Supreme Court Upholds Gift Deed Validity: Illoth Valappil Ambunhi vs. Kunhambu Karanavan (2019)

Date of the Judgment: 19 September 2019

Citation: 2019 INSC 946

Judges: Indira Banerjee J. and Sanjiv Khanna J.

Can a gift deed, once executed with a recital of delivery of possession, be unilaterally revoked by the donor? The Supreme Court of India addressed this question in a recent property dispute case, clarifying the legal position on acceptance of gifts and the validity of subsequent transactions. This case revolves around a gift deed executed in favor of a religious trust and its subsequent cancellation by the donor, leading to a legal battle over the ownership of the property. The judgment was delivered by a bench comprising Justice Indira Banerjee and Justice Sanjiv Khanna, with Justice Indira Banerjee authoring the opinion.

Case Background

The case involves a property originally owned by Raman Aithan Ashari (Raman). Raman executed a gift deed in favor of the Chuzhali Bhagavathi Dharmadeva Bhandaram (the Bhandaram), a religious trust. The deed stated that possession of the property was handed over to the Bhandaram. However, the appellants argued that there was no evidence of the gift’s acceptance or the Bhandaram taking possession. Raman later cancelled the gift deed on 15th July 1971, and subsequently sold the property to the original appellant on 31st July 1971. The respondents, family members of Raman and members of the Kizhakke Veethil Tarwad, filed a suit on 7th December 1981, challenging the cancellation and sale, claiming ownership of the Bhandaram through the gift deed.

Timeline:

Course of Proceedings

The Trial Court, after analyzing the evidence, concluded that the gift deed was not accepted, and therefore, the cancellation and subsequent sale were valid. The First Appellate Court affirmed this decision. However, the High Court of Kerala, in a second appeal, reversed these concurrent findings, declaring the gift deed valid and the subsequent transactions null and void. The High Court held that the recital of delivery of possession in the gift deed created a presumption of acceptance, which was not rebutted by the appellants. This led to the current appeal before the Supreme Court.

Legal Framework

The Supreme Court considered the following legal provisions:

• Section 100 of the Code of Civil Procedure (CPC): This section outlines the conditions under which a High Court can entertain a second appeal. It emphasizes that the appeal must involve a substantial question of law.
• Section 126 of the Transfer of Property Act, 1882: This section deals with the circumstances under which a gift can be suspended or revoked.
• Section 127 of the Transfer of Property Act, 1882: This section defines onerous gifts and their implications.
• Article 59 of the Limitation Act: This provision specifies the limitation period for suits to set aside instruments or decrees.
• Section 27 of the Limitation Act: This section deals with the concept of adverse possession.

The Court also referred to the concept of acceptance of gifts, particularly in cases where the donee is an inanimate entity like a religious trust. The court also considered the concept of perversity in arriving at factual findings, which can give rise to a substantial question of law.

Arguments

Appellants’ Arguments:

• The appellants contended that the gift deed in favor of the Bhandaram was never accepted, and there was no evidence of the Bhandaram taking possession of the property. They argued that the recital of delivery of possession in the gift deed was not sufficient to prove acceptance, especially since the donee was an inanimate entity.
• They argued that Raman continued to possess the property, paying rent and revenue in his name, and thus, he was justified in cancelling the gift deed and selling the property.
• The appellants argued that they were bona fide purchasers for value and that the suit was barred by limitation.
• They also argued that the High Court should not have re-analyzed the evidence and interfered with the concurrent findings of fact by the Trial Court and the First Appellate Court.

Respondents’ Arguments:

• The respondents argued that the gift deed was valid and that the recital of delivery of possession in the deed created a presumption of acceptance. They contended that the burden of proof was on the appellants to prove that the gift was not accepted.
• They asserted that the Bhandaram became the owner of the property upon the execution of the gift deed and that Raman was incompetent to execute any further deed transferring the property.
• The respondents claimed that the cancellation deed and the subsequent sale were invalid and that the suit was within the limitation period.

Issues Framed by the Supreme Court

The Supreme Court considered the following issue:

1. Whether Exh. A1 (gift deed) having been accepted on behalf of the donee could be revoked by the donor unilaterally?

The Court also considered the sub-issue of whether the finding of the Trial Court with regard to non-acceptance of the deed of gift, confirmed in appeal, was vitiated by perversity and if it was so vitiated, whether the unilateral revocation of the deed, by the donor, can be sustained in law.

