Conditional gift deed is valid. Conditional gift can be revoked if the recipient does not fulfill the conditions attached to the gift.
Conditional Gift Deed
Hello, My name is Sagar and I writing in regard to a property located in Bangalore. My mother who is in procession of a property was gifted to her by her elder sister. This was executed through a registered Gift Deed with due diligence. The condition that has been put forth is that my mother will let her Sister run her business from the property in question till she deems fit to do so. The business is still being run from the aftermentioned property as of today. My mother and I would like to start a business of our own in the above said property which would affect her business. If we go ahead with our plans, can the Gift Deed be cancelled? Please provide us with the options that will not lead to a confrontation in the court of law. Thank You
Asked 4 years ago in Property Law
Religion: Hindu
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19 Answers
hello, dear Sagar
whenever a property is transferred the law which is applicable is Transfer of Property Act, and there are various if and buts , so whenever a property is gifted the condition may be imposed but that condition should not be incontravention of law.
for that purpose we need to study the gift deed.
now my suggestion, you can challenge the condition before the court but gift deed will remain be unaffected.
kindly contact any local lawyer show him the document.
Conditional gift deed has been executed wherein sister can carry on business in the premises
2) sister can revoke the conditional deed if you refuse to permit her to carry on business
3) she can take legal proceedings to set aside gift deed
Thank you for your answers. I have another question. The sister who is in charge of the business is 65 years old and has made her only son as her heir. Can her son run the business which is in her name while she can obligate her day to day business to him? In that case do we have to wait till the demise of the party to get hold of our share of property?
Asked 4 years ago
dear , its not the question of business at all its the matter of possession of property. let her mausi do anything but the law is very clear once the gift is made then it can not be cancelled by the passage of time.
Dear Sir/Madam,
You are suggested not to start any business which may affect the growth, prosperity and well being of that business run by your mother's sister. Rather, you may start any business which is complimentary and not affecting her business.
Mother can authorise hr son to carry on business on her behalf
2) on demise of mother or her closing the business you would be absolute owner of property
Her son can operate business under her direction till she is alive.
Dear Sir
A deed executed as gift deed but subject to conditions is incomplete and can be cancelled before the conditions are fulfilled, the Supreme Court has clarified
Donor can stipulate conditions in a Gift Deed and resort to cancellation on non-compliance: The Clarification by the Supreme Court of India
An appeal was made to the Supreme Court raising a fundamental question as to the legality and nature of a gift deed wherein the donor reserves his right to possession and enjoyment of the property and the conveyance is subjected to the fulfillment of certain stipulated conditions present in the deed.
The two main issues raised before the court in the present appeal were[1]:
(i) 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, and
(ii) whether a document in terms whereof the executants of the document retained possession and reserved her right over the property being the subject matter of the document could be a deed of gift or whether such a document was a document in the nature of a will
The appellant in the present case is a widow, aged 74 years, who executed a gift deed in favor of the respondent (i.e. nephew of the appellant) in the expectation that he will take due care of the appellant and her husband and also for some pecuniary consideration. On a plain reading of the deed of gift it could be perceived that the deed will come in effect on the instance of the death of the appellant and her husband and not before.
The appellant in due course of time, in and around, 02.06.1999 executed a deed of cancellation thereby canceling the gift deed so made. To this effect, the respondent approached the court of learned Munsif Sasthamcotta praying to declare the cancellation deed as null and void and for his declaration of title over the suit property. To this the appellant filed another suit praying for a permanent injunction restraining the respondent from trespassing, committing waste or mischief in the suit property. Not going too much into the detailed timeline of the case, the present appeal is brought against the order dated 03.04.2017 of the High Court of Kerela at Ernakulam.
To understand what constitutes as a Gift, the Supreme Court in the case of Naramadaben Maganlal Thakker v. Pranivandas Maganlal Thakker and others, held “Gift means to transfer certain existing moveable or immoveable property voluntarily and without consideration by one person called the donor to another called the done and accepted by or on behalf of the donee”
The Supreme Court vide its judgment clarified 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 the lifetime of the donor. When a gift is incomplete and title remains with the donor the deed of gift might be canceled”
The supreme court has with precision outlined that the conditions stipulated in the deed of a gift does not make the gift invalid and such gift shall be complete only upon fulfillment of the conditions, needless to say, that before such an instance the donor can cancel the deed of gift.
The position which is clarified in the instant case is with regard to the provisions effecting gift under the Transfer of Property Act, 1882 and not with regard to other personal laws on the subject.
For your ready reference, the definition of gift under section 122 of the Transfer of Property Act, 1882 is as under –
“Gift” is the transfer of certain existing movable or immovable property made 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 to reach on the conclusion on the subject relied largely on the judgment of Reninkuntla Rajamma v. K. Sarwanamma[2], wherein it was 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 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 done. Such acceptance must, however, be made during the lifetime of the donor and while he is still capable of making an acceptance.
The court accepting this judgment was of the view that where a gift deed is executed subjected to certain conditions, the satisfaction of those conditions is of utmost importance and that conditions do not make the gift void neither does reserving the right to enjoy and possess the subject property by the donor.
The Supreme Court concluding the instant case held “We are in agreement with the decision of this Court in Reninkuntla Rajamma 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”
The decision was given by a bench of Justice Arun MishraandJustice Indira Banerjee in S. Sarojini Amma v. Velayudhan Pillai Sreekumar[3].
