A Gift is generally regarded as a transfer of ownership of a property where the sender willingly brings into effect such transfer without any compensation or consideration in monetary value. It may be in the form of moveable or immoveable property and the parties may be two living persons or the transfer may take place only after the death of the transferor. When the transfer takes place between two living people it is called inter vivos, and when it takes place after the death of the transferor it is known as testamentary. Testamentary transfers do not fall under the scope of Section 5 of the Transfer of Property Act, and thus, only inter vivos transfers are referred to as gifts under this Act.
If the essential elements of the gift are not implemented properly it may become revoked or void by law. There are many provisions pertaining to the gifts. All such provisions, for example, types of property which may be gifted, modes of making such gift, competent transferor, suspension and revocation of gift, etc. are discussed in this article.
What may be referred to as a gift
Section 122 of Transfer of Property Act defines a gift as the transfer of an existing moveable or immovable property. Such transfers must be made voluntarily and without consideration. The transferor is known as the donor and the transferee is called the donee. The gift must be accepted by the donee. This Section defines a gift as a gratuitous transfer of ownership in some property that is already existing. The definition includes the transfer of both immovable and moveable property.
Parties to a gift transfer
The donor must be a competent person, i.e., he must have the capacity as well as the right to make the gift. If the donor has the capacity to contract then he is deemed to have the capacity to make the gift. This implies that at the time of making a gift, the donor must be of the age of majority and must have a sound mind. Registered societies, firms, and institutions are referred to as juristic persons, and they are also competent to make gifts. Gift by a minor or insane person is void. Besides capacity, the donor must also have the right to make a gift. The right of the donor is determined by his ownership rights in the property at the time of the transfer because gift means the transfer of the ownership.
Donee does not need to be competent to contract. He may be any person in existence at the date of making the gift. A gift made to an insane person, or a minor, or even to a child existing in the mother’s womb is valid subject to its lawful acceptance by a competent person on his/her behalf. Juristic persons such as firms, institutions, or companies are deemed as competent donee and gift made to them is valid. However, the donee must be an ascertainable person. The gift made to the general public is void. If ascertainable, the donee may be two or more persons.
There are the following five essentials of a valid gift:
Transfer of ownership
Transfer without consideration
Voluntary transfer with free consent
Acceptance of the gift
Modes of making a gift
Section 123 of the Transfer of Property Act deals with the formalities necessary for the completion of a gift. The gift is enforceable by law only when these formalities are observed. This Section lays down two modes for effecting a gift depending upon the nature of the property. For the gift of immovable property, registration is necessary. In case the property is movable, it may be transferred by the delivery of possession. Mode of transfer of various types of properties are discussed below:
In the case of immovable property, registration of the transfer is necessary irrespective of the value of the property. Registration of a document including gift-deed implies that the transaction is in writing, signed by the executant (donor), attested by two competent persons and duly stamped before the registration formalities are officially completed. In the case of Gomtibai v. Mattulal, it was held by the Supreme Court that in the absence of written instrument executed by the donor, attestation by two witnesses, registration of the instrument and acceptance thereof by the donee, the gift of immovable property is incomplete. The doctrine of part performance is not applicable to gifts, therefore all the conditions must be complied with. A donee who takes possession of the land under unregistered gift-deed cannot defend his possession on being evicted. The following must be kept in mind regarding the requirement of registration, Registration of the gift of immovable property is must, however, the gift is not suspended till registration. A gift may be registered and made enforceable by law even after the death of the donor, provided that the essential elements of the gift are all present. In case the essential elements of a valid gift are not present, the registration shall not validate the gift.It has been observed by the courts that under the provisions of the Transfer of Property Act, Section 123, there is no requirement for delivery of possession in case of an immovable gift. The same has been held in the case of Renikuntla Rajamma v. K. Sarwanamma that the mere fact that the donor retained the right to use the property during her lifetime did not affect the transfer of ownership of the property from herself to the donee as the gift was registered and accepted by the donee.
In the case of movable properties, it may be completed by the delivery of possession. Registration in such cases is optional. The gift of a movable property effected by delivery of possession is valid, irrespective of the valuation of the property. The mode of delivering the property depends upon the nature of the property. The only things necessary are the transfer of the title and possession in favour of the donee. Anything which the parties agree to consider as delivery may be done to deliver the goods or which has the effect of putting the property in the possession of the transferee may be considered as a delivery.
Actionable claims are defined under Section 3 of the Transfer of Property Act. It may be unsecured money debts or right to claim movables not in possession of the claimant. Actionable claims are beneficial interests in movable. They are thus intangible movable properties. Transfer of actionable claims comes under the purview of Section 130 of the Act. Actionable claims may be transferred as gift by an instrument in writing signed by the transferor or his duly authorised agent. Registration and delivery of possession are not necessary.
To constitute a transfer as a gift it must follow the provisions of the Transfer of Property Act. This Act extensively defines the gift itself and the circumstances of the transfer of such a gift. The gift, being a transfer of the ownership rights, must be in possession and ownership of the transferee and must be existing at the time of making the transfer. The transferor must be competent to make such transfer but the transferee may be any person. In case the transferee is incompetent to contract, the acceptance of gift must be ratified by a competent person on his/her behalf. Gift of future property is void. Partial acceptance of prosperous gifts and rejection of onerous gifts is not valid either. The acceptance of a gift entails the acceptance of the benefits as well as the liabilities coupled with such a gift. A gift may be revoked only by a mutual agreement on a condition by the donor and the donee, or by rescinding the contract pertaining to such gift.