Supreme Court Upholds Settlement Deed as Gift, Declares Revocation Invalid
Last Updated on March 26, 2025 by Athi Venkatesh
The Supreme Court ruled that a property transfer made out of love and affection, with the donor retaining life interest, qualifies as a settlement deed in the form of a gift. Once the donee accepts the gift, the donor cannot revoke it unilaterally. The Court clarified that merely reserving a life interest and delaying possession does not turn the document into a Will.
The Court emphasized that possession delivery is not mandatory to validate a gift or settlement. Under Section 41 of the Transfer of Property Act, the donor retains only ostensible ownership. Registration and acceptance of the gift deed fulfill the legal requirement under Section 122 of the Transfer of Property Act, 1882.
A dispute arose when a father, after executing a registered settlement deed in favor of his daughter in 1985, later revoked it in 1993 and sold the property to his son. The daughter challenged the revocation and sale, seeking a declaration of ownership. The Trial Court and First Appellate Court ruled in favor of the father, considering the deed a Will. However, the High Court overturned these decisions, recognizing it as a gift deed.
Supreme Court’s Verdict
The Supreme Court upheld the High Court’s ruling. It reaffirmed that a gift is a voluntary, irrevocable transfer once accepted. The Court differentiated between a gift, settlement, and Will. It stated that a settlement deed, made out of love and affection, immediately vests ownership in the donee, even if the donor retains life interest.
Key Observations
The Court held that:
- A registered settlement deed that transfers ownership but retains life interest is a gift, not a Will.
- The donor’s continued enjoyment of property income does not negate the donee’s title.
- A gift, once accepted and registered, cannot be unilaterally revoked.
The Court invalidated the father’s revocation and subsequent sale to the son. It ruled that the daughter’s ownership under the 1985 settlement deed remained intact. The appeal was dismissed, and the High Court’s decision was upheld.