To understand what constitutes as a Gift, the Supreme Court in the case of Naramadaben Maganlal Thakker v. Pranivandas Maganlal Thakker and others, held “Gift means to transfer certain existing moveable or immoveable property voluntarily and without consideration by one person called the donor to another called the done and accepted by or on behalf of the donee”
The Supreme Court vide its judgment clarified 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 the lifetime of the donor. When a gift is incomplete and title remains with the donor the deed of gift might be canceled”
The supreme court has with precision outlined that the conditions stipulated in the deed of a gift does not make the gift invalid and such gift shall be complete only upon fulfillment of the conditions, needless to say, that before such an instance the donor can cancel the deed of gift.
The position which is clarified in the instant case is with regard to the provisions effecting gift under the Transfer of Property Act, 1882 and not with regard to other personal laws on the subject.
For your ready reference, the definition of gift under section 122 of the Transfer of Property Act, 1882 is as under –
“Gift” is the transfer of certain existing movable or immovable property made 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 to reach on the conclusion on the subject relied largely on the judgment of Reninkuntla Rajamma v. K. Sarwanamma[2], wherein it was 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 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 done. Such acceptance must, however, be made during the lifetime of the donor and while he is still capable of making an acceptance.
The court accepting this judgment was of the view that where a gift deed is executed subjected to certain conditions, the satisfaction of those conditions is of utmost importance and that conditions do not make the gift void neither does reserving the right to enjoy and possess the subject property by the donor.
The Supreme Court concluding the instant case held “We are in agreement with the decision of this Court in Reninkuntla Rajamma 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”
The decision was given by a bench of Justice Arun MishraandJustice Indira Banerjee in S. Sarojini Amma v. Velayudhan Pillai Sreekumar[3].
It can be cancelled mutually through a registered cancellation deed. If not then courts interference will be needed for the cancellation
The conditional gift deed is actually invalid.
However the conditions may be imposed in the gift settlement deed.
The conditions imposed in the deed is the decision of the donor hence is there is any breach of the said condition, the donor may revoke the gift deed.
The donor may approach court seeking cancellation of the gift deed and also may obtain an injunction order against your other in this regard
Hence it would be better that you solve it amicably and get an undertaking from her to vacate the premises and deliver vacant possession to facilitate you to begin yor business from that premises.
The condition is that your mother's sister shall be carrying out the m=business in the premises till her lifetime and there is no such clause that her legal heirs shall continue her business in the same premises after her lifetime.
Therefore you may not be worried on that aspect.
- As per law, a Gift Deed , once executed and registered cannot be revoked.
- Further according to Section 126 of the Transfer of Property Act, a Gift deed can be cancelled or revoked :
1. Revocation by mutual agreement of donor and donee . It means that the Gift deed should contain the clause that it can be cancelled by mutual agreement and also due to non fulfillment of certain conditions .
2. If the consent of the donor was not free, the gift must be revoked. It is means that , where consent for the gift has been obtained by coercion, undue influence, fraud or misrepresentation, the deed is voidable at the option of the party whose consent was so obtained.
- But the period of limitation for the revocation of gifts on the ground of fraud, coercion, misrepresentation or undue influence is three years from the date on which the same comes to the knowledge of the donor.
- Otherwise, a Gift deed cannot be cancelled due to any reasons
- Since, your mother has got the said property by a registered Gift deed , with the condition of that your my mother will let her Sister run her business from the property in question till she deems fit to do so.
- Hence if your mother wants to start her own business , she can do so without any legal obstacle , and this Gift deed cannot be cancelled .
1. One of Three conditions of Gift Deed is "giving possession" of the gifted property. Irrespective of the condition, IF such Gifted property is proved to be in possession of Mother, THEN mother can file "eviction proceedings" in the local Civil Court, to enforce the Gift Deed. This would be tricky and spoil relations with family.
2. Next, the condition should have been recorded in the Gift Deed and defined appropriately wherein typically the clause would be ONLY the Sister would be entitled "usage condition" of property and not her legal heirs (son), more so since IF "usage condition" is perpetual to sister's family members THEN the Gift Deed would itself null & void, since it would amount to No Possession.
3. IF matters have to be done legally & strategically without looking at family sentiments THEN file "eviction proceedings" for possession of property.
4. ELSE settle amicably in such a way that both business can be run concurrently.
The important question to be considered here is who decides on continuing the business in this property, your mother or her sister. What does the gift deed specifically state and to whom does this power vest in. If this power vests in your mother, then she can decide that her sister ran the business actively for more than x number of years and now that she is incapaciated to run it further, she has delegated this activity to her son, hence your mother can request her sister to shift her business from out of this property. This will then enable you and your mother to commence a business from this property as per your choice.
If the conditions go against the wishes of the Donor, elder sister, and if elder sister is alive at this point of time, and if she perceives this to be violation of the condition of the Gift Deed Dt: so and so, then she can proceed to cancel it. If this sister is not alive, then the sister who is enjoying the property currently can approach a civil court and seek a stay or cancellation of this GIFT DEED.
It would be in your best interest to contact a local advocate with a copy of the Gift Deed to get a second opinion of this situation before proceeding on our advice/s.
1. See the Gift deed cannot be conditional after gift deed your mother is absolute owner and she can seek eviction of her sister from property to start the business. The gift deed cannot be cancelled.
1. Gift deed is already made and mother is absolute owner you don't have to wait from the demise of the party to take possession or control of your property.
Hi
Yes she can make her son as the hire of the business.
Gift deed cannot be cancelled.
As per the general prinicples of law, Once the Gift Deed executed by way of registration it cannot be cancelled unless obtain decree of the Court. However, when a Gift Deed executed under the condition that can be cancelled under not acheived the condition
1. No gift deed will not be cancelled as you are not asking your aunt to close her business.
2. There was no condition that you cannot start your own business in that premises.
