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Whereas Muslim Law allows testamentary disposition in the limit of one-third, a gift intervivos (from one living person to another living person) may be made without any restriction; Muslim Law allows a man to give away the whole of his property during his lifetime.
Essential of valid gift
Writing and registration are not necessary for the validity of a gift. It may be oral or in writing. To make a gift valid the following three essentials must co-exist:
(i) a declaration of gift by the donor,
(ii) acceptance of the gift express or implied, by or on behalf of the donee, and
(iii) delivery of possession of the subject of the gift by the donor to the donee. Delivery of possession need not in all cases be actual. It should be delivery of such possession as the subject of the gift is susceptible.
In Muslim Law oral gift can validity be made. A written gift deed Hibanama need not be executed. If the oral gift fulfils the requisite conditions, viz. declaration, acceptance and delivery, the gift is complete. This declaration can be in writing and can be produced to prove the factum of a complete gift. Such declaration need not be registered.
Therefore, it was held that the document (declaration) could be understood as a declaration of the gift and it is not a document requiring to be registered.
Thus, the three essentials of a gift are:
(i) declaration of the gift by the donor;
(ii) acceptance of the gift, expressly or impliedly, by or on behalf of the donee; and
(iii) delivery of possession of the subject-matter of the gift to the donee.
Where the settlement deed created only a life interest in favour of the defendant and the executants did not say that he divested himself of the ownership over the property, it was held the document was not a gift deed.
If any of the above conditions is missing, the gift is not complete.
(i) Declaration.- Declaration does not mean simply an announcement of the gift but it also entails that the donor should have a real intention of making the gift. Gifts without intention may be sham gifts, colourable or benami transactions, etc. A gift made with intent to defraud the creditors of the donor is voidable at the option of the creditors. Such intention however cannot be inferred from the mere fact that the donor owed some debts at the time of the gift.
(ii) Acceptance.- The donee must accept the gift. This acceptance may be express or implied (that is, by conduct). But the gift of a debt to a debtor or his heir is valid without acceptance and is not invalidated by his rejection.
The acceptance of the gift must be by a person competent to accept. Till the gift in favour of the minor is accepted by a person competent to accept the gift, it cannot become valid.
(iii) Delivery of possession.- When the donor makes a declaration of a gift and the donee accepts, then the possession of the thing gifted should also given to the donee. Such delivery of possession may be actual or constructive.
Once the donee accepts the gift and was also specifically found to have been, even on the date of the gift deed, in possession of the property, it is not given to persons other than the donor, who was alive, to challenge the validity of the gift on the ground of want of delivery of possession.
If there are more donees than one, possession by one co-sharer is presumed to be in the name and on behalf of other co-sharers. If the co-sharer does not admit claim of a person believing that the real co-sharer is someone else, then he cannot be held to the put up an adverse claim to the whole of the gift property, excluding the claim of any other co-sharer. He should be considered as only expressing his doubt the title of a particular co-sharer.
Registration of gift deed could not in any way do away with the need of the delivery of possession. The delivery of possession does not mean that the donor must have physical possession of the property and must hand over that physical possession to the donee.
A gift of immovable property of which the donee is in actual possession is not complete unless the donor physically departs from the premises with all his goods chattels, and the donee formally enters into possession.
A gift of immovable property which is in the occupation of tenants may be completed by a request of the donor to the tenants to attorn to the donee, or by delivery of the title deed, or by mutation in the Revenue Register.
In case of an equality of redemption, a gift of the equality may be made validity by the mortgagor giving to the mortgagee a proper notice that the ownership in the property has been transferred to the donee, subject to the rights of the mortgagee. In such a case, physical possession need not be transferred.
Exceptions to this general rule.- There are certain cases in which delivery of possession is not necessary at all. These exceptions are as follows:
(a) Donor and donee reside in the same house.- In such a case, the donor can complete the gift without physical transfer of possession.
But mere living together does not always mean that delivery of possession is not necessary.
Similarly, even where donor and donee are living together (in the same home), though actual physical possession may not be given by donor to donee, some overt act in furtherance to hiba was essential to complete the gift.
(b) Husband to wife. -Where a married couple lives in a house which belongs to the husband, the husband may make a gift of the house to the wife, without physical delivery of possession.
When donor and donee are husband and wife and reside in the same property, gift can be completed by some overt act by the donor and donee. When the deed recites that possession has been handed over, the burden to prove to the contrary is on the person who disputes that claim. The gift deed executed in the wife's favour was held to be a valid gift under Muslim Law.
(c) Father to child: Mother to son: Guardian to ward.- No transfer of possession is necessary where a father or mother makes a gift of immovable property to their minor child. The same is the rule between guardian and ward.
