A conditional gift is incomplete till the conditions stated in the deed remain unfulfilled and may be cancelled

The Supreme court has held that a conditional gift only becomes complete on compliance of the conditions in the deed and till the time such conditions remain unfulfilled; the donor is at liberty to cancel such a gift.

The above ratio was delivered by the Supreme Court in the matter of S. Sarojini Amma Vs. Velayudhan Pillai Sreekumar in Civil Appeal No. 10785 of 2018 (Arising out of SLP (C) No. 35515 of 2017) decided on 26.10.2018

Challenge

The appellant, a childless widow, in the expectation that the respondent (her nephew) will look after her and also for some consideration, executed a purported gift deed in favour of the respondent. The gift deed clearly stated that the gift would take effect after the death of the appellant.

Subsequently, the appellant executed a deed for cancelling the gift deed. Consequently, the respondent filed a suit for declaration that the cancellation deed executed by the appellant is null and void and also for declaration of his right over the suit property being the subject matter of the purported deed of gift. The said suit was decreed. The appellant herein went in appeal which was allowed. The judgement of the appellate court was challenged by the respondent herein in a regular second appeal in the High court which stood allowed.

The short question for consideration of the Supreme Court was whether a document styled as gift deed but admittedly executed for consideration, part of which has been paid and the balance promised to be paid, can be treated as formal document or instrument of gift.

Held

The Apex Court while discussing the basic law related to ‘gift’ observed that a ‘Gift’ means to transfer certain existing moveable or immoveable property voluntarily and without consideration by one person called the donor to another called the donee and accepted by or on behalf of the donee.

The Court further held that a conditional gift with no recital of acceptance and no evidence in proof of acceptance, where possession remains with the donor as long as he is alive, does not become complete during lifetime of the donor. When a gift is incomplete and title remains with the donor the deed of gift might be cancelled.

Referring to the judgment in Reninkuntla Rajamma vs. K. Sarwanamma (2014) 9 SCC 445, the apex Court held that the fact that the donor had reserved the right to enjoy the property during her lifetime did not affect the validity of the deed. The court held that a gift made by a registered instrument duly executed by or on behalf of the donor and attested by at least two witnesses is valid, if the same is accepted by or on behalf of the donee. Such acceptance must, however, be made during the lifetime of the donor and while she is still capable of making an acceptance.

The Court further held that there is no provision in law that ownership in property cannot be gifted without transfer of possession of such property. However, the conditions precedent of a gift as defined in Section 122 of the Transfer of Property Act must be satisfied. A gift is transfer of property without consideration. Moreover, a conditional gift only becomes complete on compliance of the conditions in the deed.