The provisions of The Transfer of Property Act on gifts are applicable only to gifts inter-vivos. Discuss.
Introduction:
Our existing legal system has been developed from religious laws; most of this codified laws being developed in our country the then Indian sub-continent by the British Emperors. In Indian sub-continent, people are very much down to earth and family value is very high for them. So, transfer of property is very much common in this territory. That is why, in law of Bangladesh, the importance of Transfer of Property Act is very high. There are several sections under the Transfer of Property Act, such as Preliminary, Transfer of Property Act by Act of parties, Exchanges, Sales, Mortgages, Lease of Immoveable Property; Gift etc. “Gift” is one of the major issues of The Transfer of Property Act, which lies under the section VII. In this Act, we can find the definition of Gift, Right of party deprived of thing received in exchange.
Earlier, gift(s) were conveyed through religious laws but that does not necessarily mean that now religious laws are not applicable; rather by the development of the codified laws, it reduces conflicts in relation to conveyance of gift. Transfer of Property Act, 1882 specifically deals with this issue. Now a day’s gift of immovable property must be registered[1], whereas, obtaining physical possession of the property was sufficient for conveyance of gift. There are some rules for the law of Gift as well, such as the delivery of gift, Donative Intent and the acceptance.[2] However, it will consider as an invalid gift of a property if it is not registered. To register it, the documents must be stamped and registered as required and attested by two witnesses. If the property is gifted to a minor or on the behalf on the minor it will be consider as void.
Gift is a transfer of property in which ownership is transferred by a living person to another living person and, the transfer is made without any consideration. Gift is therefore, a transfer vivos i.e. between living persons. According to the Act, Chapter VII (122), the acceptance must be occurred during the lifetime of the donor. Where transfer of property after the death of a transferor[3], is called a will. Moreover, gift is a gratuitous transfer i.e., a transfer, without any consideration. Where ownership in a property is transferred in return of some consideration, the transfer is not a gift; it is either sale or exchange.
Gifts under Transfer of Property Act, 1882 exempts only those gifts which are made by Muslims. This exemption may appear to be discrimination on the ground of religion which is against the Constitutional mandate. But, it is now well established law that this exemption is Constitutional and lawful
Gift:
According to Chapter VII, Section 122,gift has defined as, “Gift is the transfer of certain existing moveable or immovable property made voluntarily and without consideration, by one person, called the donor (the person made the gift), to done (to whom the gift is made) and accepted by or on behalf of done”
Gift (Hiba) is a transfer which confers the right of property, in something specific, without any exchange. Hiba an Arabic term, a form of declaration by the donor and not an instrument of gift as contemplated under Section 17 of the Registration Act. If all the three essential requisites are satisfied by the gift deed, the gift in favor of donee became complete and irrevocable.
Essentials of a valid Gift:
Declaration (Must be written);
Acceptance;
The delivery of possession;
Voluntary and
Registration (Applicable in immovable property made mandatory as per section 17(a) of the Registration Act, 1908).
Classification of gift:
Gift are of two (2) kinds:
Gifts inter-vivos: Gift between the living, which are perfected and become absolute during lifetime of the donor and donee, or an immediate, voluntary and gratuitous transfer of property by one to another.
Gifts Causa Mortis: With reference to or in contemplation of death i.e., where gifted property transferred by the death donor.
Since my discussion is limited with gift of inter-vivos (in between living persons)under the light of the Transfer of Property Act, 1882, I have taken an initiative to discuss with this topic in nutshell.
The Transfer of property Act enacted in the year of 1882 and came into force on the first day of July, 1882. This Act regulates rights and liability in between transferor and transferee. According to Transfer of Property Act, in 06 (six) ways transfer can be made; they are:
of sale;
of mortgage;
of lease;
of exchange;
of gift and
of actionable claims.
Gift is one of the core discussion of the Transfer of Property Act by which transfer of property can be made. Chapter VII, section 122-129 of this Act dealt with this issue. Moreover, these provisions deals with gift if inter-vivos as this intention expressed on this Act stating “such acceptance must be made during the lifetime of the donor and while he is still capable of giving”; and such acceptance may be express or implied.
Inter-Vivos Trust:
A fiduciary relationship used in estate planning that is created during the lifetime of the trustor. Also known as a living trust, this trust has a duration that is deemed at the trust’s creation and can entail the distribution of assets to the beneficiary during or after the trustor’s lifetime. The opposite of an inter-vivos trust is a testamentary trust, which goes into effect upon the death of the trustor.
That means, both of the donor and done has to be the living person. Non-living people, such as, unborn infant, baby inside the mother’s womb or death person cannot be in the part of the gift. So, both of the parties have to be living people or the inter-vivos. This is a major provision of the Transfer of Property Act on Gift.
