Introduction:
In a recent judgment the Supreme Court Clarified the scope of Section 126 of the Transfer of Property Act, 1882 for the revocation of a gift deed which is validly made. The Court held that a gift deed can only be revoked if one of the specific exceptions under Section 126 of the Transfer of Property Act, 1882 is met.

Facts in a Nutshell
In a recent judgment the Supreme Court addressed the issue of gift deed revocability under Section 126 of the Transfer of Property Act 1882. In this case the Defendant Thajudeen had executed a gift deed in 1983 transferring property to the Tamil Nadu Khadi and Village Industries Board for the purpose of Khadi manufacturing. When the property was not used for the intended purpose, Thajudeen attempted to revoke the gift in 1987 by executing a deed of revocation citing the Donee’s non-utilisation of the property for its intended purpose as the ground. In response, the Donee filed a suit in 1991 for a declaration of title and recovery of possession arguing that the revocation was invalid. The trial court initially dismissed the suit holding that the gift deed was never acted upon. However, on appeal the first appellate court found in favour of the Donee concluding that the gift deed was validly executed and accepted thus irrevocable. This decision was upheld by the High Court which dismissed Thajudeen’s second appeal. Thajudeen then approached the Supreme Court by filing an SLP which was converted into a Civil Appeal.

Findings of the Supreme Court and conclusion
The Supreme Court upheld that the gift deed in question, once validly executed and accepted, was irrevocable. The Court held that under Section 126 of the Transfer of Property Act, there are only three exceptions allowing for the revocation of a gift deed. The first exception permits revocation when the donor and donee agree that it will be revoked upon the occurrence of a specified event. In this case there was no indication that the parties had agreed to revoke the gift deed upon any specific event so this exception did not apply. The second exception applies if the gift deed is structured to allow revocation at the donor’s mere will, rendering it void wholly or in part. Here no such agreement was present meaning that the donor’s unilateral revocation was without legal basis. The third exception pertains to instances where the gift deed operates as a contract capable of rescission; however this gift was not in the form of a rescindable contract.

Consequently none of the exceptions permitting revocation applied in this matter, leading to the only logical conclusion that the gift deed validly made could not have been legally revoked. As a result the revocation deed dated 17th August 1987 was declared void ab initio and without any effect.

The Court clarified that the non-utilisation of the property for Khadi production as intended does not provide grounds for revocation. Though the purpose was specified in the gift deed there was no stipulation for automatic revocation upon failure to use the property accordingly nor was there any clause allowing the donor to revoke at their discretion for non-use. Thus the gift deed remained valied despite the property’s non-utilisation for the specified purpose ¹.

By - Chaitanyaa Bhandarkar