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Essentials of a Valid Gift in Transfer of Property Act


Essentials of a Valid Gift in Property law
Essentials of a Valid Gift in Property law

Content:-



The definition of "Gift" as per Section 122 entails the following elements:


(i) It involves the transfer of certain existing movable or immovable property;


(ii) The transfer is made voluntarily and without any consideration;


(iii) The transfer is from one person, termed the donor, to another person, known as the donee;


(iv) The gift must be accepted by or on behalf of the donee;


(v) The acceptance must occur during the lifetime of the donor and while the donor is still capable of giving;


(vi) If the donee passes away before acceptance, the gift becomes void.


A gift is essentially a transfer without any consideration. It involves the transfer of an existing property to another person without any exchange. Such a transfer can occur between living individuals or can be executed after the death of the transferor, which is termed a testamentary gift.


While an inter vivos gift, made between living persons, falls within the ambit of Section 5 of the Transfer of Property Act, a testamentary gift is a transfer by operation of law and is not governed by the Transfer of Property Act.


Moreover, a gift made in anticipation of death, known as a gift mortis causa, also lies outside the scope of the Transfer of Property Act.


Essential Elements for a Valid Gift

The essential elements of a valid gift are:


(1) there must be a transfer of ownership of a property. 


(2) the property must be in existence. 


(3) the transfer must be voluntarily made and without consideration. 


(4) the property must be accepted by or on behalf of the person to whom it is transferred. 


(5) the transfer must be effected in the manner prescribed by law. 


Transfer of Ownership

The transfer of ownership is an integral aspect of a gift. Through a gift, the entirety of a person's interest in a property is conveyed to another individual.


The individual transferring their interest is termed the "donor," while the recipient of the interest in the property is referred to as the "donee."


The act of making the gift designates one as the donor, while acceptance of the gift establishes the donee.


Conditional gifts of property are permissible; however, the conditions attached must not contradict any provisions outlined in Sections 10 to 34 of the Act. This ensures that the conditions set forth in a gift are in alignment with the legal framework governing such transactions.


Existence of Property

In the context of a gift, it is essential that the property exists at the time the gift is made, regardless of whether its transfer occurs immediately or in the future. Both movable and immovable properties can be subject to gifting. However, gifting a future property is deemed invalid.


Section 124 specifies that the property must be in existence at the time of the gift's execution; otherwise, the gift is considered void. An actionable claim, being an existing property, is eligible for gifting. 


However, if a gift includes both existing and future properties, it is void with respect to the future property. Notably, an immovable property under mortgage or lease can still be gifted.



Voluntary Transfer, without Consideration

A valid gift necessitates the donor's voluntary act, indicating their free will and consent. If the donor's consent is not freely given, such as when it's obtained through coercion or undue influence, the gift is deemed invalid.


Coercion, as defined in Section 15 and Section 16 of the Indian Contract Act, 1872, involves compelling the donor to execute a gift deed under the threat of committing an act punishable by law.


For instance, if a gift deed is executed under the threat of harm or suicide, the gift is considered void. 


Undue influence, outlined in Section 16 of the Indian Contract Act, 1872, involves influencing the donor's consent to the gift. In cases involving undue influence, the court evaluates two key questions: first, whether one party has the ability to dominate the will of the other, and second, whether this dominance has been exercised.


If both questions are answered affirmatively, the court presumes undue influence, leading to the nullification of the gift.


Additionally, if the transaction itself is deemed unconscionable, the burden of proving that the contract was not influenced by undue influence falls on the party in the dominating position.


Acceptance by Donee

The acceptance of the gift by the donee is crucial for its validity. However, there are circumstances in which the donee may choose to refuse the gift. For instance, if the gift imposes burdens or is non-beneficial to the donee, they have the right to reject it.


An onerous gift refers to a property burdened with liabilities such as taxes or revenue obligations that surpass the property's market value.


Acceptance of the gift can be either express or implied. In cases where the donee is legally incapable of entering into a contract, such as being a minor or of unsound mind, a competent person must accept the gift on their behalf.


It's important to note that gifting to a minor is not prohibited under the Transfer of Property Act, 1882. Despite being ineligible to enter into contracts, minors can receive property.


Section 122 specifies that acceptance of the gift must occur during the donor's lifetime and while they are still capable of giving. If the donee passes away before accepting the gift, the gift is rendered void.


Since a gift involves a bilateral transaction between two living individuals, acceptance must be finalized before the donor's death or incapacity to gift. If the donee deceases before accepting the gift, the gift becomes null and void.

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