LEASE AND GIFT UNDER

TRANSFER OF PROPERTY ACT, 1882

LEASE

Introduction:

Transfer of immovable property will take place by transferring it from one person to another. To
make the transfer valid it is very essential that the person should be competent to make a contract
and it should not be forbidden by law.

Lease under Transfer of Property Act, 1882 deals with section 105 to section 117. A lease can be
done only of immovable property. A lease is the enjoyment of immovable property for a certain
period of time or in perpetuity. But, in lease transfer of immovable property is not absolute like
there it is in sale. The right of possession is separated from the right of ownership.

Q1- According to section 105 of TPA, 1882 what does lease means?

Lease is defined as, a lease of immovable property is a transfer of a right to enjoy such property,
made for a certain time, express or implied, or in perpetuity, in consideration of price or
promised, or of money, a share of crops, service or any other thing, of value, to be rendered
periodically or on specified occasion to the transferor by the transferee who accepts the transfer
on such terms.

Q2- Where does the lessor, lessee, premium and rent is defined. And what does those terms
mean?

Lessor, lessee, premium, and rent are defined under section 105 of TPA, 1882. One who
transfers the property i.e. transferor called Lessor, one who accept it i.e. the transferee called
lessee, the price is called the premium and services and other things which is rendered is called
rent.
 Q3- What are the essentials of Lease?

1. A lessor must be competent: To make a lease a lessor must be competent to make a

contract. He must be of sound mind and should not be disqualified by the contracting
law. And also he must be the true and absolute owner of the property which is grant in a
lease.
2. Ownership and possession: lease is different from a sale. In lease there is only a transfer
of possession to the lessee whereas the ownership is still remained to the lessor.
3. Acceptance: A property which is granted in a lease must be accepted by the lessee on the
terms and conditions which are agreed between the parties.
4. Consideration: A lease must be made of consideration which may be in the form of
premium or rent. It can be rent with premium or rent alone or premium alone.
5. Certain period or in perpetuity: In a lease the right to enjoy the property is given for a
certain period or in perpetuity. However, generally the time period is mentioned in the
agreement.
6. Right to enjoy the property: In a lease, right to enjoy the property is transferred. A
lessee having a right to enjoy the property at certain period of time but he does have right
to further transferred that property because in lease merely possession is transferred not
the ownership.
That means-
Parties must be competent: The parties in a lease agreement should be competent to enter into a
contract. Lesser should be entitled to a property and have absolute rights over that property.
Right of possession: Ownership rights are not transferred in a lease, only the possession of the
property is transferred.
Rent: Consideration for a lease can be taken in the form of a rent or premium.
Acceptance: Lessee, who is to get the interest in the property after lease, has to accept the lease
agreement along with the time period and terms & conditions imposed on the transfer.
Time Period: Lease always takes place for a particular time period which is to be specified in the
lease agreement. It can be relaxed at the option of the lessor.
 Q4- What can be the duration of a certain lease, if there is an absence of written contract
or local usage?

According to section 106 of TPA, 1882, if there is an absence of a written contract or a local
usage to the contrary then in the case, a lease of immovable property for manufacturing and
agriculture purpose will be valid till the time until it was terminated by either of the party, by six
months notice and if there is a lease any other purpose except agriculture or manufacturing then
it will be terminated by 15 days notice.
Section 106 provides for the duration of the lease in the absence of the lease agreement. It lays
down that in the absence of a contract, lease can be ended by both parties to the lease by issuing a
notice to quit. The prescribed time period always commences from the date of receiving the notice
to quit. Following are the circumstances:

Purpose Term (Deemed) Notice Prescribed End

Agricultural or manufacturing purpose. Year to Year 6 month 1 year

Any other purpose. Month to Month 15 days 1 month

In this table, there is a distinction of two purposes in regard to Section 106 i.e. Agricultural or
manufacturing and other purposes. Hence, two things can be derived from this table:

1. When a lease for Agricultural or manufacturing purpose is deemed to be of year to year,

then it will attract a 6-month notice that the lease will end on the expiry of 1 year from
the date of the commencement of the lease.

2. When a lease for any other purpose is deemed to be of the month to month, then it will
attract a 15-day notice that the lease will end on the expiry of 1 month from the
commencement of the lease.
There is proviso to this section which states that the notice to quit in this section should be written
and conveyed to the party who is required to abide by it. If this is not possible then it should be
attached to a conspicuous place in that property.
Q5- What are the rights and liabilities of lessor mentioned under section 108 of TPA, 1882?
Rights of the lessor are:
1. A lessor will have a right recover its rent from the property which is leased by him.

2. Lessor having a right to take back his property’s possession from the lessee, if any breach
of condition is done by lessee.
3. If there is a damaged to the property which is leased, then the lessor having a right to
recover the amount of damages from the lessee.
4. On the termination of the contract of the lease, the lessor having a right to take back his
possession from the lessee.

