Revocation and Suspension of Gift

WHAT IS A GIFT..?

The gift is dealt with under Section 122 of the Transfer of Property Act. It defines a gift as “…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.
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.”
Therefore, in the process of a gift, an existing property is transferred in favor of another person unilaterally without any consideration. Furthermore, as evident from the wording of the legislation, the Section is applicable to only inter vivos gift i.e. a gift between living persons. It doesn’t deal with inheritance or gifts mortis causa.

Following are the essentials of a valid gift:

  1. There must be a transfer of certain existing movable or immovable property. There cannot be a gift of future property.
  2. The subject matter of the gift may be corporeal or incorporeal. An actionable claim can be validly gifted.
  3. The gift should be made voluntarily and without consideration. In the case of Kartari v. Kewal Krishan, it was held by the court that a gift deed executed by an old widow, under undue influence and fraud is void.
  4. The Donor is the person who makes the gift. He should be a person who is competent to contract. Thus a minor cannot make a gift of his properties.
  5. The Donee is the person who makes the gift. A gift must be accepted by the donee or by someone on his behalf. The Donee must be an ascertainable person. 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.
  6. The acceptance by the donee may be expressed or implied.

Suspension Or Revocation Of Gift:-

Section 126 of the Transfer of Property Act, 1882 deals with when a gift may be suspended or revoked. According to it, the Donor and Donee may agree that on the happening of any the 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A gift may also be revoked in any of the cases in which if it were a contract it might be rescinded. Such 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 gift is the transfer of ownership without consideration. Like other transfers, gifts too can be made subject to certain conditions. A Donor may make a gift subject to the condition of it being suspended or revoked.
But, such gifts would then be governed by those provisions of this Act that regulate conditional transfers. Accordingly, if a gift is made subject to the condition of it being revoked in the future the condition must be valid and enforceable under those provisions. Section 126 lays down two modes of revocation of gift:

  1. Revocation by mutual agreement of donor and donee.
  2. Revocation by rescission as in the case of contracts.
  • Revocation by agreement

An agreement is when two parties agree to do a thing or an act based on similar interests. Similarly, a gift can be revoked or suspended if both the parties (the Donor & the Donee) agree to the same on the happening of a particular circumstance and under no other. This section though acquires the exception, is also explanatory of the fact that the said exception is only valid in cases, where the Donor and Donee have agreed to the particular circumstance prior to the gift being made and not anytime after that. A gift which is complete at the time, it is offered cannot be altered by a condition subsequently added.

In the case of Mool Raj v. Jamma Devi, 1995, a gift of certain properties was executed in lieu of the past and future services to be rendered by the donee to the donor. The failure of Donee to render services or to maintain the Donor in the future was not expressly laid down as a condition for the revocation of the gift deed.
The Himachal Pradesh High Court held that since this condition was not expressly laid down in the deed it was an unconditional gift and it cannot be revoked by the Donor upon a failure that has not been specified in the deed.
In Thakur Raghunathjee Maharaj v. Ramesh Chandra, 2001, the Supreme Court held that even if a condition is not expressly laid down in the gift deed itself but is specified under a mutual agreement separately and it forms a part of the transaction of gift then the condition would be valid and enforceable and upon the failure of fulfillment of such condition the gift can be revoked.

A gift at the will of the Donor is not a gift. It is necessary that the stipulation for revocation and the gift both are made at the same time but it is not necessary that the stipulation of revocation is laid down in the deed of the gift itself. There can be two separate documents but they must form part of the same transaction, thus the stipulation must be linked to the same gift which is to be revoked.

  • Revocation on the Grounds of Undue Influence, Fraud, etc.

A gift is a transfer of property without consideration and is made voluntarily. If the gift is not made voluntarily and the consent of the Donor is obtained by force or undue influence, then such a gift must be revoked. If the preceding contract of the gift is itself rescinded or revoked then the transfer of gift becomes voidable at the option of the Donor. This section deals with revocation which means rescission or repudiation of a gift, it does not deal with cases where the gift is void.
If the Donor’s consent is obtained by coercion, undue influence, fraud, or misrepresentation the Donor has the option to revoke the gift. If he chooses not to exercise this option the gift will not be revoked.
A gift can only be revoked by the Donor on the above-mentioned grounds and not by any other person on his behalf. However, the legal heirs of the donor may bring a civil suit for the revocation of gifts on any of these grounds after the death of the Donor.
The period of limitation for the revocation of a gift on the above-mentioned grounds is three years from the date on which such facts came to the knowledge of the Donor, as per the provisions of the Indian limitation act 1963.

In the case of Ashokan v. Lakshmikuty, 2007, a father executed a gift deed in favor of his son out of natural love and affection and to provide him security in life. There was no evidence of coercion or undue influence. The Donee lived out of India for a long period of time. During that time the gift deed was with the Donor and he kept paying the taxes on the property. No mutation took place for that period on the revenue records. The Apex court held that these circumstances were not sufficient to show that the execution of the gift deed was vitiated by undue influence. The deed could not be rescinded on the ground that the donee failed to fulfill the condition of financing the marriage of the Donee’s sister. The subsequent conduct of the donee cannot be a ground for the revocation of a valid gift.

Reference

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