DEFINITION (SECTION 112)
“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.
DONOR AND DONEE
Patel Prabhudas Hergovandas v. Heirs of P.B. Kachrabhai, AIR 2007 Guj 148- The parties
to the gift are, the donor, who makes the gift and the donee who or on whose behalf the gift is
accepted. The donor must be a person who is competent to contract and authorised to transfer the
property. Where the gift is by several donors and one of them, although was a minor but, had
represented him to be 22 years old, the gift would be valid unless it is proved that his admission
with respect to his majority was under duress, coercion or undue influence. A person who is not
competent to contract cannot gift his property. A guardian of the property of a minor cannot
make a transfer of the property without the permission of the court and if he exceeds his powers
and executes a gift, the same would-be void. The donor must be either the owner of the property
or should possess an express authorisation from the owner to execute a gift, otherwise it would
be invalid.
SUBJECT MATTER OF GIFT
Munnilal Mahto v. Chandreshwar Mahto, AIR 2007 Pat 66- Gift must be made of existing
movable or immovable property capable of being transferred. Future property cannot be
transferred. The share obtained after partition of the joint family property can be gifted, but not
where the coparceners are joint, as in that case their interests would be fluctuating. Even a gift of
property that is obtained after a preliminary decree of partition is passed by the court is valid.
GIFT MUST BE MADE WITH FREE AND VOLUNTARY CONSENT
Subhas Chandra v. Ganga Prosad, AIR 1967 SC 878- The offer to make the gift must be
voluntary. A gift therefore should be executed with the free consent of the donor. This consent
should be untainted by force, fraud or undue influence. Mere relationship between the donor and
donee is not a conclusive fact of the exercise of undue influence and it must be proved that the
transaction is unconscionable. For proving that the deed was exercised with free and voluntary
consent of the donor, it must be proved that the physical act of signing the deed coincided with
the animus, or the mental act, i.e., an intention to execute the gift. If both the elements are
present the gift would be executed with free and voluntary consent, and would be valid. A bare
allegation of the gift being concocted or the non-appearance of witnesses would not indicate
non-execution of the gift, more so when the executant admits its execution.
ACCEPTANCE OF THE GIFT
Habbib Ullah Bhat v. Jana, AIR 2003 J&K 32- The gift must be accepted by the donee
himself. Acceptance can be validly given by a minor donee himself or by his mother or guardian
or by an agent in case of a deity. If the guardian gives the acceptance on behalf of the minor, the
minor on attaining majority can either accept it or reject it. Acceptance must be made during the
life time of the donor and while he is capable of giving. According to s. 122, if the donee dies
before acceptance, the gift is void. A. Sreenivasa Pai v. Saraswathi Ammal, AIR 1985 SC
1359- If the gift is to the donee, and this gift was preceded by a limited estate holder, the death of
the donee after the acceptance and before the death of the limited owner will not affect the rights
which are already vested in the beneficiary.
R. Kumarasamy Kounder v. V. Ezhumalai Kounder, (1996) 2 CTC 150- Law does not
specify any specific mode of acceptance. However, it should be clear and not ambiguous. Unless
there is acceptance there is no gift. Very slight evidence is required to prove acceptance, which
would be presumed if there is no dissent. Acceptance need not be express and may be inferred or
proved by oral evidence. The mere fact that the donee stood by the side of the donor at the time
of the registration of the gift would not by itself establish acceptance on his part.
J. Kuppuswami Mudali v. Mahalingam, (1977) 1 CTC 256- Once the gift is accepted and
acted upon it is valid and complete and cannot be cancelled. However, where the validity of the
gift itself is challenged on the ground that it was not accepted, the acceptance must be proved.
TRANSFER
Deo Saran v. Deoki Bharthi, AIR 1924 Pat 657- Gift is a transfer of property and involves a
complete divesting of the ownership in the property by the donor. The terminology used does not
matter and a transfer is gift even if styled as a release when made without consideration in a
person having no right, title or interest in the subject matter.