Liabilities of the lessor:

1. Section 108(a): The lessor is bound to disclose all the material defect relating to the
property which are lease with the former intended use, of which the former is and later is
not aware.
2. Section 108(b): Lessor is bound to request the lessee, to put him in a possession of
his property.
3. Section 108(c): Lessor can make a contract with the lessee that, if he pays the rent
later on which is reserved by the lease and performs all the terms and conditions
mentioned under the contract which binds the lessee, and then the lessee may hold the
property during the specified time without the interruption.

Q6- How lease can be made?

According to section 107 of TPA, 1882, a lease can be made, if there is a lease of immovable
property for a year, or for a term which may be exceeding one year or may be reserving a
rent for a year, then it can be made only by the registered instrument.

Whereas. All other lease of immovable property can be by the registered instrument or by an
oral agreement which is accompanied by the delivery of possession.

In the case of Punjab National Bank v. Ganga Narain Kapur (1.), Court held that if the
lease is done through an oral agreement, then the provisions of Section 106 will apply.

Q7- What are the rights of the lessee mentioned under TPA, 1882?

Rights of the lessee are mentioned under section 108(d) to 108(j) of TPA, 1882 are:
1. Section 108(d): During the continuing period of lease if any accession is made ( alluvion
for the time being in force) then that accession or area will be taken under such lease.
2. Section 108(e): During the continuing period of lease, if the material part of the property
is destroyed wholly or partly through by fire, or by flood, or by war or by the violent act
of the mob or by any other means and it becomes permanently unfit for the use for which
it is to be rendered, then it becomes void at the option of the lessee.
However, if the injury is caused due the default act of the lessee, then he cannot avail
himself from the benefit of the provision.
3. Section 108(f): During the continuing period of lease, if the lessor avoids to make any
repairs to the property which he is obliged to do on a reasonable time even after notice,
and if such repairs is done by the lessee himself, then he has a right to deduct such
expenses from the rent or can recover from the lessor.
4. Section 108(g): If the lessor avoids making any such payment which a lessor is bound to
make and if such payment is recoverable from the lessee or recovered against the
property, then the lessee have a right to recover it from the lessor or can deduct it from
the interest of the rent.
5. Section 108(h): Lessee having a right to remove all such things which he has attached
himself to the earth provided that lessee has to leave the property in such a state in which
he has received it.
6. Section 108(i): When a lease is of such duration which is not specified by any means,
except the fault of the lessee, he or his legal representative having a right to collect all the
crops which is planted, sown or growing by the lessee at the lease property and they are
free to ingress and egress from such property.
7. Section 108(j): Lessee having a right to transfer the property absolutely or any part of his
interest by the way of sub-lease or through mortgage. But, by such reason a lessee cannot
by any means ceases himself from the liabilities which are attached to the leased
property.

Q8- What can be the liabilities of the lessee towards the property or against the lessor?

1. Section 108(k): Lessee is under obligation to disclose all the material facts which likely
to increase the interest or the value which the lessee and the lessor is not aware about.
2. Section 108(l): Lessee is under obligation to pay the premium or the rent to the lessor or
his agent on a reasonable time.
 3. Section 108(m): Lessee is under obligation to keep the property in a proper condition and
on the termination of the lease restore all such good in such a way as it was at the time
when he was in possession.
4. Section 108(n): if lessee is aware about any proceedings against the property or any
encroachment or any interference is done, then lessee is under obligation to give notice to
the lessor.
5. Section 108(o): Lessee having a right to use the assets or goods which are placed in the
property as a ordinary prudence men and use it as it his own but, he is under obligation
that he should not use or allow any other person to use the property in any other way or
purpose other than the purpose for the property is leased.
6. Section 108(p): Lessee cannot without the consent of the lessor taken out any structure
permanently of or on the property except in the case of agriculture purpose.
7. Section 108(q): On the termination of the lease, lessee is bound to give the possession
back to the lessor.

Q9- How a lease can be determined or terminated under the Transfer of Property Act,
1882?

According to section 111 of TPA, a lease gets determined or terminated by various ways are:

1. Lapse of time – When the prescribed time of the lease expires, the lease is terminated.

2. Specified event – When there is a condition on time of lease depending upon a

happening of an event.

3. Interest – Lessor’s interest to lease the property may cease, hence resulting in the
termination of the lease.

4. Same owner – When the interest of both lessor and lessee are transferred or vested in
the same person.

5. Express Surrender – This happens when the lessee ceases to have an interest in the
property and comes into a mutual agreement with the lessor.

6. Implied Surrender – When the lessee enters into a contract with another for the lease
of property, this is an implied surrender of the existing lease.

7. Forfeiture – There are three ways by which a lease can be terminated:

  When there is a breach of an express condition by the lessee. The lessor may get the
possession of the property back.

 When lessee renounces his character or gives the title of the property to a third person.

 When the lessee is termed as insolvent by the banks, and if the conditions provide for it,
the lease will stand terminated.
8. Expiry of Notice to Quit – When the notice to quit by the lessor to the lessee expires, the lease
will also expire.

What is notice to quit and what happens after it?