The rationale of this principle is that it would be absurd if the owner of the property (that is, parent) hands over possession to himself as guardian of the child. But if a gift is made to a minor by a person other than the father or guardian, delivery of possession to the father or guardian is necessary.
A mother, who is not a legal guardian, cannot accept a gift on behalf of her minor child, if a legal guardian exists. Where the donee is regarding in the suit property along with the donor as his son, and is a major, no interference of a guardian is required.
(d) Gift to donee in possession.- Where the subject of the gift is already in the possession of the donee, the gift is complete by declaration and acceptance, without formal delivery of possession.
Who can make gifts
Every Muslim male or female who is major and sane may make a gift, provided he or she is not subject to any force or fraud. A married Muslim female can also make a gift.
Where the female is a pardanashin lady, she is presumed to be ignorant of the result of her acts. Thus, where a pardanashin lady signed a gift deed believing that it was to take effect only after her death, it was held that the transaction was not voluntary, and the deed was void.
When a competent person makes a gift but later claims to have done it under undue influence, etc., has to prove that alleged fact. In exceptional cases like those of a pardanashin lady, the onus of proof may shift to the person claiming the benefit of the gift.
If the donor is suffering from the death-illness, or maraz-ul-maut, such a gift is called a donatis mortis causa. Strictly, it is neither exactly a gift, nor exactly a legacy (will), but a mixture of both.
In order to constitute the death-illness, it is essential that-
(i) the illness must cause the death of the ill person;
(ii) the illness must cause apprehension of death in the mind of the deceased; and
(iii) there must be some external symptoms of a serious illness.
A gift made during maraz-ul-maut cannot take effect beyond one-third estate of the donor, after paying funeral expenses and debts, unless the heirs give their consent, after the donor's death. Nor such a gift can take effect, if made in favour of an heir, unless the other heirs give their consent, after the donor's death.
A gift in death-illness takes place only when the donor dies. Such a gift is subject to all the conditions necessary for the validity of a simple gift, including delivery of possession by the donor to the donee.
An insolvent may also make a hiba with bona fide intention; but a gift to defraud the creditors is voidable at their option. The mere fact that the maker of the hiba owed some debts does not raise a presumption that the hiba was made to defraud the creditors. Thus rushd (sanity), bulugh (majority), maliki (ownership) and free mind or no undue influence-are the ingredients of capacity to make hiba.
In whose favour (donee)
A gift may be made in favour of the following:
(i) Any living person who is capable of holding property.- Thus, strictly speaking, a gift to an unborn person is invalid.
(ii) Child in the womb.- A gift to an urban person may be made provided the child is born within six months from the date of the gift, because, in that case, it is presumed that the child was actually existing as a distinct entity in the womb.
(iii) Unborn person.- A gift of a limited interest in the usufruct to property (ariat) may be made to an unborn person provided that the person is in existence when the interest opens out for him.
(iv) Juristic persons.- Gifts may be made validity to such juristic persons as mosques, durgahs and charitable institutions like schools.
(v) Non-Muslims.- A gift may be made to a non-Muslim. The gift property will be subject to the personal law of the donee, once he gets possession of it.
(vi) Two or more persons.- Where a gift is made to two or more donees without diving the property, its validity is governed by the provisions of the doctrine of mushaa.
What may be given in gift
All forms of property over which control may be exercised are proper subjects of gift. These include property of ancestral or self-acquired, movable, or immovable, corporeal or incorporeal nature.
A corporeal thing means that which exists in material form whereas incorporeal property means that which does not exist in material form. Hiba of incorporeal property can also be made.
A hiba is a transfer of ownership without consideration. A hiba-bil-ewaz is a transfer of ownership for a consideration. An areeat is not a transfer of ownership, but a temporary licence to enjoy the profits so long as the grantor pleases. A hiba is revocable except in certain cases. A hiba-bil-ewaz is not revocable in any case. An ariyat is revocable in every case.
(e) Gift of mushaa.- Mushaa has been defined as an undivided share in an immovable or movable property.
As delivery of possession is one of the essentials of a valid gift, thus the possession to be delivered must be separate and exclusive. Hence, gift of an undivided share (mushaa) in a thing capable of division is void. According to Shafii and Shiite view, however, the gift of mushaa is valid, provided that the donor, after withdrawing his control from the subject-matter of gift, delivers it to the donee.
Mushaa in law denotes the mixing up of the proprietary rights of more than one person in a thing (as in joint ownership), where each co-owner has a right until partition of the property.
Mushaa may be of two types: those joint properties which are indivisible, and those divisible.
