The Legal Framework for Gifting Property under The Transfer of Property Act, 1882

Gifting property is one of the most common ways wealth changes hands in Indian families – from parents transferring a house to their children, to a person donating land for a charitable cause. But a gift, as warm and voluntary as it may be in intent, is not immune to legal scrutiny. The Transfer of Property Act, 1882, through Sections 122 to 129, lays down a clear and structured legal framework governing how property can be gifted, what makes such a gift valid, and under what limited circumstances it can be revoked.

What is a gift under the law?
The property must already exist
Voluntariness and absence of consideration
Essentials of a valid gift
Competency of the donor
Acceptance by the donee
How is a gift made? – Section 123
Gift to multiple donees – Section 125
Suspension and revocation of a gift – Section 126
Onerous gifts – Section 127
Onerous gift to a minor donee
Universal donee – Section 128
Exceptions – Section 129
Why this legal framework matters

What is a gift under the law?

Section 122 of the Transfer of Property Act, 1882 defines a gift as the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person – the donor – to another – the donee – and accepted by or on behalf of the donee. Every word in this definition carries legal weight. The transfer must be of existing property, it must be voluntary, and it must be made without consideration – meaning there is no payment, service, or exchange involved.

It is important to note that the Transfer of Property Act deals only with inter vivos gifts – gifts made between living persons. Testamentary gifts (gifts by a will, operative after death) and gifts made in contemplation of death (donatio mortis causa) do not fall under the scope of this Act.

The property must already exist

One of the foundational requirements under Section 122 is that the property being gifted must already be in existence at the time of the gift. Future property cannot be the subject of a gift. So, if someone tries to gift property they expect to inherit but have not yet received, that gift is void. Section 124 further reinforces this: a gift consisting of both existing and future property is valid only to the extent of the existing property, and void as to the future portion.

Voluntariness and absence of consideration

A gift must flow from the donor’s free will. If the donor’s consent is obtained through coercion or undue influence – as defined under Sections 15 and 16 of the Indian Contract Act, 1872 – the gift is not valid. Equally essential is the complete absence of consideration. The moment any monetary or other exchange enters the picture, the transaction stops being a gift and takes the character of a sale or exchange.

Essentials of a valid gift

For a gift to be legally enforceable, several conditions must be satisfied simultaneously. These essentials flow directly from Section 122 and the sections that follow it.

Competency of the donor

The donor must be of sound mind and above 18 years of age. The donor must also hold legal ownership over the property being gifted – one cannot gift what one does not own. The donee, on the other hand, need not be competent to contract. Even a minor can be a donee, but a guardian must accept the gift on their behalf.

Acceptance by the donee

Acceptance is not just a formality – it is a mandatory ingredient of a valid gift. The acceptance must be made during the lifetime of the donor and while the donor is still capable of giving. If the donee dies before acceptance, the gift is void. The acceptance can be express (spoken or written) or implied through conduct. However, if a gift is accepted but the donor dies before the deed is registered, the gift is still considered valid as the acceptance had already occurred during the donor’s lifetime.

How is a gift made? – Section 123

Section 123 prescribes the mode of transferring a gift, and it differs depending on whether the property is moveable or immoveable.

For immoveable property, the gift must be effected through a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. Registration is mandatory regardless of the value of the property. An unregistered gift deed for immoveable property is not enforceable in law.

For moveable property, the gift may be completed either by a registered instrument (as above) or simply by delivery of possession. The delivery can be made in the same manner as goods that are sold may be delivered. This makes gifting moveable items – like jewellery or a vehicle – comparatively simpler, as physical handover can suffice.

Gift to multiple donees – Section 125

What happens when a donor gifts property to multiple people, and one of them refuses to accept? Section 125 provides that where a gift is made to several donees and one of them does not accept it, the gift is void only to the extent of that person’s share. The remaining donees who accept their respective portions of the gift take the property validly. The refusal of one does not affect the rights of the others.

Suspension and revocation of a gift – Section 126

Once a gift is complete and registered, the general rule is that it cannot be revoked simply because the donor has a change of heart. Section 126 provides that a gift which the parties agree shall be revocable wholly or in part at the mere will of the donor is void wholly or in part. In other words, a donor cannot unilaterally reserve an open-ended right to take back the gift whenever they please – such a condition makes the gift itself void.

However, the law does permit two specific modes of revocation:

Revocation by mutual agreement: The donor and the donee may agree at the time of the gift that it will be suspended or revoked upon the happening of a specified event – but crucially, that event must not depend on the will of the donor alone. For instance, if A gifts land to B with B’s consent, on the condition that A can reclaim it if B dies before A – and B does die before A – A may take back the land. The death of B does not depend on A’s will, so the condition is valid.

