Can a Gift Deed be Challenged in Court?

What is a Deed of Gift?

According to section 122 of the Transfer of Property Act of 1882, immovable property may be transferred by a gift deed. A gift deed, like a sale deed, is the transfer of the property but without consideration. The question that may arise is, can a gift deed be challenged in Court?

Registration of gift deeds with the sub-registrar is mandatory in accordance with sections 17 of the Registration Act of 1908 and 123 of the Transfer of Property Act. Not doing so will render the transfer void. If the gift deed is not registered, it can be challenged in Court.

Moreover, after a gift deed is recorded in the recipient’s name, only then may the recipient request a property change. A mutation is required to transfer utility connections in the recipient’s name. A registered gift deed will be necessary for the beneficiary to transfer the property further.

According to the Registration Act of 1908 and the Transfer of Property Act, a gift agreement must be recorded with the sub-registrar. Transfers are null and invalid if this is not followed, and the Gift deed can be challenged in Court. In this blog, we will answer the question of whether a gift deed can be challenged in Court.

A Gift Certificate Transfer

A gift is an act of giving away one’s property or money, whether mobile or immovable, without expecting anything in return. A possessor must record a gift in order to transfer ownership to the receiver. In accordance with Indian Registration, the registration of a gift deed with a sub-registrar is mandatory, or a Gift deed can be challenged in Court.

In a gift deed, both the donor and the donee are referred to as the transferor or transferee. Certain conditions must be satisfied for a gift to be declared authentic, or else a Gift deed can be challenged in Court.

These conditions must be satisfied for a donation to be legitimate:

• The title is transferred;
• Real estate ownership must be related to a particular parcel;
• The transmission must be completely unrestrained and unaffected by any means.
• An unintentional mistake would not have been acceptable;
• Donors must be competent persons.
• The receiver must accept the gift.

Gifts are transfers of property given without expecting anything in return from the transferee or donee. The receiver could accept the gift if they are underage. Uncompensated transfers are ones in which the receiver receives nothing. If any of the conditions of the gift is not fulfilled, the Gift deed can be challenged in Court. 

Can a Gift Deed be challenged in Court?

The answer to the question that Can a gift deed be challenged in court is that the gift deed can be challenged in court by filing an action for declaration of invalidity. However, it will only be contested if you can prove that the deed was not done in accordance with the donor’s wishes or was executed under deception, fraud, etc. 

Some reasons for which a Gift deed can be challenged in Court are outlined below.

• A gift deed can be challenged in Court if the permission for gift transfer was not freely given,
• If the gift deed was not performed and registered in accordance with legal requirements, it is invalid, and the Gift deed can be challenged in Court.
• The gift deed can be challenged in court if either party to the gift was incompetent to contract; the gift is void.
• If the condition of the gift is not met, the receiver is not entitled to the gift. In such a scenario, the gift deed is revocable and can be challenged in Court.
• A gift deed can be challenged in Court if it contains any compensation for the donation; otherwise, it is invalid.

What is a Declaration Suit?

• A “Declaration” is a court of law’s proclamation on a person’s right to property or his status.
• Any person entitled to any legal character or right to a property may file an action against any person rejecting or interested in denying his title to such character or right, and the court may, in its discretion, declare that he is entitled; the plaintiff need not seek additional remedy in such a suit.
• An action for declaration declares a party’s or plaintiff’s right; where the right pertains to property, the suit is for title/ownership declaration and recovery of possession.
• Legal consultation must be taken to get your gift deed registered. Legal consultation makes the process easier. 

What is the method for revoking a Gift Deed?

Section 126 of the Transfer of Property Act specifies the circumstances under which a gift might be cancelled, and the Gift deed can be challenged in Court. The following are necessary components for gift revocation:

• The donor and recipient must agree that the gift will be stopped or cancelled upon the occurrence of a defined circumstance;
• Such an occurrence must not be contingent on the donor’s will;
• The condition for the suspension or revocation must be agreed upon by the recipient at the time of gift acceptance. 
• A contract may be cancelled only if there is a valid reason other than a lack or absence of consideration.
• The condition should neither be unlawful nor unethical, nor should it threaten the estate formed by the gift, or else the Gift deed can be challenged in Court.
• Section 10 controls section 126. Consequently, a phrase in the gift document that totally prohibits alienation is invalid in light of the restrictions of section 10, or else the Gift deed can be challenged in the Court
• A gift that was neither the result of fraud, undue influence, or deceit nor was it onerous cannot be unilaterally revoked. Such a Gift deed can be challenged in Court.

Supreme Court Judgements on Cancellation of Gift Deed

The Supreme Court of India has provided detailed guidelines on the cancellation of gift deeds in several judgments. Notable cases include:

1. Sudesh Chhikara v. Ramti Devi & Anr. (2022):
   • The Supreme Court clarified the applicability of Section 23 of the Maintenance and Welfare of Parents and Senior Citizens Act, 2007, indicating that a gift deed could be challenged if the donee does not meet the donor’s conditions, such as providing basic amenities and physical needs​.
2. B.S. Joshi v. Sushilaben (2013):
   • The court established that making a new will by the donor does not warrant the cancellation of an earlier gift deed. The new will comes into effect only after the donor’s demise, affirming the validity of the initial gift deed​.

