Once a Gift is Validly Made and Accepted, Nothing Remains for Legal Heirs to Inherit: Kerala High Court Affirms Decree in Settlement Deed Dispute

"Bona Fide Purchaser Must Exercise Due Diligence—Purchase Ignoring Registered Gift Is No Defence", - In a notable decision Kerala High Court upheld a trial court decree declaring the plaintiff’s title to property on the strength of a registered settlement deed and granted recovery of possession, while dismissing claims of the defendants who had purchased the land via later sale deeds. Justice A. Badharudeen, authoring the judgment, clarified: “Once the gift is validly made and accepted, there remains nothing for the heirs of the donor to inherit.”

The Court rejected the defence plea that the settlement deed was false, held that execution was validly proved, and dismissed the appeal with costs to the plaintiff.

The dispute arose out of O.S. No. 126 of 1995 filed before the Sub Court, Pathanamthitta. The plaintiff sought declaration of title and possession over the plaint schedule property based on Ext.A1, a registered settlement deed executed in 1986 by one Ramachandran. In December 1994, the defendants allegedly trespassed onto the land based on a partition deed (Ext.A3) and sale deeds (Exts.A4 and A5) executed by Ramachandran’s alleged widow and son (defendants 3 and 4).

The trial court decreed in favour of the plaintiff, finding the settlement deed valid and dismissing the challenge to her title. The appellate court was called upon to re-evaluate the evidence, especially regarding execution, possession, and the alleged bona fides of the purchasers.

Court on Execution of Settlement Deed: “Proof by Document Writer and Donee's Possession Is Sufficient”

Defendants had challenged the genuineness of Ext.A1, calling it a fabricated document. However, the plaintiff produced the original deed, and the document writer who authored Ext.A1 gave evidence as PW3. The two attesting witnesses were deceased, and their death was not disputed. The Court accepted the trial court’s reliance on PW3’s credible testimony, noting:

“There is no serious dispute as to the death of attesting witnesses. The document writer was examined, and his evidence stood unshaken. Therefore, execution is validly proved.”

Citing the recent ruling in Gopinath K.I.V. v. K.I.V. Vimala [2025 KHC OnLine 281], the Court reiterated:

“Examination of attesting witness is not mandatory if the execution is not specifically denied, and the gift deed is duly registered.”

On Validity of Gift: “Delivery of Possession Is Not a Precondition under the TPA”

The Court examined Sections 122 and 123 of the Transfer of Property Act, 1882, and clarified that delivery of possession is not a sine qua non for a valid gift. Quoting Asokan v. Lakshmikutty [(2007) 13 SCC 210], the Court held:

“In order to constitute a valid gift, acceptance is essential, but mode of acceptance is not prescribed. Possession or even retention of the deed may raise a presumption of acceptance.”

Further, in Renikuntla Rajamma v. K. Sarwanamma [(2014) 9 SCC 445], the Supreme Court had held that:

“Transfer of possession is not necessary to constitute a valid gift under Section 123 of the TPA.”

In the present case, the plaintiff had possession of the original deed and had been enjoying the property, which the Court held was sufficient evidence of acceptance.

Cause of Action: “Constructive Possession Lost by Trespass—Right to Sue Triggered by Third-Party Occupation”

The Court rejected the contention that the plaintiff had lost her rights by inaction. It observed that the plaintiff was residing in Thiruvananthapuram, and learned of the trespass from neighbours' letters (Exts.A10 and A11). Justice Badharudeen explained: “When third parties entered possession under void sale deeds, the plaintiff's constructive possession ended, thereby giving rise to the cause of action.”

Claim of Bona Fide Purchase Fails: “Purchasers Ignored Registered Gift—Cannot Claim Equity”

Defendants 1 and 2 argued that they were bona fide purchasers for value, relying on Exts.A4 and A5. However, the Court held: “No encumbrance certificate was produced by the purchasers. Had they obtained one, the registered gift deed (Ext.A1) would have surfaced.”

In dismissing their claim, the Court emphasized: “Defendants 1 and 2 failed to exercise basic diligence. They either didn’t check encumbrances or purchased knowing of Ext.A1’s existence. They cannot be treated as bona fide purchasers.”

 “Ramachandran Had Nothing Left to Bequeath”

Rejecting the claims of defendants 3 and 4, who claimed to be the widow and son of Ramachandran, the Court observed: “Ext.A1 was executed on 28.07.1986, and Ramachandran died only on 03.01.1991. Once he executed Ext.A1 transferring the entire property, nothing was left to be inherited by defendants 3 and 4.”

Whether the marriage of the 3rd defendant to Ramachandran had been dissolved and revived was immaterial, as Ramachandran had already divested himself of the property.

Justice A. Badharudeen, while affirming the trial court’s decree, held: “The plaintiff perfected title over the plaint schedule property on the basis of Ext.A1. The sale deeds in favour of defendants 1 and 2 are ineffective. The appeal is found meritless and is dismissed with cost to the plaintiff.”

The Court also dismissed all pending interlocutory applications and vacated interim orders.

Date of Decision: April 3, 2025