The eight sections of “gift” regarding inter-vivos:
Section 122 of the Transfer of Property Act, 1882 provides that-
“Gift” is the transfer of certain existing moveable or immovable property made voluntarily and without consideration, b one person, called donor, to another, called done, and accepted by on behalf of the done.
Such acceptance must be made during the life time of the donor and while he is still capable of giving.
If done dies before acceptance, the gift is void.
It quite clear from section 122 both the parties i.e. the donor and donee must make this transaction during their life time and gift of inter-vivos is nothing but in between living person(s).
Acceptance of gift under the Hindu Law may be either express or implied in as much as there is nothing in section 122 of the Transfer of Property Act to say that it must be expressed[4]. A Burmese Buddist religious gift is not valid unless registered [11 Bur LT 259-45 IC 925; 50IC 809]. According to Muhammadan Law, would look not the provisions of section 122, but to the rule of Muhammadan Law.
Section 123 of Transfer of Property Act, 1882 provides that-
For the purpose of making a gift of moveable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses.
Notwithstanding anything contained in any other law for the time being inforce, a heba under Muhammadan Law shall be deemed to be gift of immovable property for the aforesaid purpose
For the purpose of making a gift of immovable property, the transfer may effected either by registered instrument singed as aforesaid or by delivery.
Such delivery may be made in the same way as goods sold may be delivered.
In the absence of a registered instrument a gift by a person belonging to Hindu Community (Governed by the Dayabhaga School of Hindu Law) is not valid under section 123 of the Act[5]. Mere non attestation of the deed of gift by any attesting witness cannot make the same invalid and section 123 of the Transfer of Property Act is not applicable to any gift made by one Muhammadan to another Muhammadan under the Muhammadan Law.
Section 124 of the Transfer of Property Act, 1882 provides that-
A gift comprising both existing and future property is void as to the latter.
Section 125 of the Transfer of Property Act, 1882 provides that-
A gift of a thing to two or more donees, of whom one does not accept it, is void to the interest which he would have taken had he accepted.
Section 124 and 125 of the Transfer of Property Act, 1882 discuss similar consequences with different events, one with property and other one with donees. If an estate is limited to two jointly, the one capable of taking the other not he who is capable shall take the whole, Humphrey vs. Teyleur, cited in 16 C at p 682. Where a gift was made by a Hindu to his daughter and her husband jointly, and the gift is found to be invalid as to the husband, the daughter would take the whole. 16 C 677-16 IA 44.
Section 126 of the Transfer of Property Act, 1882 provides that-
The donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked; but 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.
A gift may also be revoked in any of the cases (save want or failure of consideration) in which, if it were a contract, it might be rescinded.
Save as aforesaid, a gift cannot be revoked
Nothing contained in this section shall be deemed to affect the rights of transferees for consideration without notice.
Section 126 does not lay down that a gift can be revoked in the same manner as a contract can be rescinded. The right given there under is personal to the donor (152 IC 146-193 ALJ 817-1934 A 507). A gift voidable at the option of the donor can be avoided after his death by his heirs (23 ALJ 376-1925 A 437).
Section 127 of the Transfer of Property Act, 1882 provides that-
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, burden by an obligation, the donee can take nothing by the gift unless he accepts it fully
Where a gift is in the form of two or more separate and independent transfers to the same person of several things, the donee is at liberty to accept one of them and refuse the others, although the former may be beneficial and the latter onerous.
Onerous gift to disqualified person:
A donee not competent to contract and accepting property burdened by any obligation is not bound by his acceptance. But if, after becoming competent to contract and being aware of the obligation, he retains the property given, he becomes so bound.
This section is an application of the rule of election to gift; and as embodying rule of justice and equity is also applied to Hindus and Muhammadans (35 C 767). In case od disqualifications of the donee accepting onerous gifts, the option to refuse is only to done but the gift is binding on the donor. It is also been held that a minor done can accept a beneficial gift personally without the intervention of a guardian. (33 M 312 at 314 R) 13 NLR 18-39 IC 46. But a minor would not be bound during his minority by his acceptance of an onorous gift.
Section 128 of the Transfer of Property Act, 1882 provides that-
Subject to the provisions of 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 therein.
A universal done is, on the principle embodied in section 128, liable to pay the debts of the donor out of the estate in his hands[6]. The essential condition to constitute a universal done is that the gift must consist of the donor’s whole property. If any portion of the donor’s property, no matter whether it is moveable or immovable is executed from the operation of the gift, the done is not the universal done. [1930 ALJ 99-1930 A 180; 8 OWN 1291]
Section 129 of the Transfer of Property Act, 1882 provides that-
Nothing in this Chapter relates to gifts of moveable property made in contemplation of death.
