Monday, December 2, 2013

An advocate Artical about: Transferring Properties by way of Gifl

It is very common that people do make gifts to their beloved ones on different occasions to express their affection and love. Gifts are made even for other purposes including philanthropic, religious or charitable purposes. When once such gifts are made, there is transfer of property in favour of the donees from the donors. Transfer of property can be both moveable and immovable. In this article, I would deal with gifts of immovable property.

‘Gift’ is defined in section 122 of the Transfer of Property Act, 1882, as a transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the done, and accepted by or on behalf of the done. Section 123 of the Act stipulates the procedure as to how transfers of immovable properties are affected.

For a valid gift, it must have the following essential characteristics (1) Donor must be made voluntarily, (3) it should be without consideration,(4) there must be an offer by the donor, (5) there must be an acceptance by the done or on his behalf, (6) must be done during the life time of the donor and the done; and (7) must be an existing property and not a future one.

A gift is essentially a gratuitous transfer. In other words, non acceptance of monetary consideration in return from the done to the donor is the hallmark of a gift. Even an undertaking by the done to pay a token sum would tantamount to consideration and the transaction would not qualify to be treated as a gift. A gift cannot be made with an intention of placing the done under a legal obligation. Section 123 of the Transfer of Property Act postulates that an immovable property worth more than Rs.100/- requires registration and for want of registration oral gift is not admissible in view of Section 17 of the Registration Act. Therefore, gift of immovable property can be effected only through a registered instrument. The donor must sign a deed of Gift and at least two witnesses must attest his signature. A deed of gift needs donee’s acceptance and therefore the general practice is not only the done is made a party to the deed but also makes him an executing part. If the done does not accept the gift, the mere fact of registration will not make the gift legal. A gift is complete upon the execution of the deed of gift and its delivery to the done which constitutes his acceptance of the gift.

A gift deed must contain a brief narration as to how the donor got possession of property; whether it is his self-acquit red property or his share of ancestral property, whether the property is encumbered or not and if encumbered how he will indemnify the done against any monetary loss and whether the donor is competent to deal with the property and whether the done is competent to accept the gift.
If the gift is to a public trust or a charitable institution, it is always advisable to follow the procedure adopted for effecting sale of an immovable property by scrutinizing the title as to its ownership, market ability and encumbrance. It must be in writing.

The done obtains his interest in the property immediately on execution of the gift deed by the donor. Hence, even if there exists a recital in the gift deed that the gift is revocable, in effect it is irrevocable. The intention of the maker and not the nomenclature of the document which requires consideration to find out as to whether a document is a gift deed or not and the document must be read as a whole. Further, donor can gift to the donee only an existing property and not the future property. The donor must ensure that the donee is competent enough to accept the gift. Only a major can make a gift and not a minor unless the guardian of the minor is empowered to do so. Aminor can accept a gift if he is capable of understanding the transaction. Otherwise, he can accept it through his guardian. Indian Registration Act requires that all non-testamentary gifts if reduced into writing require registration with an exception as provided in sec. 129 ofthe Transfer of Property Act dealing with the gifts of Mohammedans.

Acceptance of the gift must be given by the donee or on his behalf during the lifetime of the donor and if the donee dies before acceptance, the gift becomes void. The donee is not bound to accept the gift in the same form in which it is offered to him. Mere dedication of some land for the purpose of a temple will not qualify to be considered as a gift in the absence of acceptance by the donee. Post- acceptance by the donee of the gift also is impermissible. A gift is not valid unless it is accompanied by delivery of possession of the subject of the gift from the donor to the donee. But, where from the nature of the case physical possession cannot be delivered the donor must do all the
gift, the donor should not be under pressure or under undue influence of the donee and the gift should emanate from a free will and at the discretion of the donor. Suppose, X, the donor, has been looked after by Y, the donee, during the last phase of his life and thereby there generates love and affection towards y from X leading to execution of the deed of gift. This circumstance cannot be considered to be a circumstance of undue infl uence. If a gift is not spontaneous and independent, there may be a case of undue influence against the donor. Under Mohammedan Law, a dower debt being a debt payable by the husband to his wife, a gift ill lieu of dower debt cannot be held to be valid.

The Karta of a Hindu family has the power to make a gift within reasonable limits of ancestral immovable property for pious purposes. A coparcener throwing his separate property into common stock makes no gift. It has been held by the Supreme Court in Mallesappa Bandappa Desai vs. Desai Mallappa [1961 (3) SCR 779] that the doctrine of throwing into common stock inevitably postulates that the owner of a separate property is a coparcener who has an interest in the coparcenary property and desires to blend his separate property with the coparcenary property. The act by which the coparcener throws his separate property to the common stock is a unilateral act. By his individual volition he renounces his individual rights in that property and treats it as a property of the family. When a coparcener throws his separate property into the common stock, he makes no gift under Chapter VII of the Transfer of Property Act.

A minor can accept a gift and the minority by itself is not a bar to his acceptance of the gift. A gift can be made to a class of persons provided the members thereof are existing at the time of gift. Where a gift is made to two donees, and gift to one of them becomes invalid, the other would take the whole estate. Acceptance of gift may be either express or implied.Even silence on the part of the donee is sufficient to infer that the donee has

A gift is distinguishable from grant, sale and will.

In the case of grant, neither acceptance nor delivery of posses- sion of the property is necessary. A gift is voluntary and without consid- eration while a grant may lack both. A gift conveys the corpus while a grant may convey only the right of enjoyment of property without conveying any interest in the corpus. A gift must be unconditional, but a grant need not be so. Property acquired by gift is transferable, but one obtained by grant is not necessarily so and the grant depends upon its subject, purpose and terms. Grant may be revocable at the will of the grantor while a gift is irrevocable at the will of the donor.

In the case of sale, consideration in money or money's worth is a must while a gift is a voluntary transfer of property without any consideration. In sale of property, unlawfulness of consideration would render the whole transaction void since consideration is an essential element

of sale. But, in case of a gift as consideration is of no consequence, unlawfulness of consideration would not invalidate the gift.

The criteria to be adopted for ascertaining whether an instrument is a will or not is by examining whether the disposition takes effect during the life time of the executant of the instrument or whether it takes place after his demise and whether it is revocable or not since in the case of gift, the transfer of property takes immediately upon execution and delivery of the gift deed. In the case of a will, the testator reserves to himself the power of revocation. The Will must not be intended to operate in praesent but only in future on the death of the testator. Regard must be had to the intention of the executants and the language used by him while deciding the issue.

A gift is considered as invalid (a) if the property gifted is not in praesenti,(b) if one of the donees refuses to accept his share (in respect of that donee) when the gift is made jointly to the donees, (c) if it is a revocable gift, (d) if it is an illegal transfer and (e) if it is transferred by an incompetent person.

The Gift if given to the family members, applicable Stamp Duty is Rs.l,OOOI- in Kamataka. The family members in relation to donor for the said purpose means husband, wife, son, daughter, daughter-in-law, grand children etc., If it is other than the family members that is any trust, charitable institutions etc., Stamp Duty is payable as a Conveyance as per the market value.

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