Supreme Court Judgement On Cancellation Of Gift Deed

A gift deed is a document quite suggestive of its name. It is a legal document by which one party gives specific property to another. It involves two parties. One is the party that offers the gift, called the donor. The other is done to whom the gift is given.

Features Of A Gift Deed

The following are some features of a gift deed to distinguish it from other forms of transfer of property:

1. Both parties enter into the gift deed with their consent
2. The property ownership changes from donor to donee
3. The donor has to accept the gift. If he refuses to accept it, there is no valid gift deed
4. The donee pays no consideration

Registration Of Gift Deed

If a gift deed transfers immovable property, then the gift deed has to be registered as per the Registration Act of 1908. The registration is made to a local sub-registrar. To register a gift deed, you would require these documents:

• Original gift deed
• ID proof
• PAN of donor and donee
• The title deed to prove the ownership of the donor
• Passport-size photograph

Cancellation Of Gift Deed

The donor has the right to cancel the gift deed. He can cancel the gift deed if he wants to return his property. Generally speaking, gifts can not be canceled. But in certain situations, it can be canceled.

Also Read : Cancellation of a Gift Deed in India

Grounds Of Cancellation

These are a few common grounds to cancel a gift deed in India:

Fraud or Misrepresentation

If the gift is made based on fraud or misrepresentation committed by a party, then it is a solid ground to revoke the deed. To further explain, say if Sita gifts specific property to Rita based on her false claims about the property, then the gift deed may be canceled.

Coercion Or Undue Influence

For a valid transaction, our will or consent plays an important role. An act done against our will is not our act at all. So, if a gift is made by taking consent under coercion or undue influence, then the deed itself is invalid.For example, if A makes a gift to B because B held A at gunpoint and coerced him to do the deed, then it will not be valid.

Also Read : What Is Coercion In Business Law?

Failure To Meet Conditions

There may be cases when a gift is made based on certain conditions. If these conditions are not satisfied, the gift deed can be canceled.For example, Mita gives land to Nina on the condition that she will build a school on that land, but she doesn't. Then Mita has grounds to cancel it.

Non-Acceptance By The Donee

We know that a gift passes from the donor to the donee. If the one refuses to accept the gift, the donor can cancel it and return it.

Revocation Clause

Every contractual transaction has specific terms and conditions. One of these terms is a revocation clause. It provides those circumstances when a transaction may be rescinded. If both parties add a revocation clause in their gift deed, then the deed can be revoked if they fail to fulfill the terms of the contract.

Non-Delivery By The Donor

Let's say that A promises to give B a diamond ring but keeps the ring with him forever. B can't know that he has ownership of the ring. In the concept, the gift can be canceled if the donor retains ownership and doesn't give it to the donee.

Mutual Agreement Of Parties

Consent is vital in every contractual transaction. In a gift transaction, if both parties agree to the cancellation of the gift, then it can be done.

Incompetency

As a part of the contract, the party also should be competent. This means that the party should not be a minor, intoxicated while giving the gift, or insane while executing the deed. If he is, then the deed can be revoked.

Death Of Donor Before Acceptance

There may be a case where the donor dies before the donor accepts the gift. If this happens, then the gift deed may be canceled. This can happen because the acceptance isn't validly completed.

Non-Registration

As we have seen above, a deed of immovable property must be registered. If parties do not register it, then it can be canceled.

Who Can Cancel A Gift Deed?

The donor gives the gift, so he alone can cancel it. If he wants to cancel it, he must go to the appropriate court and claim cancellation based on solid legal grounds supported with evidence.

Time Limit To Cancel A Gift Deed

As per Article 59 of the Limitation Act of 1963, a gift deed can be canceled within three years from the date of discovery of the ground of cancellation. After this period lapses, it can't be canceled anymore.

Landmark Cases On Cancellation Of Gift Deed

A few case laws based on cancellation of gift deed are:

B.S. Joshi vs. Sushilaben (2013)

The court held that a gift deed cannot be revoked solely because the donor has transferred property to another person through a will. The gift deed that is executed before the will would be valid. The will would take effect only after the death of the donor.

Sudesh Chhikara vs. Ramti Devi (2022)

In this case, a senior person transferred his property through a gift on the condition that the one would take care of him. But the one refused to do it after obtaining the gift. The court held that the gift could not be canceled for this reason.

Thajudeen vs. Tamil Nadu Khadi & Village Industries Board (2024)

In this recent judgment, the Supreme Court has highlighted that a gift deed cannot be ordinarily revoked except when the parties reserve the right to cancel. The court gave three conditions when a gift deed can be canceled:

1. Mutual agreement for revocation
2. Agreement for revocation at will
3. Nature of a gift as a contract

Conclusion

Gift deeds provide an organized and legally secure mode of gifting property. Although they are, generally, irrevocable, certain situations exist when it would be possible to revoke them. It's therefore important to know both the grounds for revoking them and the procedure of doing so in a legal manner. It is best to consult a lawyer to ensure the deed of gift is correctly written up, signed, and structured in such a way as to reflect the real intentions and expectations of each party, reducing the chances of future disputes.

FAQs

A few FAQs are as follows:

Q1. Who can cancel a gift deed?

Only the donor can initiate the cancellation process, and it must be done through a court of law with valid legal grounds.

Q2. What is the time limit for canceling a gift deed?

As per the Limitation Act of 1963, a gift deed must be challenged within three years from the date of discovery of the grounds for cancellation.

Q3. What happens if a gift deed is not registered?

For immovable property, registration is mandatory. Non-registration makes the gift deed invalid and can be grounds for cancellation.

Q4. Can a gift deed be canceled if the donee doesn't take care of the donor?

While emotional neglect might be a factor in some cases, it's generally not a sufficient legal ground for canceling a gift deed unless specifically stated as a condition in the deed itself.

Q5. What is a revocation clause in a gift deed?

A revocation clause specifies the conditions under which the gift deed can be revoked. It must be agreed upon by both the donor and the donee.