CAN A GIFT BE TAKEN BACK?

Introduction

A gift is a transfer of
property, movable or immovable, made voluntarily and without consideration by a
donor to a donee. But can a gift which has been made be taken back by the
donor? In other words, can a gift be revoked? There have been several instances
where parents have gifted their house to their children and then the children
have not taken care of their parents or ill-treated them. In such cases, the parents
wonder whether they can take back the gift which they have made on grounds of
ill-treatment. The position in this respect is not so simple and the law is
very clear on when a gift can be revoked.

LAW ON GIFTS

The Transfer of Property
Act, 1882 deals with gifts of property, both immovable and movable. Section
122 of the Act defines a gift as the transfer of certain existing movable or
immovable property made voluntarily and without consideration by a donor to a
donee. The gift must be accepted by or on behalf of the donee during the
lifetime of the donor and while he is still capable of giving. If the donee
dies before acceptance, then the gift is void. In Asokan vs.
Lakshmikutty, CA 5942/2007 (SC), the Supreme Court held that in order
to constitute a valid gift, acceptance thereof is essential. The Act does not
prescribe any particular mode of acceptance. It is the circumstances of the
transaction which would be relevant for determining the question. There may be
various means to prove acceptance of a gift. The gift deed may be handed over
to a donee, which in a given situation may also amount to a valid acceptance.
The fact that possession had been given to the donee also raises a presumption
of acceptance.

This section is clear that
it applies to gifts of movable properties, too. A gift is also a transfer of
property and hence, all the provisions pertaining to transfer of property under
the Act are applicable to it. Further, the absence of consideration is the
hallmark of a gift. What is consideration has not been defined under this Act
and hence, one would have to refer to the Indian Contract Act, 1872. Section
2(d) of that Act defines ‘consideration’ as follows – when, at the desire of
one person, the other person has done or abstained from doing something, such
act or abstinence or promise is called a consideration for the promise.

HOW ARE GIFTS TO BE MADE?

Section 123 of the Act
answers this question in two parts. The first part deals with gifts of
immovable property, while the second deals with gifts of movable property.
Insofar as the gifts of immovable property are concerned, section 123 makes
transfer by a registered instrument mandatory. This is evident from the use of
the words ‘transfer must be effected’. However, the second part of
section 123 dealing with gifts of movable property, simply requires that a gift
of movable property may be effected either by a registered instrument signed as
aforesaid or ‘by delivery’.

The difference in the two
provisions lies in the fact that insofar as the transfer of movable property by
way of gift is concerned, the same can be effected by a registered instrument
or by delivery. Such transfer in the case of immovable property requires a
registered instrument but the provision does not make delivery of possession of
the immovable property gifted as an additional requirement for the gift to be
valid and effective. This view has been upheld by the Supreme Court in Renikuntla
Rajamma (D) By Lr. vs. K. Sarwanamma (2014) 9 SCC 456.

REVOCATION OF GIFTS

Section 126 of the Transfer
of Property Act provides that a gift may be revoked in certain circumstances.
The donor and the donee may agree that on the occurrence of a certain specified
event that does not depend on the will of the donor, the gift shall be revoked.
Further, it is necessary that the condition should be express and also
specified at the time of making the gift. A condition cannot be imposed
subsequent to giving the gift. In Asokan vs. Lakshmikutty (Supra),
the Supreme Court has held that once a gift is complete, the same cannot be
rescinded. For any reason whatsoever, the subsequent conduct of a donee cannot
be a ground for rescission of a valid gift.

However,
it is necessary that the event for revocation is not dependent upon the wishes
of the donor. Thus, revocation cannot be on the mere whims and fancies of the
donor. For instance, after gifting the donor cannot say that he made a mistake
and now he has had a change of mind and wants to revoke the gift. A gift is a
completed contract and hence unless there are specific conditions precedent
which have been expressly specified, there cannot be a revocation. It is quite
interesting to note that while a gift is a completed contract, there cannot be
a contract for making a gift since it would be void for absence of
consideration. For instance, a donor cannot enter into an agreement with a
donee under which he agrees to make a gift but he can execute a gift deed
stating that he has made a gift. The distinction is indeed fine! It needs to be
noted that a gift which has been obtained by fraud, misrepresentation,
coercion, duress, etc., would not be a gift since it is not a contract at all.
It is void ab initio.

DECISIONS ON THIS ISSUE

In Jagmeet
Kaur Pannu, Jammu vs. Ranjit Kaur Pannu AIR 2016 P&H 210, the
Punjab and Haryana High Court considered whether a mother could revoke a gift
of her house in favour of her daughter on the grounds of misbehaviour and
abusive language. The mother had filed a petition with the Tribunal under the
Maintenance and Welfare of Parents and Senior Citizens Act, 2007 which had set
aside the gift deed executed by the mother. It held that the deed was voidable
at the mother’s instance. The daughter appealed to the High Court which set
aside the Tribunal’s order. The High Court considered the gift deed which had
stated that the gift was made voluntarily, without any pressure and out of
natural love and affection which the mother bore towards the daughter. There
were no preconditions attached to the gift.

