Supreme Court clarifies Gift Deed Revocation under Transfer of Property Act: N. Thajudeen vs. Tamil Nadu Khadi and Village Industries Board (2024)

Date of the Judgment: 24 October 2024

Citation: 2024 INSC 817

Judges: Pankaj Mithal, J., Ujjal Bhuyan, J.

Can a gift deed be revoked after it has been validly executed and accepted? The Supreme Court of India recently addressed this critical question in a property dispute, clarifying the circumstances under which a gift can be revoked under the Transfer of Property Act, 1882. This case highlights the importance of understanding the legal framework governing property transfers and the limitations on revoking a gift once it has been made.

The Supreme Court, in this case, examined whether a gift deed executed by the appellant in favor of the respondent was validly revoked. The core issue revolved around the interpretation of Section 126 of the Transfer of Property Act, 1882, which specifies the conditions under which a gift can be suspended or revoked. The Court’s decision provides clarity on the circumstances under which a gift, once made, cannot be revoked.

The judgment was delivered by a bench comprising Justice Pankaj Mithal and Justice Ujjal Bhuyan, with the opinion authored by Justice Pankaj Mithal.

Case Background

The case involves a property dispute between N. Thajudeen (the appellant) and the Tamil Nadu Khadi and Village Industries Board (the respondent). The respondent filed a suit seeking a declaration of title and recovery of possession of a property measuring 3750 square feet, located in Kotlambakkam Panchayat, Cuddalore District. The respondent’s claim was based on a registered gift deed dated 05.03.1983, which was allegedly executed by the appellant and accepted by the respondent.

The Trial Court initially dismissed the suit on 23.08.1994, holding that the gift deed was invalid due to lack of acceptance and action. However, the District Judge reversed this decision on 05.08.1997, decreeing the suit in favor of the respondent. The High Court dismissed the appellant’s second appeal on 11.01.2011, upholding the validity of the gift deed and stating that it could not be revoked due to the absence of a revocation clause.

The appellant then filed a Special Leave Petition before the Supreme Court, which was granted on 05.08.2013 after condoning a delay of 207 days.

Timeline:

Course of Proceedings

The Trial Court initially dismissed the suit, holding that the gift deed was not valid as it was never accepted and acted upon. The District Judge, however, reversed this decision, decreeing the suit in favor of the respondent. The District Judge found that the gift deed was valid, acted upon, and accepted by the respondent. The High Court upheld the District Judge’s decision, stating that the gift deed could not be revoked as there was no clause authorizing revocation.

Legal Framework

The central legal provision in this case is Section 126 of the Transfer of Property Act, 1882. This section outlines the conditions under which a gift can be suspended or revoked. The section states:

“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.”

This provision essentially states that a gift can only be revoked under specific circumstances, such as an agreement between the donor and donee for revocation upon a specific event, or if the gift is in the nature of a contract that could be rescinded. Importantly, it specifies that a gift cannot be revoked at the mere will of the donor.

Arguments

Appellant’s Arguments:

• The appellant argued that the gift deed was not valid as it was not accepted and acted upon by the respondent.
• The appellant contended that the revocation deed dated 17.08.1987 was valid and effectively revoked the gift.
• The appellant also argued that the suit filed by the respondent was barred by limitation.

Respondent’s Arguments:

• The respondent argued that the gift deed was validly executed and accepted, as evidenced by the gift deed itself and the subsequent actions taken by the respondent, such as applying for mutation and taking possession of the property.
• The respondent contended that the gift deed could not be revoked because there was no clause in the gift deed authorizing revocation and none of the conditions under Section 126 of the Transfer of Property Act, 1882 were met.
• The respondent argued that the suit was not barred by limitation as it was a suit for declaration of title and recovery of possession, which is governed by a 12-year limitation period under Article 65 of the Schedule to the Limitation Act, 1963.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether the registered gift deed dated 05.03.1983 was duly acted upon and accepted and is a valid document which continues to exist despite its revocation on 17.08.1987 as the donor had not reserved the right to revoke the same.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Court considered the following legal provisions:

• Section 126 of the Transfer of Property Act, 1882: This section specifies the conditions under which a gift can be suspended or revoked. The Court emphasized that a gift can only be revoked under the specific circumstances outlined in this section, and not at the mere will of the donor.
• Articles 56-58 of the Schedule to the Limitation Act, 1963: These articles specify the limitation period for suits for declaration. The Court noted that while the limitation for a suit for declaration is three years, a suit for declaration of title with a further relief of possession is governed by a 12-year limitation period under Article 65 of the Schedule to the Limitation Act.
• Article 65 of the Schedule to the Limitation Act, 1963: This article specifies the limitation period for a suit for recovery of possession based on title, which is 12 years.