Notice to quit is a formal written statement that is issued to the lessee if the lessor desires to end the
lease agreement, whether on the expiry of the duration as stated under Section 106 or on grounds
specified in Section 111.

Any lease can be forfeited as mentioned in the sub-clause (g) of Section 111, by acceptance of the
notice to quit.

But Section 112, states that if the lessor after initiating the process of termination of the lease on
the grounds of forfeiture accepts any rent from the lessee, it will be understood that the lease will
still exist and the termination and notice to quit has been waived.

Section 113 provides two ways in which the notice can be waived, that is expressly or impliedly.

1.
1. Express Waiver of notice to quit – When a lessor accepts the rent from the
lessee after the notice to quit has been served, this is called express waiver of
notice to quit.

2. Implied Waiver of notice to quit – When a lessor issues notice to quit to the
lessee, and upon expiry of that notice, lesser issues another notice to quit to
the lessee. The first notice to quit is impliedly waived.
Waiver of notice also shows the intention to continue the existing lease.
 Effect of Holding over

Section 116 states about the effect of holding overlays down that if there has been a waiver of
notice to quit, it will not be called a new lease instead it will be called as a lease on sufferance or
tolerance without objecting against it. The term ‘Holding over’ stands for retained possession of a
property which has been leased. After this, the lease is renewable as any normal lease and in the
way prescribed in Section 106.

This section provides that if the lessor agrees to the holding over of the property by the lessee, it
will be renewed. But if the lessor does not entertain the retained possession by the lessee, he can
initiate suit proceedings against him on grounds of trespass or tenant at sufferance.

Case laws of Lease under Transfer of Property Act

1. State Bank of Hyderabad vs. Nehru Palace Hotels, AIR 1991 SC 2130
In this case, the Court held that a lease entails transfer of right to enjoy such property in respect of
which a lease is made out for a defined time which is express or implied or even in perpetuity in
consideration of price paid or promised to be paid in cash or anything of value which is to be
rendered periodically or on specified occasions.

2. Bengal A &I Corporation vs. Corporation of Calcutta, AIR 1960 Cal 123 (133)
In this case, the Court held that the subject matter of lease must be ascertained, and clearly defined.
If the land is yet to be ascertained and carved out of a larger parcel of land, there cannot be a
demise. (Demise refers to premises that have been transferred by lease, as opposed to the ‘retained
parts’ which are not transferred but are retained by the landlord.)

3. Jaswant Singh Mathura Singh vs. Ahmedabad Municipal Corporation, AIR 1991
SC 2130
In this case, the Court held that a lease creates a right or an interest in enjoyment of demised
property and a tenant or a subtenant is entitled to remain in possession of the demised property
until the leases are dully terminated and eviction takes place in accordance with the law.
 GIFT
A Gift is generally regarded as a transfer of ownership of a property where the sender willingly
brings into effect such transfer without any compensation or consideration in monetary value. It
may be in the form of moveable or immoveable property and the parties may be two living persons
or the transfer may take place only after the death of the transferor. When the transfer takes place
between two living people it is called inter vivos, and when it takes place after the death of the
transferor it is known as testamentary. Testamentary transfers do not fall under the scope of Section
5 of the Transfer of Property Act, and thus, only inter vivos transfers are referred to as gifts under
this Act.

If the essential elements of the gift are not implemented properly it may become revoked or void by
law. There are many provisions pertaining to the gifts. All such provisions, for example, types of
property which may be gifted, modes of making such gift, competent transferor, suspension and
revocation of gift, etc.

Gift under Transfer of Property Act deals with section 122 to section 129. “ Gift” is the transfer of
certain existing movable or immovable property made violently and without consideration, by one
person, called Donor, to another, called the Donee and accepted by and behalf of the Donee.

Every transfer of property will take effect only when it is considered by both the parties.
However, gift is an exception to section 25 of Indian Contract Act, 1872. Where a contract or an
agreement without consideration is void to which gift is an exception. Gift is transfer of both
existing movable and immovable property with the transfer of ownership without consideration.
A gift can only be made in favour of an ascertainable person means it cannot be in favour of an
idol or public. Under the transfer of property act it is essential that gift must be accepted by the
done though it could not be necessary to be expressly accepted.

Q1- Where is the definition of “Gift” is defined?

Section 122 of Transfer of Property Act defines a gift as the transfer of an existing moveable or
immovable property. Such transfers must be made voluntarily and without consideration. The
transferor is known as the donor and the transferee is called the donee. The gift must be accepted
by the donee. This Section defines a gift as a gratuitous transfer of ownership in some property
that is already existing. The definition includes the transfer of both immovable and moveable
property.
Mt. Brij Devi v. Shiva Nanda Prasad & Ors (1939) : an analysis

One of the few essentials of a Gift is, that in event of a transfer, there must be a transference of all
the rights in the property by the donor to the donee; however, it is also permissible to make
conditional gifts. Such a clause is governed by Section 126 of the Act.

