Law relating to the Gift Deed. : Adv. Rohit Erande ©

November 11, 2022

Law relating to the Gift Deed

Adv. Rohit Erande ©

Ownership rights in any property can be transferred during the lifetime of any two or more living persons only by a registered instrument like a Sale Deed, gift deed, Release or Relinquishment Deed, Partition Deed and these are called as non testamentary documents. On the other hand, a person may transfer or bequeath his/her self acquired property after his death, by virtue of Will, which is called as a Testamentary Document. IF a person dies without making any Will, then his/her property shall be transferred as per the provisions of Succession Law.

Let's see the legal provisions related to the "Gift Deed" in nutshell. which are enshrined from Sections 122 to 129 of the Transfer of Property Act, 1882.

The Key points of a valid gift Deed.

1. Any person competent to Contract can make a Gift Deed. i.e. a person who is a major by age and who is of sound mind.

2. A person - a DONOR can transfer his/her 'Owned' and 'existing' immovable or movable property by way of gift deed to a DONEE (beneficiary). In short, something that does not exist cannot be gifted.

3. Any sale Deed made without consideration is Void. On the other hand the the Gift Deed has to be "without consideration". That is, in return for transfer of rights in the property, the Donor does not get any compensation from Donee.

Even though in practice we use words "Gift Deed by made out of natural love and affection towards Donee", the words 'out of Natural love and affection are not mentioned in the section.

4. A "conditional" Gift Deed can also be made subject to certain conditions. E.g. Even if the parents Gift their house to the kids, still parents can retain the life interest i.e. the right to live in the property till they are alive.

Hon. Supreme Court has recently clarified that a "conditional gift deed" is a gift deed which gives the right to the donor to cancel it if the Donee does not fulfill the conditions of the gift deed. (S. Sarojini Amma v. Velaidhun Pillai, Civil Appeal No. 10785/18). Let us see the facts of this case in brief. As she was issueless 74-year-old Sarojini Amma bequeathed the income to her niece -Velaidhun through a gift deed cum transfer deed and also accepted some consideration too. But the condition of the Gift Deed was that Velaidhoon would maintain Sarojini Amma and her husband for life and after the death of both of them, the Gift would become executable and ownership and possession of the land would go to Velaidhoon. But after few years, Sarojini Amma canceled the gift Deed and registered the cancellation deed. Feeling aggrieved, Velaidhun challenged it, and the case reached to the Supreme Court as the lower Court verdict went against Sarojini Amma.

Hon. Apex Court held in favour of Sarojini Amma and observed that as the Gift Deed was Conditional, the Donee - Sarojini Amma had every right to revoke it. Further, there is no legal requirement of law that in order to constitute the valid Gift Deed, delivery of a possession is a condition precedent.

Hon. The Supreme Court held that the part of the award in the transfer deed was 'conditional' and the award to the donor was

5. Mandatory Registration : It is mandatory by law to register the Gift Deed relating to Immovable property.

However in case of movable property, the transfer can be made either by registered instrument or by delivery.

6. Acceptance of a Donee :

This is very peculiar and important provision. The Donee needs to sign and accept the Gift on his own or through some authorized person. If the Donee dies before the acceptance, the Gift becomes Void.

7. Attesting Witnesses :

The Gift Deed needs to be attested by two independent witnesses.

8. Stamp duty :

The Stamp duty comes under concurrent list of the Constitution and hence every State has its different laws. In Maharashtra, same are governed by the Maharashtra Stamp Act. The percentage of Stamp duty keeps on changing from time to time. Currently, Under Article 34 of the said Act, if the Gift is to be given to the family members of the donor i.e. husband, wife, brother or sister then the stamp duty of 3% of the market value of the property to be Gifted has to be paid.

Also keep it in mind, that one need not Gift his/her 100% share, part of the property also can be gifted. This is done practically in housing Society by parents infavour of their kids so that later can avail loan after getting interest in the property.

But as far as Maharashtra is concerned, if the said Gift is to be made in respect of residential or agricultural and in favour of husband, wife, son, daughter, grandson, granddaughter, wife of the deceased child, then only two hundred rupees stamp duty will be levied.

In rest of the cases, full stamp duty like Sale Deed will be applicable. However, to the much of dismay of the people, if I may say so, in Pune, even if stamp duty is Rs.200/- as above, additional 2 percent metro sur-charge etc. are charged for.

9. Revocation of a Gift :

A gift deed can be revoked only in 'exceptional' circumstances.

suppose, If the Donor and the Donee decide that if a certain thing happens, the Gift Deed shall stand revoked, and only if such thing happens, the Gift Deed can be cancelled. But if the Donor has control over the occurrence or non-occurrence of such a particular thing, then in such case the Gift deed cannot be revoked. A Gift Deed can also be canceled for the same reasons as a contract can be cancelled.

10. Unique relief for Senior Citizens:

The comparatively recent enactment 'The Maintenance and Welfare of Parents and Senior Citizens Act, 2007', provides better remedy. As per Sec.23 of this Act which reads as , "Where any senior citizen who, after the commencement of this Act, has transferred by way of gift or otherwise, his property, subject to the condition that the transferee shall provide the basic amenities and basic physical needs to the transferor and such transferee refuses or fails to provide such amenities and physical needs, the said transfer of property shall be deemed to have been made by fraud or coercion or under undue influence and shall at the option of the transferor be declared void by the Tribunal."

Thus under this Section, the Senior citizens can cancel the gift Deed by proving the ingredients.

Last but not the least, the Gift Deed is very important documents and which needs professional guidance. Do not complicate the things by relying on "free information, not the knowledge" on the social media.

Thanks and Regards