CAN A GIFT DEED BE CHALLENGED

What is a Deed of Gift?

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According to section 122[1] of the Transfer of Property Act of 1882, immovable property may be transferred by a gift deed. A gift deed, like a sale deed, is the transfer of the property but without consideration. The question that may arise is, can a gift deed be challenged in Court?

Registration of gift deeds ?with the sub-registrar is mandatory in accordance with sections 17[2] of the Registration Act of 1908 and 123[3] of the Transfer of Property Act. Not doing so will render the transfer void. If the gift deed is not registered, it can be challenged in Court.

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Moreover, after a gift deed is recorded in the recipient’s name, only then may the recipient request a property change. A mutation is required to transfer utility connections in the recipient’s name. A registered gift deed will be necessary for the beneficiary to transfer the property further.

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According to the Registration Act of 1908 and the Transfer of Property Act, a gift agreement must be recorded with the sub-registrar. Transfers are null and invalid if this is not followed, and the Gift deed can be challenged in Court.

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A Gift Certificate Transfer

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A gift is an act of giving away one’s property or money, whether mobile or immovable, without expecting anything in return. A possessor must record a gift to transfer ownership to the receiver. In accordance with Indian Registration, the registration of a gift deed with a sub-registrar is mandatory, or a Gift deed can be challenged in Court.

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In a gift deed, both the donor and the donee are referred to as the transferor or transferee. Certain conditions must be satisfied for a gift to be declared authentic, or else a Gift deed can be challenged in Court.

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These conditions must be satisfied for a donation to be legitimate:

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• The title is transferred;
• Real estate ownership must be related to a particular parcel;
• The transmission must be completely unrestrained and unaffected by any means.
• An unintentional mistake would not have been acceptable;
• Donors must be competent persons.
• The receiver must accept the gift.

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Gifts are transfers of property given without expecting anything in return from the transferee or donee. The receiver could accept the gift if they are underage. Uncompensated transfers are ones in which the receiver receives nothing. If any of the conditions of the gift is not fulfilled, the Gift deed can be challenged in Court.?

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Can a Gift Deed be challenged in Court?

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The answer to the question that Can a gift deed be challenged in court is that the gift deed can be challenged in court by filing an action for declaration of invalidity. However, it will only be contested if you can prove that the deed was not done in accordance with the donor’s wishes or was executed under deception, fraud, etc.?

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Some reasons for which a Gift deed can be challenged in Court are outlined below.

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·??????????? A gift deed can be challenged in Court if the permission for gift transfer was not freely given,

·??????????? If the gift deed was not performed and registered in accordance with legal requirements, it is invalid, and the Gift deed can be challenged in Court.

·??????????? The gift deed can be challenged in court if either party to the gift was incompetent to contract; the gift is void.

·??????????? If the condition of the gift is not met, the receiver is not entitled to the gift. In such a scenario, the gift deed is revocable and can be challenged in Court.

·??????????? A gift deed can be challenged in Court if it contains any compensation for the donation; otherwise, it is invalid.

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What is a Declaration Suit?

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·??????????? A “Declaration” is a court of law’s proclamation on a person’s right to property or his status.

·??????????? Any person entitled to any legal character or right to a property may file an action against any person rejecting or interested in denying his title to such character or right, and the court may, in its discretion, declare that he is entitled; the plaintiff need not seek additional remedy in such a suit.

·??????????? An action for declaration declares a party’s or plaintiff’s right; where the right pertains to property, the suit is for title/ownership declaration and recovery of possession.

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What is the method for revoking a Gift Deed?

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Section 126[4] of the Transfer of Property Act specifies the circumstances under which a gift might be cancelled, and the Gift deed can be challenged in Court. The following are necessary components for?gift revocation :

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·??????????? The donor and recipient must agree that the gift will be stopped or cancelled upon the occurrence of a defined circumstance;

·??????????? Such an occurrence must not be contingent on the donor’s will;

·??????????? The condition for the suspension or revocation must be agreed upon by the recipient at the time of gift acceptance.?

·??????????? A contract may be cancelled only if there is a valid reason other than a lack or absence of consideration.

·??????????? The condition should neither be unlawful nor unethical, nor should it threaten the estate formed by the gift, or else the Gift deed can be challenged in Court.

