Gift Cannot Be Revoked Merely Because Donee Fails to Maintain Donor: Supreme Court

The Supreme Court of India has held that the failure of a donee to maintain the donor does not by itself create a legal ground to revoke a gift deed under Section 126 of the Transfer of Property Act, 1882, unless the right to revoke was expressly reserved in the document itself.

A bench of Justices Sanjay Karol and Satish Chandra Sharma made these observations while dismissing a special leave petition filed by J. Radha Krishna, challenging the judgment of the Andhra Pradesh High Court dated November 15, 2012.

The High Court had reversed the findings of the trial and appellate courts, upholding the validity of a gift deed executed in favour of the respondent, Pagadala Bharathi, who was referred to as the foster daughter of the original donor, K.V.G. Murthy.

The central question before the Court was whether a gift deed could be revoked due to the donee’s failure to fulfil an alleged promise to maintain the donor. The Court answered in the negative, ruling that there must be clear agreement or reserved right in the gift deed itself to invoke revocation under Section 126.

“The failure of the donee to maintain the donor as undertaken by him in the document is not a contingency which could defeat the gift,” the Court said, adding, “All that could be said is that the default of the donee in that behalf amounts to want of consideration.”

It added that Section 126 itself bars revocation of a gift deed for failure of consideration, and that if the donor is aggrieved, the proper remedy lies in pursuing a claim for maintenance rather than unilaterally cancelling the gift.

Background of the Case

The dispute began with the execution of a gift deed dated January 10, 1986, by K.V.G. Murthy in favour of Pagadala Bharathi. The donor later cancelled the deed through a cancellation document dated December 30, 1986, and eventually executed a will in favour of his nephew on September 30, 1992.

The appellant (Radha Krishna) contended that the original deed was more in the nature of a settlement, and was subject to the condition that Bharathi would care for the donor in his lifetime. The donee’s failure to do so, according to the appellant, justified the cancellation.

However, the High Court rejected this argument, stating that the evidence merely showed a “hope” or “expectation” that the donee would care for the donor, not a binding legal condition attached to the gift.

Agreeing with the High Court’s analysis, the Supreme Court found that there was no legal flaw in the conclusions drawn.

“It is not open to a settlor to revoke a settlement at his will and pleasure,” the Court said, adding that revocation requires proper legal grounds and must be sought through a court of law, not through unilateral action.

The bench concluded that there was no evidence of an agreement between the donor and donee reserving the right of revocation, and thus Section 126 could not be invoked.

“In our considered view, the findings remained unimpeachable from the evidence led by the parties. It cannot be said that the same are in any manner perverse or based on incorrect reading, application or interpretation of the statute.”

Having found no substantial question of law, the Supreme Court refused to interfere, upholding the validity of the gift deed in favour of the donee.

Case Title: J Radha Krishna v. Pagadala Bharthi & Anr.