To delve into the issue, we must refer to the first important pre-independence judgment of the
Allahabad High Court, where the subject matter of dispute is the same as our concern. In the case
of Mt. Brij Devi v. Shiva Nanda Prasad & Ors (1939) Brij Devi had claimed possession of a land
which had formed the focus of a gift deed executed by her ancestors on 11th December 1914, in
favor of one Jain Bulaqi Shankar. The gift deed was executed with some conditions attached to it
which read as, “The material terms of the gift-deed are as follows: I have made a gift to Pt. Jain
Bulaqi Shankar for construction of the temple of Bhaironji, and residence, and removing my
possession from the property gifted, I have put the donee in proprietary possession and he will
have the right to construct a temple and a quarter… The donee or his successors will have no right
to transfer or mortgage it; if he does, the transfer will be invalid, and I and my successors will have
a right to get the gift revoked.” As per the gift deed, Jain Bulaqi did not succeed in building the
temple or a residential quarter for his own occupation, but subsequently he made a waqf of the
property in favour of one Shiva Nanda Prasad in 1927, which means, he transferred the property
which had been gifted to him by the plaintiffs’ ancestor. This action of the done was alleged to be
in contravention of the conditions of the gift deed itself. They alleged that in circumstances of
property being alienated, by virtue of the revocation clause mentioned in the gift deed, they were
entitled to declare the transfer done to the defendant as invalid and further have the right to take
back the possession of the land as per the gift deed.

The defendants argued that the transfer made by way of gift deed, was an absolute transfer of the
land to Jain Bulaqi, and that that transfer in the gift deed had been subject to a condition absolutely
restraining the transferee and his successors from parting with or disposing of his interest in the
property which is repugnant to the Transfer of Property Act itself. Section 10 of the Transfer of
Property act states that, absolute restraint on the transferee by the transferor is void, that is, the
condition restraining the alienation is void while the transfer of the property itself is valid. The
defendants’ argument was essentially based on the foundation of Section 10 of TPA, they argued
that such a restraint on the land was void and the contract must be allowed as if an unequivocal
transfer of the land was made to the donee.

Moreover, because the condition was void, the transfers in favor of Shiva Nanda Prasad were valid
and could not be set aside, nor were the plaintiffs entitled to revoke the gift deed. The plaintiffs
then took the defense of Section 126 of the Transfer of Property Act and contested that the transfer
was not void as per the mentioned section. The section essentially means that the donor and donee
can agree upon happening of certain conditions, when the condition is not fulfilled, the gift can be
revoked. The plaintiffs argued that the right to revoke the gift was contingent upon the alienation
by the donee of the land gifted and not upon the will of the donor.

The plaintiffs supported this claim by citing the case of Makund Prasad v. Rajrup Singh (1907), in
which the court held that a gift of property made on the condition that the land would be liable to
be taken back in the event of its Alienation, was valid and the power of revocation was not
repugnant to the original transfer under Section 10.

The court in this case rightfully upheld the defendants claim and ruled that the gift deed cannot be
revoked by the successors of the ancestor who had made the gift deed in favour of Jain Bulaqi as
the transfer was uncosniable in the first place as it restricted the donee completely to alienate such
property. This was the first major judgment which rightfully upheld the donee’s claim and
rightfully interpreted the law relating to sections 10 and 126, however the thing to note in this
judgment was the lower appellant court had ruled in favour of the plaintiffs and the high court had
overturned the decision which is a usual trend which we see in cases relating to the issue of our
paper. Even after such a judgment, we see cases relating to the same issue where the lower and
high court’s decision is overturned in the Supreme Court. In the case of Sridhar vs N.
Revanna (2000), which is a case of February, 2020, out of the many issues in the suit, the same
issue, that is, whether a gift deed can be revoked by virtue of Section 126 if such property is
alienated had been raised in the Supreme Court once again for which the court had to adjudicate the
matter. In this case one Shri Muniswamappa, great grandfather of the plaintiffs and grandfather of
defendant No.1, was the absolute owner of the suit schedule property who executed gift deeds in
favour of the defendants with the same condition that the property should not be alienated and if
such property was to be alienated, then the gift deed stands invalid. The defendants on the other
hand had sold the property which they had received as a gift to which the plaintiffs’ alleged that
such a transfer was invalid as the gift deed specifically stated that the mentioned property is not to
be alienated and the plaintiffs demanded the property to be transferred to them back.

The High Court in this case too decided that the condition of the gift deed was not fulfilled and thus
ruled that the sale made by the donee was invalid and the property is to be returned, but the
Supreme court in this too cited the ruling held in the case of Mt. Brij Devi v. Shiva Nanda Prasad
& Ors (1939) and overturned the High court’s decision and ruled that the gift deed cannot be
revoked as at the very inception of the gift deed, the donee was completely restricted to alienate
such property which is prohibited by Transfer of Property Act by virtue of section 10.

For an issue that has been a settled law as per the 1939 judgment of the Allahabad High Court, it is
important to analyze what is making the courts interpret such laws in different manners and why
are the higher courts being time and again invoked to settle such disputes. Firstly we would look at
the way Section 126 is drafted in the Transfer of Property Act and also the placement of such a
section would be beneficial for an in-depth analysis. Section 126 reads as: “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.”

