Legal Guide

All about the Cancellation of the Gift Deed

by Bhavya Choudhary · 3 min read

cancellation of the gift deed

Giving property to your loved ones to show gratitude is known as gifting. Indian law permits you to gift your property to anybody you choose. When making a gift, the donor transfers ownership of a property to the “donee” without asking for anything in return.

A person may, however, occasionally rethink their choice to give an expensive item as a gift. The donor has the right to cancel the gift transaction for various reasons, including the receiver’s inability to keep his word or refusal to accept the Gift. In this blog, we will read all the factors that can lead to the Cancellation of a Gift Deed. 

Revocation/Cancellation of a Gift Deed

The cancellation of a Gift Deed and return of the property to the donor are both included in the revocation of the Gift. The provisions governing the cancellation of Gift Deeds for the moveable property are under Section 126 of the Transfer of Property Act.

The donor may consent to the Cancellation of a Gift Deed following this clause. This may happen as a result of a clause in the Gift Deed, a mutual agreement between the parties, or the occurrence of an event listed in the Deed. 

A gift transaction can be revoked if the donor signed the document under duress, such as when they were intoxicated or under duress. You might consult a lawyer to assist you in filing a lawsuit in court to reclaim your property if the Donee refuses to return the gifts.

Reasons for Cancellation of a Gift Deed

Certain circumstances may lead to the Cancellation of a Gift Deed: 

  • By Mutual Agreement: A gift transaction may be canceled or revoked by mutual agreement between the donor and Donee. This can be accomplished by including such terms in the donation deed. 

Even if it isn’t stated in the Deed, the condition needs to be made in mutual agreement and understood by both parties. The gift transaction may be mutually canceled, in which case the Donee must return the property to the donor.

  • When the Donee refuses to Accept the Gift: When a property is gifted, the donor, who is the legal owner of the property, transfers ownership in their favor, and the Donee accepts the Gift. 

It may lead to the Cancellation of a Gift Deed if the giver rejects the present or does not indicate that he accepts it. If the recipient of the Gift declines it, the gift transaction cannot be verified.

  • Via rescissions – Just like a contract, a gift can be given subject to restrictions and revoked if those requirements are not met. Such terms must be specifically stated in the donation agreement. 

Cancellation of a Gift Deed is the right of the donor to reclaim possession of the property upon the occurrence of a certain event or the Donee’s failure to satisfy a condition. The giver only has three years from the event date to cancel the gift transaction.

  • When the donor’s permission was obtained by coercion or deceit – A gift is an uncompensated transfer made willingly by the donor. Similar to a contract, a transaction like this can be canceled if it can be shown that the donor’s permission was not given voluntarily. The donor can seek legal consultation to terminate the contract and prove any case of coercion. 
  • The donor might cancel the Deed of Gift if the donor’s assent is acquired by force, fraud, undue influence, or deception. The donor has three years from the day when the facts were discovered to cancel the donation transaction. 
  • If the donor approves the Gift, either explicitly or implicitly, by his actions, the ability to rescind the transaction may also be forfeited.
  • Additional reasons for Cancellation of a Gift Deed: A Gift Deed’s forgery is a recognized reason for the Cancellation of a Gift Deed. Additionally, if the Gift Deed is not recorded, it might be revoked.

Therefore, the aforementioned are the justifications for the Cancellation of a Gift Deed.

Other Reasons for Cancellation of a Gift Deed

By bringing a lawsuit for Cancellation of a Gift Deed, a Gift Deed might be revoked for the reasons listed below:

  1. Failure or a lack of concern, such as the Donee failing to fulfill their obligation to look after the donor.
  2. An unregistered deed of Gift.
  3. Inadequate payment of stamp duty
  4. An improper attestation of a Gift Deed may lead to the Cancellation of a Gift Deed.
  5. The donor did not sign the Gift Deed is also one of the reasons for the Cancellation of a Gift Deed.
  6. The Gift relates to future real estate.
  7. Minor’s Gift.
  8. A donor who refused to accept the Gift Deed.
  9. The Gift wasn’t accepted while the donor was alive.
  10. A provision in the Deed prevents the Donee from acquiring ownership.
  • The Gift Deed may be revoked by one of the parties by filing a suit for cancellation of the Gift Deed with little court costs. Anyone who wishes to declare the Gift Deed invalid must file a Declaration Suit even if they are not a party to the Deed.
  • According to Article 59 of the Limitation Act, 1963, a person who seeks to have the Gift Deed canceled (the plaintiff) has three years from the day he or she learns of the fact that entitles him to do so to have the Gift Deed cancelled or set aside. 
  • If a lawsuit is not filed within 3 years, a request for a delay pardon may be made per Section 5 of the Limitation Act.
  • However, it should be noted that according to Articles 64 and 65 of the Limitation Act, a person who has been in adverse possession of the property for 12 years acquires the title to the property, and possession cannot be regained from him after that period. 
  • Accordingly, the maximum period for cancellation of a Gift Deed and regaining possession is 12 years from the date that adverse possession becomes known, even if the delay is excused.

Conclusion 

Several factors can cause the cancellation of a Gift Deed. The reasons vary according to the given situation and per law and regulations under section 126 of the Transfer of Property Act.

It cannot be revoked unless the conditions for revocation are met or the Donee has accepted the property from the donor by any kind of duress coercion. The parties can clear the issue by taking legal consultation to solve the matter at hand with the help of a property expert lawyer.

The cancellation or termination can be done by mutual consent of the donor and the Donee. They might decide to add a terminating clause in the Gift Deed for future occurrences. The Deed can be drafted or canceled with the help of a property expert lawyer.

Bhavya Choudhary

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Bhavya Choudhary

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