The
High Court held that the provisions of section 126 of the Transfer of Property
Act would apply since this was an important provision which laid down a rule of
public policy that a person who transferred a right to the property could not
set down his own volition as a basis for a revocation. If there was any
condition allowing for a document to be revoked or cancelled at the donor’s own
will, then that condition would be treated as void. The Court held that there
have been decisions of several courts which have held that if a gift deed was
clear and operated to transfer the right of property to another but it also
contained an expression of desire by the donor that the donee will maintain the
donor, then such expression in the gift deed must be treated as a pious wish of
the donor and the sheer fact that the donee did not fulfil the condition could
not vitiate the gift.

Again,
in the case of Syamala Raja Kumari vs. Alla Seetharavamma 2017 AIR (Hyd)
86 a similar issue before the High Court was whether a gift which was
made without any pre-conditions could be subsequently revoked. The donor
executed a gift deed in favour of his daughters out of love and affection. He
retained a life-interest benefit and after him, his wife retained a life-interest
under the said document. However, there were no conditions imposed by the donor
for gifting the property in favour of the donees. All it mentioned was that he
and his wife would have a life-interest benefit. Subsequently, the donor
executed a revocation deed stating that he wanted to cancel the gift since his
daughters were not taking care of him and his wife and were not even visiting
them. The Court set aside the revocation of the gift. It held that once a valid
unconditional gift was given by the donor and was accepted by the donees, the
same could not be revoked for any reason. The Court held that the donees would
get absolute rights in respect of the property. By executing the gift deed, the
donor had divested his right in the property and now he could not unilaterally
execute any revocation deed for revoking the gift deed executed by him in
favour of the plaintiffs.

Similarly,
in the case of Sheel Arora vs. Madan Mohan Bajaj, 2007 (6) Bom CR 633,
the donor executed a registered gift deed of a flat in favour of a donee.
Subsequently, the donor unilaterally executed a revocation deed cancelling the
gift. The Bombay High Court held that after lodging the duly executed gift deed
for registration, there was a unilateral attempt on the part of the donor to
revoke the said gift deed. Section 126 of the Transfer of Property Act provides
that the revocation of gift can be done only in cases specified under the
section and the same requires participation of the donee. In the case on  hand, there was no participation of the donee
in an effort on the part of the donor to revoke the said gift deed. On the
contrary, unilateral effort on the part of the donor by execution of a deed of
revocation itself disclosed that the donor had clearly accepted the legal consequences
which were to follow on account of the execution of a valid gift deed and
presentation of the same for registration.

However,
in the case of S. Sarojini Amma vs. Velayudhan Pillai Sreekumar 2018 (14)
SCALE 339, the Supreme Court considered a gift where, in expectation
that the donee would look after the donor and her husband, she executed a gift
deed. The gift deed clearly stated that the gift would take effect after the
death of the donor and her husband. Subsequently, the donor filed a deed of
cancellation of the gift deed. The Supreme Court observed that a conditional
gift became complete on the compliance of the conditions mentioned in the deed.
Hence, it allowed the revocation.

GIFTS MADE RESERVING INTEREST
FOR DONOR

One other mode of making a gift is a gift where the donor reserves an
interest for himself. For instance, a father may gift his flat to his son but
reserve a life-interest benefit for himself and his wife. Thus, although the
son would become the owner of the flat immediately, he would have an overriding
obligation to allow his parents to reside in the flat during their lifetime.
Thus, as long as they are alive, he would not be able to sell / lease or
otherwise transfer the flat or prevent them from staying in the flat. This issue
of whether a donor can reserve an interest for himself was a controversial one
and even the Supreme Court had opined for and against the same.

Ultimately,
a larger bench of the Supreme Court in Renikuntla Rajamma (D) By Lr. vs.
K. Sarwanamma (Supra) dealt with this matter. In this case, the issue
was that since the donor had retained to herself the right to use the property
and to receive rents during her lifetime whether such a reservation or
retention rendered the gift invalid? The Supreme Court upheld the validity of
such a gift and held that what was retained was only the right to use the
property during the lifetime of the donor which did not in any way affect the
transfer of ownership in favour of the donee by the donor. Thus, such a gift
reserving an interest could be a via media to making an absolute gift and then
being at the mercy of the donee. However, the gift deed should be drafted very
carefully else it would fail to serve the purpose.

CONCLUSION

‘Donor beware of how you gift, for a gift once given cannot be easily
revoked!’ If there are any
doubts or concerns in the mind of the donor then he should refrain from making
an absolute unconditional gift or consider whether to avoid the gift at all.
This is all the more true in the case of old parents who gift away their family
homes and then try to claim the same back since they are being ill-treated by
their children. They should be forewarned that it would not be easy to revoke
such a gift. In all matters of estate and succession planning, due thought must
be given to all possible and probable scenarios and playing safe is better than
being sorry!