Treatment of the Issue by the Court

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

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Sir Chunilal V. Mehta and Sons VS. The Century Spinning and Manufacturing Co. Ltd. [AIR 1962 SC 1314]: The Court applied the test laid down in this case to determine if a substantial question of law existed.
• Gurnam Singh (D) by LRs. and Other vs. Lehna Singh (D) by LRs. [2019(7) SCC 641]: The Court reaffirmed the principle that the jurisdiction of the High Court in a second appeal is limited to substantial questions of law.
• Md. Noorul Hoda vs. Bibi Raifunnisa & Ors. [(1996 (7) SCC 767)]: The Court applied the principles laid down in this case regarding the applicability of Article 59 of the Limitation Act.
• Prem Singh & Ors. vs. Birbal & Ors. [2006 (5) SCC 353]: The Court referred to this case to distinguish between void and voidable documents and to determine the applicability of Article 59 of the Limitation Act.
• S. Sarojini Amma vs. Velayudhan Pillai Sreekumar [(2018 SCC Online SC 2200)]: The Court distinguished this case on facts as the gift in that case was conditional and to take effect at a subsequent date.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The recital of delivery of possession in the gift deed created a presumption of acceptance, placing the burden of proof on the appellants to prove non-acceptance.
• The High Court correctly identified that the lower courts had wrongly assumed that the burden of proof was on the respondents to show that the gift had been accepted.
• The fact that Malingan Chuzhali Ashari, the Karnavan of the Tharawad, and the donor were trustees of the Bhandaram at the time of the gift, and that no action was taken to repudiate the gift, indicated acceptance.
• The gift deed did not provide for reversion of the property to the donor in case of failure to pay maintenance, further solidifying the validity of the gift.

The Court reasoned that the recital of delivery of possession in the gift deed created a presumption of acceptance. This presumption was not rebutted by any evidence of non-acceptance. The Court also considered the fact that the donor and the Karnavan of the Tharawad were trustees of the Bhandaram, and no action was taken to repudiate the gift. The Court concluded that the gift deed was valid and that the subsequent transactions were null and void. The Court also noted that the lower courts had wrongly assumed that the burden of proof was on the respondents to show that the gift had been accepted.

The Court rejected the appellants’ arguments that the gift was not accepted, that Raman was justified in cancelling the gift, that the suit was barred by limitation, and that the High Court should not have re-analyzed the evidence. The Court upheld the High Court’s decision that the gift deed was valid and that the subsequent transactions were null and void.

“The proposition of law that when the document of transfer by gift records delivery of possession, a presumption of acceptance would arise, in the absence of overt repudiation of the gift, by and/or on behalf of the donee, is unexceptionable.”

“The High Court rightly found that there was no direction in the gift deed which made the gift onerous as understood in Section 127 of the Transfer of Property Act.”

“The High Court rightly declined to accept the findings of the Courts below that the deed of gift had not been accepted during the lifetime of the donor, in the absence of any evidence of non acceptance of the same.”

Key Takeaways

• A recital of delivery of possession in a gift deed creates a presumption of acceptance, unless there is evidence of repudiation.
• The burden of proof lies on the party asserting non-acceptance of a gift when the deed itself records delivery of possession.
• A donor cannot unilaterally revoke a gift deed once it has been accepted, especially if the gift is not onerous.
• Lower courts must correctly apply the burden of proof and not assume that the burden is on the donee to prove acceptance.
• When a gift is made to a trust, the trustees’ actions (or inaction) can indicate acceptance of the gift.

Directions

The Supreme Court directed that the Appellant will be entitled to initiate such proceedings as the Appellant may be advised, against the vendor for damage and recovery of the consideration paid to him.

Development of Law

The ratio decidendi of this case is that a recital of delivery of possession in a gift deed creates a presumption of acceptance, and the burden of proof lies on the party asserting non-acceptance. This judgment clarifies the legal position on acceptance of gifts and the validity of subsequent transactions, reinforcing the importance of clear and unambiguous recitals in gift deeds. This judgment does not change the previous position of law, but rather reinforces it.

Conclusion

The Supreme Court dismissed the appeal, upholding the High Court’s decision that the gift deed was valid. The Court reiterated that a recital of delivery of possession in a gift deed creates a presumption of acceptance, and the burden of proof lies on the party asserting non-acceptance. The judgment reinforces the importance of clear and unambiguous recitals in gift deeds and clarifies the legal position on acceptance of gifts and the validity of subsequent transactions. This case serves as a reminder that once a gift deed is executed with a recital of delivery of possession, the donor cannot unilaterally revoke it.