The section as it appears has a highly generic wording and allows the donor to make some
condition while gifting it to the donee and if such condition is not fulfilled or abided by, the donor
can revoke the gift deed not on the basis of his will but subject to the condition that remained
unfulfilled or which has not been abided by. This section is type of a conditional clause as the gifts
chapter starts from Section 122 of the Transfer of Property Act. Chapter 2 of the Act is a general
chapter which puts some restrictions on the property while the gifts form a part of separate chapter,
that is, ‘of Gifts’ in the Act. Moreover if we look at the illustrations present in the section, it
appears that the law is silent upon such matters, that is, what if there is a complete restriction on the
alienation of the property. The courts while adjudicating the matter look at the placement of these
conditional clauses, where the presence of section 126, that is, the conditional clause is already
present in the chapter, the courts tend to think that the gifts are to be governed only by the set
conditions that have been made in the gift deed. Moreover, the courts also interpret that if such
conditional clause is present in the chapter ‘of gifts’ hwere parties can make own conditions in the
gift deed, there must be a legislative intent behind this structuring and the chapter ‘of gifts’ must be
looked at aloof of other chapters, specifically Section 10 (to which our analysis is limited). The
illustrations (Section 126), being silent on such conditions, also add to this mis-interpretation of the
court. The first illustration provided in the section is contingent upon the death of B and his
descendants but in the first place, the donee is not restricted from alienation of the property.

The second illustration provided also does not talk about the alienation issue rather it clarifies that
if an amount of 100 is gifted to someone by the donor and with both the donor and donee’s assent,
they agree that Rs 10 can be asked back at any time, this shows that the actual gift was of Rs 90
only as the donee has to return back the Rs 10 to the donor back, that is, that amount of Rs 10 is
inalienable. The second illustration is somewhat related to the issue at hand but because it is talking
about a movable gift, that is, in cash, the courts tend to think that this may be applicable to only
movable gifts as we cannot gift land in such a way. Thus, due to the absence of such clarity in the
issue, the court thinks that the act is silent in the issue at hand and they tend to give different
rationale and rule that the property which forms center of a gift deed can be revoked if the
condition of alienation is not abided by the donee.

This interpretation or perception of the courts is wrong as section 10 of the act is part of the chapter
2, that is, ‘of transfers of property by act of Parties’ which is a general section and must apply to all
the chapters of the Act as it defines the ‘action’ of the parties per se which is void in the eyes of
law. Needless to mention, Parties of any transaction are an essential element for a transaction to
take place, thus a specific chapter has been created by the Act which gives some clarity of what all
actions of the parties entering into the transaction are good or bad in law. If there was a legislative
intent for a gift to be governed only by the conditions of the gift deed, that is, section 126 of the
Transfer of Property Act and section 10 would not apple to such conditions, then such an exception
would be specifically mentioned in the section 10 of the Act just like mortgage, which has been
specifically excluded in the section 10 of the Act. Thus, reading into the issues where the act
appears to be silent as section 126 and section 10 are a part of different chapters is the wrong
approach that is often followed by the court which leads to wrong judgments time and again. The
same logic of free market that is used to defend the creation of section 10 of the Act can also be
extended to this issue as well. The main reason for which such a section, that is, section 10 was
created was to not allow accumulation of the property. People in India hold a lot of sentimental
value towers the land and property they own and subsequently the ancestors do not want their
future generations to alienate such property.
To counter such problem, that is, a property does not start limiting to one family lineage; such a
section was created and is still needed as exclusion of such a section would pull us back to
the zamindari system as was prevalent in India as few years back. Moreover when a gift deed is
revoked the government too is not benefitted from this transfer in terms of taxes. A gift deed in the
first place when is executed, it does not attract any tax but there is a change in ownership as there is
a change in title of the property and when such a gift deed will be revoked, there will be again a
change in the title and ownership which would not attract any tax as the property which was owned
by the donor at some time is being handed back to him by way of revocation, thus two transfers of
title are made and the taxable amount is none on the property which is something not beneficial for
a new democracy to progress. Moreover the legal maxim, “alienation rei praefertur juri
accrescendi” meaning that Law favours Alienation instead of Accumulation can be extended to the
issue at hand and by way of alienation of the gifted property, even the government could benefit
from the amount of taxes that would be charged by way of transfer of such property to a third
person.

Essential elements

There are the following five essentials of a valid gift:

1. Transfer of ownership

2. Existing property

3. Transfer without consideration

4. Voluntary transfer with free consent

5. Acceptance of the gift

Transfer of ownership

The transferor, i.e., the donor must divest himself of absolute interest in the property and vest it in
the transferee, i.e., the donee. Transfer of absolute interests implies the transfer of all the rights and
liabilities in respect of the property. To be able to effect such a transfer, the donor must have the
right to ownership of the said property. Nothing less than ownership may be transferred by way of
gift. However, like other transfers, the gift may also be made subject to certain conditions.

