S. 126 TPA | Gift Deed Can't Be Revoked Ordinarily, More Particularly When No Right Of Revocation Is Reserved In Deed : Supreme Court

The Supreme Court observed that a gift deed could not be revoked ordinarily, especially when no right of revocation is reserved in the deed.  

The judgment also explained the conditions to revoke a gift deed as per Section 126 of the Transfer of Property Act,

The bench comprising Justice Pankaj Mithal and Justice Ujjal Bhuyan said that when the gift deed was executed by the donor in favor of the donee setting out a purpose of a gift with no right reserved for its revocation in any contingency, then fulfillment of the gift's purpose by the donee would make it a valid gift, rendering it irrevocable.

In this case, the appellant-defendant executed a gift deed in the year 1983 transferring the suit property to the plaintiff-respondent to manufacture Khadi Lungi and Khadi Yarn, with a condition prohibiting the plaintiff from using the property for personal gain. The deed specified that neither the donor nor their heirs retain any rights to the property after the transfer, and the gift was made with the donor's full consent. The deed was absolute, with no conditions for revocation, and only stipulated the intended use of the property.

However, in the year 1987, the appellant-defendant revoked the gift deed which was challenged by the plaintiff-respondent by filing a suit for recovery of possession on the ground that once the purpose set out in the gift deed was fulfilled by setting out a manufacturing unit of Khadi Lungi and Khadi Yarn, then, in absence of any conditions of revocation being present in the deed would not make the deed revocable.

Accepting the appellant's contention, the court observed that the gift deed cannot be revoked when no such right is reserved under the gift deed.

“No doubt, the gift validly made can be suspended or revoked under certain contingencies but ordinarily it cannot be revoked, more particularly when no such right is reserved under the gift deed.”, the court said.

In this regard, the Court set out three conditions stating when a gift deed could be revoked and tested those conditions with the facts of the present case to ascertain whether the gift deed could be revoked.

“The first is where the donor and the donee agree for its revocation on the happening of any specified event. In the gift deed, there is no such indication that the donor and donee have agreed for the revocation of the gift deed for any reason much less on the happening of any specified event. Therefore, the first exception permitting revocation of the gift deed is not attracted in the case at hand.

Secondly, a gift deed would be void wholly or in part, if the parties agree that it shall be revocable wholly or in part at the mere will of the donor. In the present case, there is no agreement between the parties for the revocation of the gift deed wholly or in part or at the mere will of the donor. Therefore, the aforesaid condition permitting revocation or holding such a gift deed to be void does not apply.

Thirdly, a gift is liable to be revoked in a case where it is in the nature of a contract which could be rescinded. The gift under consideration is not in the form of a contract and the contract, if any, is not liable to be rescinded.”

“Thus, none of the exceptions permitting revocation of the gift deed stands attracted in the present case. Thus, leading to the only conclusion that the gift deed, which was validly made, could not have been revoked in any manner. Accordingly, revocation deed dated 17.08.1987 is void ab initio and is of no consequence which has to be ignored.”, the court said.

Accordingly, the appeal was dismissed.

Also From Judgment: When Title Declaration Suit Seeks Possession Recovery Also, Limitation Period For Possession Recovery Applicable : Supreme Court

Case Title: N. THAJUDEEN VERSUS TAMIL NADU KHADI AND VILLAGE INDUSTRIES BOARD, CIVIL APPEAL NO. 6333 OF 2013

Citation : 2024 LiveLaw (SC) 839

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