Gift under property law

 GIFT UNDER PROPERTY LAW

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. If the essential elements of the gift are not implemented properly it may become

revoked or void by law.

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.

There are the following five essentials of a valid gift:

1. Transfer of ownership

2. Existing property

3. Transfer without consideration

4. Voluntary transfer with free consent

5. Acceptance of the gift

Transfer without consideration

A gift must be gratuitous, i.e., the ownership in the property must be transferred without

any consideration. Even a negligible property or a very small sum of money given by the

transferee in consideration for the transfer of a very big property would make the

transaction either a sale or an exchange. Consideration, for the purpose of this section, shall

have the same meaning as given in Section 2(d) of the Indian Contract Act. The

consideration is pecuniary in nature, i.e., in monetary terms. Mutual love and affection is

not pecuniary consideration and thus, property transferred in consideration of love and

affection is a transfer without consideration and hence a gift. A transfer of property made in

consideration for the ‘services’ rendered by the donee is a gift. But, a property transferred in

consideration of donee undertaking the liability of the donor is not gratuitous, therefore, it is

not a gift because liabilities evolve pecuniary obligations.

Section 122 provides that the acceptance must be made during the lifetime of the donor and

while he is still capable of giving. The acceptance that comes after the death or

incompetence of the donor is no acceptance. If the gift is accepted during the life of the

donor but the donor dies before the registration and other formalities, the gift is deemed to

have been accepted and the gift is valid.

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.

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.

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.