CASE TITLE :- N.P. Saseendran v. N.P. Ponnamma & Ors. (Neutral Citation: 2025 INSC 388)
The two-Judge Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan enunciated, “What is not to be forgotten is that in case of a gift, it is a gratuitous grant by the owner to another person; in case of a settlement, the consideration is the mutual love, care, affection and satisfaction, independent and resulting out of the preceding factors; in case of a will, it is declaration of the intention of the testator in disposition of his property in a particular manner.
Therefore, even when there is any ambiguity in understanding the nature of the documents from its contents, we are of the view that the subsequent conduct of the executant must also be considered to take a decision.”
The Bench added that in a single document, there could be multiple directions, the document must be harmoniously read to not only understand the true intent and purport but also to give effect to each and every word and direction.
Factual Background
The Respondent was the Plaintiff (daughter) in a Suit filed before the Sub Court and the Appellant was the Defendant No. 2 (son) in the said Suit. Alleging that the property gifted by her father, who was Defendant No. 1 in the Suit, vide registered deed, the Plaintiff filed a Suit for declaration of right, title, and interest over the property and also for a declaration that the cancellation deed and sale deed executed by the father in favour of the son are null and void and for consequential injunction. During the pendency of the Suit, the father died and his legal heirs were impleaded as Defendant Nos. 3 and 4
The Trial Court after due contest by the parties, accepted the defence put forth by the Appellant that the deed executed in 1985 was only a Will and not a Gift and hence, dismissed the Suit. Challenging this, the Plaintiff filed an Appeal before the Additional District Court and the First Appellate Court affirmed the findings of the Trial Court and dismissed the Appeal Suit.
The Respondent then filed a Second Appeal before the High Court, which set aside the concurrent findings of the lower Courts and granted a declaratory decree in favour of the Plaintiff by construing the document of 1985 as a Gift Deed. Being aggrieved, the Appellant was before the Apex Court.
Difference between Gift and Settlement
The Court observed that the primary difference between the Gift and the Settlement is the existence of consideration in the settlement. It said that a gift is a voluntary disposition which is essentially not an agreement and hence, the element of consideration is taken away from it. It further explained that the settlement on the other hand is always coupled with consideration as it is mostly executed in favour of a family member.
Difference between Gift and Will
The Court emphasised, “The most important requirement for a valid will is that it must again be a voluntary disposition in sound mind, which must be explicit from the instrument itself. Therefore, it can be concluded that every will also has an element of gift, with the difference being the disposition deferred until the death of the testator. Insofar as the revocation is concerned, the testator is at liberty to revoke or alter the will any number of times until his demise, but it is essential that he remains of sound mind while doing so.”
Difference between Gift, Settlement, and Will
The Court observed that the element of gift is traceable to both ‘settlement’ and ‘will’ and that the nomenclature of an instrument is immaterial and the nature of the document is to be derived from its contents. “While so, a voluntary disposition can transfer the interest in praesenti and in future, in the same document. In such a case, the document would have the elements of both the settlement and will. Such document, then has to be registered and by operation of the doctrine of severability, becomes a composite document and has to be treated as both, a settlement and will and the respective rights will flow with regard to each disposition from the same document”, it further noted. The Court also clarified that the reservation of life interest or any condition in the instrument, even if it postpones the physical delivery of possession to the donee /settlee, cannot be treated as a will, as the property had already been vested with the donee/settlee. “Thus, the legal position is well settled. There must be a transfer of interest in praesenti for a gift or a settlement and in case of postponement of such transfer until the death of the testator, the document is to be treated as a will.
The fact that a document is registered, cannot be the sole ground to discard the contents and to treat the document as a gift, just because the law does not require a will to be registered. The act and effect of registration depends upon the nature of the document, which is to be ascertained from a wholesome reading of the recitals”, it observed. The Court said that the nomenclature given to the document is irrelevant and the contents of the document have to be read as a whole and understood, while keeping in mind the object and intent of the testator. “The postponement of delivery by creation of life interest is not an anathema to absolute conveyance in praesenti”, it remarked. Furthermore, the Court reiterated that the delivery of possession is not sine qua non to validate a gift or settlement and therefore, for the document to be valid, it is sufficient if it is proved that the same was acted upon during the life time of the executant.
“In the present case, it is not in dispute that the plaintiff has registered the instrument. Such registration by the plaintiff is possible only if the document was handed over by Defendant No.1. The factum of acceptance can be derived from the conduct of the parties”, it added.
Decision
The Court elucidated that once a gift has been acted upon, the same cannot be unilaterally cancelled and that the delivery of possession is only one of the methods to prove acceptance, not the sole method. “The receipt of the original document by the plaintiff and registration of the same, would amount to acceptance of the gift and the transaction satisfies the requirement of Section 122 of the Transfer of Property Act, 1882. The creation of life interest with rights to enjoy the income from the property is a plausible and justifiable reason for the plaintiff not to reside in the premises. Once the document is declared as “gift”, Defendant No.1 had no right to cancel the same unilaterally and the Sub Registrar had no right to register the cancellation deed”, it noted. The Court, therefore, concluded that once the document is categorized as a gift, in the absence of any clause or reservation to cancel, the executant has no right to cancel the same and the reasons for cancellation or revocation of gift have to be proved in a Court of law; therefore, the unilateral cancellation of the document is void and as a natural corollary, the sale deed executed by the father is also invalid. “… we find that the trial Court as well as the First Appellate Court had erroneously come to the conclusion that Ext.A1 document was a Will, without appreciating the law. However, the High Court rightly set aside the concurrent judgments of the Courts below by treating the document as settlement in the judgment impugned herein”, it added. Accordingly, the Apex Court dismissed the Appeal and confirmed the High Court’s Judgment.
