Gift

Section 125: one donee refuses. A gift of a thing to two or more donees, of whom one does not accept, is void as to the interest which he would have taken had he accepted. The rest of the gift stands, and the refused share reverts to the donor rather than accruing to the others.

Section 126: suspension and revocation

This section contains three rules and they must be kept apart.

One, revocation on a specified event. The donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor, the gift shall be suspended or revoked.

Two, revocation at will is void. A gift which the parties agree shall be revocable wholly or in part at the mere will of the donor is void wholly or in part, as the case may be.

The difference is the whole of the section. A condition tied to an external event is a genuine condition; a power to take the property back whenever the donor pleases means he never really parted with it, so the "gift" is not a gift at all.

The Act's illustrations:

(a) A gives a field to B, reserving to himself, with B's assent, the right to take it back if B and his descendants die before A. B dies without descendants in A's lifetime. A may take back the field. The event is external to A's will.

(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.

Three, rescission grounds. A gift may also be revoked in any of the cases in which, if it were a contract, it might be rescinded, save want or failure of consideration. So coercion, undue influence, fraud and misrepresentation will do; absence of consideration will not, since a gift has none by definition.

Save as aforesaid, a gift cannot be revoked.

The saving. Nothing in the section affects the rights of transferees for consideration without notice. So if the donee has sold the property to an innocent purchaser for value, revocation cannot reach it.

Section 127: onerous gifts

An onerous gift is one burdened by an obligation, so that what is given carries a liability with it.

A single transfer. Where a gift is in the form of a single transfer to the same person of several things, of which one is and the others are not burdened by an obligation, the donee can take nothing by the gift unless he accepts it fully.

Separate transfers. Where the gift is in the form of two or more separate and independent transfers to the same person, the donee is at liberty to accept one and refuse the others, although the accepted one may be beneficial and the refused ones onerous.

The rule is the doctrine that a person may not approbate and reprobate, take the benefit and reject the burden, of the same transaction. The dividing line is whether there is one transaction or several.

The Act's illustrations:

(a) A has shares in X, a prosperous company, and in Y, a company in difficulties on which heavy calls are expected. A gives B all his shares in joint stock companies. B refuses the Y shares. He cannot take the X shares. One transfer.

(b) A, having a lease of a house at a rent above its letting value which he and his representatives must pay, gives B the lease and, as a separate and independent transaction, a sum of money. B refuses the lease. He does not by his refusal forfeit the money. Two transfers.

Onerous gift to a person not competent to contract. A donee not competent to contract who accepts property burdened by an obligation is not bound by his acceptance. But if, after becoming competent and being aware of the obligation, he retains the property, he becomes bound.

Section 128: the universal donee

Subject to section 127, where a gift consists of the donor's whole property, the donee is personally liable for all the debts due by and liabilities of the donor at the time of the gift, to the extent of the property comprised in the gift.

This closes an obvious escape: a debtor could otherwise give away everything he had and leave his creditors with nobody to sue and nothing to seize. The liability is personal, but it is capped at the value of what he received.

Note the two requirements: the gift must be of the donor's whole property, and the debts must have been due at the time of the gift.

Section 129: what this Chapter does not touch

Nothing in Chapter VII relates to gifts of movable property made in contemplation of death, nor is it deemed to affect any rule of Muhammadan law.

A donatio mortis causa is a gift of movables made by a person in expectation of death, conditional on his dying, and revocable until then. It is governed by section 191 of the Indian Succession Act 1925, not by this Chapter.

The Muhammadan law saving is why a hiba is valid without a registered and attested instrument. A hiba requires declaration by the donor, acceptance by the donee and delivery of possession, and section 123 does not apply to it.

A worked example

Keshav wishes to provide for his family.

He executes a registered deed, attested by two witnesses, giving his flat to his nephew Lokesh, who accepts. A valid gift: existing immovable property, voluntary, without consideration, by a registered attested instrument, accepted.

He hands his gold chain to his niece. A valid gift of movable property by delivery; no writing is needed.

He signs an unregistered writing giving his shop to his brother. No gift. Section 123 requires a registered instrument for immovable property, whatever its value.

He gives Lokesh "my flat and whatever I inherit from my uncle". Under section 124 the gift is void as to the future property; it stands as to the flat.

