Concept of Revocation of Gift

Author: Anisha Tak, Rajiv Gandhi National University of Law, Punjab

Introduction

The Transfer of Property Act was enacted in the year 1882. This act established uniformity in the regulation of the transactions associated with the transfer of immovable property. Before the formulation of this act, there were a lot of conflicts in dealing with such property due to a lack of uniform principles.[1] This act comprises eight chapters and 137 sections. Chapter Seven of the act discusses the concept of Gifts under section 122- 129 of the Transfer of Property Act, 1882.[2]

Section 122 of the act elucidates that a gift is some movable or immovable property that is in existence and transferred by one person to another.  This act of transferring such property is discharged voluntarily and no consideration is asked for the same. The person who transfers such property is called a donor and to whom, it is transferred, is referred as a donee. The gift is required to be accepted by the donee or on part of the donee. The acceptance will be completed when it is made during the lifetime of the donor and while the donor has the capacity to give such a gift. However, the gift will be declared void if before accepting such gift, donee dies.[3]

Section 123 of the act explains the effectuation of the transfer of gift and delineates how and when the transfer of gift is effectuated.[4] Section 124 of the act specifies that the gift which comprises existing and future property will be executed for the existing property only and will be void in nature for the future property.[5] Section 125 of Transfer of Property Act, 1882 describes that if a gift is effectuated in favour of two or more persons and among them, one does not accept the gift, then the gift will be considered void in that part of the gift in which the interest would have been taken by the person who has not accepted it.[6]

Revocation of Gifts

The revocation and suspension of gifts are described in section 126 of the Transfer of Property Act, 1882. This section states certain grounds on which the gifts will be revoked or suspended.[7] The following sections analyze these grounds.

a. Agreement between Donor and Donee

The donor and donee may assent that if a particular event takes place, then, the gift will be declared suspended or will be revoked. Thus, if the condition of occurrence of this particular event is fulfilled then, such gift would be stated as suspended or revoked. The essential part of the happening of the event to which the donor and donee agree is that this event must not be based on the will of the person transferring the movable or immovable property as a gift.[8]

However, if the happening of this particular event is dependent on the will of the donor, then the gift would be declared void. The gift will be considered void in part when the condition of revocation on the occurrence of the agreed event which is determined by the will of the donor, is for that part of the gift. The gift would be termed as completely void if the gift is to be revoked as a whole and the revocation is dependent on the happening of the agreed event which is conditioned on the will of the donor.[9]

This condition of the happening of the agreed events must not violate section 10 and 11 of the Transfer of Property Act, 1882. According to Section 10 of the stated act, if the property is transferred on the requirement that the person to whom the property is transferred cannot alienate from the property so transferred in an absolute manner, then this condition will be declared void.[10] The condition of the transfer of the property cannot completely restrict the transferee from disposing of his interest in such property as the transferee also has the right to transfer and no absolute restriction can be made on such right.[11] However, this condition could be upheld in the case of the exceptions as provided under section 10 of the Transfer of Property Act, 1882.[12]

Section 11 of the stated act specifies that if an absolute interest is constructed for any person when the property is transferred and a requirement is created that such interest must be executed and enjoyed by the person in a specific way, then such a specification would be considered void. The person in favour of whom such absolute interest is created can enjoy and discharge the interest without being obligated to the terms of the defined manner of application of this interest.[13] If the interest is restricted then, the enjoyment of this cannot be considered as unlimited but if this created interest is absolute then, no fetters can be imposed on the disposal of this interest.[14]

The honourable Supreme Court held in the case of Thakur Raghunath Ji Maharaj & Anr v. Ramesh Chandra, that the gift would be revoked if the requirement on which both the parties agreed is not fulfilled. In the present case, the plaintiff transferred a land as a gift in favour of the defendant, Thakur Raghunath Ji Maharaj, on the condition that a college is required to be built on the land in six months from the effectuation of the deed. The court held that this gift cannot be considered absolute and is conditional. The gift will be stated to have come to an end since the prerequisite of the building of a college in six months is not executed. The plaintiff will be given the entitlement of the land. The gift has not taken effect since the charitable purpose for which the land was granted as a gift is not accomplished. [15]

The above-explained section is one of the criteria on which the gift could be revoked or suspended.

b. Rescission of the Contract

Section 126 of the Transfer of Property Act, 1882 describes that a gift would be revoked in those cases, where if the gift were a contract, there might be a rescission of this contract.[16] Prior to the transfer of a gift, there is a formation of the contract. However, if this contract is rescinded then, the transfer of gift cannot take place and will be revoked. This gift cannot be revoked on the grounds that there was no consideration for it because of the exceptions given in section 25 of the Indian Contract Act, 1872.

Section 25 of the Indian Contract Act, 1872 states that for making a valid contract, consideration is a necessary element. However, in clause 1 of this section, it is described that an agreement that is in written form and is also registered according to the law which is in force for the registration, will not be declared void if this agreement is established on natural love and affection between the parties entering into the contract.[17] The parties are required to be near relatives which mean that the relation between them must be based on blood or marriage. In addition to it, the presence of natural love and affection between these near related parties is a necessity. If these requirements are fulfilled then an agreement without consideration could be created.[18] Clause 2 of the same section states that if a person wants to pay another person for any service given by him voluntarily in the past, then such agreement would be valid without consideration.[19] Hence, the validity of a gift made between the donor and donee under these provisions will not be affected by the requirement of consideration for the same and the agreement made without consideration under the conditions described would not be termed as void.[20]

