Supreme Court Affirms Gift by Settlement Over Father's Subsequent Actions

The appeal was preferred before the Supreme Court which involves a long litigation over the nature of a deed signed in 1985 by a father for his daughter. The daughter, in 1994, instituted a suit with a prayer to declare her right, title, and interest over the suit property, alleging the 1985 deed to be a registered gift deed. The father, who was Defendant No. 1 in the case, then executed a sale deed and a cancellation deed in 1993 in favor of his son (the appellant) stating that the document of 1985 was only a will. The first appellate court and the trial court upheld the argument of the son and rejected the suit of the daughter. Yet, the High Court overruled these simultaneous conclusions, considering the 1985 document a gift deed. Dissatisfied with the High Court judgment, the son filed a petition in the Supreme Court.

The learned counsel for the appellant contented that the 1985 document was a will due to the absence of immediate transfer of ownership and the father's continued possession of the property. It was contended that the disposition was intended to take effect after the father's death, a key characteristic of a will.

Furthermore, it was argued that even if considered a gift, it was not accepted by the daughter during the father's lifetime. Conversely, the respondent's counsel asserted that the 1985 deed unequivocally transferred ownership, reserving only a limited right to income and a minor right to mortgage, thus satisfying the requirements of a gift under Section 122 of the Transfer of Property Act, 1882. The presentation of the deed for registration by the daughter was quoted as evidence of acceptance. The counsel also quoted precedents that transfer of possession is not necessary for a valid gift.

The Supreme Court, upon examining the respondent's claims and on analyzing the 1985 document, deemed it to be a "Gift by Settlement". The Apex Court held that the document categorically expressed the nature of Transferring of the Property to the daughter due to love and affection, which is subjected to some conditions such as the father's life interest and limited right to mortgage, however, the presence of consideration in the form of love and affection distinguishes a settlement from a pure gift. While a will takes effect after the testator's death and is revocable, a gift or settlement involves the vesting of right in praesenti. The reservation of a life interest by the settlor does not negate the immediate vesting of the property in the settlee.

Supreme Court held that the presentation of the gift deed for registration by the daughter constituted a valid acceptance in life-time of the donor itself, which fulfills the condition under Section 122 of the Transfer of Property Act. The Court reaffirmed that delivery of possession is not a sine qua non condition for a valid gift of immovable property.

In conclusion, the Supreme Court found that the trial court and the first appellate court erred in construing the 1985 document as a will. The High Court, according to the Supreme Court, correctly set aside the concurrent judgments by interpreting the document as a settlement. Thus, while dismissing the appeal, the Supreme Court affirmed the High Court's judgment and upholding the daughter's right, title, and interest over the suit property. The father's subsequent cancellation and sale deeds were deemed invalid.

CORAM: Justice J.B. Pardiwala and Justice R. Mahadevan
Between: N.P. SASEENDRAN VS N.P. PONNAMMA & ORS 2025 INSC 388
Date of Judgment: 24-03-2025