When can a gift be suspected or revoked?

Under Indian property law, a gift is generally regarded as an irrevocable transfer, provided it is executed with free consent, accepted by the donee, and registered in accordance with the law, where applicable. However, Section 126 of the Transfer of Property Act, 1882, lays down specific circumstances under which a gift may be revoked or suspended despite its apparent finality.

The general rule is that once a gift is made, the donor cannot retain the right to revoke it at will. The very concept of a gift rests upon the donor’s intention to part with the property without expecting anything in return. However, Section 126 carves out an exception by allowing revocation if the gift is subject to a condition subsequent—provided the condition is not based solely on the donor’s discretion.

In the landmark case of Balai Chandra Parui v. Durga Bala Dasi [AIR 2004 Cal 276], the court held that a gift deed may be revoked if it was executed without the donor's free will, such as under fraud, coercion, or undue influence. Since a gift deed is based on an underlying contract, it must fulfill all essentials of a valid contract, including free consent. If any essential is lacking, the gift can be set aside.

Modes of Revocation under Section 126

(i) Revocation by Mutual Agreement:

The donor and the donee may mutually agree at the time of executing the gift that it shall be revoked or suspended upon the occurrence of a specific event. The crucial point is that the event must not depend on the donor’s will. For instance, a gift may be revoked if the donee fails to marry a specific person within a certain time, provided the donee accepts this condition and it does not contravene public policy.

(ii) Revocation by Rescission (Contractual Grounds):

Like any contract, a gift can be revoked if it is vitiated by factors such as fraud, misrepresentation, mistake, undue influence, or coercion. For example, if a donor was misled into believing that the donee is his biological child and executed a gift deed in favour of the donee, but later discovers this to be untrue, the gift may be revoked on grounds of fraudulent misrepresentation.

While gifts are meant to be absolute and irrevocable transfers made without consideration, the law under Section 126 of the Transfer of Property Act, 1882 provides necessary safeguards to protect donors against unfair outcomes. Conditions attached to gifts must be reasonable, lawful, and not based solely on the donor's will. Revocation is permissible when both parties have agreed to a valid condition or when the gift is shown to be flawed due to lack of free consent.

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