Where property is indivisible.- A gift may be validly made of an undivided share (mushaa) in a property which is incapable of being divided; or where the property can be used to better advantage in an undivided condition, such indivisible things may be a staircase, small house or small bath.
Where property is divisible.- The gift of mushaa of a property which is capable of being divided is irregular but not void. Subsequent division and delivery of possession renders the gifts as valid.
There are six exceptions to this general rule.
Exception I.- Where the gift is made by one co-heir to another.
Exception II.- Where the gift is of a share in a Zamindari or taluka.
Exception III.- When the gift is to two or more persons.
Exception IV.- Where the gift is of a share in freehold property in a large commercial town.
Exception V.- Where the gift is of shares in a Land Company.
Exception VI.- Where a property is gifted out of the absolutely to a person with a condition that he shall make certain periodical payments out of the recurring income of the property, such payments are not governed by the doctrine of mushaa.
Devices against doctrine of mushaa.- Where the divisible property is not divided the gift of such property is rendered only fasid (irregular) but not batil (void) by the application of the doctrine of mushaa. Therefore it is possible to employ a device in order to get over the defect. The donor may first sell the property to the donee at a fixed price and then absolve him of the debt, that is the price.
Conditional, contingent and future gifts
The conditional gifts may be of two types: (i) conditional gifts; and (ii) gifts with conditions.
(i) Conditional gifts.- Conditional gifts or gifts that are suspended on a condition are invalid, unless the condition is such that it can be fulfilled immediately, in which case it constitutes the acceptance.
(ii) Gifts with conditions.- If a gift is made subject to a condition which hampers in the way of fill ownership of the gifted property, the gift is valid, but the condition is void.
Contingent gift.- A gift cannot be made to take effect on the happening of a contingency, i.e., a future uncertain event. Gifts of insurance policy, though of contingent nature may be effectively made by virtue of Section 38(7) of the Insurance Act, 1938. Further Section 39(5) provides that in the case of the death of the nominee before the maturity of the policy, the amount of the policy, the amount of the policy is payable to the holder.
Gift in futuro.- A gift cannot be made so as to take effect at any future time, whether such time is definite or indefinite.
Gifts in the form of trust
The basic concept of gift in Islam is that the donor should transfer the whole bundle of rights (ownership) which he possesses over the corpus to the donee; delivery of possession is therefore essential. But if the donor transfer the corpus with a simple condition (which the donee accepts) to receive the recurring income of the corpus during his life, the gift and the condition are both valid.
The principle described and illustrated above has been extended by the Courts in India to cases where a gift is made subject to the condition that the donee shall pay the income to a person nominated by the donor during the life of such person.
Revocation of gift
According to Muslim Law, all voluntary transactions are revocable; hence, gifts may also be revoked. There is, however, a difference between completed and incompleted gifts; i.e. after or before the delivery of possession.
Before delivery.- A gift may be revoked by the donor at any time before delivery of possession. The reason is that the gift is no gift before delivery of possession, and hence, the rules relating to gifts do not apply over it.
After delivery.- When a gifts is made and the subject-matter of the gift is duly transferred to the possession of the donee, its revocation is only possible (a) by the intervention of the court of law, or (b) by the consent of the donee; a mere declaration on the part of the donor is not enough.
The following completed gifts cannot be revoked even with the consent of the donee, or intervention of the court:
(i) where it is made by the husband to his wife, or vice versa;
(ii) where the donor and donee are related to one another within the prohibited degrees by consanguinity;
(iii) where the donor or donee dies;
(iv) where the thing given is destroyed or lost;
(v) where the thing given has passed out of the donee's possession by sale, gift or otherwise;
(vi) where the thing given has been increased in value;
(vii) where the thing given is so changed that it cannot be identified (for example, when wheat is grinded into flour);
(viii) where the donor has received a return (ewaz) for the gift;
(ix) where the motive of the gift is religious or spiritual, for in this case the gift amounts to sadaqa.
Gifts involving return (ewaz)
(1) Hiba-bil-ewaz.- After the gift has been made, the donee may offer to make a reciprocal gift, to the person making the primary gift, then the reciprocal gift is called the ewaz or return for the primary gift. If this return gift is accepted then it is Hiba-bil-ewaz (or gift with return).
Indian form of Hiba-bil-ewaz.- There is an Indian form of Hiba-bil-ewaz, as distinguished from the classical concept described above, where (i) delivery of possession is not necessary, and (ii) an undivided share in property capable of division (mushaa), may be transferred. Although this goes counter to the classical concept, nevertheless the anomaly is now so well established in India that the Indian Courts generally give recognition to them. Two essential requirements are (1) actual payment of ewaz by the donee, and (2) donor's bona fide intention to part with the property in praesentie. As to the first, adequacy of consideration is not material; even a copy of the Koran is a good consideration; but mere promise to pay is not; nor is "love and affection" or 'relationship'. As to the second, when property was transferred to the donee subject to a reservation of the possession and enjoyment to the donor and his wife during their lives, if there was no intention on the part of the donor to divest himself in praesenti of the property and the transaction could not be upheld as a Hiba-bil-ewaz.
