REVOCATION OF GIFT DEED

[Mr. M. GOVINDARAJAN]

A Gift Deed is a legal document used to transfer ownership of assets or property from one person to another. This is a voluntary transfer of property rights. The primary purpose of a Gift Deed is to legally establish the transfer of ownership and to protect the interests of both parties.

Once the gift deed is accepted and acted upon the same cannot be revoked unless there is a clause in the deed as to its revocation under certain contingencies. Section 128 of the Transfer of Property Act, 1882 provides the situations when the gift deed can be suspended or revoked. The said section provides that the donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked; but a gift which the parties agree shall be revocable wholly or in part, at the mere will of the donor, is void wholly or in part, as the case may be. A gift may also be revoked in any of the cases (save want or failure of consideration) in which, if it were a contract, it might be rescinded. Save as aforesaid, a gift cannot be revoked. Nothing contained in this section shall be deemed to affect the rights of transferees for consideration without notice.

A gift deed cannot be revoked except in the following cases-

• the donor and donee may agree for the suspension or revocation of the gift deed on the happening of any specified event which does not depend on the will of the donor.
• a gift which is revocable wholly or in part with the agreement of the parties, at the mere will of the donor is void wholly or in part as the case may be.
• a gift may be revoked if it were in the nature of a contract which could be rescinded.

In N. THAJUDEEN VERSUS TAMIL NADU KHADI AND VILLAGE INDUSTRIES BOARD - 2024 (10) TMI 1329 - SUPREME COURT, the appellant, this civil appeal, gifted a property to Tamil Nadu Khadi and Village Industries Board (‘Board’ for short), on 05.03.1983. The said property was gifted to the Board for the purposes of manufacturing of Khadi Lungi and Khadi yarn with a condition that the said property should not be transferred for its own self-interest. I was also stipulated that the donor and his legal heirs will not claim the said gifted property in future. The gift was made with full consent of the donor and the gifted property was duly accepted by the donee. The gifted property is about 3700 square feet.

The appellant made a revocation of the gift deed made by him 17.08.1987. Therefore the Board filed a suit for a declaration of its title over the gifted property. The Trial Court dismissed the suit on 23.08.1994. The Trial Court held that the gift deed was invalid as it was never accepted and acted upon. Against this order the appellant filed an appeal before the District Judge, who allowed the appeal of the appellant. The Appellate Court reversed the judgment of lower court and decreed the suit. The appellant filed second appeal before the High Court. The High Court also dismissed the appeal on the ground that the gift deed was accepted and acted upon.

Against the order of High Court, the appellant filed the present appeal before the Supreme Court. The Supreme Court intended to dispose the case on the issue as to whether the gift deed was duly acted upon and accepted and it is a valid document which continue to exist despite its revocation on 17.08.1987 as the donor had not reserved the right to revoke the same. The Supreme Court analysed the gift deed and found that the gift was absolute with no right reserved for revocation of the same in any contingency. The gift deed itself stated that from the date of the gift deed the suit property is accepted by the plaintiff-respondent for the purpose of manufacturing Khadi Lungi and Khadi Yarn etc., which duly proves that the gift was accepted.  The appellant also issued a memo on 16.09.1983 which also proved that the possession of the suit property was taken over and that it proceeded to raise construction thereon. The Supreme Court also observed that the possession of the suit property was taken over by the Board on the date of the gift itself. It would be the sufficient evidence that the gift was accepted and acted upon by the Board.

The appellant pursuant to the aforesaid gift deed and its acceptance has even applied to the revenue authorities for the mutation of its name which further fortifies the fact that the gift was duly accepted.  Therefore, the Supreme Court held that the said gift deed cannot be held to be invalid for want of acceptance and the Board has every right and title over the gifted property.

The Supreme Court next considered the question as to whether the aforesaid gift deed has been validly revoked vide revocation deed dated 17.08.1987, and if so, what would be its impact upon the rights of the Board in respect of the suit property. In this regard, the Supreme Court observed that the gift validly made can be suspended or revoked under certain contingencies but ordinarily it cannot be revoked, more particularly when no such right is reserved under the gift deed.

The Supreme Court considered the three contingencies on which the gift deed can be revoked. In the gift deed, there is no such indication that the donor and donee have agreed for the revocation of the gift deed for any reason much less on the happening of any specified event.  There is no agreement between the parties for the revocation of the gift deed wholly or in part or at the mere will of the donor. A gift is liable to be revoked in a case where it is in the nature of a contract which could be rescinded.  The gift under consideration is not in the form of a contract and the contract, if any, is not liable to be rescinded. The Supreme Court held that none of the exceptions permitting revocation of the gift deed stands attracted in the present case. The gift deed was validly made. Therefore, the revocation deed is void ab initio. There is no stipulation in the gift deed that if the suit property is not so utilised, the gift would stand revoked or would be revoked at the discretion of the donor.

The Supreme Court next considered the question of limitation as put forth by the appellant. The Supreme Court held that the relief claimed in the suit is for recovery of possession based upon title and as such its limitation would be 12 years in terms of Article 65 of the Schedule to the Limitation Act.

The Supreme Court did not find any illegality on the part of the first appellate Court and High Court in decreeing the suit in favour of the Board. The Supreme Court dismissed the appeal as devoid of merits.