Supreme Court Rules on Conditional Gift Deed: Sarojini Amma vs. Velayudhan Pillai Sreekumar

The Supreme Court of India, in the case of S. Sarojini Amma vs. Velayudhan Pillai Sreekumar, ruled on a significant issue concerning the validity of a conditional gift deed. The judgment dealt with whether a document styled as a ‘gift deed’ but executed for consideration and reserving rights of enjoyment until the donor’s death could be treated as a valid gift or should instead be construed as a will.

Background of the Case

The appellant, S. Sarojini Amma, a 74-year-old widow, executed a gift deed in favor of her nephew, the respondent, Velayudhan Pillai Sreekumar. The gift deed contained a clause stating that the transfer of ownership would take effect only after the death of the appellant and her husband. The appellant later executed a deed of cancellation, revoking the gift. The respondent, challenging this revocation, filed a suit claiming that the cancellation was null and void and that he had absolute rights over the property.

The trial court ruled in favor of the respondent, upholding the validity of the gift deed. However, on appeal, the District Court set aside this ruling, holding that the gift was conditional and hence revocable. The High Court of Kerala, in a second appeal, reversed this decision and reinstated the trial court’s ruling, leading the appellant to approach the Supreme Court.

Legal Issues Before the Supreme Court

• Whether a document titled as a ‘gift deed’ but executed for consideration is legally a gift.
• Whether a gift deed that transfers ownership only after the donor’s death should be treated as a will.
• Whether a conditional gift deed can be revoked before the conditions are met.

Arguments by the Appellant

• The document should be treated as a will rather than a gift deed since ownership transfer was conditional upon her death.
• The Transfer of Property Act, 1882, does not allow conditional gifts to be enforced before the conditions are met.
• The donor retained control over the property, meaning the gift was never completed.
• Since the donee did not assume ownership during the donor’s lifetime, the deed was revocable.

Arguments by the Respondent

• The execution of the gift deed and its registration completed the transfer of ownership.
• The conditions attached to the deed did not invalidate the nature of the gift.
• The deed was accepted by the donee, making it legally binding and irrevocable.
• Under Section 126 of the Transfer of Property Act, 1882, a gift cannot be revoked unless there is a clause allowing such revocation.

Supreme Court’s Observations

The Supreme Court extensively analyzed the relevant legal provisions and precedents, making the following key observations:

• “A gift is a transfer of property made voluntarily and without consideration.”
• “A conditional gift only becomes complete when the conditions stipulated in the deed are met.”
• “A document that postpones transfer until after the death of the donor is, in essence, a will, not a gift.”
• “The appellant was within her rights to revoke the gift deed before the conditions were fulfilled.”

Final Judgment

The Supreme Court ruled in favor of the appellant, setting aside the High Court’s judgment. The Court held that:

• The document executed by the appellant did not constitute a completed gift.
• The deed was revocable since it did not transfer ownership during the donor’s lifetime.
• The respondent had no valid claim over the property.

Implications of the Judgment

This ruling clarifies several legal aspects related to property transfers:

• Defining a Gift vs. a Will: A document that delays ownership transfer until after death should be considered a will.
• Revocability of Conditional Gifts: If conditions in a gift deed are unmet, the donor retains the right to revoke it.
• Clarity in Property Transactions: The judgment emphasizes the need for clear drafting of legal documents to avoid disputes.

Conclusion

The Supreme Court’s decision in S. Sarojini Amma vs. Velayudhan Pillai Sreekumar establishes an important precedent in property law. The ruling ensures that conditional gift deeds are not misconstrued as absolute transfers, providing clarity on the distinction between gifts and wills. This judgment reinforces the legal principle that a gift must be unconditional and complete to be irrevocable.

Petitioner Name: S. Sarojini Amma.
Respondent Name: Velayudhan Pillai Sreekumar.
Judgment By: Justice Arun Mishra, Justice Indira Banerjee.
Place Of Incident: Kerala.
Judgment Date: 26-10-2018.

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