Revocation of Gift under Transfer of Property Act

The importance of the revocation of a gift under Transfer of Property Act lies in its legal and financial implications, ensuring clarity and fairness in property transactions. It provides a mechanism to address situations where the donor or donee seeks to nullify a gift, often due to changing circumstances or unforeseen events.

According to Section 122 of the Transfer of Property Act, a gift is when someone willingly gives away something they own, whether it’s a thing you can move or something fixed in place. It’s important that this giving is done without expecting anything in return. The person giving the gift is the “donor,” and the person receiving it is the “donee.”

The donee has to agree to accept the gift. In simpler terms, a gift is a free and voluntary transfer of ownership for something that already exists. This rule applies to both things you can move and things that are fixed in place.

Meaning of Revocation of Gift

Revocation of gift under Transfer of Property Act refers to the legal act of cancelling or annulling a previously made gift, rendering it void and restoring ownership of the gifted property to the donor. The revocation process is subject to specific legal provisions and the ability to revoke a gift may depend on various factors, such as conditions outlined in the gift agreement, mutual agreements between the donor and donee and the governing legal framework.

In essence, revocation involves the termination of the voluntary transfer of ownership, either through mutual consent, fulfilment of specified conditions or legal decree, ensuring legal clarity and adherence to relevant laws in the context of property transfers.

Suspension or Revocation of Gift under Section 126 of Transfer of Property Act, 1882

Section 126 of the Transfer of Property Act, 1882, explains when a gift can be put on hold or cancelled. According to this section, the person giving the gift (donor) and the person receiving it (donee) can agree that the gift will be put on hold or cancelled if a specific event, not controlled by the donor’s will, occurs. However, if the parties agree that the gift can be cancelled entirely or partially at the donor’s whim, the gift becomes void either wholly or partly, depending on the case.

In certain situations, a gift can be cancelled, just like a contract can be undone. However, not all gifts can be cancelled. It’s essential to note that the rights of those who received the gift for a valid consideration without knowing about any cancellation conditions remain unaffected.

A gift involves the transfer of ownership without any consideration involved. Similar to other transfers, a gift can have certain conditions attached to it. The donor can set conditions for the gift, such as putting it on hold or revoking it. However, if such conditions exist, the rules governing conditional transfers under this Act come into play. Therefore, for a gift with a condition of potential revocation in the future, the condition must be valid and enforceable under the relevant provisions of the Act.

Section 126 outlines two ways in which a gift can be revoked:

• Revocation through mutual agreement between the donor and the donee.
• Revocation through rescission, similar to how contracts can be undone.

Revocation of Gift under Transfer of Property Act by Mutual Agreement

The donor and the donee can agree that the gift will be put on hold or cancelled if a specific event, not under the donor’s control, occurs. This condition for revoking the gift under Transfer of Property Act must be clearly stated; it cannot be just a wish or desire. In simpler terms, the condition that allows the donor to cancel the gift must be explicitly mentioned in the gift agreement.

For instance, a gift was given as a thank-you for past and future services. However, if the gift deed doesn’t specify that the donor can cancel the gift if the donee fails to provide services or support in the future, the gift is considered unconditional and cannot be revoked, as ruled by the Himachal Pradesh High Court.

Even if the condition is not explicitly stated in the gift deed but is separately agreed upon by both parties and is part of the overall gift transaction, it remains valid and enforceable.

The condition for revoking the gift must be not solely based on the donor’s will. If the donor can cancel the gift whenever they please, it’s not a valid gift. The agreement for revocation must be made at the time of the gift, not after the gift is completed and absolute. While the stipulation for revocation doesn’t have to be in the same document as the gift deed, both must be part of the same transaction.

The condition for revocation of gift under Transfer of Property Act is considered a “condition subsequent,” and it must comply with the legal provisions for conditional transfers. Any condition that completely prohibits the property’s transfer is void. Therefore, if the gift is made revocable with such a void condition, the gift itself remains unaffected.

Moreover, the condition for revocation must be a “condition subsequent,” meaning it depends on a future event beyond the donor’s control. For example, if A gives a field to B with the condition that A can take it back only if B and his descendants die before A, this condition depends on an uncertain future event beyond A’s control.

If the stipulation allows the donor to revoke the gift at their will or pleasure, it is void and the gift remains valid. For instance, if A gives Rs. 1,00,000 to B but reserves the right to take back Rs. 10,000 at A’s pleasure, the gift of Rs. 90,000 is valid, but the gift of Rs. 10,000 is void and it continues to belong to A.

