By Shantam Sharma and Ritvik Kashyap
Introduction
In India, the registration of Gift Deeds plays a crucial role in ensuring the legality and authenticity of the transfer of property without consideration. While gifting property or assets is an age-old practice, the legal formalities surrounding Gift Deeds are imperative to avoid disputes and ensure that the transfer is valid in the eyes of the law. The Transfer of Property Act, 1882[1], mandates registration of Gift Deeds, to provide clarity and security to both parties involved. It serves as proof of the gift and the intent behind the transfer. Additionally, the gift must be made out of free will and not under any duress or coercion. This article delves into the registration process of gift deed and the consequences of non-registration of gift deed.
Registration process of Gift Deed
Registering a gift deed is an essential step in validating and ensuring the enforceability of the transfer of immovable property. Below is an overview of the process and the key components involved:
- Validity of the Gift Deed:
As per Section 123 of the Transfer of Property Act, 1882[2], a gift of immovable property is legally valid only when it is made through a registered gift deed. This requires both the donor and the donee to sign the deed in the presence of two witnesses. For the gift of movable property, the deed may be registered, or the property may be handed over to the donee to complete the transfer. - Drafting and Execution:
To begin the registration process, the gift deed must be drafted carefully, ensuring it includes all required clauses. It should be printed on stamp paper of the appropriate value, as per the stamp duty regulations of the relevant state. The donor and donee must sign each page of the deed, with the signatures attested by at least two witnesses. - Acceptance and Mental Capacity:
For the gift to be legally binding, the donee must accept the gift while the donor is still alive and of sound mind. This acceptance is necessary to confirm the donee’s consent to receive the property. - Stamp Duty and Registration:
The stamp duty required for the gift deed varies by state. It is crucial to comply with the stamp duty regulations in the applicable jurisdiction. After the gift deed is executed on the stamp paper, it must be registered at the office of the Registrar or Sub-Registrar having jurisdiction over the location of the immovable property. For movable property, the registration should take place at the office located in the donor’s place of residence.
Consequences of Non-registration of Gift Deed
Non-registration of a gift deed, especially for immovable property, renders the transfer legally invalid and unenforceable, complicating ownership disputes and future transactions. The following are the consequences of non-registration of a gift deed:
- Invalidity of the Gift Deed: As per Section 123 of the Transfer of Property Act, 1882, and the Section 17 of the Indian Registration Act, 1908[3], the registration of a gift deed for moveable and immovable property is mandatory for it to be legally valid. Without registration, the transfer will not be recognized, and the donor may retain ownership. Registration ensures the transfer is recorded in public records, providing legal proof and protecting the rights of both the donor and donee.
- Inability to Enforce the Gift: In case of a dispute or if the donee wishes to claim ownership of the property or assert their rights, the unregistered gift deed will not be considered enforceable in a court of law. The donee may not be able to claim the gifted property unless the deed is registered.
- Loss of Legal Evidence: A gift deed that is not registered will lack the evidentiary value required to prove the gift transfer in legal proceedings. The deed, being unregistered, would not be admissible as evidence in court to establish the transfer of ownership or intention of the donor.
- Disputes Over Gift Validity: If a family member or another third party challenges the validity of the gift, an unregistered deed may lead to unnecessary complications. The lack of registration might give rise to allegations of fraud, coercion, or lack of consent from the donor.
- Non-transfer of Possession: For a gift to be legally effective, possession of the gifted property must be transferred. Non-registration may prevent the donee from legally taking possession, especially in the case of immovable property, where physical possession and registration are both necessary to establish the transfer of ownership.
- Future Transactions: Without a registered gift deed, the donee may face difficulties in future transactions involving the property. If the donee wishes to sell, mortgage, or transfer the gifted property, the lack of registration may hinder such processes, as the property’s ownership may not be recognized by authorities, banks, or buyers.
For these reasons, it is crucial to register the gift deed to ensure that the gift is legally binding, transferable, and valid under the law.
Revocation of Gift Deed[4]
Once a valid gift deed is executed and registered, it cannot be revoked at the donor’s will. However, Section 126 of the Transfer of Property Act, 1882, provides certain conditions under which a gift may be revoked:
Grounds for Revocation:
- Mutual Agreement:
- If the donor and donee agree, a gift can be revoked through a mutually executed cancellation deed.
- Failure of Condition:
- If the gift was made subject to a specific condition, and the donee fails to fulfill it, the donor can seek revocation.
- Fraud, Coercion, or Undue Influence:
- If the donor proves that the gift was obtained fraudulently or under duress, a court may declare it void.
Conclusion
The registration of Gift Deeds in India is a vital legal procedure that ensures the validity, authenticity, and enforceability of property transfers made without consideration. While the act of gifting property has deep cultural roots, adhering to the legal requirements set forth in Section 123 of the Transfer of Property Act, 1882, and the Indian Registration Act, 1908 is essential to avoid disputes and protect the interests of both the donor and donee. A registered gift deed serves as a clear record of the transfer, safeguarding both parties’ rights and confirming the donor’s intent.
Failure to register a gift deed can have significant consequences, including the invalidity of the transfer, inability to enforce the gift in legal proceedings, and complications in future property transactions. As such, registration is a crucial step in making a gift legally effective and ensuring the smooth transfer of ownership.
[1] Available at: https://www.indiacode.nic.in/bitstream/123456789/2338/1/A1882-04.pdf
[2] Transfer how effected, available at: https://www.indiacode.nic.in/show-data?abv=null&statehandle=null&actid=AC_CEN_3_20_00042_188204_1523272233671&orderno=132&orgactid=AC_CEN_3_20_00042_188204_1523272233671
[3] Documents of which registration is compulsory, available at: https://www.indiacode.nic.in/show-data?actid=AC_CEN_18_43_00004_190816_1523340837338&orderno=18