Gift Deeds & Revocation: Can Donors Legally Reclaim Their Gifts?

Many of us remember instances in childhood where children unilaterally reclaimed gifts they had given away. However, this scenario rarely mirrors the complexities of the real world. Today, I will explore the validity of a revocation deed in India concerning gifts, particularly those involving immovable property.

Understanding Gift Deeds

A donor executes a gift deed to transfer ownership of immovable property to another party, known as the “donee”. This transfer can serve various purposes, such as distributing assets among friends or family members or supporting community welfare initiatives. However, it is not uncommon for donors to seek to reclaim gifted property when the original intent behind the gift is no longer fulfilled. This raises critical questions: Can a donor revoke a gift deed and reclaim his/her rights over the gifted property? If so, what is the process for doing so?

Hon’ble Supreme Court in N. Thajudeen (Appellant) vs. Tamil Nadu Khadi and Village Industries Board:

The Hon’ble Supreme Court answered the aforesaid questions in the matter of N. Thajudeen (“Appellant”) Vs Tamil Nadu Khadi And Village Industries Board (“Respondent”) (2024 INSC 817) through a judgement pronounced on 24-October-2024. In this case, the Appellant donated property to the Respondent through a gift deed executed in 1983. Later, in 1987, he attempted to reclaim rights over the property via a revocation deed. To protect its rights over the gifted property, the donee i.e., the Respondent filed a suit for declaration of title and recovery of possession. The Trial Court dismissed the donee’s suit, however, the donee got a decree in its favour in the first appeal. The donor filed the second appeal in the suit which was dismissed and thus the matter reached the Supreme Court under Article 136 Civil Petition filed by the donor. The Hon’ble Court referred to Section 126 of The Transfer of Property Act to assess the validity of the revocation deed and its implications for the gift deed.

Section 126 of The Transfer of Property Act

“126. When gift may be suspended or revoked.– 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 of the Act has laid down three contingencies to revoke the gift deed.

1. Condition 1: Mutual Agreement: The donor and donee may agree for the suspension or revocation of the gift deed on the happening of any specified event. However, the specified event should be independent of the will of the donor.
2. Condition 2: Revocation at the Donor’s Will: If the Gift deed is revocable wholly or in part with the agreement of the parties, at the mere will of the donor, then such type of gift deed is void, wholly or in part as the case may be, even if the parties have mutually agreed.
3. Condition 3: Revocation as a Contractual Rescission: A gift deed may be revoked if it were in the nature of a contract which could be rescinded.

Thus, as per the principles of Section 126 of the Act, the gift deed cannot be revoked except for the three contingencies mentioned above.

Analysis of the Case

The Supreme Court examined the facts in light of Section 126 and concluded as follows:

1. No Applicability of Condition No.1: The gift deed disclosed that the donee will use the property for the manufacturing Khadi products. There is no stipulation in the gift deed that if the suit property is not so utilised, the gift would stand revoked or would be revoked at the discretion of the donor. The donee did not use the property for the said purpose and the property remained vacant. The Hon’ble Court held that such non-utilisation of the suit property can at best be a disobedience of the object of the gift but that by itself would not attract the power to revoke the gift deed. There is no indication in the gift deed 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.
2. No Applicability of Condition No. 2: There existed 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.
3. No Applicability of Condition No. 3: The gift deed did not constitute a contract that could be rescinded. Consequently, no legal basis existed for revoking the gift under this provision.

Since none of the exceptions permitting revocation of the gift deed stands attracted in the matter, the Hon’ble Court declared the revocation deed void ab initio and emphasized that validly executed gift deeds cannot be unilaterally revoked.

Key Takeaways

This judgment underscores the importance of drafting clear and comprehensive gift deeds:

For Donors: Include specific conditions for revocation in the deed to protect your interests if the purpose of the gift is defeated.

For Donees: Ensure that the deed’s terms protect you from future disputes, including potential claims by the donor or their legal heirs.

Conclusion

This judgment underscores that a properly drafted gift deed must include explicit conditions for revocation; otherwise, unilateral attempts to reclaim gifted properties will not be legally valid. To protect their rights, donors should ensure their intentions are clearly articulated within the deed. Conversely, donees should be aware that unilateral actions by donors cannot easily disrupt their ownership rights once a gift has been legally executed. In summary, both donors and donees must navigate these legal frameworks carefully to safeguard their interests regarding gifted properties.

What are your thoughts on this topic? Have you faced or heard of similar disputes? Share your feedback and suggestions in the comments. Let’s discuss and learn together.

Download PDF – N. Thajudeen (Appellant) vs. Tamil Nadu Khadi and Village Industries Board (Respondent)

Disclaimer: In compliance with the Bar Council of India guidelines, this article is intended for informational purposes only and does not constitute legal advice or a 
solicitation for legal services.