Revocation of Gift under Transfer of Property Act by Rescission, Similar to Contracts

A gift is a voluntary and free transfer of ownership. If it can be proven that the gift wasn’t made willingly, meaning the donor’s consent was not freely given, the gift must be revoked. Every gift involves an explicit or implicit contract, where the donor makes an offer and the donee accepts it. If the preceding contract is rescinded or revoked, the subsequent transfer (gift) under it is nullified. Section 126 allows the revocation of a gift on the same grounds that would apply to the rescission of a contract.

According to Section 19 of the Indian Contract Act, if consent to an agreement is obtained through coercion, undue influence, fraud or misrepresentation, the agreement is a voidable contract at the option of the party whose consent was manipulated. Therefore, if the gift is not made voluntarily due to any of these factors, the donor has the right to revoke the gift. It’s important to note that this section addresses revocation, which is the annulment or rejection of a gift; it doesn’t cover cases where the gift is void, such as for lack of the donor’s title.

If the donor’s consent was obtained through coercion, undue influence, fraud or misrepresentation, the donor can choose to repudiate or revoke the gift. If the donor doesn’t exercise this option, the gift remains unaffected. The right to revoke the gift under Transfer of Property Act on these grounds lies solely with the donor and cannot be assigned to any other person. However, after the donor’s death, legal heirs may seek revocation based on these grounds.

The time limit for revoking gifts on the grounds of fraud, coercion, misrepresentation or undue influence is three years from the date when the plaintiff (donor) becomes aware of these facts. The right to revoke the gift on these grounds is forfeited if the donor explicitly ratifies the gift, either through express approval or by conduct.

No Revocation on Any Other Ground

A gift can only be revoked under two circumstances: (a) if there’s a condition subsequent that doesn’t depend on the donor’s pleasure and (b) based on the grounds justifying the rescission of a contract. Any attempt to revoke a gift under Transfer of Property Act on other grounds is not valid.

In a specific case, a gift deed was properly executed in favour of the donee. It was ruled that a unilateral claim by the donor, stating that the gift deed was revoked and submitted for registration, was not valid because the donee did not participate in this revocation process.

The subsequent conduct of the donee after accepting the gift is irrelevant. For example, a father executed a registered deed of gift for his son out of love and affection. Even though the son stayed abroad for an extended period and the gift deed remained with the donor and the donor continued paying taxes without any changes in revenue records, the Supreme Court held that these circumstances were not enough to prove that the gift deed was not voluntary.

The deed cannot be rescinded on the grounds that it was an onerous gift and that the donee failed to fulfil a condition related to contributing to the marriage of the donee’s sister. Once a gift is complete, it cannot be rescinded for any reason whatsoever. The subsequent actions of the donee do not provide a valid ground for rescinding a valid gift.

Transferee for Consideration without Notice

The final part of Section 126 in the Act safeguards the rights of an innocent buyer who acquires the property for a price without being aware of the donor’s right to revoke. Here’s an example to illustrate this protection:

Suppose A gifts his house to B with a condition that the gift can be revoked if B’s son doesn’t pursue a law degree after graduating. Later, B sells the house to C, but C is unaware of this condition. After graduation, B’s son decides not to pursue law. In this case, A cannot revoke the gift under Transfer of Property Act because C’s interest in the property would be affected. If C had known about the condition or if C had received the property as a free gift, A would have had the right of revocation of gift under Transfer of Property Act.

Suspension or Revocation of Gift under Mohammedan Law

In cases where both parties involved are Muslims, a gift is regulated by the Quranic Law, also known as Mohammedan Law and not by the Transfer of Property Act, as it conflicts with the provisions of this act. Under Mohammedan Law, a Muslim has the authority to revoke a gift even after delivering possession, except in specific situations:

• When the gift is made from a husband to his wife or vice versa.
• When the donee is within the prohibited degrees of relation to the donor.
• When the gift is Sadaka, meaning it’s made to a charity or for any religious purpose.
• When the donee has passed away.
• When the gifted item has left the possession of the donee through sale, gift or any other means.
• When the gifted item is lost or destroyed.
• When the gifted item has increased in value, regardless of the cause of the increase.
• When the gifted item has undergone such a change that it cannot be identified, such as wheat being transformed into flour through grinding.
• When the donor has received something in exchange for the gift.

In all other cases, a gift may be revoked at the mere will of the donor, with or without reserving the power to revoke, but the revocation must be done through a court decree.

Conclusion

The revocation of gift under Transfer of Property Act is a nuanced legal process influenced by various factors, depending on the governing laws. Under the Transfer of Property Act, certain conditions and mutual agreements between the donor and donee dictate the revocability of a gift.

Additionally, Mohammedan Law introduces unique considerations for Muslims, allowing revocation in specific cases. Notably, the protection of innocent transferees without notice is crucial under both legal frameworks.

Understanding these legal intricacies ensures clarity for individuals involved in the gift-giving process, emphasising the importance of legal expertise and compliance with relevant statutes to navigate potential revocation scenarios.