·??????????? Section 10[5] controls section 126[6]. Consequently, a phrase in the gift document that totally prohibits alienation is invalid in light of the restrictions of section 10[7], or else the Gift deed can be challenged in the Court

·??????????? A gift that was neither the result of fraud, undue influence, or deceit nor was it onerous cannot be unilaterally revoked. Such a Gift deed can be challenged in Court.

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What is the time limit for the cancellation of a gift deed?

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Article 59[8] of the Limitation Act of 1963 states that the time limit for cancelling a gift deed is three years from the date of discovery of grounds for cancellation. However, this time limit can vary depending on the specific circumstances and the laws applicable in different states. Therefore, consulting with legal experts for precise guidance on the time frame for initiating gift deed cancellation proceedings is advisable.

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In conclusion, cancelling a gift deed is a legal process governed by specific grounds and time limits. While the reasons for cancelling the gift deed may vary, such as forgery, non-registration, or lack of donor consent, it is crucial to adhere to the applicable laws and initiate cancellation proceedings promptly upon discovering grounds for revocation.

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Supreme Court Judgements on Cancellation of Gift Deed

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The Supreme Court of India has provided detailed guidelines on the cancellation of gift deeds in several judgments. Notable cases include:

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1.???????????? Sudesh Chhikara v. Ramti Devi & Anr[9]. (2022):

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The Supreme Court clarified the applicability of Section 23[10] of the Maintenance and Welfare of Parents and Senior Citizens Act, 2007, indicating that a gift deed could be challenged if the donee does not meet the donor’s conditions, such as providing basic amenities and physical needs.

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2.???????????? B.S. Joshi v. Sushilaben (2013):

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The court established that making a new will by the donor does not warrant the cancellation of an earlier gift deed. The new will comes into effect only after the donor’s demise, affirming the validity of the initial gift deed.

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3.???????????? Thulasimani Ammal vs Commissioner Of Income Tax & Anr[11]. - Mere delivery of immovable property does not satisfy the requirements of Section 123[12].

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4.???????????? Paul v. Nathaniel[13], - In this case, it was held that the English law, which presumed a gift by the husband to the wife in such a case, was not applicable in India

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Key reasons for revocation, as highlighted by the Supreme Court, include:

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·??????????? Mutual Agreement: A gift deed can be revoked if there is mutual consent between the donor and donee as per the terms agreed upon at the time of the gift.

·??????????? Fraud or Coercion: If the donor’s consent was obtained through fraud, undue influence, or coercion, the gift deed could be cancelled (as referenced in various judgments interpreting Section 126[14] of the Transfer of Property Act, 1882).

·??????????? Non-Acceptance: The deed can be revoked if the donee does not accept the gift.

·??????????? Failure to Meet Conditions: If the gift is contingent upon certain conditions that were not fulfilled, it can be revoked.

·??????????? Forgery: A forged gift deed is legally invalid and can be cancelled.

·??????????? Non-Registration: If the gift deed is not registered as required by law, it can be challenged and revoked

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Conclusion

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People have been giving gifts for a very long time, and such objections did not exist before then. However, due to changes in thinking and culture, many individuals now consider the giving of assets a secure and efficient method for averting future disputes.?A gift deed can be challenged in Court if it is not registered.?

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[1] Gift” defined.—

“Gift” is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Acceptance when to be made. —Such acceptance must be made during the lifetime of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void.

[2]Documents of which registration is compulsory.

(1)????????? The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely,

(a)?????????? instruments of gift of immovable property;

(b)????????? other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;

(c)?????????? non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and

(d)????????? leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;

(e)????????? ?non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property:

Provided that the State Government?may, by order published in the exempt from the operation of this sub-section any leases executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees.

(1-A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53-A of the Transfer of Property Act, 1882, shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001, and if such documents are not registered on or after such commencement then, they shall have no effect for the purposes of the said section 53-A.]?[Inserted by Act 48 of 2001, Section 3 (w.e.f. 24.9.2001).]

