2018 (12) TMI 349 - SC - Indian Laws

Gift Deed executed for consideration - Conditional gift - Whether a document styled as gift deed but admittedly executed for consideration, part of which has been paid and the balance promised to be paid, can be treated as formal document or instrument of gift? Held that - Gift means to transfer certain existing moveable or immoveable property voluntarily and without consideration by one person called the donor to another called the donee and accepted by or on behalf of the donee as held by the Supreme Court in Naramadaben Maganlal Thakker Vs. Pranivandas Maganlal Thakker and Others 1996 (9) TMI 618 - SUPREME COURT - A conditional gift with no recital of acceptance and no evidence in proof of acceptance, where possession remains with the donor as long as he is alive, does not become complete during lifetime of the donor. When a gift is incomplete and title remains with the donor the deed of gift might be cancelled. It was held in the case of RENIKUNTLA RAJAMMA (D) BY LRS. VERSUS K. SARWANAMMA 2014 (7) TMI 1284 - SUPREME COURT that there is no provision in law that ownership in property cannot be gifted without transfer of possession of such property. However, the conditions precedent of a gift as defined in Section 122 of the Transfer of Property Act must be satisfied. A gift is transfer of property without consideration. Moreover, a conditional gift only becomes complete on compliance of the conditions in the deed. In the instant case, admittedly, the deed of transfer was executed for consideration and was in any case conditional subject to the condition that the donee would look after the petitioner and her husband and subject to the condition that the gift would take effect after the death of the donor - thus there was no completed gift of the property in question by the appellant to the respondent and the appellant was within her right in cancelling the deed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether a document styled as a gift deed but executed for consideration can be treated as a formal document or instrument of gift.
2. Whether a gift deed reserving the right of the donor to keep possession and right of enjoyment, enforceable after the death of the executant, is a gift or a will.

Analysis:
1. The appeal in question challenged a High Court judgment setting aside a First Appellate Court's decision in favor of the appellant. The central issue revolved around the nature of a document styled as a gift deed but executed for consideration. The appellant, a childless widow, executed the deed in favor of her nephew, with the gift to take effect after her and her husband's death.

2. The appellant later cancelled the gift deed, leading to legal disputes and multiple suits. The lower courts decreed in favor of the appellant, but the High Court, in its judgment, set aside these decrees. The core legal question was whether the document in question, despite being styled as a gift deed, could be considered a deed of gift or a will due to the conditions attached, such as retaining possession and enforcement post the executant's death.

3. The Transfer of Property Act, 1882, was crucial in determining the validity of the purported gift deed. Section 122 of the Act defines a gift as the voluntary transfer of property without consideration from the donor to the donee, accepted by the latter. Additionally, the Act outlines provisions regarding the transfer of immovable and movable property through gifts, emphasizing the necessity of compliance with the statutory requirements for a valid gift.

4. Legal precedents, such as the case of Reninkuntla Rajamma Vs. K. Sarwanamma, were cited to support the argument that a gift deed, even if the donor reserves certain rights, can still be valid if executed properly and accepted during the donor's lifetime. The completion of a gift requires acceptance by the donee and the transfer of possession, as highlighted in the judgments referred to during the analysis.

5. Ultimately, the Supreme Court held that the deed in question, executed for consideration and conditional upon the donee looking after the appellant and her husband, did not constitute a completed gift as per the requirements of the Transfer of Property Act. Therefore, the appellant was justified in cancelling the deed, and the High Court's judgment was set aside, allowing the appeal in favor of the appellant.

6. The detailed analysis of the legal provisions, precedents, and specific circumstances of the case led to the conclusion that the document in question did not meet the criteria of a valid gift under the law. The judgment provided clarity on the distinction between a gift and a will, emphasizing the importance of compliance with statutory requirements for a transfer of property to be considered a gift.