What is the difference between a Gift, Settlement and Will? The nomenclature of the instrument is immaterial and the nature of the document is to be derived from its contents. 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. Delivery of possession is not sine qua non to validate a gift or settlement. 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. Once the donee has accepted the gift or settlement (express or implied) the donor cannot unilaterally revoke it.

(i) Section 122 of the Transfer of Property Act, 1882 defines “Gift”. Article 33 of the Indian Stamp Act, 1899 and Article 31 of the Kerala Stamp Act, 1959, defines “Gift” as an instrument of, not being settlement, will or transfer. Therefore, a valid Gift, as defined would refer to an instrument by which there is voluntary disposition of one’s existing property either movable or immovable, without consideration to another, the acceptance of which should be made during the lifetime of the donor, implying imminent vesting of the right upon acceptance. Section 123 states, how a gift is to be made. It has two parts. The earlier part deals with immovable property and the later, with movable property. Insofar as an immovable property is concerned, registration is mandatory, which is in tune with Section 17 of the Registration Act. Whereas, it is not only mandatory to register a gift of a movable property, it also can be effected by delivery. Section 126 states, as to when a gift can be suspended or revoked. This section bars unilateral revocation. Section 127 enables the donor to impose any condition in the deed, which has to be accepted for the gift to take effect or in other words, the donee without accepting the obligation, cannot be said to have accepted the gift. Section 128 deals with the liability of the donee for the debts of the donor to the extent of the property comprised therein. A conspicuous reading of the provisions would disclose that for a gift of an immovable property to be valid, it has to be registered, universal cancellation of the gift is impermissible and delivery of possession is not a condition sine qua non to validate the gift.

(ii) Insofar as a settlement deed is concerned, Section 2(b) of the Specific Relief Act, 1963, defines the same to be a non-testamentary instrument whereby, there is a disposition or an agreement to dispose of any movable or immovable property to a destination or devolution of successive interest. “Settlement” under the Indian Stamp Act and the Kerala Stamp Act under Section 2(q) refers to a non-testamentary disposition of any movable or immovable property in writing, in consideration of marriage or for the purpose of distributing the property of the settlor among his family or to those to whom he desires to provide or for the purpose of providing for some person dependent on him or for any religious or charitable purpose and includes an agreement in writing to make such a disposition. However, insofar as immovable properties, the registration is mandatory under Section 17 of the Registration Act. From the above definitions, it can be discerned that a settlement would mean a disposition of one’s property to another directly or to vest in any such person after successive devolution of rights on other(s). Further, the circumstances and reasons that led to the execution of such a settlement deed are described as its consideration, which need not necessarily be of any monetary value. More often than not, it consists of love, care, affection, duty, moral obligation, or satisfaction, as such deed are typically executed in favour of a family member. Also, a settlor is entitled to reserve a life interest either upon himself or upon others and impose any condition. The person in whose favour, a life interest is created, is permitted to use and enjoy the income arising out of such property during his life time, but has no right of alienation as the property had already vested in the settlee. The breach of any condition in the settlement, would then render the settlement void. However, there are restrictions 12 under the Transfer of Property Act,1882 on the conditions that can be imposed. Section 11 of the Transfer of Property Act, 1882 states that when by virtue of a transfer, absolute right and interest has been vested in a party, any condition restricting or directing that the property must be enjoyed in a particular manner would be void as it is repugnant to the original grant. Similarly, any condition restraining or limiting the transferee from enjoying the property is also void to that extent. Though under both the situations, the conditions are void, the interest vested already can be enjoyed absolutely as per the will of the transferee.