WITHOUT CONSIDERATION
Pawan Kumar v. Tilak Raj, AIR 2011 (NOC) 98 (HP)- The word ‘consideration’ refers to
monetary consideration. If the consideration is a nominal amount of money, or the property is
grossly undervalued, yet the transfer would not be a gift but a sale. In fact, the passing of money
as a consideration, howsoever small it may be, would destroy the nature of the transfer as of gift.
Gifts in lieu of expectation of spiritual and moral benefit or a promise to look after the donor in
her old age or throughout life are transactions without any consideration. A transfer executed for
consideration of a donee undertaking the liability of the donor is not gratuitous, and is not a gift.
MODE OF TRANSFER
Immovable Property
Commr of Income Tax, Jaipur v. Hirehmal Nawalakha, AIR 2001 SC 3648- Where
immovable property is gifted, the transfer must be affected by a registered instrument signed by
or on behalf of the donor, and attested by at least two witnesses. A gift of immovable property is
invalid without a registered instrument even if the intended donee is put in possession. An oral
gift is void in law, unless there is a specific statutory provision dispensing with the formalities
for gifts as laid down in the Act.
Kunji Kuttiamma v. Kunji Kuttiamma, (2001) 1 Ker LT 797- A release deed which
unambiguously transfers the right, title and interest of the executant, and is attested by two
witnesses, would operate as a gift. But where the gift appears to be unconscionable and is
attested by only one attesting witness, it is not a valid gift.
Movable Property
Rameshwar Narain Singh v. Biknath Koeri, AIR 1923 Pat 165- For the purpose of making a
gift of movable property, the transfer may be affected either by a registered instrument signed by
the transferor or by delivery of the subject matter of the gift. Such delivery may be made in the
same way as sold goods may be delivered. Till handing over of goods takes place, the gift is
incomplete. A fixed deposit of money by a person in a bank repayable to himself or his wife or
survivor, or payable to ‘either or survivor’ is not a gift.
Chanan Singh v. Pritam Kaur, AIR 1984 P&H 153- Even with respect to movable properties a
gift cannot be made by a mere verbal declaration and in order that a gift of movable property is
valid and complete, the donor should do all that he can to put the subject-matter of the gift within
the power of the donee to obtain possession. For example, for the gift of the share-certificates,
the donor makes them out in the name of the donee, gets it registered as well as delivers its
possession and nothing is left to be done so far as the vesting of rights in the donee is concerned
the gift is complete.
CONDITIONAL GIFTS
A gift is primarily a contract and if both the parties agree that the gift would be revoked on the
happening of an event the happening of which does not depend purely on the wishes of the
donor, if that event happens, the gift will be revoked. This event may be certain or uncertain. It
may happen or may not happen. However, if the revocation of the gift is purely on the wishes of
the donor, then the gift is void. Illustration- The donor and the donee agree, that if B’s son dies
during the lifetime of the donor, the gift would be revoked. The gift would also be revoked if the
son dies during the lifetime of the donor, as the death of a person is not dependent purely on the
wishes of the donor. However, if the condition is that after six months from the date of the
execution of the gift, the donor if he so wants may revoke it, this condition is void, as here the
revocation is depended purely on the wishes of the donor.
The gifts can therefore validly be revoked, in two situations:
● 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;
● The gift can be revoked, in case, if it was a contract, it could have been rescinded.
Condition Precedent and Condition Subsequent (Somashekarrao v. [Link], AIR 1944
Nag 185)- A gift may be subject to a condition precedent or a condition subsequent if the
condition precedent is impossible or illegal, or immoral, the gift fails. A gift may be subject to a
condition subsequent and the gift fails and property reverts back to the donor if the condition is
not fulfilled.
