Concept of gift under transfer of property Act, 1882 by Diksha Dubey @ Lexcliq

Introduction

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.

What may be referred to as a gift?

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

Donor 

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

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.

Essential Elements of Gift:

  1. Parties to the gift – There must be two parties i.e. the donor and the donee. The transferor is called the donor and he must be a competent person (competency as defined in Indian Contract act 1872). The transferee is called the donee and he need not be competent to contract.
    A gift made to a minor or an insane person or even if it is made to an unborn person is valid and can be accepted by their guardian.
  2. Transfer of ownership: When a property is transferred through gift, the right created in favor of donee is an absolute right i.e. ownership of property is transferred.
  3. Subject matter: The subject matter of gift can be moveable or immovable property, but it should be in existence and the donor should have vested right in that property and not contingent.
  4. Without consideration: A gift must be gratuitous i.e. without consideration. It must be a pecuniary consideration.
  5. Voluntarily: It must be made with donor’s free will and free consent without any force, coercion, undue influence. If it is not done voluntarily then the gift is void. Voluntarily done also means that donor had full knowledge about the transaction and its nature.
  6. Acceptance of gift: A gift must be accepted by the donee. Acceptance made can be expressed or implied but it must be accepted before the death of the donee and before the revocation by the donor.

Section 126: Revocation of gift

A revocation means annulment of a promise or decree. The revocation of a gift is always done before its acceptance. It can also be a condition by a donor that on the happening of some event and fulfillment of some condition, the gift will be suspended or revoked.

It can be done by two methods:

  1. Revocation by mutual agreements: when both the parties i.e. donor and donee agree that the gift will be suspended or revoked on happening of some event, provided that, that particular event is not dependent upon the will of the donor.
    The condition for revocation is condition subsequent and it must be valid and enforceable. Any such condition which is not valid, the gift cannot be revoked.
  2. Revocation by the recession of contract: gift deed is always preceded by an express or implied contract. As per the Indian contract act, all the essentials of a valid contract should be fulfilled. If any essential is not fulfilled, it can be revoked.
    For example, if a gift is made out of coercion, that means the donor’s consent was not there and therefore it can be revoked.

Conclusion

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.

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