What is Gift? Explain Essentials of a Valid Gift
Introduction
A gift is a transfer of ownership of property by the sender to the receiver without any consideration or compensation.
The Property which is to be gifted can be movable property or immovable property.
Section 3 of Transfer of Property Act does not define what immovable property is but it states what is not included in immovable property. Following are the things which are not included in immovable property:
- Standing Timber
- Growing Crops
- Growing Grass
Movable property has not been defined in the Transfer of Property Act, 1882. In General Clauses Act, 1897 movable property has been defined. It is as such:
“Movable property means property of every description except immovable property.”
Following are not immovable property as per the General Clauses Act, 1897:
- Royalty.
- A decree for sale of immovable property.
- A decree for arrears of rent.
- Right of worship.
- Machinery which is not permanently attached to the earth.
- Government promissory notes.
- A right to recover maintenance allowance.
- Standing timber, growing crops or grass.
Gift : [Section 122 of Transfer of Property Act, 1882]
“Gift is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee.”
Parties:
- Donor: The person who gives the Gift is Donor.
- Donee: The person who receives the Gift is Donee.
Essentials of a Valid Gift
- Transfer of Ownership
- Existing Property
- No consideration
- Free Consent
- Acceptance of Gift
- Transfer of Ownership
For a gift to be a valid transfer of ownership is necessary. The donor is the person who transfers his property to the donee; donee is the person to whom the donor transfers his property. Conditional gifts are permissible but the condition must not be contrary to the provisions mentioned in sections 10 to 34 of Transfer of Property Act, 1882.
In Nur Bhanu v Abdul Amis Bhuinya (AIR 2006 Gau 27), the court held that the donor must be competent to contract. It means the Donor must be a Major, Sound Person and must not be disqualified by law.
- Existing Property
The property which is to be given must exist at the time of making the gift, even if the transfer of the property may be in the present or future. Property to be gifted can either be movable or immovable. The property which is not in existence cannot be given as a gift, it will be declared void.
Section 124 states that if the property is not in existence at the time of making the Gift then the Gift will be void.
Example:
- The actionable claim is a gift as it is an existing property.
- A Gift which compromises both existing and future property then the part of gift which is future property will be void.
- Mortgage property and leased property are a gift as they are immovable property.
In Munni Lal Mahto v Chandeshwar Mahto (AIR 2007 Pat 66), the court said that once a preliminary decree in a suit for partition is passed, it amounts to the end of the status of the Joint Family Coparcenary. Parties are no coparceners. They are then tenants in common in possession. The moment the coparcenary comes to an end, each coparcener is free to give his share though still not physically divided. Their shares become definite under the decree. When the Donor gives a gift which has joint ownership then the donee receives the part of the Gift which comes under the Donor’s share.
- No consideration
It is necessary that when a gift is given it is given free of charge.
Example:
Jagesh Transfers a villa of ₹50, 00,000 to Hitesh in ₹100. Here this transaction will not be considered a gift. It will be considered as sale of the property because as per the definition of Gift the property must be transferred without any consideration. However here Hitesh has paid ₹100 for the Villa, it does not matter what amount of money is paid.
The consideration has the same meaning as in the Indian Contract Act. Consideration must be in monetary terms.
- When a father transfers his property to his daughter because of love and affection then it is considered a gift. Because here there is no consideration as the consideration must be monetary but love and affection cannot be calculated in monetary terms.
- Property transferred to the donee by the donor for the services rendered by the donee is a gift.
- Property transferred by the donor to donee because the donee has undertaken the liability of the donor does not give. Because here donee has undertaken liability of Donor which forms monetary obligation.
- Free Consent
The Donor must transfer the property to Donee voluntarily or free consent.
When consent is not free:
- When consent obtained by coercion
- When consent obtained by undue influence
- When consent obtained by fraud, etc.
Example:
- Mital points the gun at Raghu’s head and tells him to sign the gift deed here the consent of Donor who is Raghu has been taken by threatening him so the gift deed is not valid.
- Radha and Mitual (Radha’s son) under the threat of Dignesh (Radha’s husband and Mitual’s father) that he will commit suicide if they did not sign the gift deed in which the property is gifted to Kirtan (Dignesh’s Brother) signs the gift deed. Here the consent of Radha and Mitual is not given voluntarily so the gift deed is not valid.
- Acceptance of Gift
The gift by the donor must be accepted by donee. The Donee has the right to refuse the gift.
In some situations Donee is unable to accept the gift then it is accepted by someone else of the donee’s behalf:
- When the donee is minor then the gift is accepted by his lawful guardian.
- When the donee is of unsound mind then the gift is accepted by the lawful guardian of the donee on his behalf.
- When a donee is a juristic person then the gift is accepted by the competent authority of the legal person.
- When the gift is given to deity then it is accepted by the agent of the place.
If the donee dies before accepting the gift then the gift deed is void.
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