Supreme Court Upholds Gift Deed Validity: Jagdish Chander vs. Satish Chander (27 February 2019)

Introduction

Date of the Judgment: 27 February 2019

Citation: 2019 INSC 197

Judges: R. Banumathi, J., R. Subhash Reddy, J.

Can a gift deed be declared invalid if a sum mentioned in the document for valuation is mistaken as consideration? The Supreme Court of India recently addressed this question in a property dispute, clarifying the distinction between valuation and consideration in gift deeds. This case revolves around a dispute over a property where a gift deed was challenged on the grounds that it was executed for consideration, which would make it invalid under the Transfer of Property Act, 1882. The Supreme Court, in this case, examined the validity of a registered gift deed and whether the High Court was correct in overturning the concurrent findings of the Trial Court and the First Appellate Court.

Case Background

The dispute began with Smt. Vidya Devi, who originally owned the property. She executed a registered Will on 09 April 1991, bequeathing a portion of her land to her son, the first respondent, and another portion to her other son, the appellant. Subsequently, on 23 April 1991, Smt. Vidya Devi executed a gift deed in favor of the appellant. The first respondent challenged the gift deed, alleging that it was fraudulently obtained and that the land was ancestral property governed by Kangra Customary Law. He claimed that the gift deed was invalid as it was executed for a consideration of Rs. 5,000, which is not permissible for a gift under the Transfer of Property Act, 1882. The appellant contested this, stating that the gift deed was valid and executed out of free will, without any undue influence, and the mention of Rs. 5,000 was only for valuation purposes.

Timeline

Course of Proceedings

The Trial Court dismissed the first respondent’s suit, holding that the gift deed was valid. It noted that Smt. Vidya Devi never challenged the gift deed during her lifetime, and the first respondent, being a third party, could not challenge its validity. The court also found no evidence of fraud and concluded that the property was Smt. Vidya Devi’s self-acquired property. The First Appellate Court upheld the Trial Court’s decision. However, the High Court reversed these findings, primarily on the ground that the gift deed was executed for a consideration of Rs. 5,000, which is not permissible under the Transfer of Property Act, 1882. The High Court also considered the mutation document, which recorded the delivery of possession upon receipt of Rs. 5,000.

Legal Framework

The primary legal provision at the center of this case is Section 122 of the Transfer of Property Act, 1882, which defines a gift as follows:

“Gift is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee.”

This section specifies that a gift must be made without consideration. If a transfer of property is made with consideration, it is not considered a gift under this Act. The High Court held that the gift deed was invalid as it was made for a consideration of Rs. 5,000. The Supreme Court examined whether the High Court’s interpretation of the gift deed and the mutation document was correct.

Arguments

Appellant’s Arguments (Jagdish Chander):

• The High Court erred by re-appreciating the evidence and overturning the concurrent findings of the Trial Court and the First Appellate Court.
• The mention of Rs. 5,000 in the gift deed was only for valuation purposes for stamp duty and registration, not as consideration.
• The gift deed was valid and executed by Smt. Vidya Devi out of her free will and consent.
• The High Court should not have relied on the mutation document to conclude that consideration was paid.

Respondent’s Arguments (Satish Chander):

• The gift deed was executed within a short span of time after the execution of the Will, raising doubts about its genuineness.
• The gift deed was executed without Smt. Vidya Devi’s knowledge and consent.
• The gift deed was evidenced by a consideration of Rs. 5,000, as supported by the mutation document.

Issues Framed by the Supreme Court

The Supreme Court considered the following issues:

1. Whether the High Court was justified in interfering with the factual findings recorded by the Trial Court and the First Appellate Court by re-appreciating the evidence on record in exercise of power under Section 100 of the Code of Civil Procedure.
2. Whether the High Court was correct in holding that the gift deed was invalid due to the alleged consideration of Rs. 5,000.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following legal provisions and documents:

• Section 122 of the Transfer of Property Act, 1882: This section defines a gift and specifies that it must be made without consideration.
• Ext.D-4: Judgment in Civil Suit No. 163 of 1987, which established that Smt. Vidya Devi acquired the property by way of a Will and was considered her self-acquired property.
• Ext.DW2/A: The registered gift deed.
• Ext.PW3/F: The mutation order.

