Yes. A Gift deed being an instrument for transferring the rights in the property can be challenged in India.
Gift: A gift is a gratuitous transfer of property by a donor to a donee voluntarily.
Gift Deed: A legal document describing the transfer of property. A gift deed is an agreement between the two parties (donor and donee) for transfer of right in the property.
Essentials to make a gift valid:
- Property: The property to be gifted can be moveable or immovable. It must be an existing property. Future property cannot be transferred
- Acceptance of gift: The gift has to be accepted by the donee or on his behalf. If the gift is not accepted during the lifetime of the donor, it is invalid. If the donee dies without accepting the gift, it becomes void.
- Parties must be competent to contract: Donor has to be a person capable of making a contract. A minor cannot be a donor. However, a minor can be a donee. In such a case, the gift has to be accepted by a guardian on his behalf.
- Consideration: There is no consideration in gift. There can be a conditional gift such that the condition is not based on donor’s will or pleasure. The conditional gifts are incomplete until conditions are complied with.
- Voluntarily: Gift has to be made with free consent. Free consent implies the absence of :
- Undue influence
- Registration: A gift deed made for transferring immovable property has to be registered compulsorily as per The Registration Act, 1908. The gift deed has to be signed by the parties and attested by two witnesses.
When we gift any moveable property, gift deed is not mandatory. The gift deed even if made, may or may not be registered but delivery and acceptance is a must.
Grounds for challenging the Gift Deed:
A gift deed can be challenged if any of the above mentioned legal requirements for making a gift transaction valid have not been complied with, like:
- Consent was not free.
- Gift deed not executed and registered as per legal provisions
- Parties not competent to contract
- Consideration is present.
- Acceptance not made
- If the gift is conditional and the condition is not fulfilled, gift deed can be revoked.
Revocation of gift deed:
- Gift deed can be revoked by the donor for any legally valid reason as available for rescinding the contract.
- Revocation by agreement – Donor and donee may agree at the time of making the gift that the gift can be revoked on the happening of an event which is not dependent on the will of the donor. The condition for revoking the gift should be made clear to the donee at the time of executing the gift deed. The unilateral revocation of the gift is not possible.
- If the gift is incomplete and the title remains with the donor, the gift deed can be cancelled by the donor.
When to file suit for cancellation of gift deed:
A civil suit for cancellation of a gift deed can be filed within three years of coming to the knowledge of the fact that there exists a ground to challenge the gift deed.
A gift deed can also be cancelled by executing a cancellation deed if both parties agree.