Section 123 of Transfer of Property Act – MODE OF TRANSFER OF GIFT

by
ANALYSIS OF SECTION 123- MODE OF TRANSFER OF GIFT


Author: Anoushka Borker,
School of Law, Christ university.
Abstract
The paper traces the scope of section 123 of the transfer of property act that enlists the modes of transfer of gifts. The paper divulges into the requisites of a valid transfer of a gift such as the absence of consideration, the donor and the done, the subject matter, the transfer and an acceptance of the same. Therefore, through the course of this paper it shall be pointed that a satisfaction of the above requisites proves a valid transfer of property under the scheme of the act. Furthermore, the paper differentiates between an immoveable and a moveable property as the section under consideration herein deals with gifts in immoveable property. The paper shall also address the question of who amounts to a valid doner / done within the purview of the provision. Ultimately, the paper draws a comparison between the transfer of gifts under the Muslim law and Section 123 of the Transfer of Property Act, 1882.

Introduction

The Transfer of Property Act, 1882 happens to be one of the early legislations of the nineteenth century. The Act has important place in the statute book with the main objective to render the system of transfer of immovable property a system of public transfer. Registration is therefore generally insisted upon for completing transfer, except in cases of transactions of small value. Property is a very wide term and would include anything which carries some value and over which the right of ownership may be exercised. The word property in its most comprehensive sense includes all legal rights of a person except his personal rights, which constitute his status or personal condition.’ Under English law, property is generally classified into real property and personal property. Real property comprises of all properties admitted to specific recovery and is freehold interests in land. Property in respect of which only a personal action lay was classified as personal property, i.e., which comprised of all forms of property other than real property. The distinction in English law between real and personal property is paralleled in Indian law by the distinction between immovable and movable property.

The act of transfer as per the above statute may be done in the present or for the future. The person may include an individual, company or association or body of individuals, and any kind of property may be transferred, including the transfer of immovable property. The phrase transfer of property in goods means transfer of ownership of the goods from one person to another. Therefore, property in goods is different from possession of goods. The later refers to the custody over the goods whereas the former means ownership over the goods.[1]

Immovable and movable property


It is a surprising fact that the Transfer of Property Act does not contain a comprehensive definition of immovable property. Section 3, Para 2 merely says: “Immovable property does not include standing timber, growing crops or grass”.[2]This is a negative definition and is not satisfactory. We can find a definition of immovable property in the General Clauses Act, 1897, which reads as follows; “Immovable property include land, benefits to arise out of land and things attached to the earth”. The Transfer of Property Act has supplied us in Para 6 of section 3 a definition of the expression “attached to the earth”. This expression means:
 (a) “Rooted to the earth, as in the case of trees and shrubs;
 (b) Imbedded in the earth as in the case of walls of buildings, or
 (c) Attached to what is so imbedded for the beneficial enjoyment of that to which it is attached.

Things rooted to the earth are immovable property. It should be noted, however, that standing timber, growing crops and grass are not immovable property. The reason for the exclusion of these from the category of immovable property is that they are useful as timber, corn and fodder only after their severance from the land. In case of trees apart from the size of the trees the relevant consideration would be the intention to cut the tree or to let it remain attached to the earth and in the former case it will be deemed as standing timber while in the latter it remains as immovable property[3]. 
From the foregoing it is clear that land is immovable property. Land means the surface of the earth and includes subjacent things such as minerals. So also are buildings. Benefits arising out of land, e.g., a right to receive future rent, are also immovable property. Trees so long as they are rooted in the earth are immovable property provided they are not standing timber. Timber is useful for house construction, but to be used as timber it has to be severed from the land. So even while it is standing on land, when the wood is useful as timber, the tree is treated only as movable property. Shisham, nim and jack trees, for instance, are useful as timber. So when these trees are ripe for use as timber, even though they are still rooted in the earth, they are treated only as movable property. Movable property on the other hand is not defined in the act. However section 2(9) of the registration act defines the same.

