N.P. SASEENDRAN versus N.P. PONNAMMA & ORS.

Summary

A registered deed of 1985 by which a father conveyed property to his daughter 'in consideration of love and affection', reserving to himself and then his wife a life interest in the income and a limited right to mortgage up to Rs. 2,000, while permitting the daughter to build, pay taxes and obtain a purchase certificate from then on, is a gift by way of settlement vesting title in praesenti, not a Will. Reservation of a life interest or postponement of possession does not make a deed testamentary; delivery of possession is not essential to a gift, and the daughter's receipt and registration of the deed proved acceptance. The father's unilateral cancellation deed and the later sale to his son were therefore void, and the High Court's decree in the daughter's favour was affirmed.

Issues

1. Whether the registered 'Dhananischayaadharam' of 26.06.1985 executed by the father in favour of his daughter was a gift or settlement operating in praesenti or a Will taking effect on his death.
2. Whether the reservation of a life interest in the income and a limited right to mortgage, and a clause permitting the daughter to possess and reside in the property after the lifetime of the parents, postponed the vesting of title so as to render the document testamentary.
3. Whether the gift was accepted and acted upon during the donor's lifetime, delivery of possession not having been made.
4. Whether the donor could unilaterally cancel the deed by a registered cancellation deed and thereafter sell the property to his son.
5. Whether the Supreme Court could entertain the appeal despite the plea that no substantial question of law arose.

Provisions considered

• Section 122, Transfer of Property Act, 1882A gift is a voluntary transfer of existing property without consideration, accepted by or on behalf of the donee during the donor's lifetime. The Act prescribes no mode of acceptance; it may be inferred from conduct, such as possession of the deed or its registration by the donee. The daughter's receipt of the original deed and presentation of it for registration satisfied the requirement. (¶¶ 11, 11.3, 16, 18)
• Section 123, Transfer of Property Act, 1882A gift of immovable property must be made by a registered instrument signed by the donor and attested by two witnesses; delivery of possession is not an additional requirement, so retention of possession by the donor under a life interest does not invalidate the gift. (¶¶ 11, 11.3, 18)
• Section 126, Transfer of Property Act, 1882A validly accepted gift (or settlement) cannot be unilaterally revoked except as the section permits or as the deed itself provides; absent any reserved power to cancel, the executant's cancellation deed was void and the Sub-Registrar had no authority to register it. Grounds for revocation must be proved in court. (¶¶ 11, 11.3, 18)
• Section 11, Transfer of Property Act, 1882Where an absolute interest is created, a later direction restricting its enjoyment is void as repugnant to the grant. Even if the clause allowing the daughter to possess and reside after the parents' lifetime were read as repugnant to the earlier absolute conveyance, it would be discarded and the earlier clause would prevail. (¶¶ 11.1, 15.2)
• Section 41, Transfer of Property Act, 1882After the conveyance, the father holding a life interest was only an ostensible owner in possession, the true owner being the daughter. (¶¶ 15.1, 16)
• Section 2(b), Specific Relief Act, 1963'Settlement' is a non-testamentary instrument disposing of property or creating successive interests; read with the Stamp Act definitions, a settlement is typically made for a family member for consideration such as love, affection or moral duty, may reserve a life interest and impose conditions, and vests the property in praesenti. (¶¶ 11.1, 11.3, 15.1)
• Article 33 / Article 31 (Gift) and Section 2(q) (Settlement), Indian Stamp Act, 1899 and Kerala Stamp Act, 1959Used to define 'gift' as an instrument not being a settlement, will or transfer, and 'settlement' as a non-testamentary disposition in consideration of marriage, for distributing property among family, providing for dependants or for religious or charitable purposes. (¶¶ 11, 11.1)
• Sections 2(h), 59, 62, 63, 70 and 82 to 89, Indian Succession Act, 1925A Will is a declaration of intention to take effect after death, revocable at any time while the testator is competent, and must be executed and attested as prescribed; the rules of construction require reading the whole instrument to give effect to every clause. The test distinguishing a Will from a gift or settlement is whether the disposition takes effect in praesenti or only on death. (¶¶ 11.2, 11.4, 11.5, 14.1)
• Section 17, Registration Act, 1908A gift or settlement of immovable property must be registered, but registration cannot by itself convert a Will into a settlement, since a composite document with gift and testamentary parts is also registered; the nature of the document is derived from its contents. (¶¶ 11, 11.1, 11.3, 14, 14.1)
• Articles 133 and 142, Constitution of IndiaThe plea that no substantial question of law arose was rejected: the appeal to the Supreme Court and the High Court's second-appellate interference both rest on the existence of a substantial question of law, and the Court in any event has power under Article 142 to do complete justice. (¶ 8)

Held

• The real and only reliable test for distinguishing a gift or settlement from a Will is whether the document transfers an interest in praesenti or defers the disposition until the executant's death. Nomenclature and registration are not decisive; the document must be read as a whole, harmoniously, giving effect to every clause, and where its nature is ambiguous the executant's subsequent conduct may also be considered. A composite document may operate partly as a settlement and partly as a Will. (¶¶ 11.5, 12, 13, 14, 14.1)
• A settlor may reserve a life interest for himself or others and impose conditions; reservation of a life interest or postponement of physical delivery of possession does not convert a present conveyance into a Will, since the property has already vested in the settlee. The primary difference between a gift and a settlement is the presence of consideration (such as love, affection or moral obligation) in a settlement; both must be registered, both vest in praesenti, both require acceptance in the executant's lifetime and neither can be unilaterally revoked, so there is an element of gift in every settlement. (¶¶ 11.1, 11.3, 11.5)
• The 1985 deed, conveying the property 'in consideration of love and affection' with immediate rights in the daughter to construct, pay taxes and obtain a purchase certificate, while reserving to the father and then the mother only the income during their lives and a limited right to mortgage, effected an absolute conveyance in praesenti and is a gift by settlement. The clause permitting the daughter to reside in the property with full rights of transfer after the parents' lifetime is an ancillary qualifying clause, not a repugnant postponement; even if repugnant, the earlier absolute disposition prevails and the later clause is void under Section 11. (¶¶ 15, 15.1, 15.2, 16, 19)
• Delivery of possession is not a sine qua non for a valid gift or settlement; it is only one way of proving acceptance. Acceptance may be inferred from conduct, including the donee's receipt of the original deed and its registration. The daughter's registration of the deed, possible only if the father handed it to her, and her possession of the original title deed when the suit was filed, established acceptance under Section 122; the life interest reserved explained why she did not reside in the premises. (¶¶ 11.3, 18)
• Once a gift or settlement has been accepted and acted upon, it cannot be unilaterally cancelled in the absence of a reserved power of revocation; the grounds for revocation must be proved in court. The registered cancellation deed of 1993 was void, the Sub-Registrar had no authority to register it, and the sale deed of the same date in favour of the son was consequently invalid. Mutation of revenue records in the son's favour did not confer title. (¶¶ 11, 11.3, 18)
• The appeal was entertained despite the plea that no substantial question of law arose, since both the High Court's interference with concurrent findings and the appeal to the Supreme Court depend on such a question and the Court also holds power under Article 142 to do complete justice. (¶ 8)

Result

Leave granted; appeal dismissed; High Court's judgment construing the 1985 deed as a settlement, declaring the daughter's title and holding the 1993 cancellation deed and sale deed not binding on her, confirmed. Parties to bear their own costs.