2014 (7) TMI 1284 - SC - Indian Laws

Conditional Gift - right to use the property during the lifetime of the donor retained - whether retention of possession of the gifted property for enjoyment by the donor during her life time and the right to receive the rents of the property in any way affected the validity of the gift? Held that - There is indeed no provision in law that ownership in property cannot be gifted without transfer of possession of such property. As noticed earlier, Section 123 does not make the delivery of possession of the gifted property essential for validity of a gift. In the case at hand, the execution of registered gift deed and its attestation by two witnesses is not in dispute. It has also been concurrently held by all the three courts below that the donee had accepted the gift. The recitals in the gift deed also prove transfer of absolute title in the gifted property from the donor to the donee. What is retained is only the right to use the property during the lifetime of the donor which does not in any way affect the transfer of ownership in favour of the donee by the donor. The High Court was in that view perfectly justified in refusing to interfere with the decree passed in favour of the donee - appeal dismissed.

Summary

Issues Involved:
1. Validity of the revocation of a gift deed.
2. Impact of donor retaining possession and benefits of the gifted property on the validity of the gift.
3. Interpretation of Sections 122 and 123 of the Transfer of Property Act, 1882.

Issue-wise Detailed Analysis:

1. Validity of the revocation of a gift deed:
The plaintiff-respondent filed a suit for a declaration that the revocation deed dated 5th March 1986 executed by the defendant-appellant, which purported to revoke an earlier gift deed, was null and void. The trial court held that the gift deed was valid and irrevocable, as it had been accepted by the plaintiff. The court found no evidence of fraud, misrepresentation, or undue influence affecting the gift deed. The first appellate court and the High Court affirmed these findings, holding that the gift deed was not a sham and that its revocation was legally impermissible. The courts concluded that the donor had voluntarily executed the gift deed, and the long delay in challenging it indicated the absence of any undue influence or fraud.

2. Impact of donor retaining possession and benefits of the gifted property on the validity of the gift:
The main contention in the appeal was whether the donor retaining possession and the right to receive rents from the gifted property during her lifetime affected the validity of the gift. The appellant argued that such retention rendered the gift invalid, relying on the decision in Naramadaben Maganlal Thakker v. Pranjivandas Maganlal Thakker & Ors. However, the respondents argued that the gift was valid even with the retention of life interest by the donor, citing K. Balakrishnan v. K. Kamalam & Ors. The court held that there is no prohibition in law against gifting ownership of property while retaining possession and enjoyment during the donor's lifetime. The court emphasized that Section 123 of the Transfer of Property Act does not require delivery of possession for a valid gift of immovable property.

3. Interpretation of Sections 122 and 123 of the Transfer of Property Act, 1882:
Section 122 defines a gift as a voluntary transfer of property without consideration, requiring acceptance by the donee during the donor's lifetime. Section 123 mandates that a gift of immovable property must be effected by a registered instrument signed by the donor and attested by at least two witnesses. The court clarified that delivery of possession is not a sine qua non for a valid gift under the Transfer of Property Act. The court referred to judicial interpretations, including a full bench decision of the Allahabad High Court in Lallu Singh v. Gur Narain and Ors., which held that Section 123 supersedes the rule of Hindu Law requiring delivery of possession for a valid gift. The court also noted the amendment of Section 129, which now only protects rules of Muhammadan Law from the provisions of Chapter VII of the Transfer of Property Act, further reinforcing that delivery of possession is not necessary for a valid gift of immovable property.

Conclusion:
The court upheld the validity of the gift deed, even with the donor retaining possession and the right to receive rents during her lifetime. The appeal was dismissed, affirming that the gift was validly executed and accepted, and that the revocation deed was null and void. The court reiterated that under Sections 122 and 123 of the Transfer of Property Act, delivery of possession is not required for a valid gift of immovable property.