Existing property

The property, which is the subject matter of the gift may be of any kind, movable, immovable,
tangible, or intangible, but it must be in existence at the time of making a gift, and it must be
transferable within the meaning of Section 5 of the Transfer of Property Act.

Gift of any kind of future property is deemed void. And the gift of spes successionis (expectation
of succession) or mere chance of inheriting property or mere right to sue, is also void.

Transfer without consideration

A gift must be gratuitous, i.e., the ownership in the property must be transferred without any
consideration. Even a negligible property or a very small sum of money given by the transferee in
consideration for the transfer of a very big property would make the transaction either a sale or an
exchange. Consideration, for the purpose of this section, shall have the same meaning as given
in Section 2(d) of the Indian Contract Act. The consideration is pecuniary in nature, i.e., in
monetary terms. Mutual love and affection is not pecuniary consideration and thus, property
transferred in consideration of love and affection is a transfer without consideration and hence a
gift. A transfer of property made in consideration for the ‘services’ rendered by the donee is a gift.
But, a property transferred in consideration of donee undertaking the liability of the donor is not
gratuitous, therefore, it is not a gift because liabilities evolve pecuniary obligations.

Voluntary transfer with free consent

The donor must make the gift voluntarily, i.e., in the exercise of his own free will and his consent
as is a free consent. Free consent is when the donor has the complete freedom to make the gift
without any force, fraud coercion, and undue influence. Donor’s will in executing the deed of the
gift must be free and independent. Voluntary act on a donor’s part also means that he/she has
executed the gift deed in full knowledge of the circumstances and nature of the transaction. The
burden of proving that the gift was made voluntarily with the free consent of the donor lies on the
donee.
Acceptance of gift

The donee must accept the gift. Property cannot be given to a person, even in gift, against his/her
consent. The donee may refuse the gift as in cases of non-beneficial property or onerous gift.
Onerous gifts are such where the burden or liability exceeds the actual market value of the subject
matter. Thus, acceptance of the gift is necessary. Such acceptance may be either express or implied.
Implied acceptance may be inferred from the conduct of the donee and the surrounding
circumstances. When the donee takes possession of the property or of the title deeds, there is
acceptance of the gift. Where the property is on lease, acceptance may be inferred upon the
acceptance of the right to collect rents. However, when the property is jointly enjoyed by the donor
and donee, mere possession cannot be treated as evidence of acceptance. When the gift is not
onerous, even minimal evidence is sufficient to prove that the gift has been accepted by donee.
Mere silence of the donee is indicative of the acceptance provided it can be established that the
donee had knowledge of the gift being made in his favour.

Where the deed of gift categorically stated that the property had been handed over to the donee and
he had accepted the same and the document is registered, a presumption arises that the executants
are aware of what was stated in the deed and also of its correctness. When such presumption is
coupled with the recital in the deed that the donee had been put in possession of the property, the
onus of disproving the presumption would be on the donor and not the donee.

Where the donee is incompetent to contract, e.g., minor or insane, the gift must be accepted on his
behalf by a competent person. The gift may be accepted by a guardian on behalf of his ward or by a
parent on behalf of their child. In such a case, the minor, on attaining majority, may reject the gift.

Where the donee is a juristic person, the gift must be accepted by a competent authority
representing such legal person. Where the gift is made to a deity, it may be accepted by its agent,
i.e., the priest or manager of the temple.

Section 122 provides that the acceptance must be made during the lifetime of the donor and while
he is still capable of giving. The acceptance that comes after the death or incompetence of the
donor is no acceptance. If the gift is accepted during the life of the donor but the donor dies before
the registration and other formalities, the gift is deemed to have been accepted and the gift is valid.
 Modes of making a gift

Section 123 of the Transfer of Property Act deals with the formalities necessary for the completion
of a gift. The gift is enforceable by law only when these formalities are observed. This Section lays
down two modes for effecting a gift depending upon the nature of the property. For the gift of
immovable property, registration is necessary. In case the property is movable, it may be
transferred by the delivery of possession. Mode of transfer of various types of properties are
discussed below:

Immovable properties

In the case of immovable property, registration of the transfer is necessary irrespective of the value
of the property. Registration of a document including gift-deed implies that the transaction is in
writing, signed by the executant (donor), attested by two competent persons and duly stamped
before the registration formalities are officially completed. In the case of Gomtibai v. Mattulal, it
was held by the Supreme Court that in the absence of written instrument executed by the donor,
attestation by two witnesses, registration of the instrument and acceptance thereof by the donee, the
gift of immovable property is incomplete.

The doctrine of part performance is not applicable to gifts, therefore all the conditions must be
complied with. A donee who takes possession of the land under unregistered gift-deed cannot
defend his possession on being evicted. The following must be kept in mind regarding the
requirement of registration:

 Registration of the gift of immovable property is must, however, the gift is not
suspended till registration. A gift may be registered and made enforceable by law even
after the death of the donor, provided that the essential elements of the gift are all
present.

