Gift: Concept and Kinds

INTRODUCTION 

In layman terms, gifts refers to a unilateral transfer of ownership, without any consideration. According to the Transfer of Property Act, 1882, ‘gift’ means the transfer of a thing, which can be movable or immovable in nature, to a person, without any consideration. In the transfer of gift, it is essential that the thing which is being transferred should be in existence at the time of making the gift and thus, a future property cannot be transferred or cannot be gifted.

Gifts should be made voluntarily. In such transfers, there are two parties to the transaction, one who transfers the property, known as a ‘donor’, and the one who accepts the property being gifted, known as ‘donee’.  A gift that is made voluntarily is known as a gratuitous transfer.

Section 122 of the Transfer of Property Act, 1882 defines gift and deals with the acceptance of the gift. As per the provision, acceptance of a gift is to be made in the lifetime of a donor and donee.  If the donee dies before accepting the gift, then it will not be considered as a gift, and the gift will be void. 

ESSENTIAL ELEMENTS OF GIFT

1. PARTIES TO THE GIFT: There are two parties for making a valid gift, i) who transfers his property as a gift, known as the donor, and the one who accepts the gift, known as donee.

• • Donor: Donor should be a competent person, i.e., he must have attained majority age and should be of sound mind. If a person is capable of doing a contract then he is also capable of making a gift. Juristic person means companies, registered societies are also capable of making a gift. If a gift is made by a minor or unsound person that gift will become void. The donor should have a right in the property which he is going to transfer. 

• • Donee: A donee is a person who accepts the gift from the donor, he need not be competent to contract. Donee may be any person in existence at the date of making a gift. A gift made to a minor or unsound person or even in favour of  a child in the mother’s womb is valid, it should be accepted by any competent person on his/her behalf. Donee too may be a juristic person meaning companies, registered societies.                     

2. TRANSFER OF OWNERSHIP: Gift entails a transfer of ownership. i.e. the donor transfers all his rights as well as liabilities to the donee on that property which he is going to transfer. If he kept any rights and liabilities related to that property while giving a gift, then it will not be considered as a gift.

3. EXISTING PROPERTY: Any movable or immovable property can be transferred by the donor subject to the condition that the property should be in existence while making a gift. Gift of future property will be void. Tangible and intangible property can also be transferred. For example, A transfers his house to B which he is going to purchase in the year 2021. Gift made by A is void because at present A himself doesn’t have the ownership of that house, this is future property.[1]

4. NO CONSIDERATION: If you transfer property to someone and get money in return for that, then it will become a sale of goods. A gift is always without any consideration. There should be no consideration for that. For example, a father gifted his land to his daughter and Rs. 40,000 was mentioned in the gift deed as the valuation of property which was necessary for stamp duty. This money was not for consideration and the court held that this transfer was not the sale, it was a gift made by father to his daughter.[2]

5. VOLUNTARILY: A gift should be made without any force or pressure. It should be made by the donor’s free consent. Gifts should be made voluntarily by the donor. Acceptance of gifts should also be made voluntarily without any force. For example, A by force gets transferred all B’s property, it will not be considered as a gift.

6. ACCEPTANCE OF GIFT: To constitute a valid gift, there should also be acceptance by the donee. Donee may refuse to accept the gift, it will depend on the donee whether he wants to accept the gift or not. If the property which the donor is going to give is beneficial for donee, then donee will accept the gift, if that property is a burden for him means if he would be burdened with many liabilities on that property, then he may refuse to accept the gift. Acceptance may either be expressed and implied. Implied acceptance would be considered when one took possession over the property, and then he impliedly accepted the gift.

MODES OF MAKING GIFT

For making gifts, certain formalities need to be complied with. There are two modes of making a gift: (i) By Registration, (ii) By delivery of Possession. [3]

• BY REGISTRATION: In case of immovable property, registration is mandatory, no matter what the value of the property. If a gift of a piece of land values less than 100 rupees, it must also be registered. 

• BY DELIVERY OF POSSESSION: In case of movable property, registration is optional and depends on the donor, whether he wants to register it or not. Value of property does not matter here. Making a gift of movable property can be by mere delivery of goods in the same way as goods sold. Registration is also not required for making a gift to an idol. Further, making a gift to an idol means making a gift to a religious trust. It can be made orally like the delivery of goods. Actionable Claim is an intangible movable property means an unsecured debt on the property. Section 130 of the Transfer of Property Act deals with the transfer of actionable claims according to which it may be transferred by a signed instrument. Registration is not mandatory for transfer of actionable claims.

