Provisions of law

1. S. 122 lays down the ingredients of a valid gift as follows:

a. transfer of existing movable or immovable property

b. made voluntarily
c. without consideration
d. by donor
e. accepted by done during lifetime of donee

2. S. 127 provides that where a donor gifts several things to a donee in a single transaction and
one or more things is burdened by some obligation, the donee has two options:

a. he can either accept the whole gift (including the things with obligations), or
b. refuse to accept the whole gift.

The donee cannot choose to accept the things without obligations and refuse to accept the things
with obligations as both the things form a part of the same transaction. Part-acceptance of gifts
contained in a single transaction is impermissible.

However, if the things with obligations and things without obligations are transferred by way
of two separate transactions, the done may choose to accept one while refusing the other.

3. S. 128 provides that where a gift consists of the donor’s whole property, the donee is personally
responsible for all the debts due by and all the liabilities of the donor in respect of the gifted
properties, as they stood at the time of the gift.

4. It must be noted that a conjoint reading of Sections 122, 127 and 128 sufficiently show that
there can exist a gift where the donee is under an obligation to meet the liabilities and
obligations of the donor in respect of the gifted properties and the same will not constitute a
‘consideration’ in terms of Section 122 which can invalidate the transaction of gift. If this was
not the case, the legislature would not have framed provisions like S. 127 and 128.

Therefore, the mere existence of obligations and liabilities upon a gifted property cannot
invalidate a gift. Rather, S. 128 itself makes the donee liable to pay off the debts due and satisfy
other liabilities concerning the gifted property. Existence of liabilities and debts and donee’s
undertaking to satisfy the same does not qualify to mean a ‘consideration’ in terms of S. 122.

5. Moreover, what would and would not constitute a ‘consideration’ is well settled under the
common law jurisprudence. Any act that would accrue any personal benefit to the donor is
considered as a ‘consideration’ and would therefore invalidate the gift. However, if the doing
of any act by the donee does not cause any personal benefit to the donor, it would constitute a
‘consideration’, and therefore such a gift would be a valid one. The High Court of Australia
(Apex Court) in Federal Commissioner of Taxation Vs. McPhail [1968] HCA 13 held as
follows:

“But it is, I think, clear that to constitute a "gift", it must appear that the property
transferred was transferred voluntarily and not as the result of a contractual
obligation to transfer it and that no advantage of a material character was received
by the transferor by way of return.”

Therefore, only an act that causes any material advantage to transferor (donor) would be
constitute a “consideration” sufficient to invalidate a gift. If an act does not cause a material
benefit to the transferor, it would not constitute a “consideration” and such a gift would be
valid.

Application of law to the facts of the present case

1. It is not disputed that the primary transaction of sale was a mortgage by way of
conditional sale in terms of Section 58(c) TPA.
2. The property mortgaged by way of the above transaction was gifted along with all other
properties of the donor to the donee. While other properties had no liability upon them,
the one property which is subject matter of the present case was mortgaged by way of
conditional sale.
3. As the donor transferred his entire property to the donee in a single transaction by way
of a single instrument, the donee could have either accepted the entire gift or refused
the entire gift.
4. The donee accepted the entire gift, and is thus liable to pay all debts and fulfil other
liabilities with respect to gifted properties as provided under section 128 TPA.
5. The fact that the donee is liable to pay debts and fulfil obligations with respect to a
gifted property cannot constitute a “consideration” which can invalidate the gift in
terms of S. 122 TPA. In fact, S. 128 of the same Act casts an obligation upon the donee
to pay the debts and fulfil the liabilities concerning the gifted properties. The two
Sections must be read harmoniously and S. 122 cannot be read in such a manner that it
vitiates the mandate of S. 128.
6. In the instant case, the repayment of debt by the donee for the redemption of property
mortgaged by conditional sale could not have brought any personal benefit to the donor.
Therefore, it cannot constitute a ‘consideration’. Upon the repayment of the debt, the
property is supposed to come to the donee in terms of the gift deed. No person benefit
can accrue to the donor if the repayment of debt is made and the property is redeemed
by the donee for her own benefit.
7. Therefore, the gift transaction under question is a valid one as there is no element of
“consideration” and it satisfies all other conditions of a valid gift under S. 122.