Gift Once Validly Executed and Accepted Cannot Be Revoked Without Specific Conditions: Supreme Court

Supreme Court of India delivered a significant ruling in the case of N. Thajudeen v. Tamil Nadu Khadi and Village Industries Board, addressing the legality of revocation of a gift deed under Section 126 of the Transfer of Property Act, 1882. The Court dismissed the appellant’s challenge to the gift deed, affirming that it had been validly executed, accepted, and acted upon, and could not be revoked in the absence of express provisions permitting such revocation.

The dispute arose from a gift deed executed on March 5, 1983, wherein the appellant, N. Thajudeen, transferred a parcel of land (3750 square feet in Survey No. 16/1, Cuddalore District) to the Tamil Nadu Khadi and Village Industries Board (respondent) for the purpose of manufacturing Khadi products. On August 17, 1987, the appellant sought to revoke the gift, claiming that the respondent had not accepted it.

The respondent, however, had filed a suit seeking a declaration of its title over the property and recovery of possession, relying on the gift deed. The trial court dismissed the suit, holding that the gift deed was not valid as it had allegedly not been accepted. On appeal, both the District Court and the Madras High Court reversed this finding, ruling in favor of the respondent. The appellant then approached the Supreme Court.

The Supreme Court focused on two key issues:

Validity and Acceptance of the Gift Deed: Whether the gift deed dated March 5, 1983, had been validly executed, accepted, and acted upon as per the Transfer of Property Act, 1882.

Revocation of the Gift Deed: Whether the revocation of the gift deed on August 17, 1987, was valid under Section 126 of the Transfer of Property Act.

The Court ruled that the gift deed was validly executed and accepted by the respondent. It noted that the possession of the suit property had been handed over to the respondent on the date of the gift itself. Additionally, the respondent applied for mutation of the property and had begun construction on the land, clearly demonstrating that the gift had been accepted and acted upon.

“Exhibits A-2 to A-4 prove that the possession of the suit property was taken over by the plaintiff-respondent on the date of the gift itself, which is sufficient evidence that the gift was acted upon and accepted by the plaintiff-respondent.” [Para 9]

Thus, the donor had no further rights or interest in the property after the execution of the gift deed.

The Court examined Section 126 of the Transfer of Property Act, 1882, which governs the revocation of gifts. According to this section, a gift can be revoked only under specific conditions agreed upon by the donor and donee or if the circumstances resemble those under which a contract could be rescinded.

The Court ruled that no such contingency or agreement existed in this case. The gift deed did not contain any clause permitting its revocation, nor was there any agreement between the parties regarding the same. The Court observed:

“A gift which is revocable wholly or in part at the mere will of the donor is void... In the present case, there is no agreement between the parties for the revocation of the gift deed wholly or in part.” [Para 15]

Consequently, the appellant’s attempt to revoke the gift on August 17, 1987, was deemed invalid. The revocation deed was declared "void ab initio."

The appellant also contended that the suit was barred by limitation. The Court clarified that a suit for recovery of possession based on title is governed by Article 65 of the Limitation Act, 1963, which provides for a 12-year limitation period. Since the suit was filed within this period, the Court held that it was not time-barred.

The Supreme Court upheld the decisions of the District Court and High Court, affirming that the gift deed was valid and could not be revoked. The appeal was dismissed, and the revocation deed was rendered void.

“Thus, none of the exceptions permitting revocation of the gift deed stands attracted in the present case. Leading to the only conclusion that the gift deed, which was validly made, could not have been revoked in any manner.” [Para 15]

The Court’s decision reinforces the sanctity of properly executed gift deeds and the limited grounds under which they can be revoked.

Date of decision: 24/10/2024

N. Thajudeen v. Tamil Nadu Khadi and Village Industries Board