SUSPENSION OR REVOCATION OF GIFTS
Gift is transfer of ownership without consideration. It is given by one individual i.e., the donor to another i.e., the donee out of love and affection and without any condition. Any type of transfer which does not have consideration is called a gratuitous transfer. A gratuitous transfer may occur in two ways (i) by one individual voluntarily to another or inter vivos and (ii) it takes place after the death of a transferor i.e., will. Therefore, gift may be either inter vivos or testamentary. Gift is gratuitous transfer as it is made without any condition and by this transfer of ownership between two living persons takes place and also, it is a transfer of property within the meaning of Section 5 of the Transfer of Property Act. Gift testamentary is called a will which is transfer by operation of law and is outside the scope of this Act. A gift made in apprehension of death is called a gift mortis causa. Such gifts are also excluded. Only in case of gifts inter vivos, the provisions of this Act have been made applicable.
Essential Elements of Gift – the essentials of a valid gift are as follows :
- Transfer of ownership must be there.
- The property must be existing property.
- Transfer must be without consideration.
- The transfer must be made voluntarily, i.e., with free consent.
- Gift must be accepted by transferee.
SUSPENSION OR REVOCATION OF GIFTS
Gift is transfer of ownership which is made unconditional and without consideration. Donor while making a gift to a donee, may make certain conditions of its being suspended or revoked. Then in such situation, gifts would be governed by those provisions of this Act which regulate conditional transfers. Accordingly, if the donor makes such conditions on the basis of which a gift may be suspended or revoked in future, must be valid and enforceable under those provisions. Section126 of the Act deals with that as to how a gift may be suspended or revoked by a donor. It provides two modes of suspension or revocation of a gift (i) revocation by mutual agreement of donor and donee and, (ii) revocation by rescission as in the case of contracts.
Revocation by Mutual Agreement
Donor and donee may agree that the gift shall be suspended or revoked upon the happening of an event not dependent on the will of the donor. The condition for revoking the gift should always be in writing; it can never be made merely in the form of a wish or desire. In other words, the factors or condition on the failure of which, the donor may revoke the gift, must be mentioned in writing in the gift deed only. Certain properties were executed as a gift in lieu of the past and future services rendered by donee to donor. But if it was not specified as a condition in the gift deed that if the donee would fail to render services or to maintain donor in future, the donor would be able to revoke the gift, then he cannot revoke the gift. The High Court of Himachal Pradesh held that as the condition of revocation of gift upon donee’s failure to render services to donor was not mentioned in the deed, and gift was made without any condition, therefore, the donor cannot revoke the gift. Where a condition has not been expressly mentioned in the gift-deed, it might be treated simply as the wish or desire of the donor and it would not be a condition upon the breach of that, the donor could revoke the gift.
Revocation by Rescission of Contract
Gift is gratuitous transfer of ownership made voluntarily. In a situation where it is proved that a gift made to a donee was not voluntarily, that gift can be suspended or revoked. Gift is a kind of contract entered by two parties – the donor and the donee. The donor makes proposal of gift to the donee and the donee must accept it. The acceptance of gift may be made either expressly or by his conduct. Under Section 126 a gift is revoked also on any of the grounds on which it might be rescinded has it been a contract. According to section 19 of the Indian Contract Act, “Where consent to an agreement is caused by coercion, undue influence, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so obtained”, Thus if a gift is made on any of factors mentioned above, the donor may revoke the gift. It is to be noted that this section deals with revocation which means rescission or repudiation of gift; it does not deal with cases where gift is void, e.g., for want of donor’s tide. So, where the donor’s consent has been obtained by coercion, undue influence, fraud or misrepresentation, such gift may be revoked or repudiated by the donor, if he wants to do so and subsequently, he loses the right to revoke the gift if he does not revoke such gift. Only above mentioned factors, a donor may revoke the gift. No one can revoke the gift except the donor himself. However, the donor’s legal representatives may sue for the revocation of gift on any of the above mentioned factors after his death.
For the revocation of gifts on the ground of fraud, coercion, misrepresentation or undue influence, the period of limitation is three years from the date on which such facts are known to the plaintiff (donor). Afterwards, the donor will not have any right to revoke the gift, if he ratifies the gift on the above-mentioned grounds either by expressly or by his conduct.
Revocation is not available on any other ground
Besides, on the ground of (a) condition subsequent which does not depend upon the desire or pleasure of donor and (b) on the grounds justifying of a contract, the donor cannot revoke the gift on any other ground. A donor had validly executed a gift deed in favour of the donee. The Court held that a simultaneous claim by the donor that the gift deed was revoked unilaterally by him and lodged for registration was not valid as there was no participation by the donee.
Non-compliance with condition of gift
A property was gifted to the daughter-in-law. The donor reserved in his favour the right of residence in the property. There was no mention in the gift deed of any such thing as that if residence was not allowed, the gift would be revoked. The Court said that the gift could not be revoked on the ground that there was failure on the part of the donee to allow residence to the donor in the property. A suit to revoke the gift failed. There was nothing in the plaint to suggest that there was fraud or misrepresentation or undue influence. Furthermore, a condition in the gift deed that the property in question was to go to the son of the daughter after her Marriage was a condition repugnant to the interest created such condition was void under Section 11, TPA.
Bona fide Purchaser
The last paragraph of section 126 protects the interest of a bona fide transferee for value without notice of donor’s right of revocation. For example, A transfers his house X as a gift to B with a condition that he will have an option to revoke the gift if the son of B, does not choose the studies of law after graduation. A few years later, B sells the house X to C. C did not have the notice of such condition and after completing graduation, B does not choose the law course. Now, A has no right to revoke the gift as it will affect C’s interest in the house X. Only in one situation, A could have revoked the gift, if C was aware about the notice of such condition or if he was a gratuitous transferee.