(iii) Will is a testamentary document dealt under the Indian Succession Act, 1925. Part VI of the Act deals with the Testamentary Succession. We will consider only the relevant provisions applicable to this case. Will is defined under Section 2(h) as a legal declaration of the intention of the testator to be given effect after his death. Such declaration is with respect to his property and must be certain. As per Section 59, every person of sound mind, not being a minor, may dispose of his property by executing a Will. Section 61 states the circumstances under which a Will is void. Section 62 enables a person to revoke or alter a Will at any time while he is competent to dispose of his property by will. Needless to say, since the Will comes into effect only after his life time, he is at full liberty to revoke or alter his earlier Will any number of times as long as he is in sound state of mind and not hit by the circumstances enumerated under Section 62. Section 63 deals with execution of the Will. As per this section, a Will must be signed by the testator or have his mark affixed by him, or by any other person in his presence and under his direction. It must also be attested by at least two witnesses in the presence of the testator, either by actually witnessing the execution of the Will by the testator or by receiving an acknowledgment from the testator that he or a person authorized by him has signed or affixed his mark. It is not necessary for the witnesses to attest at the same time. Section 70 speaks about the revocation of unprivileged will which can be revoked by marriage or by execution of another will or codicil or by writing in some other instrument clearly expressing his intention to revoke the will or by destroying the will by burning or tearing or in some other form by the testator or by his authorised person in his presence with the intention to revoke the same. Chapter VI of Part VI deals with construction of wills. The provisions consider the various rules regarding the construction of wills to determine the true intention of the testator and to ensure that object of such testament is achieved. The rules prescribe the remedy to deal with certain errors and circumstances like misdescription, misnomer and the need for causes omisus. They also lay down that the meaning is to be discerned from the contents of the entire will and every attempt must be made to give effect to every clause. Section 89 states that the later clause will prevail in case of the two conflicting clauses of gifts in the will, if they are irreconcilable.

Interplay between Gift and Settlement

(iv) The primary difference between the Gift and the Settlement is the existence of consideration in the settlement. Consideration is nothing but the quid pro quo, that each party to a contract is to perform or render a part of their obligation under the contract. In view of the fact that a gift is a voluntary disposition, it is essentially not an agreement and hence, the element of consideration is taken away from it. Settlement on the other hand is always coupled with consideration as it is mostly executed in favour of a family member. The gift or settlement of an immovable property has to be registered as per Section 17 of the Registration Act. The conditions regarding acceptance, reservation of life interest and restriction on revocation are applicable to both “gift and settlement”. The vesting of the right also takes place in praesenti in both the cases. Therefore, there is an element of gift in every settlement.

(iv) Further, in both the cases, unilateral revocation is not permitted as evident from Section 126 of the Transfer of Property Act, 1882. There can be a clause permitting such revocation in the deed. Similarly, the creation of a life interest would not affect the grant and change the character of the document. Similarly, the delivery of possession is not mandatory as in both cases. In case of a gift or settlement, it is sufficient if the donee/settlee had accepted the same during the life time of the executor of the document and such acceptance can be either express or implied, but must be visible from the conduct of the parties. Putting the donee/settlee into possession or handing over the document to the recipient can also be recognised as valid acceptance. The registration of the gift by the donee and the possession of such document will also amount to valid acceptance.

(v) In Satya Pal Anand v. State of M.P. (2016) 10 SCC 767 : (2017) 1 SCC (Civ) 1 : 2016 SCC OnLine SC 1202, the Supreme Court after considering the scope of the Registration Act, held that even if fraud is pleaded or claimed, the authorities under the Registration Act cannot unilaterally cancel the document and the parties should only approach the jurisdictional Civil Court.

Interplay between Gift and Will

(vi) A will is the declaration of the intention of the testator to give away his property. Such will comes into force after the death of the testator. 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.

Interplay between Gift, Settlement and Will

(vii) The element of voluntary disposition is common to all the three deeds. The element of gift is traceable to both “settlement” and “will”. As settled in law, 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 is pertinent to mention here 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.

(viii) 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. The nomenclature given to the document is irrelevant. 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. 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. It is possible that in a single document, there could be multiple directions in different clauses though seemingly repugnant but in reality, it could only be ancillary or a qualification of the earlier clause. Therefore, 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

(ix) It is settled law that delivery of possession is not sine qua non to validate a gift or settlement. 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. This Court in the judgment in Daulat Singh (Supra) has held that the possession of the gift itself would amount to acceptance. The plaintiff, when the suit was filed, was in possession of the original title deed. The stand of the defendants that the plaintiff took away the document later is unbelievable. Even assuming that the original deed was returned after registration, the fact that it was already acted upon, cannot be altered. Once a gift has been acted upon, the same cannot be unilaterally cancelled. As already held by us, delivery of possession is only one of the methods to prove acceptance and 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. 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. The reasons for cancellation or revocation of gift have to be proved in a court of law. Therefore, according to us, the unilateral cancellation of the document is void and as a natural corollary, the sale deed dated 19.10.1993 executed by Defendant No.1 / father also, is invalid.