UNIT 3 GIFT

Definition - A gift is a transfer of property made voluntarily and without consideration. It is a

transfer of property that is made by the donor to the donee, without any expectation of receiving
something in return. The Transfer of Property Act has specific provisions relating to gifts of
immovable property.
Section 122 - “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.Acceptance when to be made.—Such
acceptance must be made during the lifetime of the donor and while he is still capable of giving.If
the donee dies before acceptance, the gift is void.
Explanation - Section 122 of the Transfer of Property Act defines a gift as a voluntary transfer of
property made without consideration, by one person (the donor) to another person (the donee),
who accepts the gift. This section outlines the conditions that must be met for a gift to be valid,
including the requirement that the donor must be competent to make the gift, and that the gift must
be accepted by the donee.
Once the gift is made, it becomes irrevocable, except in certain cases where the donee dies
before accepting the gift or the gift is not registered. The section also notes that gifts can be made
by way of a registered gift deed or by way of an oral gift, which must be made in the presence of
witnesses. The section also emphasizes that gifts of immovable property are subject to the
payment of stamp duty and registration fees.
Essential Elements Of Gift:
Parties to the gift - There must be two parties i.e. the donor and the donee. The transferor is
called the donor and he must be a competent person (competency as defined in Indian Contract
act 1872). The transferee is called the donee and he need not be competent to contract.
A gift made to a minor or an insane person or even if it is made to an unborn person is valid and
can be accepted by their guardian.
Transfer of ownership: When a property is transferred through gift, the right created in favor of
donee is an absolute right i.e. ownership of property is transferred.
Subject matter: The subject matter of gift can be moveable or immovable property, but it should
be in existence and the donor should have vested right in that property and not contingent.
Without consideration: A gift must be gratuitous i.e. without consideration. It must be a pecuniary
consideration.
Voluntarily: It must be made with donors free will and free consent without any force, coercion,
undue influence. If it is not done voluntarily then the gift is void. Voluntarily done also means that
donor had full knowledge about the transaction and its nature.
Acceptance of gift: A gift must be accepted by the donee. Acceptance made can be expressed or
implied but it must be accepted before the death of the donee and before the revocation by the
donor.
Section 123: Transfer how effected
 By registration
 By delivery
The method of execution mainly depends upon the nature of the property. When it is a movable
property, delivery of possession is sufficient but when it is an immovable property registration is
compulsory irrespective of the valuation of the property.
Section 126: Revocation of gift : A revocation means annulment of a promise or decree. The
revocation of a gift is always done before its acceptance. It can also be a condition by a donor that
on the happening of some event and fulfillment of some condition, the gift will be suspended or
revoked.
Revocation by mutual agreements: when both the parties i.e. donor and donee agree that the
gift will be suspended or revoked on happening of some event, provided that, that particular event
is not dependent upon the will of the donor.
The condition for revocation is condition subsequent and it must be valid and enforceable. Any
such condition which is not valid, the gift cannot be revoked.
Revocation by the recession of contract: A gift deed is always preceded by an express or
implied contract. As per the Indian contract act, all the essentials of a valid contract should be
fulfilled. If any essential is not fulfilled, it can be revoked.
For example, if a gift is made out of coercion, that means the donors consent was not there and
therefore it can be revoked.
127. Onerous gifts.—Where a gift is in the form of a single transfer to the same person of several
things of which one is, and the others are not burdened by an obligation, the donee can take
nothing by the gift unless he accepts it fully.Where a gift is in the form of two or more separate and
independent transfers to the same person of several things, the doneee is at liberty to accept one
of them and refuse the others, although the former may be beneficial and the latter onerous.The
onerous gift to disqualified person.—A donee not competent to contract and accepting property
burdened by any obligation is not bound by his acceptance. But if, after becoming competent to
contract and being aware of the obligation, he retains the property given, he becomes so bound.
128. Universal donee.—Subject to the provisions of section 127, where a gift consists of the
donor’s whole property, the donee is personally liable for all the debts due by and liabilities of the
donor at the time of the gift to the extent of the property comprised therein.
UNIT IV ( Lease )
105. Lease: A lease of immoveable property is a transfer of a right to enjoy such property, made
for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised,
or of money, a share of crops, service or any other thing of value, to be rendered periodically or on
specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
The transferor is called the lessor, the transferee is called the lessee, the price is called the
premium, and the money, share, service or other thing to be so rendered is called the rent.