 In case the essential elements of a valid gift are not present, the registration shall not
validate the gift.
It has been observed by the courts that under the provisions of the Transfer of Property Act,
Section 123, there is no requirement for delivery of possession in case of an immovable gift. The
same has been held in the case of Renikuntla Rajamma v. K. Sarwanamma that the mere fact that
the donor retained the right to use the property during her lifetime did not affect the transfer of
ownership of the property from herself to the donee as the gift was registered and accepted by the
donee.

Movable properties

In the case of movable properties, it may be completed by the delivery of possession. Registration
in such cases is optional. The gift of a movable property effected by delivery of possession is valid,
irrespective of the valuation of the property. The mode of delivering the property depends upon the
nature of the property. The only things necessary are the transfer of the title and possession in
favour of the donee. Anything which the parties agree to consider as delivery may be done to
deliver the goods or which has the effect of putting the property in the possession of the transferee
may be considered as a delivery.

Actionable claims

Actionable claims are defined under Section 3 of the Transfer of Property Act. It may be unsecured
money debts or right to claim movables not in possession of the claimant. Actionable claims are
beneficial interests in movable. They are thus intangible movable properties. Transfer of actionable
claims comes under the purview of Section 130 of the Act. Actionable claims may be transferred as
gift by an instrument in writing signed by the transferor or his duly authorised agent. Registration
and delivery of possession are not necessary.

A gift of future property

Gift of future property is merely a promise which is unenforceable by law. Thus, Section 124 of the
Transfer of Property Act renders the gift of future property void. If a gift is made which consists of
both present as well as future property, i.e., one of the properties is in existence at the time of
making the gift and the other is not, the whole gift is not considered void. Only the part relating to
the future property is considered void. Gift of future income of a property before it had accrued
would also be void under Section 124.

A gift made to more than one donee

Section 125 of the Act says that in case a property is gifted to more than one donee, one of whom
does not accept it, the gift, to the extent of the interest which he would have taken becomes void.
Such interest reverts to the transferor and does not go to the other donee.
A gift made to two donees jointly with the right of survivorship is valid, and upon the death of one,
the surviving donee takes the whole.

Provisions relating to onerous gifts

Onerous gifts refer to the gifts which are a liability rather than an asset. The word ‘onerous’ means
burdened. Thus, where the liabilities on a property exceed the benefits of such property it is known
as an onerous property. When the gift of such a property is made it is known as an onerous gift, i.e.,
a non-beneficial gift. The donee has the right to reject such gifts.

Section 127 provides that if a single gift consisting several properties, one of which is an onerous
property, is made to a person then that person does not have the liberty to reject the onerous part
and accept the other property. This rule is based upon the principle of “qui sentit commodum
sentire debet et onus” which implies that the one who accepts the benefit of a transaction must also
accept the burden of it. Thus, when two properties, one onerous and other prosperous, are given in
gift to a donee in the same transaction, the donee is put under the duty to elect. He may accept the
gift together with the onerous property or reject it totally. If he elects to accept the beneficial part of
the gift, he is bound to accept the other which is burdensome. However, an essential element of this
Section is a single transfer. Both the onerous and prosperous properties must be transferred in one
single transaction only then they require the obligation to be accepted or rejected in a joint manner.

In case the onerous gift is made to a minor and such donee accepts the gift, he retains the right to
repudiate the gift on attaining the age of majority. He may accept or reject the gift on attaining
majority and the donor cannot reclaim the gift unless the donee rejects it on becoming a major.

Universal donee

The concept of universal donee is not recognised under English law, although universal succession,
according to English law is possible in the event of the death or bankruptcy of a person. Hindu law
recognises this concept in the form of ‘sanyasi’, a way of life where people renounce all their
worldly possessions and take up spiritual life. A universal donee is a person who gets all the
properties of the donor under a gift. Such properties include movables as well as
immovables. Section 128 lays down in this regard that the donee is liable for all the debts and
liabilities of the donor due at the time of the gift. This section incorporates an equitable principle
that one who gets certain benefits under a transaction must also bear the burden therein. However,
the donee’s liabilities are limited to the extent of the property received by him as a gift. If the
liabilities and debts exceed the market value of the whole property, the universal donee is not liable
for the excess part of it. This provision protects the interests of the creditor and makes sure that
they are able to chase the property of the donor if he owes them.

Suspension or revocation of gifts

Section 126 of the Act provides the legal provisions which must be followed in case of a
conditional gift. The donor may make a gift subject to certain conditions of it being suspended or
revoked and these conditions must adhere to the provisions of Section 126. This Section lays down
two modes of revocation of gifts and a gift may only be revoked on these grounds.

Revocation by mutual agreement

Where the donor and the donee mutually agree that the gift shall be suspended or revoked upon the
happening of an event not dependent on the will of the donor, it is called a gift subject to a
condition laid down by mutual agreement. It must consist of the following essentials:

 The condition must be expressly laid down

 The condition must be a part of the same transaction, it may be laid down either in the
gift-deed itself or in a separate document being a part of the same transaction.

 The condition upon which a gift is to be revoked must not depend solely on the will of
the donor.

