Gift Deed Once Validly Accepted Cannot Be Revoked At Will: Supreme Court

In a significant ruling, the Supreme Court of India held that a registered gift deed, once validly accepted, cannot be unilaterally revoked unless specific legal conditions are met. This decision came in N. Thajudeen v. Tamil Nadu Khadi and Village Industries Board, where the bench, comprising Justice Pankaj Mithal and Justice Ujjal Bhuyan, upheld the principles under Section 126 of the Transfer of Property Act, 1882, affirming that a gift deed, once accepted, becomes irrevocable unless both parties mutually agree otherwise.

 

Background

 

The dispute began when N. Thajudeen gifted a 3,750 sq. ft. plot in Cuddalore District to the Tamil Nadu Khadi and Village Industries Board in 1983, intending it to be used for khadi manufacturing facilities. In 1987, Thajudeen attempted to revoke the gift, claiming the board did not fulfill the terms of the deed. This led to prolonged litigation, with the trial court initially ruling in Thajudeen's favor. However, higher courts, including the Madras High Court, reversed this decision, affirming the validity and acceptance of the gift, prompting an appeal to the Supreme Court.

 

Supreme Court’s Analysis

 

The Supreme Court examined three primary issues:

 

1. Acceptance of the Gift: The Court found that the board had clearly accepted the gift, as evidenced by a mutation application and actions to utilize the property. Thus, the gift was both accepted and acted upon.

 

 

2. Legality of Revocation: The Court emphasized that under Section 126 of the Transfer of Property Act, revocation of a gift deed requires specific legal conditions, such as an agreed-upon event or a mutual agreement for revocation. Justice Bhuyan stated that the absence of any clause permitting revocation rendered Thajudeen’s revocation deed “void ab initio.”

 

 

3. Limitation for Filing the Suit: The Court clarified that for cases involving both title declaration and recovery of possession, the limitation period is twelve years, not three, as argued initially. This made the 1991 suit by the board within the permissible timeframe.

 

 

 

Key Observations

 

The Court underscored that once a gift is validly made and accepted, it cannot be revoked without legal grounds. It noted that failing to use the property for its intended purpose does not grant the donor a right to reclaim it unless explicitly stated in the gift deed. Justice Mithal emphasized, “The right to possess and utilize the gifted property, once transferred, becomes absolute.”

 

Conclusion

 

This ruling reaffirms the principle that the intent behind gifting is irrevocable unless explicitly conditioned otherwise. By upholding the appellate and High Court decisions, the Supreme Court has set a precedent ensuring that gift deeds are treated with finality, reinforcing fairness in property transfers.

 

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