However, if the contract could be rescinded on grounds other than the want of consideration, would lead to revocation of the Gift. Free consent is an essential prerequisite for the formulation of a contract as defined in section 14 of the Indian Contract Act, 1872.[21] The contract in which the consent of a party for the agreement is obtained by coercion, undue influence, fraud or misrepresentation then, such contract will be declared voidable at the choice of the party whose consent was attained in the ways described.[22]

Sections 19 and 19-A of the Indian Contract Act, 1872 states that the party at whose discretion, the contract is voidable because of the absence of free consent, such party can exercise its option to rescind the contract and can set it aside. Therefore, if the consent to give the gift is not free and is not made voluntarily but obtained from coercion, undue influence, misrepresentation or fraud, then such gift could be revoked in the same manner as it would be rescinded if it were a contract.[23]

In the case, Subhas Chandra Das Mushib v. Ganga Prosad Das Mushib and Ors., the honourable Supreme Court of India held that the provisions and rules connected to the undue influence would be applied in a similar manner in the case of a gift as they would have been implemented in the case of contract. In the present case, grandfather gifted some part of his property to his grandson, Subhas Chandra. The court upheld that grandfather, Prasanna was of sound mind and his will to transfer some part of his property to his grandson was not dominated and influenced by his son, Balaram. Moreover, the gifting of property by the grandfather to a grandson is not an unconscionable act on the face of it and undue influence in such cases could not be presumed. The honourable court stated that the gift cannot be revoked as in the present case, it could not be established there was an exercise of undue influence.[24]

c. Unilateral Revocation

There is no basis on which the gift could be revoked or suspended other than the grounds detailed above. The participation of donee in the revocation of the gift is necessary and the gift cannot be revoked unilaterally.[25] The honourable High Court of Andhra Pradesh, held in the case of Fazalullah Khan v. State of Andhra Pradesh, that the transaction of transfer of gift between the petitioner and respondent no.3 has been completed. The gift deed was effectuated in the favour of the petitioner and the same was also registered under the law in force. The court held that the gift cannot be cancelled unilaterally and the participation of the parties is required. Hence, the gift was valid in favour of the petitioner.[26] Similarly, in Sheel Arora v. Madan Mohan Bajaj, it was held that if there is valid execution of gift by the donor in the interest of donee, then the donor cannot revoke the gift unilaterally. The participation of both parties is necessary in case of revocation and unilateral revocation is not permitted if the transfer of gift has been completed. [27]

Conclusion

Section 126 of the Transfer of Property Act, 1882 describes the concept of the revocation of gift. The conditions under which the gift could be revoked and suspended is when both the donor and donee agrees on the revocation or suspension of the gift based on a contingent event that is not dependent on the will of the donor. The gift could be revoked in the same manner, if it would be rescinded as it were a contract. Another essential element of revocation is that there are no criteria of revocation other than those explained earlier. The revocation cannot be executed unilaterally and requires the participation of both donor and donee.

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[1] Bishnu Prasad Dwivedi, Review: The Transfer of Property Act by R.K. Sinha, 38 JOURNAL OF THE INDIAN LAW INSTITUTE 268, 268 (1996), https://www.jstor.org/stable/43927480.

[2] The Transfer of Property Act, 1882, §. 122, No. 4, Acts of Parliament, 1882 (India).

[3] The Transfer of Property Act, 1882, §. 122, No. 4, Acts of Parliament, 1882 (India).

[4] The Transfer of Property Act, 1882, §. 123, No. 4, Acts of Parliament, 1882 (India).

[5] The Transfer of Property Act, 1882, §. 124, No. 4, Acts of Parliament, 1882 (India).

[6] The Transfer of Property Act, 1882, §. 125, No. 4, Acts of Parliament, 1882 (India).

[7] The Transfer of Property Act, 1882, §. 126, No. 4, Acts of Parliament, 1882 (India).

[8] The Transfer of Property Act, 1882, §. 126, No. 4, Acts of Parliament, 1882 (India).

[9] Id.

[10] The Transfer of Property Act, 1882, §. 10, No. 4, Acts of Parliament, 1882 (India).

[11] MALLIKA TALY, V.P. SARATHI’S LAW OF TRANSFER OF PROPERTY, (Eastern Book Company 2017).

[12] The Transfer of Property Act, 1882, §. 10, No. 4, Acts of Parliament, 1882 (India).

[13] The Transfer of Property Act, 1882, §. 11, No. 4, Acts of Parliament, 1882 (India).

[14] TALY, supra note 11.

[15] Thakur Raghunath Ji Maharaj & Anr v. Ramesh Chandra, AIR 2001 SC 2340.

[16] The Transfer of Property Act, 1882, §. 126, No. 4, Acts of Parliament, 1882 (India).

[17] The Indian Contract Act, 1872, §. 25, No. 9, Acts of Parliament, 1872 (India).

[18] AVTAR SINGH, CONTRACT & SPECIAL RELIEF ACT, (Eastern Book Company, 12th ed. 2017).

[19] The Indian Contract Act, 1872, §. 25, No. 9, Acts of Parliament, 1872 (India).

[20] SINGH, supra note 18.

[21] The Indian Contract Act, 1872, §. 14, No. 9, Acts of Parliament, 1872 (India).

[22] The Indian Contract Act, 1872, §. 15, 16, 17 and 18, No. 9, Acts of Parliament, 1872 (India).

[23] The Indian Contract Act, 1872, §. 19 and 19-A, No. 9, Acts of Parliament, 1872 (India).

[24] Subhas Chandra Das Mushib v. Ganga Prosad Das Mushib and Ors, AIR 1967 SC 878.

[25] TALY, supra note 11.

[26] Fazalullah Khan v. State of Andhra Pradesh, AIR 2012 AP 163.

[27] Sheel Arora v. Madan Mohan Bajaj, MANU/MH/1070/2007.