Gift Deed Once Executed Cannot Be Cancelled Without Reserved Right: Supreme Court

The Supreme Court of India recently upheld a decision by the Andhra Pradesh High Court, ruling that gift deed once executed cannot be cancelled without Reserved Right, unilaterally unless a specific clause allows for such revocation, as per Section 126 of the Transfer of Property Act, 1882. The Court dismissed Civil Appeal No. 1834 of 2015—J. Radha Krishna vs. Pagadala Bharathi & Anr.—which challenged the High Court’s judgment dated 15 November 2012 in Second Appeal No. 1459 of 2005.

Background of the Dispute

The case originated from a deed executed on 10 January 1986 by K.V.G. Murthy, who referred to Pagadala Bharathi as his foster daughter. This deed, titled as a “gift deed” (Exhibit B.1), conveyed certain property in her favour. However, on 30 December 1986, Murthy executed a cancellation deed revoking the earlier gift. Later, in 1992, he drafted a Will in favour of his brother’s son—J. Radha Krishna, the appellant in this matter.

While the trial court and the first appellate court accepted the Will and ruled in the appellant’s favour, the High Court reversed their findings. It held that the original gift deed remained valid and enforceable, as there was no legal basis for its unilateral revocation.

Legal Questions Considered

The High Court considered three key issues:

1. Whether the lower courts’ decisions were contrary to Section 126 of the Transfer of Property Act;
2. Whether the judgments were legally flawed or unsupported by evidence;
3. Whether an unregistered Will in favour of a relative could override a previously registered gift deed made to a non-family member.

Supreme Court’s Observations

A Bench of Justices Sanjay Karol and Satish Chandra Sharma examined the validity of the gift deed and its revocation. The Court stressed that a gift deed can only be revoked under Section 126 if a condition for revocation was explicitly agreed upon by both parties. In this case, there was no such stipulation in the deed.

Testimony from the plaintiff indicated that the gift may have been made in the expectation of future care by the donee. However, since there was no contractual obligation or conditional clause in the deed linking the gift to such care, the Court held that these expectations were insufficient grounds for revocation.

The Court reaffirmed earlier precedents—such as Namburi Basava Subrahmanyam v. Alapati Hymavathi and M. Venkatasubbaiah v. M. Subbamma—that once a valid and unconditional gift is made, it cannot be nullified later by executing a fresh document or Will, unless allowed under law.

Final Verdict

Concluding that the High Court’s interpretation was both sound and evidence-based, the Supreme Court dismissed the appeal. It held that the unilateral cancellation of the gift deed lacked legal validity and reiterated that a donor must follow proper legal procedures if they wish to revoke such a transfer.

Case details: [J. Radha Krishna vs. Pagadala Bharathi & Anr. Case No.: Civil Appeal No. 1834 of 2015]