Disobedience Of The Object Of Gift By Itself Would Not Attract The Power To Revoke A Gift Deed: Supreme Court

The Court upheld the decision of the ​​High Court which observed that the gift deed was duly acted upon and accepted by the Tamil Nadu Khadi and Village Industries Board (respondent), which concluded that the gift deed could not be held as invalid for want of acceptance. Therefore, on the basis of the gift deed, the respondent acquired absolute right and title over the suit property.

A Bench of Justice Pankaj Mithal and Justice Ujjal Bhuyan held, “The non-utilisation of the suit property for manufacturing Khadi Lungi and Khadi Yarns etc., the purpose set out in the gift deed, and keeping the same as vacant may 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 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.”

AOR K.K. Mani represented the appellant, while AOR Vipin Kumar Jai appeared for the respondent.

The respondent instituted a suit for declaration of its title over the suit property and for recovery of its possession. The said suit was filed on the basis of a registered gift deed allegedly executed by the appellant which was said to have been accepted by the respondent.

The Trial Court dismissed the suit primarily on the ground that the alleged gift deed was not valid as it was never accepted and acted upon. However, the appellate Court reversed the judgment and decreed the suit. The High Court too held the gift to be valid with a finding that it was acted upon and accepted and as such in the absence of any clause in the gift deed authorizing revocation, it could not have been revoked as alleged.

The Supreme Court noted that the gift deed revealed that the suit property was gifted in favour of the respondent for the manufacturing of Khadi Lungi and Khadi Yarn etc., with the condition that the respondent should not transfer the suit property for its self-interest. “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,” it noted.

Section 126 of the Transfer of Property Act, 1882 (TPA) provides that a gift cannot be revoked except for certain contingencies. “Section 126 of the Act is drafted in a peculiar way in the sense that it contains the exceptions to the substantive law first and then the substantive law,” the Court remarked.

“In simpler words, ordinarily a gift deed cannot be revoked except for the three contingencies…The first is where the donor and the donee agree for its revocation on the happening of any specified event…Secondly, a gift deed would be void wholly or in part, if the parties agree that it shall be revocable wholly or in part at the mere will of the donor…Thirdly, a gift is liable to be revoked in a case where it is in the nature of a contract which could be rescinded…Thus, none of the exceptions permitting revocation of the gift deed stands attracted in the present case. Thus, leading to the only conclusion that the gift deed, which was validly made, could not have been revoked in any manner,” the Court explained.

Finally, the Court clarified that once the gift deed was held to be validly executed resulting in the absolute transfer of title in favour of the respondent, the same was not liable to be revoked, and that “the revocation deed is meaningless especially for the purposes of calculating the period of limitation for instituting the suit.”

Accordingly, the Supreme Court dismissed the appeal.

Cause Title: N. Thajudeen v. Tamil Nadu Khadi And Village Industries Board (Neutral Citation: 2024 INSC 817)

Appearance:

Appellant: Advocates T. Archana and Rajeev Gupta; AOR K.K. Mani

Respondent: AOR Vipin Kumar Jai; Advocates Gurinder Jai, Vipul Jai, Sanjna Dua and Jainika Mohan

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