(2)????????? Nothing in clauses (b) and (c) of sub-section (1) applies to

(i)???????????? any composition deed; or

(ii)?????????? any instrument relating to shares in a joint stock company, notwithstanding that the assets of such company consist in whole or in part of immovable property; or

(iii)???????? any debenture issued by any such company and not creating, declaring, assigning, limiting or extinguishing any right, title or interest, to or in immovable property except insofar as it entitles the holder to the security afforded by a registered instrument whereby the company has mortgaged, conveyed or otherwise transferred the whole or part of its immovable property or any interest therein to trustees upon trust for the benefit of the holders of such debentures; or

(iv)???????? any endorsement upon or transfer of any debenture issued by any such company; or

(v)?????????? any document other than the documents specified in sub-section (1-A)]?[Substituted by Act 48 of 2001, Section 3, for "any document" (w.e.f. 24.9.2001).]?not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest; or

(vi)???????? any decree or order of a Court [except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject-matter of the suit or proceeding]?[Substituted by A.O.1937, for "and any award" .]; or

(vii)?????? any grant of immovable property by the [Government]?[Substituted by A.O.1950, for "Crown" .]; or

(viii)???? any instrument of partition made by a Revenue Officer; or

(ix)???????? any order granting a loan or instrument of collateral security granted under the Land Improvement Act, 1871, or the Land Improvement Loans Act, 1883; or

(x)?????????? any order granting a loan under the Agriculturists Loans Act, 1884, or instrument for securing the repayment of a loan made under that Act; or[(x-a) any order made under the Charitable Endowments Act, 1890, vesting any property in a Treasurer of Charitable Endowments or divesting any such Treasurer of any property; or]?[Inserted by Act 39 of 1948, Section 2 (w.e.f. 3.9.1948).]

(xi)???????? any endorsement on a mortgage-deed acknowledging the payment of the whole or any part of the mortgage-money, and any other receipt for payment of money due under a mortgage when the receipt does not purport to extinguish the mortgage; or

(xii)?????? any certificate of sale granted to the purchaser of any property sold by public auction by a Civil or Revenue Officer.[Explanation?[Inserted by Act 2 of 1927, Section 2.].a document purporting or operating to effect a contract for the sale of immovable property shall not be deemed to require or ever to have required registration by reason only of the fact that such document contains a recital of the payment of any earnest money or of the whole or any part of the purchase money.]

(3)????????? Authorities to adopt a son, executed after the first day of January, 1872, and not conferred by a will, shall also be registered.

[3]Transfer how effected

For the purpose of making a gift of immoveable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses.

For the purpose of making a gift of moveable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery

[4] When gift may be suspended or revoked.

The donor and done may agree that on the happening of any specified event which does not depend on the will of the donor a it shall be suspended or revoked; but a gift which the parties agree shall be revocable wholly or in part at the mere well of the donor is void wholly or in part, as the case may be.

A gift also be revoked in any of the cases (save want or failure of consideration) in which, if it were a contract, it might be rescinded.

Save as aforesaid, a gift cannot be revoked.

Nothing contained in this section shall be deemed to affect the rights of transferees for consideration without notice.

Illustrations

(a)?????????? a gives a field to B, reserving to himself, with B's assent, the right to take back the field in case B and his descendants dies before A, B dies without descendants in A's lifetime. A may take back the field.

(b)????????? A gives a lakh of rupees to B, reserving to himself, with B's assent, the right to take back at pleasure Rs. 10, 000 out of the lakh. The gift holds good as to Rs. 90, 000, but is void as to Rs.10, 000, which continue to belong to A.

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[5] Condition restraining alienation

Where property is transferred subject to a condition or limitation absolutely restraining the transferee or any person claiming under him from parting with or disposing of his interest in the property, the condition or limitation is void, except in the case of a lease where the condition is for the benefit of the lessor or those claiming under him: provided that property may be transferred to or for the benefit of a woman (not being a Hindu, Muhammadan or Buddhist), so that she shall not have power during her marriage to transfer or charge the same or her beneficial interest therein.

[6] Supra N 4

[7] Supra N 5

[8]

To cancel or set aside an instrument or decree or for the rescission of a contract.

Three years

When the facts entitling the plaintiff to have the instrument or decree cancelled or set aside or the contract rescinded first become known to him.

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[9] 2022 LiveLaw (SC) 1011

[10] Transfer of property to be void in certain circumstances.

(1)????????? 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

(2)????????? Where any senior citizen has a right to receive maintenance out of an estate and such estate or part thereof is transferred, the right to receive maintenance may be enforced against the transferee if the transferee has notice of the right, or if the transfer is gratuitous; but not against the transferee for consideration and without notice of right.

(3)????????? If, any senior citizen is incapable of enforcing the rights under sub-sections (1) and (2), action may be taken on his behalf by any of the organisation referred to in Explanation to sub-section (1) of section 5.

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[11] (2000)158CTR(MAD)5

[12] Supra N 3

[13] AIR 1931 All 596 (597)

[14] Supra N 4