Supreme Court Rules on Validity of Gift Deed and Revocation: Legal Ownership Decided

The Supreme Court of India recently ruled on a crucial civil dispute involving the validity of a gift deed and its subsequent revocation. The case, Illoth Valappil Ambunhi (D) by LRs. v. Kunhambu Karanavan, examined whether a gift executed in favor of a religious trust (Bhandaram) was legally binding and whether the donor could later revoke it.

Background of the Case

The dispute centered around a piece of property originally owned by Raman Aithan Ashari. In 1963, Raman executed a gift deed transferring the property to Chuzhali Bhagavathi Dharmadeva Bhandaram (hereinafter referred to as ‘Bhandaram’). The deed stated that possession of the property had been delivered to the Bhandaram. However, the appellants contended that there was no evidence of acceptance of the gift or actual possession by the donee.

Raman later executed a deed of cancellation in 1971, revoking the earlier gift. Subsequently, he sold the property to the appellant. The respondent, representing the Bhandaram, challenged the revocation and subsequent sale, arguing that the property had already been transferred to the religious trust and could not be taken back.

Arguments of the Appellants

The appellants, represented by their legal counsel, made the following arguments:

• The gift was never accepted by the Bhandaram, making it legally ineffective.
• The donee, being an inanimate religious institution, had no representative who formally accepted the gift.
• Raman continued in possession of the property and paid rent and revenue under his name even after the gift deed was executed.
• Since the gift was not validly completed, Raman was entitled to revoke it and execute a fresh sale in favor of the appellant.

Arguments of the Respondents

The respondents countered with the following arguments:

• The Bhandaram had acquired ownership of the property once the gift deed was executed and possession was delivered.
• The recitals in the gift deed clearly stated that the donor had given possession, and there was no evidence contradicting this.
• Once a gift is validly executed and possession is transferred, the donor loses all rights over the property.
• The cancellation of the gift deed was legally null and void, as Raman had no authority to revoke an unconditional gift.
• The appellant was not a bona fide purchaser since they were aware of the gift deed at the time of purchase.

Supreme Court’s Analysis

1. Validity of the Gift Deed

The Court analyzed the essential legal requirements of a valid gift under the Transfer of Property Act, 1882. It noted that for a gift to be legally binding:

• It must be executed in writing and signed by the donor.
• It must be accepted by the donee.
• Possession of the property must be transferred.

The Court found that the gift deed explicitly stated that possession had been delivered to the Bhandaram. It observed:

“When the document itself states that possession has been transferred, a presumption arises that the gift was accepted unless there is concrete evidence to the contrary.”

2. Can a Donor Revoke a Gift?

The Court held that a valid gift, once executed and accepted, cannot be revoked at the donor’s discretion. The judgment cited the legal principle that:

“A gift, once complete, cannot be revoked by the donor unless it falls under exceptions specified in Section 126 of the Transfer of Property Act.”

Section 126 allows revocation only if the gift is conditional, and the condition remains unfulfilled. In this case, no such condition was attached to the gift, making the revocation unlawful.

3. Role of Acceptance in Gift Transactions

The Court clarified that acceptance of a gift by a religious institution does not require a specific individual to formally accept it. Instead, the conduct of the trustees or members managing the institution can establish acceptance. The Court ruled:

“In cases of gifts to a deity or religious trust, acceptance can be inferred from circumstances, and it is not necessary for a particular individual to expressly accept the gift.”

4. Impact on the Sale Deed

Since the gift was held to be legally valid and irrevocable, the subsequent sale deed executed by Raman in favor of the appellant was deemed invalid. The Court stated:

“A person cannot transfer title to property that he does not own. Since the property was validly gifted to the Bhandaram, Raman had no authority to sell it later.”

Final Judgment

The Supreme Court ruled in favor of the respondents, setting aside the decisions of the lower courts that had upheld the revocation of the gift deed. The judgment stated:

“The gift in favor of the Bhandaram was valid and could not be revoked. The subsequent sale is null and void, and the property shall remain vested in the Bhandaram.”

The Court directed the appellants to return possession of the property to the respondents and dismissed their appeal.

Implications of the Judgment

This ruling has significant implications for property law and gift transactions. Key takeaways include:

• A validly executed and accepted gift cannot be unilaterally revoked by the donor.
• Possession, once transferred, strengthens the validity of a gift deed.
• Religious institutions can accept gifts without formal individual acceptance, provided the trust or organization takes steps indicating acceptance.
• Any subsequent sale of property that has been lawfully gifted is void and unenforceable.

The Supreme Court’s decision reinforces the principles governing gifts under the Transfer of Property Act and ensures that donors cannot arbitrarily revoke gifts once they have been completed.

Petitioner Name: Illoth Valappil Ambunhi (D) by LRs..
Respondent Name: Kunhambu Karanavan.
Judgment By: Justice Indira Banerjee, Justice Sanjiv Khanna.
Place Of Incident: Kerala.
Judgment Date: 19-09-2019.

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Download Judgment: Illoth Valappil Ambu vs Kunhambu Karanavan Supreme Court of India Judgment Dated 19-09-2019.pdf

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