Judgment

How each authority was viewed by the Court:

• Section 122 of the Transfer of Property Act, 1882: The Court used this provision to clarify the definition of a gift and emphasized that a gift must be without consideration. The Court held that the gift deed was valid as the mention of Rs. 5,000 was not consideration.
• Ext.D-4: The Court relied on this judgment to establish that the property was Smt. Vidya Devi’s self-acquired property, which she could dispose of as she wished.
• Ext.DW2/A: The Court clarified that the gift deed itself did not indicate any consideration. The mention of Rs. 5,000 was for valuation and not consideration.
• Ext.PW3/F: The Court clarified that the mutation order also only referred to the valuation of the property and did not indicate any payment of consideration.

What weighed in the mind of the Court?

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

• The registered gift deed did not mention any consideration being paid to the donor.
• The amount of Rs. 5,000 was mentioned only for the purpose of valuation for stamp duty and registration.
• The High Court exceeded its jurisdiction by re-appreciating the evidence and overturning the concurrent findings of the lower courts.
• There was no evidence of fraud or undue influence in the execution of the gift deed.

The Court’s reasoning was primarily based on the legal interpretation of the gift deed and the relevant provisions of the Transfer of Property Act, 1882. The Court also considered the factual aspects of the case, such as the absence of evidence of fraud and the fact that the property was self-acquired.

The Court rejected the High Court’s interpretation that the mention of Rs. 5,000 in the gift deed and mutation document indicated consideration. The Court emphasized that the gift deed was valid, and the High Court had exceeded its jurisdiction by re-appreciating the evidence.

The Supreme Court quoted the following from the judgment:

“A perusal of the gift deed makes it clear that what is mentioned on the first page of the document, is the valuation of the property for the purpose of stamp duty and registration charges which is arrived at Rs.5,000/-, but not the consideration received by the donor for executing the gift deed.”

“The High Court erred in saying that Ext.DW2/A when read with Ext.PW3/F candidly convey qua the alienation of the suit land under Ext.DW2/A and the donor receiving consideration from the donee.”

“Further, the High Court fell in error in re-appreciating the evidence on record to come to a different conclusion than the findings recorded by the Trial Court, in exercise of power under Section 100 of the Code of Civil Procedure.”

Key Takeaways

• A gift deed is not invalid if a sum is mentioned for valuation purposes only.
• The High Court should not re-appreciate evidence and overturn concurrent findings of the lower courts unless there is a substantial question of law.
• A gift deed must be challenged directly by the donor or someone with a direct interest, not by a third party.
• The mention of a valuation amount in a gift deed does not automatically imply that consideration was exchanged.

Directions

The Supreme Court set aside the High Court’s judgment and dismissed the suit filed by the first respondent. The judgment of the Trial Court was restored.

Specific Amendments Analysis

There was no specific amendment discussed in this judgment.

Development of Law

The ratio decidendi of this case is that a mention of a valuation amount in a gift deed does not invalidate it. The Supreme Court clarified that a gift deed is valid if it is made without consideration, and the mention of a valuation amount for stamp duty purposes does not constitute consideration. This judgment reinforces the principle that the High Court should not interfere with the factual findings of the lower courts unless there is a substantial question of law.

Conclusion

In the case of Jagdish Chander vs. Satish Chander, the Supreme Court upheld the validity of a registered gift deed, clarifying that the mention of a valuation amount does not constitute consideration. The Court emphasized that the High Court should not re-appreciate evidence and overturn concurrent findings of the lower courts. This judgment reinforces the importance of adhering to the legal definition of a gift under the Transfer of Property Act, 1882, and the distinction between valuation and consideration.