The rules as to gifts under Muhammadan Law are contrary to the rules under the Transfer of Property Act and the letter do not apply to a Muhammadan gift. This section does not state that the provisions of this chapter shall not apply at all to Muhammadans, but it only lies down that its provisions shall not affect any rules of Muhammadan Law. Hence, insofar as the rules in this chapter are in consonance with justice and equity and do not conflict with any rules of Muhammadan Law, they would be applied to Muhammadans also.
Case of inter-vivos:
GruenvsGruen
The Plaintiff, Michael Gruen (Plaintiff), commenced an action seeking a declaration that he is the rightful owner of a painting that his now deceased father had given to him, despite the fact that he never retained possession of the painting.
Fact: According to the rule of inter-vivos, a gift must be given in the lifetime of the donor which has to be registered. But, any personal letter cannot be a legally registered copy. So, the plaintiff cannot demand the painting from his step-mother KemijaGruen (defendant) the painting now. It could be possible only if the donor gave the gift physically during his lifetime and the done accept it before his father’s death, which would be a valid intervivos gift. So, it means, it required, the intention of the donor, the constructive delivery of the gift and the acceptance of the donee.
Applicability of Transfer of Property Act in case of Inter-Vivos Gifts:
For any legal transfer of any property there must have some conditions. These are age of majority; sound mind; legal possession of the property. However, in case of inter vivos gift the main element is the gift must take place after the death of donee and others are the gift deed must be signed by two witnesses. Acceptance is main criterion.
According to section 122 & 123 of the Transfer of Property Act, in order to effect a valid gift there must be a transfer of the immovable property made voluntarily and without consideration of donee and such transfer must be effected by a registered instrument signed by the donor and attested at least by two witnesses.
The acceptance by the donee need not be express; it may be constructive as well to be inferred from the donee’s possession of the property or the donee collecting the rents of the property involved or that the gift-deed is in his possession
While there possession by or on behalf of the donee may amount to acceptance, where the subject-matter of the gift was enjoyed jointly by the donor and the donee, mere possession cannot be treated as evidence of acceptance.
So, the Transfer of Property Act is applicable in case of inter vivos gift. Though the inter vivos gift accepted after the death of donee and there must exists at least two witnesses when the gift has been made. The donor must attend the age of majority and must be sound minded. At last the gifted property also be registered legally.
Conclusion:
It is obvious that gift must be voluntary exchange of property whether moveable or immovable and without any consideration; in practice it seems to be voluntary but it is not always without consideration. For instance, in Bangladesh most of the gifts are being made in consideration of “love and affection”, it is also consideration as per law of contract. Earlier, people tend to give gifts or make will orally, but to avoid so many circumstances, a give must have to be oral and registered. However, Chapter VII of the Transfer of Property Act, 1882 in its section 122 to 129 deals with gifts and obviously gift of inter-vivos i.e. gifts in between living persons. There are many provisions of gift embodied in the Muhammadan Law but these are not maintainable under the Transfer of Property Act. Of gifts Transfer of Property Act reduces post dispute among the heirs of the donees accordingly increase government revenue by way of registration (under the Registration Act, 1908).
References:
Baillie, Digest of Mohammadan Law, Part I, Ed.II, 1967
Dhaka Law Report (DLR), Volume-VII, 1956
Dhaka Law Report (DLR), Volume-XI, 1956
Chowdhury, Obaidul, Transfer of Property Act, third edition, 2004
Sinha, R, The Muslim Property Law, third edition, 1995
The Registration Act, 1908, Government Publication
The Transfer of Property Act, 1882, Government Publication
The FREEDICTIONARY, legal dictionary
<http://legal-dictionary.thefreedictionary.com/inter+vivos+trust>
The INVESTOPEDIA, intervivos,
<http://www.investopedia.com/terms/i/intervivostrust.asp>
The journal, Advocate MMMOHAN,
< https://advocatemmmohan.wordpress.com/2011/05/05/hiba-muslim-gift-registration/>
[1] . Registration is mandatory according to section 17(a) of the Registration Act, 1908.
[2] See http://legal-dictionary.thefreedictionary.com/gift
[3] . Transferor means a person who made the transfer.
[4] .Hari Kison Pandy Vs. Nageswari Devi and others, 8 DLR 1956, p.65
[5]. Kala Miah Vs. Gopal Chandra Paul and others 51 DLR 1999, p 77
[6] . 42 PLR 307-1940 L 285