By Mukasa (bay' al-muqasal).- This is a transfer of property by the husband to the wife in lieu of mahr, and an agreement by the wife not to claim dower. It is in Indian law a sale and the formalities of the law of gift, like possession, need not be followed strictly; but registration is necessary where immovable property is concerned, and such a gift cannot be made orally.
(2) Hiba-ba-shart-ul-ewaz.- When a gift is made with a stipulation (shart) for a return (ewaz), it is called hiba-ba-shart-ul-ewaz. The distinctions between a hiba-bil-ewaz and hiba-ba-shart-ul-ewaz are (a) that informer the intention to make an ewaz is an afterthought; (b) while in the latter the two go hand in hand; (c) the return is contemplated by both parties in the hiba-ba-shart-ul-ewaz. In the hiba-bil-ewaz, it is the donee under the primary gift who of his own accord thinks of making a return, and offers it to the primary donor, while in hiba-ba-shart-ul-ewaz, there is stipulation for a return before making the gift.
Where a hiba-ba-shart-ul-ewaz is made, and the stipulation is unlawful both the gift and the stipulation are void. After the gift and the return have been completed by delivery of possession, neither of them can be revoked. The return gift must be made with all the formalities necessary for hiba, i.e., offer, acceptance and delivery of possession.
Distinction between life estate and life interest
The ayn is the substance of a thing. e.g. a plot of land, a house, a camel or a book. Manafi (singular manafaa) is literally the profits or produce. It means, not the thing itself, but its use, benefit produce or profits; e.g., the right to reside in a house, the right to fish in the pond, the right to take the produce, fruits of a garden, the recurring income of partnership, dividends on shares, interests on government loans or stock.
The right to take the produce is intimately connected with the notice of time, or duration; therefore, you many transfer the manafi (usufruct) for a specific duration, time. But the notion of time-limit does not govern the transfer of corpus, ayn; the notice is that it is the absolute transfer of ownership, and is therefore for an indeterminate duration, in simple words-forever.
Now hiba is a transfer of the corpus; hence the rule that hiba cannot be cut down by a repugnant condition of time-limit. Therefore according to Muhammadan Law as received in India, you can make gift of the corpus, ayn. Or you may make gift of the usufruct, ariya, wasiyat-bil-manfi, tawrith, etc., these are the ways of making gift of usufruct. A life interest may therefore be considered as a transfer of the usufruct for a well-defined period.
Limited interests have long been recognised under Shia Law. In dealing with a gift under Muslim Law, the first duty of the court is to construe the gift. If it is a gift of the corpus, then any condition which derogates from absolute dominion over the subject of the gift will be rejected as repugnant; but if on construction the gift is held to be one of a limited interest the gift can take effect out of the usufruct, leaving the ownership of the corpus unaffected except to the limited interest.
Life interest.- In Muslim Law, therefore, both the corpus (ayn) and usufruct (manafi) of a property can be the subjects of gift. A gift of the usufruct for a definite period is called life interest. Life interest may be created in the following ways:
(i) By family wakfs;
(ii) By will;
(iii) By the rule in Umjad Ali Khan case;
(iv) By the rule in Ashraf Khan case;
(v) By Nawazish Ali Khan case; and
(vi) By family settlements.
(i) By family wakfs.- A makes a wakf of his property for the benefit of his children and descendants, and on the extinction of the line of his lineal descendants, to a school.
(ii) By will.- A life interest can be created by will. Thus, if a life interest is given by will to A for life, and thereafter to B, the life interest in favour of A is valid.
(iii) By the rule in Umjad Ali Khan case.- The point in issue in this case was: whether a real transfer of property by a donor in his lifetime under the Muslim Law, reserving not the dominion over the corpus of the property, nor any share of dominion over the corpus, but simply stipulating for and obtaining a right to the recurring produce during his lifetime, is an incomplete gift by the Muslim Law?
Their Lordships of the Privy Council held both the gift and the condition as valid. This is a recognition of life interest.
(iv) By the rule in Ashraf Khan case
(v) By Nawazish Ali Khan case
(vi) By family settlements.- An agreement settling disputes between the parties of a family, and which also involves a transaction for a consideration, is called "family settlement". Life interest may be created by such agreements.