The Court also relied on the following case law:

• C. Mohammad Yunus vs. Syed Unnissa And Ors [AIR 1961 SC 808]: The Supreme Court of India held that in a suit for declaration with a further relief, the limitation would be governed by the Article governing the suit for such further relief. The Court also held that a suit for a declaration of title to immovable property would not be barred so long as the right to such a property continues and subsists.

Judgment

How each authority was viewed by the Court?

• The Court followed Section 126 of the Transfer of Property Act, 1882* and held that none of the conditions for revocation were met.
• The Court followed Articles 56-58 of the Schedule to the Limitation Act, 1963* and Article 65 of the Schedule to the Limitation Act, 1963* and held that the suit was not barred by limitation.
• The Court relied on C. Mohammad Yunus vs. Syed Unnissa And Ors [AIR 1961 SC 808]* to determine the applicable limitation period for a suit for declaration with a further relief.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily driven by the following considerations:

• The Court emphasized the importance of upholding the sanctity of gift deeds once they have been validly executed and accepted.
• The Court strictly interpreted Section 126 of the Transfer of Property Act, 1882, emphasizing that a gift can only be revoked under the specific circumstances outlined in the section.
• The Court also considered the actions of the respondent after the execution of the gift deed, such as applying for mutation and taking possession of the property, as evidence of acceptance and action.
• The Court also held that the suit was not barred by limitation as it was a suit for declaration of title and recovery of possession, which is governed by a 12-year limitation period under Article 65 of the Schedule to the Limitation Act, 1963.

The Court’s reasoning was based on a combination of legal principles and factual findings. The Court’s decision was also influenced by the need to ensure that property rights are protected and that gift deeds are not revoked arbitrarily.

Logical Reasoning:

The Court considered alternative interpretations of Section 126 of the Transfer of Property Act, 1882, but rejected them, holding that the provision must be interpreted strictly. The Court also considered the argument that the suit was barred by limitation, but rejected it, holding that the suit was governed by a 12-year limitation period.

The Court’s decision was based on a thorough analysis of the legal provisions and the facts of the case. The Court’s decision was also influenced by the need to ensure that property rights are protected and that gift deeds are not revoked arbitrarily.

The Court stated, “A simple and complete reading of the aforesaid gift deed would reveal that the gift is absolute with no right reserved for its revocation in any contingency.”

The Court also stated, “The limitation for a suit for declaration is provided under Part III of the Schedule to the Limitation Act, 1963. It is governed by Articles 56-58 of the Schedule to the Limitation Act.”

Finally, the court concluded, “Thus, in the totality of the facts and circumstances of the case, we do not find any error or illegality on part of the first appellate court and the High Court in decreeing the suit of the plaintiff -respondent.”

Key Takeaways

• A gift deed, once validly executed and accepted, cannot be revoked at the mere will of the donor.
• Section 126 of the Transfer of Property Act, 1882, strictly limits the circumstances under which a gift can be revoked.
• The acceptance of a gift can be evidenced by the gift deed itself and the subsequent actions of the donee, such as taking possession and applying for mutation.
• A suit for declaration of title with a further relief of possession is governed by a 12-year limitation period under Article 65 of the Schedule to the Limitation Act, 1963.
• Non-utilization of gifted property for the purpose specified in the gift deed does not automatically lead to the revocation of the gift.

This judgment reinforces the importance of understanding the legal framework governing property transfers and the limitations on revoking a gift once it has been made. It also highlights the need for careful drafting of gift deeds to ensure that the intentions of the donor are clearly expressed and that the gift is not subject to arbitrary revocation.

Directions

No specific directions were given by the Supreme Court in this case.

Development of Law

The ratio decidendi of this case is that a gift deed, once validly executed and accepted, cannot be revoked at the mere will of the donor, and that Section 126 of the Transfer of Property Act, 1882, strictly limits the circumstances under which a gift can be revoked. This judgment reinforces the existing legal position on the revocation of gifts and provides clarity on the application of Section 126 of the Transfer of Property Act, 1882.

Conclusion

In conclusion, the Supreme Court dismissed the appeal, upholding the decisions of the first appellate court and the High Court. The Court held that the gift deed was validly executed and accepted, and that the revocation deed was void ab initio. The Court also held that the suit was not barred by limitation. This judgment clarifies the legal position on the revocation of gifts under the Transfer of Property Act, 1882, and reinforces the importance of upholding the sanctity of gift deeds once they have been validly executed and accepted.