Gift and Exchange: Legal Definitions and Principles

DEFINITION

As per Section 122 of the Transfer of Property Act, a present denotes the voluntary transfer of present movable or immovable belongings with no consideration. Such a transfer necessitates the donor's voluntary purpose and calls for recognition by the donee, either at once or via a representative.

Parties Involved:

1. Donor: The character who voluntarily transfers their assets without receiving consideration.

2. Donee: The recipient of the present, who accepts the transferred belongings.

ESSENTIAL ELEMENTS

The transfer must be of title or possession. In the case of immovable property, the transfer has to be effected by a registered instrument and without such registration, these transactions are not valid.

It is also important to note that verbal transfer will not provide any right, title or interest in an immovable property. In the case of moveable property, merely by delivery of possession with or without a registered instrument.

Existence of Property: The property being gifted must exist at the time of the transfer. Future property cannot be gifted

Voluntary Intent: A gift must be made voluntarily by the donor, without coercion, fraud, misrepresentation, undue influence or force.

Without consideration: A gift is given without any consideration. If any consideration is involved, no matter how small, the transaction is not a gift but rather a sale or exchange.

Acceptance: The gift becomes complete only when the donee accepts it. Without acceptance by the donee, the gift is incomplete and not legally recognized.

TYPES OF PROPERTY

Under Section 122 of the Transfer of Property Act, a present encompasses both movable and immovable belongings:

1. Immovable Property: This class consists of land, buildings, timber rooted in the floor, and structures affixed to the land, including tanks, doors, and home windows.

2. Movable Property: Movable assets, rather than immovable belongings, includes gadgets that can be relocated without harm. While the Transfer of Property Act does now not define movable property, Section 3 of the Act enumerates examples consisting of status wooden and growing vegetation or grass.

For instance, even though a tree is commonly considered immovable property, if cultivated for wood, it qualifies as movable assets due to the fact it can be harvested and applied for other functions.

MODES OF GIFTING

As per section 123 of the act, the act of gifting includes precise procedural necessities to make sure its validity. These procedures vary depending on whether the property in question is immovable or movable.

1. Immovable Property

A present of immovable assets ought to be achieved thru a registered device. This tool should be signed by the donor or via a person authorized by way of the donor, and it must be attested with the aid of as a minimum two witnesses.

.R.N.Dawar v. Ganga Ram Saran Dhama

It was held that title in immovable property requires registration. The mere possession of it will not create another entity to have ownership.

2. Movable Property

Contrary to the above, a gift of movable property does not require registration to make it valid. Therefore, a gift of movable property can be made by way of delivery of possession only as well.

Ms. Mayawati vs. Dy Commissioner of Income-Tax

It was held that voluntary gifting and delivery of possession are both needed to validate a gift of movable property.

ACCEPTANCE REQUIREMENT IN GIFTS

For transfer of gift to be valid the donee must accept it. As per Section 122 of the Transfer of Property Act, such acceptance must occur during the donor's lifetime. Additionally, the donor must be capable of giving the gift. If the donee dies before acceptance, the gift becomes void.

NECESSITY OF DONEE'S ACCEPTANCE FOR VALIDITY

Except under Mohammedan law the validity of a gift hinges on the donee's acceptance. Whether advantageous or burdensome, the donee must accept the gift for it to be legally effective.

Acceptance must occur during the donor's lifetime. The donor must also be competent to give the gift.

If multiple gifts are given in separate transactions the donee may accept beneficial gifts. He may also reject burdensome ones. However, if gifts are given in a single transaction the donee must accept all or reject all. In all cases the donee's acceptance is pivotal.

Delivery of possession requirements for immovable property

Section 123 of the Transfer of Property Act, 1882, applies to the necessity that really requires giving possession in a transaction relating to immovable property. makes an express provision that effective transfer of ownership in an immovable property is based on the actual or constructive delivery of possession from one party. This requirement of the law is very expedient in effecting a proper transfer of rights in property and avoiding the likely disputes related to claims in ownership.

-It lays down that the sale must be accompanied by actual transfer of possession of the immovable property from the seller to the buyer. A mere sale deed or instrument of transfer is not sufficient; the possession has to be physically given up by the transferor.

-Possession may be either actual or constructive:

Actual Possession: Direct physical occupation by the transferee. It requires the seller to vacate the premises physically and the buyer assumes physical occupancy.

Constructive Possession: Applies in those cases wherein direct physical transfer is not possible; symbolic possession through legal means or documents is enough to convey the idea of transfer.