Revocation as in rescission of contracts: A gift may be revoked on the same grounds on which a contract can be rescinded – such as fraud, coercion, misrepresentation, or undue influence – under Section 19 of the Indian Contract Act, 1872. However, failure of consideration is not a valid ground for revoking a gift (since a gift has no consideration to begin with). The Supreme Court, in the case of N. Thajudeen v. Tamil Nadu Khadi and Village Industries Board, reinforced that a gift deed without any revocation clause cannot be revoked simply because the property was not used for the intended purpose.

Onerous gifts – Section 127

Not every gift is purely beneficial. Sometimes, a property comes with attached liabilities – an ongoing mortgage, pending dues, or other obligations. Such a gift is called an onerous gift. The word “onerous” means burdened, and when the liabilities on a property exceed its benefits, the donee has the right to reject such a gift.

However, Section 127 introduces an important limitation: where a gift is a single transfer involving several properties – some of which are onerous and others beneficial – the donee must accept the whole gift or reject it entirely. The donee cannot cherry-pick by accepting only the beneficial properties and rejecting the burdened ones. This is based on the legal maxim qui sentit commodum sentire debet et onus – one who accepts the benefit of a transaction must also bear its burden.

The rule changes when the properties are transferred through two or more separate and independent transactions. In that case, the donee is free to accept one and reject others, even if the rejected one is onerous and the accepted one is beneficial.

Onerous gift to a minor donee

A minor who accepts an onerous gift is not immediately bound by its obligations. An onerous gift made to a minor does not become binding unless, on attaining majority, the minor ratifies the acceptance. On reaching adulthood, the minor may choose to accept the whole gift – including its burdens – or reject it entirely. If the minor retains the property after turning eighteen, that retention amounts to implied acceptance, and the obligations become binding.

Universal donee – Section 128

When a donor gifts their entire property – moveable and immoveable – to a single person, that person is called a universal donee. This is a significant position, because it comes with substantial liability. Under Section 128, the universal donee is personally liable for all the debts and liabilities of the donor that existed at the time of the gift, to the extent of the property received.

This is an equitable principle – someone who receives the totality of another’s wealth must also shoulder the creditors’ claims against that wealth. Importantly, the donee’s liability is capped. If the total liabilities exceed the market value of the gifted property, the universal donee is not required to pay the excess amount from their own resources. For example, if A gifts property worth ₹1 crore to B and A’s total debts are ₹2 crore, B is liable only up to ₹1 crore – the value of what was received.

Exceptions – Section 129

Section 129 carves out two categories of gifts that fall outside the scope of Chapter VII entirely:

Donatio mortis causa (gifts in contemplation of death): These are gifts made by a person who believes they are about to die, intending the gift to take effect only upon their death. Such transfers are governed by separate legal principles and are not subject to the Act’s requirements of registration, acceptance during the donor’s lifetime, etc.

Gifts under Muslim personal law (Hiba): Under Muslim law, a valid gift (Hiba) requires only three elements: a declaration by the donor, acceptance by the donee, and delivery of possession. Registration is not mandatory, irrespective of value, though it becomes necessary for immoveable property worth more than ₹100 under the Registration Act. Only the donor needs to be Muslim – the religion of the donee is irrelevant.

Why this legal framework matters

The provisions under Sections 122 to 129 exist to protect all parties involved in a gift transaction. The registration requirement safeguards against future disputes over title. The acceptance requirement ensures the donee’s agency is respected – no one is forced to receive property against their will. The rules on onerous gifts prevent donors from using gifts as a mechanism to transfer liabilities without consent. And the universal donee provisions protect the rights of the donor’s creditors, ensuring that a gift of the donor’s entire property cannot be used to defraud those to whom money is owed.

Together, these sections ensure that what begins as an act of generosity is also an act that is transparent, consensual, and legally sound – protecting the donor’s intent and the donee’s rights in equal measure.

What do you think? If a donor gifts a property with a condition that they can take it back anytime they please, should such a gift be treated as entirely void or only partially void to the extent of that condition? And given the strict registration requirements for immoveable gifts, do you think the law adequately balances the formality of the process with the informal, relationship-driven nature in which most family gifts actually occur in India?

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References

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Table of Contents

What is a gift under the law? 🔗

The property must already exist 🔗

Voluntariness and absence of consideration 🔗

Essentials of a valid gift 🔗

Competency of the donor 🔗

Acceptance by the donee 🔗

How is a gift made? – Section 123 🔗

Gift to multiple donees – Section 125 🔗

Suspension and revocation of a gift – Section 126 🔗

Onerous gifts – Section 127 🔗

Onerous gift to a minor donee 🔗

Universal donee – Section 128 🔗

Exceptions – Section 129 🔗

Why this legal framework matters 🔗