Key reasons for revocation, as highlighted by the Supreme Court, include:

• Mutual Agreement:
  • A gift deed can be revoked if there is mutual consent between the donor and donee as per the terms agreed upon at the time of the gift.
• Fraud or Coercion:
  • If the donor’s consent was obtained through fraud, undue influence, or coercion, the gift deed could be cancelled (as referenced in various judgments interpreting Section 126 of the Transfer of Property Act, 1882).
• Non-Acceptance:
  • The deed can be revoked if the donee does not accept the gift​.
• Failure to Meet Conditions:
  • If the gift is contingent upon certain conditions that were not fulfilled, it can be revoked.
• Forgery:
  • A forged gift deed is legally invalid and can be cancelled.
• Non-Registration:
  • If the gift deed is not registered as required by law, it can be challenged and revoked​

Conclusion

People have been giving gifts for a very long time, and such objections did not exist before then. However, due to changes in thinking and culture, many individuals now consider the giving of assets a secure and efficient method for averting future disputes. A gift deed can be challenged in Court if it is not registered. 

Frequently Asked Questions

Q1. What is a gift deed?
Ans1. A gift deed is a legal document that records the voluntary transfer of ownership of property or assets from one person (the donor) to another (the donee) without any exchange of money or other considerations. It is essential for the transfer to be registered to be legally valid.

Q2. Can a gift deed be challenged in court?
Ans2. Yes, a gift deed can be challenged in court. The challenge is typically based on the claim that the deed was executed under duress, fraud, undue influence, or if the legal requirements for a valid gift deed were not met.

Q3. What are the legal requirements for a valid gift deed?
Ans3. A gift deed must be:

• Voluntarily executed without any coercion.
• Properly registered with the sub-registrar.
• Accepted by the donee during the lifetime of the donor.
• Executed by a competent donor and accepted by a competent donee.

Q4. On what grounds can a gift deed be challenged?
Ans4. A gift deed can be challenged on several grounds, including:

• Lack of free consent by the donor.
• Non-compliance with legal formalities (e.g., registration).
• Incompetence of the donor or donee.
• Conditions attached to the gift are not being fulfilled.
• Presence of fraud, undue influence, or coercion during execution.

Q5. What is the process for challenging a gift deed in court?
Ans5. To challenge a gift deed, the aggrieved party must file a suit for declaration in the appropriate court, providing evidence to support the claim that the deed is invalid due to reasons like fraud, coercion, or non-compliance with legal requirements.

Q6. Can a gift deed be revoked once it is executed?
Ans6. A gift deed can be revoked under certain conditions as per Section 126 of the Transfer of Property Act, 1882. These conditions include mutual agreement between the donor and donee about the revocation terms at the time of gift acceptance, which must not be at the sole will of the donor and should not be illegal or immoral.

Q7. What is a declaration suit in the context of a gift deed?
Ans7. A declaration suit is a legal action where the court declares the rights of the parties involved, such as the validity or invalidity of a gift deed. The suit aims to establish the legal status of the property or the parties’ rights.

Q8. Why is registration of a gift deed important?
Ans8. Registration of a gift deed is crucial because it legally validates the transfer of property. Without registration, the gift deed is not legally binding and can be easily challenged in court.

Q9. What steps should be taken to ensure a gift deed is legally enforceable?
Ans9. To ensure a gift deed is legally enforceable, it should:

• Be executed voluntarily and without any coercion.
• Be registered with the sub-registrar.
• Clearly state the transfer of ownership and be accepted by the donee.
• Be executed by competent parties.

Q10. What should one do if one wants to challenge a gift deed? Ans10. Suppose someone wants to challenge a gift deed. In that case, they should consult a legal expert to file a suit in court, providing all necessary evidence to support their claim of invalidity due to factors like fraud, duress, or legal non-compliance.

Q11. In India, can a gift deed be challenged after the death of the donor?
Ans11. Yes, in India, a gift deed can be challenged after the death of the donor. The challenge can be based on grounds such as the donor lacking mental capacity at the time of execution, the deed being executed under undue influence, fraud, or coercion, or non-compliance with legal requirements. The heirs or legal representatives of the donor can file a suit to declare the gift deed invalid.

Q12. Can gift deed be challenged after 3 years?
Ans12. Yes, a gift deed can be challenged after 3 years. However, it depends on the specific circumstances and legal grounds for the challenge. Generally, under the Limitation Act, 1963, the time limit for challenging a gift deed on grounds of fraud or coercion is three years from the date when the fraud is discovered or the coercion ceases. If the challenge is based on other grounds, different limitation periods may apply.

Q13. Who can challenge a registered gift deed?
Ans13. A registered gift deed can be challenged by the donor, the donee, or legal heirs of the donor.

Q14. Can gift deed be challenged by siblings?
Ans14. Yes, siblings can challenge a gift deed if they have valid legal grounds, such as alleging fraud, coercion, or undue influence.