He gives a plot jointly to two cousins, and one refuses. Under section 125 the gift is void as to the share the refusing cousin would have taken, which reverts to Keshav; the other cousin keeps his share.

The deed says Keshav may cancel the gift whenever he likes. Under section 126 that makes the gift void to that extent, on illustration (b).

The deed instead says the gift is revoked if Lokesh predeceases Keshav without children, and Lokesh agreed. Valid, on illustration (a): the event does not depend on Keshav's will.

Keshav gives Lokesh, by one deed, a debt-free house and a heavily mortgaged godown. Under section 127 Lokesh cannot take the house unless he accepts the godown too. Had they been separate and independent transfers, he could have taken one and refused the other.

Keshav gives Lokesh everything he owns, and owes Rs. 15 lakh at the time. Under section 128 Lokesh is personally liable for those debts, but only to the extent of the property he received.

Keshav, gravely ill, hands his watch to a friend saying it is his if he does not recover. A donatio mortis causa of movable property, outside this Chapter by section 129 and governed by the Indian Succession Act 1925.

What it does NOT mean

Love and affection is not consideration. It is the motive for a gift, not a price that turns it into a sale.

There is no value threshold for a gift of land. Every gift of immovable property needs a registered, attested instrument.

A gift is not complete without acceptance, and acceptance must be during the donor's lifetime and while he is still capable of giving.

A donee's death before acceptance makes the gift void, not merely lapsed.

Future property cannot be given, and a mixed gift fails only as to the future part.

A gift is not generally revocable. Only on an agreed external event, or on a ground that would rescind a contract other than want or failure of consideration.

A power of revocation at will destroys the gift, to the extent it applies.

Section 127 depends on one transaction or several, not on the donee's preference.

A universal donee is not liable without limit. His liability is capped at the property he received.

A hiba does not need section 123, by the saving in section 129.

Distinctions

Quick revision

• Gift: transfer of certain existing property, voluntarily and without consideration, by a donor to a donee, and accepted.
• Acceptance must be during the donor's lifetime and while he is capable of giving; if the donee dies before acceptance, the gift is void.
• s.123: immovable property, registered instrument signed by or for the donor and attested by two witnesses, with no value threshold; movable property, such an instrument or delivery.
• s.124: a gift of existing and future property is void as to the future.
• s.125: where one of several donees refuses, the gift is void as to his share only.
• s.126: revocation on a specified event not depending on the donor's will is valid; revocation at the donor's mere will is void; a gift may also be revoked on any ground that would rescind a contract except want or failure of consideration; transferees for consideration without notice are protected.
• s.127: one transfer, accept all or nothing; separate transfers, pick and choose. A donee not competent to contract is not bound, but becomes bound if he retains the property after becoming competent and aware.
• s.128: a universal donee is personally liable for the donor's debts and liabilities at the time of the gift, to the extent of the property received.
• s.129: the Chapter does not apply to donatio mortis causa of movables, nor affect Muhammadan law.

Test yourself

1. State the essentials of a valid gift. Certain existing movable or immovable property; transferred voluntarily; without consideration; by a donor to a donee; and accepted by or on behalf of the donee during the donor's lifetime and while he is still capable of giving.

2. How must a gift of land worth Rs. 50 be made? By a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. Section 123 sets no monetary threshold for immovable property.

3. What happens if the donee dies before accepting? The gift is void.

4. A gives B a field, reserving a right to take it back whenever he pleases. Is the gift good? No. Under section 126 a gift agreed to be revocable at the mere will of the donor is void, wholly or in part as the case may be.

5. A gives B, by one deed, valuable shares and shares carrying heavy calls. B refuses the burdened shares. What can he take? Nothing. Under the first paragraph of section 127, where the gift is a single transfer of several things of which one is burdened, the donee can take nothing unless he accepts it fully.

6. What is the liability of a universal donee? He is personally liable for all the debts due by and liabilities of the donor at the time of the gift, but only to the extent of the property comprised in the gift.

7. Why does a Muslim gift not require a registered instrument? Because section 129 provides that nothing in the Chapter shall be deemed to affect any rule of Muhammadan law, under which a hiba is complete on declaration, acceptance and delivery of possession.

8. On what grounds other than an agreed event may a gift be revoked? On any ground on which, if it were a contract, it might be rescinded, save want or failure of consideration. Save as so provided, a gift cannot be revoked, and the rights of transferees for consideration without notice are unaffected.