Happening of an Event
Thakur Raghunath Ji Maharaj v. Ramesh Chandra, AIR 2001 SC 2340- Where an
unconditional gift deed and an agreement between the donor and the donee were executed on the
same day, the conditions prescribed in the agreement would attach to the deed as gift deed and
the agreement would form part of one transaction. Thus, where via a gift deed the land was
gifted unconditionally to the donee, however, by another agreement executed on the same day it
was stipulated that the donee was to construct a college building on the land within a time of six
months failing which the donor would have a right to take back the possession, it is a conditional
gift.
Illustrations:
Following are illustrations of gifts with a condition subsequent and are revocable if the condition
happens:
● A condition of residence in a gift of a house failing which the gift will be forfeited;
● A condition in a gift by a man sentenced to life imprisonment that should he come back the
gifted land will come back to him;
● A gift to a Hindu widow on the condition that gift will revert back to the donor if she
remarries;
● A gift to a daughter with a condition that only her issue will enjoy it.
ONEROUS GIFT
Where a gift is in the form of a single transfer to the same person of several things of which one
is, and the others are not burdened by an obligation, the donee can take nothing by the gift unless
he accepts it fully.
Where a gift is in the form of two or more separate and independent transfers to the same person
of several things, the donee is at liberty to accept one of them and refuse the others, although the
former may be beneficial and the latter onerous.
Onerous gift to disqualified person- A donee not competent to contract and accepting property
burdened by any obligation is not bound by his acceptance. But if, after becoming competent to
contract and being aware of the obligation, he retains the property given, he becomes so bound.
A gift with a burden is an onerous gift. This section incorporates a rule that if by a single
instrument the donor confers in favour of the donee a benefit and a burden, the donee has to
either accept the gift in totality or reject it in its entirety. He cannot accept only the benefit and
reject the burden. This principle is based on a maxim, qui sentit commodum sentire debetet onus.
It means that the one who receives an advantage must bear the burden as well. The
distinguishing feature between the first and the second paragraph is that gift by a single transfer
is to be accepted or rejected by the donee in its entirety, but if several properties are gifted to a
donee through separate transfers, then, he is at liberty to pick and choose the ones he wants and
validly reject the one he does not want. Fazulbhay v. Credit Bank of India, (1915) ILR 39
Bom 331- Where the donee is a minor, he can express his option soon after attaining majority or
else he would lose the option. When a minor has been made a shareholder in a joint stock
company, he cannot repudiate his holding in the company if he has drawn dividends after
attaining majority.
UNIVERSAL DONEE
Universal donee is a person who gets the complete property of another under a gift deed. If any
portion of the donor’s property, whether movable or immovable, is excluded from the gift, the
donee is not a universal donee. This section enacts a principle, that if a person who has to pay
debts, gives his total property to another under a gift deed, this donee becomes personally liable
to pay the debts of the donor. This liability can extend only to the extent of the property that he
receives under the gift but cannot exceed it. Shyam Behari Mal v. Maha Prasad, AIR 1930 All
180- If the total property is not gifted and the donor retains a part, the creditor is not entitled to
the benefit of this rule. Illustration- A owes B a debt of Rs. 20 lakhs. A has property worth Rs.
40 lakhs. He executes a gift of this property and all his assets in favour of C and does not retain
anything of value with him. C would be termed as a universal donee. It is his liability to pay the
debt of Rs. 20 lakhs to B, failing which B can rightfully proceed against C for this claim. In the
same illustration, suppose the value of the property that C receives under the gift is Rs. 15 lakhs.
In this case C’s liability would be only to the extent of Rs. 15 lakh and not more.
Dayanandan v. Veenugopal, AIR 1964 Mad 78- The rule fastens a personal liability upon the
universal donees for all the debts due by the donor at the time of the gift. The liability of the
universal donee to pay the decree debts of the donor arises not by reason of the donee accepting
the gift and of being the legal representative of the deceased but also by the very terms under
which he becomes a universal donee. Where the entire properties were settled in favour of A
with no one else empowered to use them, A alone, as the universal donee is liable to discharge
the burden as well as liabilities to the extent comprised in the gift deed.