-Delivery of possession is of the utmost importance, as it represents the successful completion of the transfer process. Under it, the buyer acquires full dominion and the right to use the property to the exclusion of everyone.

-Criteria of Effective Delivery:

The seller should have a clear intention to transfer the possession to the buyer.

The seller should be competent to transfer possession.

Transfer must be done as per the agreed terms defined in the sale deed or transfer agreement amongst the parties.

-Breach of terms for delivery of possession may lead to disputes and result in resorting to legal intervention:

Specific performance of the contract can be sought by buyer.

• Damages owning to non-delivery may be claimed.

• Partial or conditional possession to be mentioned to avoid ambiguity.

-The sale deeds or transfer documents of immovable property should be compulsorily registered, especially when the value of a property exceeds the stipulated local acts. By means of registration, the title is duly authenticated and is also admissible as evidence to a transaction.

Registered deed is mandatory for transferring ownership of immovable property.

Section 123, Transfer of Property Act, emphasizes registration of the deed for transferring immovable property. This includes a statutory requirement for ensuring transparency, security, and legality associated with property transactions, which protect the interest of all concerned parties in the process of transfer.

-It applies only in the case of immovable property, meaning land or buildings.

-When the ownership of such immovable property is intended to be transferred from one party to another, Section 123 requires that the transfer must effected only by a registered document.

-The term "registered document," normally one means a document registered with the competent governmental authority. In that sense, it will mean a transfer deed, like a sale deed or gift deed, properly recorded and registered with the Registrar of Sub-Assurances or any other equivalent authority.

-A may result in legal consequences. More specifically, an unregistered document of transfer does not grant the transferee any title to the property. The requirement of registration is, therefore, a condition precedent to the effective validation and enforcement of a transfer.

Exceptions

There is an exceptions and subtleties to the Section 123 requirement to register, including transfers by operation of law, such as inheritance, express leases, and a number of other situations where registration may not be required. In the vast majority of cases, there will still be a requirement to register where there is an outright transfer of ownership.

Formalities involved in registering a deed

Procedural requirements for the registration of a deed under the Transfer of Property Act normally include the following:

1. Execution:

The deed is to be drafted with extreme care and executed by parties concerned the transferor and transferee, being the seller and buyer respectively, sticking strictly to statutory requirements.

2. Verification of Signature:

Such deed is to be signed by both the transferor and transferee. Such signatures are to be attested by at least two competent witnesses capable of giving evidence.

3. Verification of Identity:

Both parties and the witnesses are under a duty to furnish identity documents for the purpose of proving their identity.

4. Payment of Stamp Duty:

The deed must bear appropriate stamp duty, as provided under the relevant provisions of the Stamp Act applicable in the concerned jurisdiction.

5. Registration:

The deed is required to be taken to the office of the Sub-Registrar or any other authorized authority for registration. Together, with the deed, a certain amount of fee, as fixed by the government, has to be paid along with one or more supporting documents.

6. Recording:

On registration, full details of the deed are duly recorded in the records kept by the Registrar. This is done for purposes of public notice of the transaction.

GIFT OF FUTURE PROPERTY

A gift can only be made with existing property. Section 124 of the Transfer of Property Act specifies that gift of future property is invalid. The property must exist at the time. Transfer.

GIFT TO MULTIPLE DONEES

A donor can gift to one or more donees. According to Section 125 of the Transfer of Property Act if a gift is made to multiple donees. If one refuses to accept their share becomes void. It reverts back to the donor. The remainder remains valid for other donees.

CONDITIONAL GIFTS

Section 126 of the Transfer of Property Act, 1882, governs conditional gifts of movable property. A conditional gift involves the voluntary transfer of movable property by a donor to a donee, with the donor imposing conditions that must be fulfilled for the gift to be effective.

For a conditional gift to be valid:

- The donor must intend to transfer the property to the donee.

- The donee must accept the gift during the donor’s lifetime for the transfer to be completed.

- The conditions imposed by the donor must be lawful; immoral, illegal, or impossible conditions are not enforceable.

If the conditions attached to the gift are not fulfilled:

- The gift does not take effect.

- The property reverts back to the donor or their legal heirs if the donor is deceased.

The donor retains the right to revoke or withdraw the conditional gift before the conditions are fulfilled and before acceptance by the donee.

Once the conditions are fulfilled and the gift is accepted:

- The gift becomes irrevocable.

- The property transfers to the ownership of the donee.

