Under the Transfer of Property Act, 1882, a conditional gift involves transferring ownership of property under terms specified by the donor. The act, specifically in Sections 122 and 126, outlines the requirements and legal implications of such gifts, explaining how conditions affect the completion or revocation of a gift. The nature of these conditions significantly impacts the rights of both the donor and donee, especially in cases of non-fulfillment.

Essential Characteristics of Conditional Gifts

Nature of Condition

• A conditional gift is either bound by a condition precedent or condition subsequent.
• Condition Precedent: Requires the donee to fulfill specific terms before the gift transfer takes effect.
  • Example: A donor may stipulate that a donee complete education or reach a certain age before receiving the gift.
• Condition Subsequent: Allows the gift transfer immediately, but the donor retains a right of reversion if certain conditions aren’t met or are violated after the transfer.
  • Example: The donee should not sell the gifted property or should use it for a particular purpose.

Legal Effect of Conditions

• Condition Precedent: If the donee fails to meet the specified condition before the transfer, the gift remains incomplete and does not pass to the donee.
• Condition Subsequent: If the condition is breached after the transfer, the gift may be revoked, meaning ownership reverts to the donor. However, the conditions must be reasonable, clear, and not impose an impossible or unlawful obligation.

Void Conditions and Unlawful Restrictions

• According to Section 126, conditions that are impossible, illegal, or against public policy are void.
  • For instance, requiring a donee to commit an illegal act as a condition for retaining the gift would make the condition invalid, though the gift itself might still remain valid.
• Conditions that attempt to place an absolute restriction on the donee's ownership rights, such as permanently restricting the donee from selling the property, are void as they oppose the basic principle of ownership freedom.

Legal Consequences of Non-Fulfillment of Conditions

• The non-fulfillment of a condition affects the enforceability and ownership of the gift.
• If the condition precedent is not met, the gift does not take effect; the donor retains ownership, as the transfer is incomplete.
• In contrast, a breach of condition subsequent allows the donor to legally reclaim the property through revocation. For such revocations, the donor may pursue legal action, which might involve court intervention, especially in cases of disputes about compliance with the condition.

Judicial Interpretations and Case References

• K. Balakrishnan v. K. Kamalam (2004) 1 SCC 581: The Supreme Court clarified that a condition precedent, if unmet, renders the transfer invalid. Here, the donor's stipulation was a legitimate condition precedent, and its non-fulfillment negated the transfer.
• Uma Devi Nambiar v. T.C. Sidhan (2004) 2 SCC 321: The Supreme Court upheld that a conditional gift with a condition subsequent could be revoked if the stipulated terms were not maintained. The court highlighted that if the donor’s intent to make the gift conditional was clearly stated, the donee's failure to meet that condition warranted revocation.
• Vishwambhar v. Laxminarayan, AIR 2001 SC 2607: The Court noted that conditions that are impossible or ambiguous could render the condition unenforceable, although the gift itself may remain valid.

In summary, conditional gifts under the Transfer of Property Act, 1882 provide a unique mechanism for donors to impose specific requirements on the donee. The legal implications depend significantly on whether the condition is precedent or subsequent, as well as the reasonableness and lawfulness of the condition itself. Courts have reinforced that clear intent and feasible conditions are vital for enforcing conditional gifts. Non-fulfillment of these conditions allows the donor certain rights to revoke or prevent the transfer, ensuring that gifts adhere to the donor's specified intentions.

Written By: Prithwish Ganguli, Advocate
LLM (CU), MA in Sociology (SRU), MA in Criminology & Forensic Sc (NALSAR), Dip in Psychology (ALISON), Dip in Cyber Law (ASCL), Dip in International Convention & Maritime Law (ALISON), Faculty, Heritage Law College, Kolkata