Explanation: A lease is a contract wherein the lessor grants the lessee temporary use and
pleasure of a thing, in whole or in part, in exchange for payment (rent).If the lease is for real estate
that cannot be moved, the lessor is the owner and the lessee is the tenant. In this situation, the
rent may take the form of cash or a share of the property’s profits.

What are the essentials of a lease?

I. Parties must be competent: The parties in a lease agreement should be competent to enter
into a contract. Lesser should be entitled to a property and have absolute rights over that
property.
II. Right of possession: Ownership rights are not transferred in a lease, only the possession of
the property is transferred.
III. Rent: Consideration for a lease can be taken in the form of a rent or premium.
IV. Acceptance: Lessee, who is to get the interest in the property after lease, has to accept the
lease agreement along with the time period and terms & conditions imposed on the transfer.
V. Time Period: Lease always takes place for a particular time period which is to be specified
in the lease agreement. It can be relaxed at the option of the lessor.
VI. Maintain: Provision for the payment of the costs of maintenance and repair, taxes,
insurance, and other expenses appertaining to the asset leased.
VII. Term of Lease: The term of the lease is the period for which the agreement of lease
remains in operation.
VIII. Ownership: During the lease period, ownership of the assets is being kept with the lessor,
and its use is allowed to the lessee.
IX. Terminating: At the end of the period, the contract may be terminated.
X. Renew or Purchase: An option to renew the lease or to purchase the assets at the end of
the basic period.
XI. Default: The lessee may be liable for all future payments at once, receiving title to the asset
in exchange.
What happens when the lease agreement does not prescribe the time period of the lease?
Section 106 provides for the duration of the lease in the absence of the lease agreement. It lays
down that in the absence of a contract, lease can be ended by both parties to the lease by issuing
a notice to quit. The prescribed time period always commences from the date of receiving the
notice to quit.
When a lease for Agricultural or manufacturing purpose is deemed to be of year to year, then it will
attract a 6-month notice that the lease will end on the expiry of 1 year from the date of the
commencement of the lease.
When a lease for any other purpose is deemed to be of the month to month, then it will attract
a 15-day notice that the lease will end on the expiry of 1 month from the commencement of the
lease.
Term of Lease
Section 107 of the Transfer of Property Act, 1882, provided for the two modes of creation of leases
(a) Leases which can be made only by registration and (b) Where registration is optional. In the
event, the same is not made through a registered instrument, then, contrary to what is mentioned
in the said lease, the duration of the lease will be assumed to be of a month, and the same may be
terminated by either party by providing a fifteen days’ notice. However, in case the term is less
than a year, then the said lease may be made either by oral agreement accompanied by delivery
of possession of the immovable property, or by a registered instrument.

The Section read as follows:

Leases how made.—A lease of immovable property from year to year, or for any term exceeding
one year or reserving a yearly rent, can be made only by a registered instrument. All other leases
of immovable property may be made either by a registered instrument or by oral agreement
accompanied by delivery of possession.
Where a lease of immovable property is made by a registered instrument, such instrument or,
where there are more instruments than one, each such instruments shall be executed by both the
lesser and the lessee.
Provided that the State Government may from time to time, by notification in the official Gazette,
direct that leases of immovable property, other than leases from year to year, or for any term
exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by
unregistered instrument or by oral agreement without delivery of possession.
In simpler words, Section 107 of the Act covers three aspects:
Registered Deed: When the lease of immovable property is for a term of 1 year or more.
Other leases of immovable property can be either made by a registered deed or by an oral
agreement accompanied by the transfer of possession.
A lease will be made by both the parties when the lease is of multiple properties that require
multiple deeds.
The court in the case, Punjab National Bank v. Ganga Narain Kapur held that the provisions of
Section 106 of the Act will apply if the lease is done through an oral agreement.