- If the conditions are not fulfilled or if acceptance does not occur during the donor’s lifetime, the gift does not confer any rights upon the donee.

Gifts can be revoked only under specific circumstances:

As a general principle, a gift, once made and accepted by the donee, cannot be revoked under the Transfer of Property Act. A gift cannot, therefore, be revoked under ordinary circumstances based on this rule.

However, exceptions are provided for when specific conditions governing revocation have been agreed upon between the donor and the donee. These conditions dictate whether and under what circumstances a gift can be revoked.

Any such conditions must be clearly reduced to writing in a written agreement between donor and donee, which must specify:

- The exact conditions under which the gift may be revoked

- The procedure or steps to be followed for revocation

- Any legal implications or responsibilities arising from the revocation.

Such a written agreement is necessary for validating and enforcing the terms under which a gift could be revoked, so the parties are quite clear as to their respective rights and obligations concerning the gift. Conditions for revocation have, therefore, to be laid down in writing under the Transfer of Property Act for the protection of interests of both the donor and the donee, to anticipate issues, and avoid mistakes or misunderstanding around the status and ownership of the gift.

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Condition for revocation cannot be within the donor's control.

Under the Transfer of Property Act, once a gift is validly made and the gift deed is executed and registered (if required), it becomes irrevocable. Section 126 of the Act specifies that the donor cannot reserve the power to revoke the gift at a later time. This ensures that once the gift is completed and possession of the property is transferred to the donee, the donor relinquishes all control over the gifted property. The Act aims to provide certainty and stability in property transfers by preventing the donor from retaining any influence over the gifted property after it has been transferred. Exceptions exist, such as conditional gifts where the condition must not be within the donor's control for revocation to be possible. Overall, the Transfer of Property Act safeguards the interests of the donee and maintains the integrity of property transfers in India.

ONEROUS GIFTS

An onerous gift includes obligations for the donee alongside benefits. Section 127 of the Transfer of Property Act states that if gifts of both benefit and burden are given in single transaction the donee must accept. Alternatively, the donee must reject all gifts together. In separate transactions. The donee can accept beneficial gifts. They can reject burdensome ones.

An onerous gift is one wherein a person is empowered to transfer property wherein the donee accepts not only the benefits but also the burdens associated with the property; these may include liabilities in regard to debts, charges, or any other kind of liability. Hence, this section enunciates that when a donor makes a gift of this kind, it should be accepted by the donee that such responsibilities will be incurred with the property's benefits. The obligations, once accepted, are binding, and the donee cannot later disclaim them. It only emphasizes that the acceptance by the donee has to be an informed one, wherein he understands and is willing to take on the advantages and responsibilities of the property gifted.

Acceptance or Rejection:

- All aspects of the gift must be accepted or rejected in a single transaction, including both the advantages and disadvantages.

- This is a requirement to ensure that the donee understands and assumes all parts of the gift at one time.

Separate Transactions:

If the gifts are conveyed in separate transactions:

• The donee retains the right to accept the beneficial features of the gifts and reject RS burdensome features individually.

• There are no rigidities in handling acceptance of property and related liabilities for separate transactions under this section.

It lays down a systematic legal framework for regulating transactions of onerous gifts so that transparency and fairness may be provided in transfer of property with its benefits and burdens.

UNIVERSAL DONEE

Section 128 of Transfer of Property Act pertains to universal donee where entire property of the donor is gifted. The universal donee assumes responsibility for all benefits attached to the property. This includes liabilities as well limited to the value of the gift.

A universal donee is the donee who takes a gift of the whole of the donor's property, with all its advantages and incumbrances thereto, to the extent of the value specified in the gift. This is a statutory provision that there shall not be any ambiguity or exhaustiveness in the transfer of property, thus covering all reciprocal aspects involving ownership and the related obligations.

A universal donee inherits the whole estate of the donor and, hence, receives all assets that comprise the gift whether such assets be immovable properties, movable assets, or other kinds of riches.

The universal donee gets absolute and irrevocable title to all assets that comprise the gift on conveyance.

The universal donee holds, concurrent with the benefits accruing from ownership, all responsibilities and liabilities affixed to the property, though limited to the value of the gift. It makes the transfer complete and prior debts or obligation respecting property binding upon.

The provision under section 128 lays down that the transfer to the universal donee extends only to the value of the gift. Thus, the donee is subjected to liability for debts related to the property only in this much extent, and the liabilities exceeding that will have to be borne by the donor or any other person liable.