KINDS OF GIFT

1. Onerous Gift: An onerous gift means a ‘Burden Gift’. In such a case, the property being gifted entails certain liabilities and the person who receives the gift is bound to fulfil all obligations on that property. If a single gift consists of both, benefits as well as onerous obligations. The donee is bound either to accept all of them or reject all of them. He cannot just accept the beneficial ones and reject others. The donee has to accept the full transaction. However, if the gift is made severally, then he/she can reject and accept according to their wish. If an onerous gift is made to a disqualified person, then he is bound by the acceptance only when he becomes competent.[4] 

Illustration: Mohan has shares in A’s company and also in B’s company, which is ‘a joint-stock company’. Mohan wishes to give both his companies’ shares to Sohan but B’s company’s shares entail more liabilities. So, Sohan refused to take this company’s shares. Now he can’t get shares in A’s company.

2. Void Gift: A gift that is expressly barred by the Transfer of Property Act is void, irrespective of whether it fulfils the essentials of a valid gift. A gift of future property, as per the Act, is void. When a property is gifted for the fulfillment of unlawful purpose, or if before accepting the gift, the donee dies, or if there is any condition imposed on the gift and that condition is unlawful and impossible to fulfil, the gift will be void.

SUSPENSION OR REVOCATION OF GIFT

The parties to a gift may agree on certain contingencies, in which event the gift may be revoked and suspended.[5]  There are two ways in which gift can be revoked: (i) revocation by mutual agreement, (ii) revocation by rescission as contracts

1. Revocation by Mutual Agreement:   Both the donor and donee should agree on a certain event(s) that if such event will happen, the gift will be revoked and this condition must be expressed in the gift deed. If this condition is not expressed by the donor on the time of transfer, then gift can’t be revoked.[6] If this condition is not mentioned in the gift deed, it will be considered merely a desire of the donor. Condition(s) for revocation of gift should be mutually agreed by both donor and donee.

PRIVATE DEFENCE- PROTECTION AGAINST BODY OR PROPERTY

Illustration- Donor gifted land to the donee and in the agreement stated that on this land college should be built and it should be built within 6 months, and if it is not done in 6 months, then this gift will be revoked. On this condition, both donor and donee agreed. If a building is built in 6 months, then the donor has no right on that land, and if it is not built then it belongs to the donor. Donee failed to build a college within 6 months and then the donor moved to court. The SC held that it is clear that this gift is made on the condition and can be revoked.[7]

2.  Revocation by Rescission as in case of Contracts: It means if the consent of the donor is not free and is obtained through coercion, undue influence, fraudulently or by misrepresentation, then the gifts can be revoked by him anytime but if he didn’t exercise his right of revocation, the gifts is valid. There is also a limitation period in which a donor can exercise his right of revocation i.e., 3 years, and this time is started when the donor gets to know this.

GIFT MADE TO MORE THAN ONE PERSON

A property can be gifted to several persons by a donor. If a gift is made to more than one person means a gift is made to more than one person.[8] For example, A makes a gift to B, C, and D. D did not accept the gift then the whole transfer became void.

UNIVERSAL DONEE

A person will become a universal donee only when the donor gives him all his properties. The donee has to fulfil all the obligations of the donor. If the donor doesn’t gifts all his properties and kept some part with himself, then the donee is not a universal donee, and he is not bound to fulfil his obligation.[9]

EXCEPTIONS

These provisions of the gifts is not applicable in Mohammedan Law which is differently governed by Muslim Law. These are not applicable to movable and immovable properties for Muslims. But for making a gifts in Muslim law, the only donor is required to be Muslim, the religion of donee does not matter.[10] 

CONCLUSION

For making the gifts, the donor and donee should fulfil the provisions of the Transfer of Property Act, 1882, as stated under Sections 122 to 129. Competency of parties, unconditional transfer, and the existence of property to be gifted are essential for the valid gifst. The donatio mortis causa and Hiba are not included within the ambit of the Act. 

 

References

[1] The Transfer of Property Act, 1882 (Act 4 of 1882), s.124.

[2] Chaudhary Ramesar v. Prabhawati Phool Chand, AIR 2012 AII 173.

[3] The Transfer of Property Act, 1882 (Act 4 of 1882), s.123.

[4] The transfer of property act, 1882 (Act 4 of 1882), s. 127.

[5] The transfer of property act, 1882 (Act 4 of 1882), s.126.

[6] Mool Raj v. Jamma Devi, AIR 1995 HP 117.

[7] Thakur Raghunathjee Maharaj v. Ramesh Chandra, AIR 2001 SC 2340.

[8] The Transfer of Property Act, 1882 (Act 4 of 1882), s.125.

[9] The Transfer of Property Act, 1882 (Act 4 of 1882), s.128.

[10] The Transfer of Property Act, 1882 (Act 4 of 1882), s.129.

 

BY- Nidhi Garg | Geeta Institute of Law, Delhi NCR