Gifts to minors and their acceptance- Binding or Not?
The blog is authored by Aryan Singh Chouhan, fourth-year law student at Institute of Law, Nirma University. His main interests lie in Corporate Law.
Introduction
“Gift” is defined under the Transfer of Property Act :- “the act wherein one party gives away any property which may be immovable or movable, to another party, but the main essence is that there is a lack of consideration, and but that gift shall be freely given and willingly” [1]and the party who accepts the gift is called as donee and the party who gives the gift is called donor.
The most important condition in that section is that, the gift must be acknowledged by the donee itself or that the gift must be acknowledged by somebody else on the behalf of donee.
Section 11[2] of the Indian Contract Act states that a person who has not attained age of majority is incapable of doing any contract.
Section 127 [3] of the Transfer of Property Act, states onerous gifts, which means that giving more than one property as gift, voluntarily and freely in a single gift, to the donee and the condition for such onerous gifts is that the donee has to accept all the property given by donor and there is no choice available to select any property from the lot and reject the others, the donee has to either accept all the gifts or has to reject all the gifts and in this section there is a condition given to minor, that if they received any gifts under section 127, then they are only obligated to keep and retain the gift, if after becoming major, they had not rejected the gift.
So the basic issue here arises is that, whether minor on their can accept the gift and can such acceptance be valid, as under contract law, they are not eligible to contract, but can this principle be applied on the receiving of gifts by Minor.
Now in the instances of such ambiguity in law, the role of judiciary comes to give us a clear picture and interpret the law accordingly and judiciary has in various cases tried to settle this debate.
K.Balakrishnan v. K. Kamalam[4]
In the present case the apex court of the India dealt with the question about the acknowledgment of gift that is received by the minor.
In the present case, a lady who was the mother of 2 children (a boy and a girl) received some share in the property and thereafter she prepared a gift deed wherein she gave the ownership and title of the property to her children and both of her children were at the time of gift deed minors (boy was of 16 years of age and girl was of 4 years) and she kept with herself the possession and the enjoyment of the land.
Later sometime, she cancelled the gift deed transferred all the property in favor of her daughter and at the time, when she cancelled the gift deed, the son had attained the age of majority and this cancellation of the gift deed was challenged by the son.
“The main contention before the court was that, there was no proper acknowledgement of receiving of gift deed, as when the gift deed was made, the appellant was a minor and the respondents contended that, since he was a minor, he cannot accept the gift on his own but his guardian has to give the acceptance and the willingness to keep the gift, which was not given in the present case and so the gift was never acknowledged and thus the deed was not valid.
The court in the present case firstly looked upon the section 127[5] of the act and held that in that particular section, it is clearly stated that a minor can receive a gift in his minority years but that such acknowledgment would not bind the minor, as the gift may not be free from encumbrances and that after attaining majority , minor can deny to take the gift, so the option to deny gift is always there with minor, after he achieves majority, but a minor cannot deny to a gift taking a defence that he was a minor at that time, if after attaining majority, he continues to keep the gift, then in that circumstances, minor had to oblige the gift received.
“Also the court held that an widened combined interpretation of the Transfer of property act with contract act, it can be said that though minor cannot participate in a contract, but it does not mean that minor cannot accept or receive any property which is given to him either through gift, will, intestacy or transferred through other methods and that a minor cannot receive or accept such property only in the cases wherein the transfer done is not in the benefit of the minor”[6]
Also the court held that the fact that the mother herself made the transfer through gift deed and that she is the guardian of her children, so no express acknowledgment of the gift deed is required and that in the cases where minor receives gift from their parents or guardians, it is not required that a specific acknowledgment of same shall be made by the guardian.
Also when mother cancelled the deed, the son at that time was a major, so it was upon the son to cancel the deed or to continue with the deed and that son never cancelled the deed so the apex court held that the gift was valid and that there was implied acceptance of the gift deed by the guardians.
Vannathi Valappil Janaki vs. Puthiya Purayil Paru[7]
The case was decided by the high court of Kerala wherein , the facts of the case was that, a gift deed was passed in favour of donees who were minor at the time the deed was made, and the gift was given to them by their family members, thinking that the donees would take care of them in their old age, but when they felt that the donees were hostile to the family members, they cancelled the deed and sold the property to defendants in the present case and on cancellation of deed, they said that since there was no proper acknowledgment was made by the minor donees, so they can cancel the deed , and the court in the present case held that “since the donee knew that the gift has been given in their favour, so they had the awareness and it is enough, and there is no requirement of an express acknowledgment of gift deed and the fact that the donees though minor, if are aware, then their acceptance is implied”[8].
Smt. Shakuntla Devi v. Smt. Amar Devi[9]
In the present case, Shri Sansar Chand was engaged in a usufructuary mortgage deal and gave the possession and rights to the mortgagor and he claimed that the mortgagor had taken the benefits from the mortgage ,equivalent to the amount of advance, thus the mortgage becomes complete and later gave the said property in a gift deal, and later cancelled the deal on the basis that acceptance was not given and the Himachal Pradesh court held that “there is no need for an express acceptance and if the receiver of the gift does not rejects the gift, then acceptance is presumed and thus there is no need to expressly do certain act, to make the donor believe that the gift has been acknowledge.”[10]
Conclusion
The judiciary had through a number of cases had decided that minors can accept and acknowledge gifts that they receive under a gift deed.
Though in the contract act, it is specifically stated that any contract with minors is void and that minor cannot be a party to contract, but these provisions were added only to protect the interest of minors, but if they receive any property , through any will, or gift, etc., then these transfers are done in favor of minor and unless and until, the transfer is such that it would not be in interest of minor, minor can be party wherein he receives some property, for his own interest.
Section 127[11] of the Transfer of Property act specifically says that minor can accept any property and then also they would not be obligated to keep the property till the time they are minor that, the main question only arises, when the person who received any property during the time when law would consider such person as minor due to age, then after becoming major, whether such person keeps that property or not, if the person does keeps that property then, he cannot claim the defense that he received the property when he was minor, but this section, does implies that, minor can accept gifts and that such acceptance is not bad in the eye of law.
Also section 122[12] of the Transfer of Property Act says that acceptance must be there from donee, but such acceptance can be given by either minor or guardian and that such acceptance can be implied also, taken from the conduct of minor or guardian, by not rejecting the gift and therefore, when a minor receives any gift, acceptance of it is implied, unless the minor or guardians, specifically rejects such gift.
And as per the principles settled by judiciary, in a gift deed, the minor is not required to expressly do any act, through which the donor believes that gift is accepted and that normally it is presumed that the gift is always acknowledged by donee by not rejecting it and thus if a gift is given to minor, then such minor or guardian if not rejects the gift at the time when gift was given or when they become major, they have the option to reject the gift or otherwise the deed is assumed to be complete and donor cannot take it back.
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[1] Section 122, The Transfer of Property Act, 1882.
[2] Section 11, The Indian Contract Act, 1872.
[3] Section 127, The Transfer of Property Act, 1882.
[4] K.Balakrishnan v. K. Kamalam AIR 20014 SC 1257.
[5] supra note, 3.
[6] supra note, 4.
[7] Vannathi Valappil Janaki v. Puthiya Purayil Paru AIR 1986 Ker 110.
[8] id.
[9] Smt. Shakuntla Devi v. Smt Amar Devi AIR 1985 HP 109.
[10] id.
[11] supra note, 3.
[12] supra note,1.
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