Gift Deed — Onerous Gift, Conditional Gift and Revocation Under TPA 2026

Types of Gift Under the Transfer of Property Act

While a simple (absolute) gift transfers property without conditions, the Transfer of Property Act, 1882 recognizes several variations: (a) Onerous Gift — a gift that comes with a burden or obligation (Section 127), (b) Conditional Gift — a gift subject to a condition that may suspend or revoke it (Section 126), (c) Universal Gift — a gift of the donor's entire property with all obligations attached. Understanding these variations is essential for drafting gift deeds that accurately reflect the parties' intentions and comply with legal requirements.

Onerous Gift — Section 127

Section 127 of the TPA deals with gifts with burdens: "Where a gift is in the form of a single transfer to the same person of several things of which one is, and the others are not, burdened by an obligation, the donee can take nothing by the gift unless he accepts it fully."

Meaning: An onerous gift is a gift where the gifted property comes with an attached obligation, liability, or burden that the donee must accept along with the property. The donee cannot accept the beneficial part and reject the burdensome part — it is an all-or-nothing proposition.

Example 1: A father gifts his house to his son, but the house has an outstanding mortgage loan of Rs. 20 lakh. The son must accept BOTH the house and the loan liability — he cannot take the house free of the mortgage.

Example 2: A person gifts a business to their nephew. The business has Rs. 50 lakh in trade creditors' liabilities. The nephew must accept the business WITH the liabilities — or refuse the gift entirely.

Rule for Multiple Properties: If the gift involves several distinct properties — some beneficial and some burdensome — the donee may accept some and refuse others IF the properties are clearly separable and the gift of each is independent. But if the properties are given as a single transfer (composite gift): the donee must accept all or reject all.

Universal Donee — Section 128

Under Section 128: a person who receives a gift of the donor's entire property (universal gift) is personally liable for ALL the donor's debts and liabilities at the date of the gift. The liability is limited to the value of the property received. This is important in estate planning — gifting ALL property to avoid creditors is ineffective because the donee assumes the donor's liabilities.

Conditional Gift — Section 126

Section 126 allows a gift to be made subject to a condition that may suspend or revoke it:

Section 126(1) — Condition for Revocation: "The donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor, a gift shall be suspended or revoked." The key requirement: the specified event must NOT depend on the donor's will — the donor cannot retain unilateral power to revoke. The event must be: (a) objective and specific (e.g., "if the donee dies without children," "if the donee sells the property," "if the donee commits a criminal offence"), (b) NOT dependent solely on the donor's discretion (e.g., "if I change my mind" — this is NOT a valid condition).

Section 126(2) — Gift Revoked by Death: "A gift which the parties agree shall be revocable wholly or in part shall not thereby become void, but may be revoked to the extent and in the manner provided by the agreement." This allows parties to agree on specific revocation mechanisms.

Example 1 — Valid Condition: "I gift this property to my son. If my son dies without children, the property shall revert to me or my surviving children." This is valid because the condition (dying without children) does not depend on the donor's will.

Example 2 — Invalid Condition: "I gift this property to my nephew. I reserve the right to take back the property if I need it." This is INVALID because the revocation depends entirely on the donor's will — it creates an uncertain and impractical gift.

General Rule — Irrevocability of Gift

Section 126 establishes the default rule: a gift, once accepted, is irrevocable. The donor CANNOT take back the property simply because they changed their mind, need the property, or are unhappy with the donee. Revocation is possible ONLY if: (a) the donor and donee agreed at the time of the gift to a specific revocation condition (as described above), AND (b) that specific event occurs.

A gift can also be set aside (voided) by the court if: (a) it was obtained by fraud, coercion, or undue influence (Sections 19-19A of the Indian Contract Act), (b) the donor was of unsound mind at the time of the gift, (c) the gift was made without free consent, (d) the gift is illusory — the donor did not actually intend to transfer (sham transaction).

Muslim Law — Gift (Hiba) Revocation

Under Islamic personal law: gifts (Hiba) can be revoked BEFORE delivery of possession — with certain exceptions. After delivery of possession: revocation is possible through a court decree, except for gifts: (a) made by one spouse to the other, (b) made to a blood relative within prohibited degrees, (c) where the donee has sold or consumed the property, (d) where the donee has died, (e) where something has been accepted in return (consideration). This is a significant difference from the TPA (which applies to Hindus, Christians, Parsis) — under the TPA, gifts of immovable property are irrevocable once registered and accepted.

Gift with Conditions — Drafting Considerations

When drafting a conditional gift deed:

(a) Clearly specify the condition: The condition must be precise and specific — "If the donee sells, transfers, or encumbers the gifted property during the donor's lifetime, the gift shall stand revoked."

(b) Condition must not depend on donor's will: Conditions like "if I want," "at my discretion," or "if I need the property" are INVALID — the condition must be objective.

(c) State the consequence: What happens if the condition is triggered — "the property shall revert to the donor" or "shall be transferred to [alternate donee]."

(d) Acceptance of condition: The donee must ACCEPT the condition — record the acceptance in the deed: "The Donee has accepted the gift subject to the conditions herein."

(e) Register the deed: For immovable property — the conditional gift deed must be registered under Section 123 TPA and Section 17 Registration Act, with the conditions clearly stated.

Specimen Clause — Conditional Gift

[Illustrative — for inclusion in a gift deed]

"This gift is made subject to the following conditions as agreed between the Donor and the Donee:

(a) The Donee shall not sell, mortgage, lease, or otherwise transfer the gifted property during the lifetime of the Donor without the Donor's prior written consent.

(b) If the Donee predeceases the Donor without leaving any surviving children, the gifted property shall automatically revert to the Donor.

(c) The Donee shall maintain the gifted property in good condition and shall bear all taxes, maintenance charges, and other expenses related to the property.

The Donee hereby accepts the gift subject to the above conditions."

Challenging a Gift — Grounds

A gift can be challenged by the donor or their legal heirs on the following grounds:

(a) Undue influence: The donee exercised dominance or coercion over the donor — common in elderly donor cases.

(b) Fraud: The donee misrepresented facts to induce the gift.

(c) Unsound mind: The donor was mentally incapacitated at the time of the gift.

(d) Sham/nominal: The gift was not a genuine transfer — created to defeat creditors or avoid taxes.

(e) Unregistered: Gift of immovable property without registration is void under Section 123 TPA.

(f) Non-acceptance: The donee did not accept the gift during the donor's lifetime.

The challenge is made through a civil suit — the burden of proof is on the person challenging the gift.