 Such condition must be valid under the provisions of law given for conditional transfers.
For eg. a condition totally prohibiting the alienation of a property is void under Section
10 of the Transfer of Property Act.

 The condition must be mutually agreed upon by the donor and the donee.

 Gift revocable at the will of the donor is void even if such condition is mutually agreed
upon.

Revocation by the rescission of the contract

Gift is a transfer, it is thus preceded by a contract for such transfer. This contract may either be
express or implied. If the preceding contract is rescinded then there is no question of the
subsequent transfer to take place. Thus, under Section 126, a gift can be revoked on any grounds
on which its contract may be rescinded. For example, Section 19 of the Indian Contract Act makes
a contract voidable at the option of the party whose consent has been obtained forcefully, by
coercion, undue influence, misrepresentation, or fraud. Thus, if a gift is not made voluntarily, i.e.,
the consent of the donor is obtained by fraud, misrepresentation, undue influence, or force, the gift
may be rescinded by the donor.

The option of such revocation lies with the donor and cannot be transferred, but the legal heirs of
the donor may sue for revocation of such contract after the death of the donor.

The limitation for revoking a gift on the grounds of fraud, misrepresentation, etc, is three years
from the date on which such facts come to the knowledge of the plaintiff (donor).

The right to revoke the gift on the abovementioned grounds is lost when the donor ratifies the gift
either expressly or by his conduct.

Bonafide purchaser

The last paragraph of Section 126 of the Act protects the right of a bonafide purchaser. A bonafide
purchaser is a person who has purchased the gifted property in good faith and with consideration.
When such a purchaser is unfamiliar with the condition attached to the property which was a
subject of a conditional gift then no provision of revocation or suspension of such gift shall apply.

Exceptions

Section 129 of the Act provides the gifts which are treated as exceptions to the whole chapter of
gifts under the Act. These are:

 Donations mortis causa

These are gifts made in contemplation of death.

 Muslim-gifts (Hiba)

These are governed by the rules of Muslim Personal Law. The only essential requirements are
declaration, acceptance and delivery of possession. Registration is not necessary irrespective of the
value of the gift. In case of a gift of immovable property worth more than Rupees 100, Registration
under Section 17 of the Indian Registration Act is must, as it is applicable to Muslims as well. For a
gift to be Hiba only the donor is required to be Muslim, the religion of the donee is irrelevant.

Q2- When an acceptance of a gift to be made?

An acceptance of a gift is to be made only when a donor is still capable of giving or during the
lifetime of the donor.

Q3- What are the void gifts under Transfer of Property act, 1882?

Void gifts means a gift which is not enforceable by the law due to the incompetence of a person
or both the persons i.e. donor or donee.

Void gifts can be:

1. Donee died before the acceptance of a gift.

2. When a gift is made for unlawful purpose.

3. When a condition which is impose is forbidden by law or unlawful

4. When a person is incompetent to make a gift i.e. minor or lunatic

Q5- What do you understand by universal done?

Universal donee is defined under the section 128 of Transfer of Property Act,1832 which means
that when the transfer is made, whole donor’s property of is being transferred to the donee with
all the debts due by and with the liabilities of the donor at the time when the gift is made and the
donee is personally liable.

Q6- Where the onerous gift is defined and what do you understand by it?

Onerous gift is defined under section 127 of Transfer of Property Act which stated that when a
gift is in a form of single transfer and is to be made to the same person with several things where
one or two can be and others are not, created a burden on the donee that the donee can take
nothing until he has accepted it fully.
Whereas, a gift is in a form of two or more separate transfers, which is made to the same person
with several things then in this situation a donee is under liberty to accept the one of them and
rejects the other.

Q7- What is the principle on which the onerous gift is based upon?

Onerous gift is based upon the maxim “Qui Sntit Commodum Sentire Debet Et Onus”. It means
that one who receives the advantage must have to bear the burden.

Q8- What do you understand by the onerous gift to the disqualified person?

When a donee is not competent to make a contract and accepted the property which is burdened
by and that time he is not bound by his obligation. But, as soon as he becomes competent to
make contract and being aware about his obligation, he can retain back his property and becomes
bound of it.

Q9- What can be a mode of creating a gift to make it effective according to section 123 of
Transfer of Property Act, 1882?

According to section 123, Transfer of immovable property through gift will be effective only by
a registered instrument which is signed by or on behalf of the donor, and it should be attested by
at least two witnesses. But, if the instrument is not registered then the title of the immovable
property to the donee cannot pass.

However, transfer of movable property will be effective either by the registered instrument
which is signed by or on behalf of the donor and attested by at least two of the witnesses or
merely delivery of possession is sufficient. And such delivery will take place in the same way as
the goods sold may be delivered.

Q10- What are the grounds of revocation or suspension of gift under section 126 of TPA,
1882?

Section 126 of Transfer of Property Act states the ground of revocation and suspension of gifts:

1. A gift can be revoked if there is a failure of consideration and if it were a contract then it
might get rescinded.
2. If the validity of a gift is dependent on any specified event, and that of such specified
event is not depend on the will of the donor then the gift can be suspended or revoked,