Sarojini Amma v. Velayudhan Pillai Sreekumar
A transfer evidenced by consideration is not a gift; consideration excludes natural love and affection, and transfer of possession is not a sine qua non for a valid gift.
Facts
A document styled as a gift deed of immovable property was executed but its operation was made conditional and intertwined with consideration / obligations of the donee, rather than being a purely gratuitous transfer. The donor later sought to resile from the transaction, raising a question whether the deed operated as a completed and valid gift.
Issues
- Whether a transfer that is supported by or coupled with consideration can qualify as a gift under section 122 of the Transfer of Property Act.
- Whether transfer or delivery of possession of the property is an essential requirement for the validity of a gift.
Arguments
The donee contended that the registered deed effected a completed and irrevocable gift of the property. The donor contended that the transaction was not a true gift because it was not purely gratuitous and remained conditional, so no valid completed gift had come into existence.
Held
The Supreme Court held that the essence of a gift is that it is a gratuitous transfer made voluntarily and without consideration, the word 'consideration' bearing the same meaning as in the Indian Contract Act and excluding natural love and affection. If a transfer is evidenced by consideration, it cannot be a valid gift within the meaning of section 122. The Court further held that there is no provision in law mandating transfer of possession for the creation of a gift, so delivery of possession is not a sine qua non for a valid gift; on the facts, the transaction did not operate as a completed, unconditional gift.
Ratio decidendi
A gift under section 122 must be wholly gratuitous; the presence of consideration vitiates its character as a gift, but actual transfer or delivery of possession is not essential to the validity of a gift if the other requirements are met.
Significance
A leading recent Supreme Court authority clarifying two recurring questions: that a transaction coupled with consideration is not a gift, and that delivery of possession is not an essential condition of a valid gift. It is widely cited on the gratuitous nature of gifts and on the irrelevance of possession to gift validity.
Related
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