Can a Gift Deed be challenged in India?
What is a Gift Deed?
Section 122 of the Transfer of Property Act defines a gift deed as a legal document that describes the voluntary transfer of gift from a donor (owner of the property) to donee (receiver of gift) without any exchange of money. The donor must be solvent and should not use this tool for tax evasion and illegal gains.
Section 17 of the Registration Act,1908 makes it mandatory to register a gift deed with the sub-registrar. If a gift deed is not registered, the transfer of property is not valid. Once a gift deed is registered in the favour of the donee, only the donee has the right to apply for mutation of the property.
What can be Gifted?
To qualify as a valid gift, a thing must have the following properties:
It must be well defined and in existence (can be both movable or immovable).
# It must be transferable.
# It should exist in the present. It should not be a future property.
# It should be tangible.
How to register a Gift Deed?
Registration of gift deed is done as per the provisions of the Registration Act, 1908. Common steps involved in the registration process are:
The property in question must be valued by an approved valuation expert.
The appropriate stamp duty and transfer duty must be paid. Stamp duty varies for men and women and is generally lower for women. Stamp duty is subject of the state list and thus varies from state to state.
In case of Minor
Since contracts with a minor avoid ab into, and a gift deed is a legal contract, Minors are not eligible to be a donor and therefore a gift deed where the minor is the transferrer is not valid in the eyes of law.
In a circumstance where the donee is a minor, a natural guardian has the right to accept the gift on his behalf.
Conditions when a gift can be revoked
Section 126 of the Transfer of Property Act provides the essential ingredients for the revocation of a gift:
The Donor and Donee must have an agreement wherein the gift can be revoked on the happening or non-happening of a specific event.
# The happening of this event must not depend on the donor.
# The condition regarding the revocation must be made clear to the donee and the same must be accepted by him at the time of accepting the gift.
# there must exist a ground, except want or failure of consideration, on which a contract may be rescinded
# Such a condition should not be illegal or immoral and should not have ill effects on the gift property.
# Section 126 is controlled by sec. 10. As such, a clause in the gift deed completely prohibiting alienation is void in view of the provisions contained in Sec. 10
# A bonafide gift cannot be canceled unilaterally. The court needs to be involved in order to revoke a bonafide gift.