The Allahabad High Court explained what a universal donee under Section 128 of the Transfer of Property Act means in Rampershad v. Anant (1882). It held that a universal donee takes the whole estate of the donor, including the assets and liabilities of the donor to the extent of the gift. This case again illustrates the comprehensive transfer of property rights and obligations to the donee under Section 128. Each case brings out specific provisions or exceptions of the Transfer of Property Act, which delineate the legal principles governing such gifts as those under Mohammedan law, gifts made in contemplation of death, and the scope of rights and responsibilities conferred upon a universal donee under Section 128.

Chapter VII of the TPA does not apply to Gifts under Mohammedan Law.

In the Case of Abdur Rahim v. Mahomed Ibrahim, (1912). It was held by the Calcutta High Court that Chapter VII of the Transfer of Property Act relating to gifts does not apply to gifts regulated by Mohammedan Law. Mohammedan Law lays down different principles and different requirements for gifts, and these are therefore outside the ambit of the TPA. The provisions and limitations of Chapter VII, relating to gifts, do not apply to gifts under Mohammedan Law.

Gifts in Contemplation of Death:

Gifts in contemplation of death are transfers of property by grantors who are in contemplation of their own imminent death. The surrounding circumstances bring these transfers under very close scrutiny, as they may be viewed as an attempt to defeat the devolution of assets at death. The legality of such transactions is reviewed with respect to mental capacity, intention, and observance of legal formalities that should be complied with in order to have a legal conveyance under applicable laws. The essence of such gifts is to create transparency and fairness in the distribution of property during sensitive transitional periods in life.

In the Case of Bindu Basini Dasi v. Jogendra Nath, AIR 1922, a decision relating to gifts in contemplation of death. A Division Bench of the Calcutta High Court further explained that such gifts are governed by different rules of law than ordinary gifts. Gifts against imminent death stand on an even more delicate footing and are always carefully examined for their validity and conformity to the requirement of law, especially where it appears to be an attempt to get rid of property in anticipation of the donor's death.

Exception: Provisions of Chapter VII of the Transfer of Property Act do not affect gifts under Mohammedan law. They also do not affect gifts made in contemplation of death.

Nothing in Chapter VII of the Transfer of Property Act prevails over the rule relating to gifts under Mohammedan law. They do not operate similarly as an exclusion against the special statutory requirements relating to gifts in contemplation of death under the Transfer of Property Act. These exceptions thus recognize the independent laws on gifts under Mohammedan law and gifts in contemplation of death of the donor, and ensure that such provisions shall continue to operate and be valid notwithstanding the provisions of Chapter VII of the Transfer of Property Act.

EXCHANGE

Sections 118 to 121 of the Transfer of Property Act (TPA) outline the legal principles governing the "exchange" of properties. Section 118 defines "exchange" as transfer of ownership in one property for ownership in another either simultaneously or at different times.

Requirements for Exchange:

- Exchange involves mutual transfer of ownership between parties.

- Properties exchanged must be of the same nature. Or can be treated as of the same nature.

Mutual Transfer:

Section 119 states that for exchange to be valid. There must be mutual transfer of ownership of one property for another between the parties involved.

Consideration:

Section 120 specifies in an exchange. Consideration is presumed to be present. Each party's property is considered as consideration for the other party's property.

Registration:

Section 121 deals with the requirement of registration for exchange of immovable property. It states that an exchange of immovable property must be registered to be valid. Registration provides evidence of the exchange. It protects the interests of both parties.

The properties involved in the exchange must be either of the same nature or capable of being treated as such. For example: land for land house for house, etc. The exchange can occur simultaneously or at different times. But there must be a clear intention to transfer ownership in both properties. Exchange of immovable property requires registration. This is to be enforceable in law. Moveable property can be exchanged by delivery or any other agreed method.

Unlike gifts exchanges are presumed to involve consideration. This is because each party gives up something of value their property in exchange for the other party's property. Upon completion of exchange each party assumes rights and liabilities associated with the property received. Similar to a sale transaction.

These sections ensure clarity. They ensure legality in the process of property exchange. Protecting the rights of parties involved and providing legal frameworks for the transfer of ownership.

CONCLUSION

A gift as gratuitous transfer, necessitates voluntary acceptance by the donee to be legally effective. Immoveable property transfers require registration and witnesses. Moveable property can be transferred by delivery The acceptance by the donee is critical. It considers potential burdens of gifts and the liabilities of a universal donee.