  • Doctrine of fixtures

In Indian law movable property sometimes assumes for legal purposes the, character of immovable property. In English law also chattels are sometimes treated as real property. They are then called fixtures. In England the general rule is that whatever is planted on (or built in) the soil belongs to the soil. When a chattel is annexed to the soil and so becomes a fixture, the person who was owner of it when it was a chattel loses his property in it for it immediately vests in the owner of the soil. Thus, a house becomes part of the land on which it stands and anything affixed to the building is by common law treated as an addition to the property of the owner. In Indian law also things imbedded in the earth or attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached are regarded as immovable property. When a property is treated as fixtures any dealing with the property to be valid should conform to the legal requirements laid down for such dealings in relation to immovable property. Hence we can see the movable property or chattels, to use the expression familiar in England, when attached to buildings, sometimes become immovable property and are then called fixtures. Thus, machinery, ceiling fans, doors and windows, etc., can become fixtures. Suppose A sells his house. The fixtures appertaining to the house pass along with the house and need not be separately mentioned in the sale deed. They are treated as part of the immovable property sold. So, A cannot remove the doors and ceiling fans after he has sold the house. He may, however, remove the coatstands; boxes and bookracks for these are not fixtures and are only movable property.

Gifts


In a gift, property is transferred without any consideration. It is complete when it is accepted by or on behalf of the donee. A gift of immovable property can be effected only by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. [4]The gift is complete when it is accepted by the donee or on his behalf. The acceptance should be during the life time of the donor. If the document is executed and the donee accepts the gift, even if the donor dies, the document may be registered. The donor cannot revoke the gift after acceptance even if registration of the document has not been effected. Registration is a ministerial act. Even if the document is registered, the donor can revoke the gift before it is accepted by the donee. So, it is acceptance that completes the gift. The law on gifts is contained in Chapter VII of Transfer of Property Act from sections 122 to 129. Sec 122 of the Transfer of Property Act defines a gift which has the following essential requisites:-
i) There must be a transfer of ownership of a property;
 ii) The property should be of existing property;
iii) The transfer should be voluntary;
iv) It shall be without consideration;
v) It can be of movable or immovable property;
vi) The transfer should be accepted by the Donee from the Donor;
vii) The acceptance of such a transfer must occur during the lifetime of the donor and he must be still capable of giving. In the event of the donor dying before acceptance, the gift is void.

Section 123- Mode of transfer of gifts


The following section is read as:
“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 maybe effected either by a registered instrument signed as aforesaid or by delivery.
Such delivery may be made in the same way as goods sold may be delivered.”
Section 123 of the Transfer of Property Act makes a reference ‘to delivery’. This section deals with the mode of transfer in the case of gifts. It provides separate provisions for the gift of immovable and movable properties.

A. Immovable property


    With regard to gifts of immovable property, Sec 123 provides that the transfer must be effected by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. Two essentials have been prescribed for the transfer by way of gifts namely.
    1. Must be effected by a registered instrument;
    2. Attested by atleast two witnesses.
      In view of sec. 123 of Transfer of Property Act, a gift of immovable property, which is not registered, is bad in law and cannot pass any title to the donee. Any oral transfer of gift concerning immovable property cannot be made within the scope sec. 123.

      No mention is made with regard to delivery of possession. One of the prerequisite for registration is the transfer must be in writing and cannot be done orally. The registration must be completed in the manner prescribed by the Indian Registration Act, 1908. Although a registered document carries with it a presumption that the gift was validly executed but a mere registration will not perfect and imperfect title if any essential ingredient of a gift is lacking. However, a Registration deed is not a conclusive proof of its genuineness.  [5] In other words, gifts of immovable property are compulsorily registrable and it amounts to notice for a subsequent transfer and not for earlier transactions prior to registration.[6] 

      Also, with respect to the procedure of attestation, only an Attesting witness may be examined by donee to establish validity of deed, if the witness denies such execution the deed is invalid. The deed’s validity is questio
      nable when the witness is unreliable and it is not established that the donor signed in the presence of the witness      [7]. A deed executed by the original owner but presented for registration by duly authorised power of attorney if attested by 2 witnesses is also held to be be valid.[8] Once gift is effected by registered instrument duly attested and the gift has been acted upon by the donee, the title legally passes to the donee and shall not be defeated by any intention of the donor to the contrary. [9] There exist exceptions to the rule of registration, i.e
      • A property with pre-existing rights does not require registration
      • Property given to daughter on her marriage by way of pusupu kumkuma by way of a written deed does not require registration[10]. 
      • A gift to idol or deity may be oral and may be effected by unregistered document as it constitutes religious trust.

        Delivery of possession

        Delivery of possession is not an essential condition. The donor may retain right to use property during his/ her lifetime and there may not be immediate delivery of possession if gift is effected by a duly attested registered instrument and recitals in the deed show absolute transfer of title and the same is accepted by the donee. A Gift after delivery of possession becomes irrevocable. [11]

        B. Movable property


        With regard to movable property, the gifts can be effected either by registered instrument signed as aforesaid (signed by the donor or on his behalf) or by delivery. For transfer of movable property by way of gift two modes are prescribed namely –
        1. by a registered instrument (signed by the donor or on his behalf) and attested by two witnesses;
        2. by delivery of possession Even in the case of movable property, registration is made optional when delivery of possession takes place.

