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by Admin
17 December 2025 12:49 PM
“The postponement of delivery by creation of life interest is not an anathema to absolute conveyance in praesenti” - Supreme Court of India delivered a pivotal ruling clarifying the distinction between gift, settlement, and will. The Court upheld the Kerala High Court’s decision declaring a 1985 registered deed executed by a father in favour of his daughter as a valid gift and not a will, thereby affirming her absolute ownership rights over the disputed property.
Setting aside the concurrent findings of the Trial and First Appellate Court, the Supreme Court agreed with the High Court's interpretation and held that mere retention of life interest does not alter the nature of the transaction as a gift.
“Life Interest Retained by the Donor Does Not Make the Deed a Will” – Apex Court Affirms High Court's View
At the heart of the dispute was whether a document dated 26.06.1985, titled
“Dhananischayaadharam”, was a will, settlement, or gift deed. The father (Defendant No.1) had executed it in favour of his daughter (Respondent No.1), while reserving the right to enjoy income and mortgage the property up to ₹2,000 during his lifetime.
The Court observed:
“The conditions to construct a house, to reside in the house, retention of life interest, and right of mortgage… cannot alter the gift, by which in unequivocal terms, the property stood vested in the plaintiff.”
Rejecting the argument that it was a testamentary instrument, the Bench ruled:
“Reservation of life interest is permissible in a disposition by settlement and such retention cannot affect the rights already vested.”
The document vested title in praesenti with the donee, which is the key distinguishing feature of a gift or settlement, and not a will, which only operates posthumously.
“Acceptance of Gift Can Be Implied from Conduct” – No Need for Physical Possession
The appellant contended that the daughter never took possession, and hence, there was no acceptance of the gift. But the Supreme Court reaffirmed settled law: “Delivery of possession is not a sine qua non for a valid gift… Acceptance can be express or implied, and presenting the deed for registration amounts to acceptance.”
The Court referred to Renikuntala Rajamma v. K. Sarwanamma and K. Balakrishnan v. K. Kamalam, which held that a valid gift deed need not result in immediate physical possession if life interest is retained by the donor.
“If Vesting Is Immediate, Even Life Interest Clause Will Not Convert It into a Will”
The Bench cited its own earlier judgments, including P.K. Mohan Ram v. B.N. Ananthachary, emphasizing that the disposition in praesenti is the decisive test.
It held:
“Even if the later part of the deed seems to postpone rights till after the father’s and mother’s lifetime, it must be treated as a qualification—not a revocation—of the earlier unconditional conveyance.”
Any such repugnant clause, the Court said, must be discarded under Section 11 of the Transfer of Property Act, which voids conditions inconsistent with absolute grants.
“Nomenclature Is Irrelevant – Substance of Document Must Prevail”
The Court reiterated that what matters is the substance of the document, not its title:
“Even when there is ambiguity… the subsequent conduct of the executant must also be considered… The document must be harmoniously read to understand the true intent.”
In this case, the document mentioned love and affection as the basis for conveyance and imposed no restrictions on the donee’s eventual use and transfer, thereby confirming it was not testamentary in nature.
Conclusion:
Affirming the Kerala High Court’s declaration, the Supreme Court held:
“The vesting of rights in the plaintiff is clear and unconditional, notwithstanding the reservation of life interest. The High Court rightly construed the deed as a valid settlement or gift.”
The appeal was dismissed, and the rights of the daughter over the suit property were upheld in full.
Date of Decision: 24 March 2025
