By Vikrant Rana, Rupin Chopra and Shantam Sharma
Gift deeds play a significant role in property law, allowing individuals to transfer ownership of their property—movable or immovable—without any monetary consideration. However, one crucial aspect of gift deeds is their irrevocability once certain conditions are met. This article delves into the legal nuances surrounding the irrevocability of gift deeds, drawing insights from the landmark judgment of the Supreme Court in N. Thajudeen vs. Tamil Nadu Khadi and Village Industries Board.[1]
Definition and Validity of Gift Deeds
According to Section 122[2] of the Transfer of Property Act, 1882, a gift is defined as a voluntary transfer made without compensation by one person (the donor) to another (the donee), provided the donee accepts it. For a gift deed to be valid, it must satisfy the following conditions:
- Voluntary Transfer: The donor must willingly transfer the property without coercion or any monetary consideration.
- Acceptance by the Donee: Acceptance is essential and must occur while the donor is alive and capable of making the gift; otherwise, the gift deed is void.
- Legal Documentation: Especially for immovable property, registration and attestation are mandatory under the Registration Act, 1908, for the deed’s validity.
Supreme Court’s Judgment on Irrevocability
In the case of N. Thajudeen vs. Tamil Nadu Khadi and Village Industries Board, the Supreme Court addressed the revocability of a gift deed, emphasizing that a gift deed cannot ordinarily be revoked, especially when no right of revocation is reserved in the deed. The bench, comprising Justice Pankaj Mithal and Justice Ujjal Bhuyan, stated, “No doubt, the gift validly made can be suspended or revoked under certain contingencies but ordinarily it cannot be revoked, more particularly when no such right is reserved under the gift deed.”
The case revolved around a gift deed executed in 1983, whereby the appellant-defendant transferred a property to the plaintiff-respondent for manufacturing Khadi Lungi and Khadi Yarn. The deed included a condition prohibiting the plaintiff from using the property for personal gain and expressly stated that neither the donor nor their heirs retained any rights to the property after the transfer. The deed was absolute, with no conditions for revocation, only stipulating the intended use of the property.
In 1987, the appellant-defendant attempted to revoke the gift deed. The plaintiff-respondent challenged this revocation, asserting that once the purpose set out in the gift deed was fulfilled—by establishing a manufacturing unit of Khadi Lungi and Khadi Yarn—the absence of revocation conditions made the gift deed irrevocable.
The court accepted the plaintiff’s contention and reiterated the principle that a gift deed cannot be revoked when no right of revocation is reserved.
Conditions for Revocation of Gift Deeds[3]
The Supreme Court further elucidated the conditions under which a gift deed may be revoked as per Section 126 of the Transfer of Property Act:
- Mutual Agreement for Revocation:The first condition states that a gift deed can be revoked if both the donor and the donee agree for its revocation upon the happening of a specified event. In this case, the court found no indication in the gift deed that such an agreement existed between the parties.
- Agreement for Revocation at Will:Secondly, a gift deed would be void, wholly or partially, if the parties agree that it shall be revocable at the mere will of the donor. The court noted that there was no such agreement present between the parties.
- Nature of the Gift as a Contract:Thirdly, a gift is liable to be revoked if it is in the nature of a contract that could be rescinded. The court observed that the gift in question was not in the form of a contract and therefore not subject to rescission.
Ultimately, the court concluded that none of the exceptions permitting revocation of the gift deed applied in this case. The judgment stated, “Thus, none of the exceptions permitting revocation of the gift deed stands attracted in the present case. Thus, leading to the only conclusion that the gift deed, which was validly made, could not have been revoked in any manner. Accordingly, the revocation deed dated 17.08.1987 is void ab initio and is of no consequence which has to be ignored.”
Conclusion
This judgment underscores the importance of understanding the irrevocability of gift deeds under Indian law. Once a gift deed is executed and the necessary conditions are met, it becomes irrevocable unless specific contingencies for revocation are clearly outlined within the deed. The principles set forth by the Supreme Court in N. Thajudeen vs. Tamil Nadu Khadi and Village Industries Board serve as a vital reminder for both donors and donees regarding their rights and responsibilities concerning gift deeds.
[1] Civil Appeal No. 6333 of 2013
[2] Available at- https://www.indiacode.nic.in/bitstream/123456789/2338/1/A1882-04.pdf
[3] Para 15 of Civil Appeal No. 6333 of 2013