A conditional gift is a gift made under a condition that must be fulfilled for the gift to take effect. Under the Transfer of Property Act, 1882 (TPA), particularly in Section 123, a gift is defined as the voluntary transfer of property from one person (the donor) to another (the donee) without any consideration, i.e., a gift is essentially a transfer without any exchange of money or anything in return.

A conditional gift occurs when the donor makes the transfer subject to a condition, meaning that the gift will either take effect or not, depending on whether the specified condition is fulfilled. Conditions attached to a gift can range from simple requirements to more complex stipulations.

The Transfer of Property Act, 1882 does not explicitly deal with conditional gifts, but it is understood through judicial interpretation and the general principles of property law. Section 123 of the TPA provides that gifts must be made by a deed of gift and requires the donor's intent to be clearly expressed. In cases of conditional gifts, the interpretation of conditions, their fulfilment, and the consequences of non-fulfilment are governed by general contract principles, along with Section 25 of the TPA and relevant case law.

Types of Conditions in Conditional Gifts

Conditions attached to gifts can be of two types:

• Condition Precedent: A condition precedent is one that must be satisfied before the gift can take effect. If the condition is not fulfilled, the gift does not become valid. Example: A donor may gift a house to a donee provided the donee marries within a year. If the donee does not marry within the specified time, the gift is not valid.
• Condition Subsequent: A condition subsequent is one that takes effect after the gift has already been made. If the condition is not fulfilled after the gift has been completed, the gift may be revoked or cancelled. Example: The donor may give a property to a donee on the condition that they do not sell the property. If the donee sells it, the gift may be revoked.

Legal Implications of Conditional Gifts

The legal implications of conditional gifts under the Transfer of Property Act are significant. Depending on whether the condition is precedent or subsequent, different outcomes arise if the condition is not fulfilled.

1. Condition Precedent: Gift Does Not Take Effect

   • If the condition precedent is not fulfilled, the gift does not take effect. In such a case, the donor does not transfer any rights or title to the donee.
   • Non-Fulfillment of Condition Precedent:
     • If the donee fails to fulfill the condition, the gift fails to materialize. This is because, under the TPA, the transfer of ownership only happens if the conditions are satisfied.
     • In legal terms, the donor's intent is that the transfer should happen only if certain conditions are met. If the conditions are not fulfilled, the property remains with the donor, and the donee does not gain ownership.
     • Example: If a donor says, "I give my property to you, provided you marry within the year," and the donee does not marry within the stipulated time, the gift does not take effect.
        

2. Condition Subsequent: Gift May Be Revoked

   • In the case of a condition subsequent, the gift is valid as soon as it is made, but if the donee does not fulfill the condition afterward, the donor has the right to revoke the gift.
   • Revocation of the Gift:
     • The donor can recover the gifted property if the donee breaches the condition subsequent. However, such revocation must be based on the specific terms agreed upon in the gift deed.
     • The donor has the legal right to withdraw the gift if the donee violates the conditions, such as by selling the property when the condition was to retain it.
     • Example: If a donor gives a gift of land to the donee on the condition that the donee does not sell the land, and the donee sells it, the gift may be revoked by the donor, and the property may revert to the donor.
        

3. Conditions that are Void or Impossible to Fulfil

   • In some cases, the condition attached to the gift may be impossible or void. A condition that is illegal, contrary to public policy, or impossible to fulfill can make the gift either void or unenforceable.
   • Examples of Void Conditions:
     • A condition that asks the donee to commit an illegal act (e.g., the condition to use the property for unlawful purposes) is void.
     • A condition that is impossible to perform (e.g., a condition requiring the donee to travel to Mars) can also result in the failure of the gift.
     • Under the Indian Contract Act, 1872, if a condition is void, the gift can be considered void and unenforceable. The donor cannot revoke or enforce the gift based on an impossible or illegal condition.
        

4. Doctrine of Acceleration in Conditional Gifts

   • If a condition precedent is fulfilled, the gift becomes effective immediately, and the ownership is transferred to the donee. If the condition is fulfilled after the transfer, the donee gains full ownership rights to the property.
   • In the case of condition subsequent, even though the gift is initially valid, failure to comply with the condition can lead to a legal action to terminate the gift and demand its return to the donor.
      

What Happens If the Conditions Are Not Fulfilled?

• Condition Precedent: If the condition is not fulfilled before the gift takes effect, the gift does not take place at all. In such cases, the ownership of the property remains with the donor, and the donee has no rights to the property.
• Condition Subsequent: If the condition is not fulfilled after the gift has already been made, the donor can take steps to revoke the gift. This involves legal action for the recovery of the property and may require returning the property to the donor, depending on the terms of the deed.
• Void or Impossible Conditions: If the condition is void, impossible, or illegal, the gift can fail, and the donor is not bound by it. The gift would not be valid, and the donor retains ownership.

A conditional gift under the Transfer of Property Act, 1882 must be carefully constructed to ensure that the donor's intent is clear and enforceable. The fulfilment of conditions plays a crucial role in determining whether the gift takes effect or is subject to revocation. If the conditions are not fulfilled, the gift may fail or be revoked, depending on whether the condition is precedent or subsequent. Conditions that are void, impossible, or illegal may result in the gift being invalid from the outset. Therefore, both donors and donees must fully understand the terms of a conditional gift to avoid legal complications.

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