          No delivery of possession is required when it is made through a registered document. Section 123 provides that delivery may be made in the same manner as goods sold are made i.e., which the parties agree to constitute delivery or putting the goods in possession of the buyer. As laid down by the Delhi High Court, “when it is executed by a deed, donor’s admission of execution of gift is enough to prove the gift; though one of the attesting witness is not called for proving it.”[12] However, there a number of exchanges that do not qualify as gifts, i.e

          • A fixed deposit of money by a person repayable to himself or his wife or survivor is not a gift[13].
          • Mere entries in account books in favour of a family member. [14]
          • When money is deposited in the bank but the certificate is retained by the donor as there is no delivery of the subject matter of a gift. [15]


            A Gift in movable property similar to immovable property cannot be made by verbal declaration. For gift in movable property to be complete, the donor should do the best he can to put the subject matter of the gift within the power of the donee to obtain possession. No delivery of possession is required when it is made through a registered document.

            C. Collusive gifts


            Collusive gifts is one that is not genuine and has been executed in order to defeat the rights of a third party. Such gifts are hence void. In Surendra Kumar Vs. Nathulal & Anr, the owner of the properties, A mortgaged them to B. B in turn mortgaged them to C who effected a sub mortgage of the same property by a usufructuary mortagage to D. D started demolishing, and A filed a suit for injection and declaration of easement rights over the property. During the pendency of this litigation, A gifted the property to X, who filed for redemption of property. B,C,D claimed that the gift was collusive and hence void. Court however held the same to be not collusive as the the owner executed it himself. [16]

            Muslim Law and The Transfer of Property Act


            Muslim Law of gifts remains unaffected by the above provisions of the Transfer of Property Act. Muslim gifts enjoy protection from Transfer of Property Act. Muslim Law has laid down different rules relating to gifts. They may be stated thus:-
            1. A declaration of gift by the donor;
            2. Acceptance of the gift by the done
            3. Delivery of possession, if possible.

              A clear reading of Muslim Law requirements makes it clear that registration is not required with regard to gifts.

              Conclusion

              The conception of the term gift and the subject matter of gift has been an age old and traditional issue which developed into a distinct facet of property law. different aspects related to gift in property act and its implications has been the major subject matter of this article. In considering the law of gifts, it is to be remembered that the English word ‘gift’ is a generic term. The English law on rights in property is classified by a division on the basis of immoveable and moveable property. Therefore, the essential elements of a gift are a) the absence of consideration; b) the donor; c) the done; d) the subject matter; e) the transfer; and f) its acceptance. A satisfaction of the above requisites proves a valid transfer of property under the scheme of the act.


              CLICK HERE TO JOIN LAW COLUMN’S TELEGRAM AND WHATSAPP GROUPS


              [1] Property law, 3rd edition, Dr Poonam Pradhan Saxena

              [2] The Transfer of Property Act, 11th edition, Sir Dinshaw Fardunji Mulla 


              [3] Jagdish v. Mangal Pandey AIR 1986 All. 182

              [4] Textbook on The Transfer of Property Act, 5th edition, Dr Avtar Singh


              [5] Om Prakash v Shanti Devi (2015) 4 SCC 160

              [6] Sahadev Vs. Shekh Papa (1905)29 Bom. P.119.

              [7] Nila Devi v Bidyadhar Sahan AIR 1999 Ori 69.

              [8] Brij Raj v Sewak Ram AIR 1999 SC 2003

              [9] Bhagatrai v Ghanshyamdas AIR 1948 Nag 326.

              [10] P. Buchi Reddy v A Sudhakar AIR 1999 ANDH PRA 188.

              [11] Kasi Ammal v Vellat Gounder, (1980) 2 Mad Lj 232.

              [12] D.N.Dawar Vs. Ganga Ram Saran Dhama, AIR 1993 Del P.19.

              [13] Paul v Nathaniel AIR 1931 ALL 596.

              [14] Chambers v Chambers, AIR 1941 MAD 154.

              [15] Salibala Das v Jitendra Kumar AIR 1962 Ori 74.

              [16] AIR 2001 SC 2040

              Leave a Comment