REG 038 Gift Settlement Release and Relinquishment Deeds — Law of Registration Notes for Judiciary

Gift, Settlement, Release and Relinquishment Deeds, and the Registration of Family Arrangements

These instruments are grouped together because they raise one question and it is always the same question: does this document itself create, declare, assign, limit or extinguish a right in immovable property, or does it merely record something that has already happened outside it? If the document does the work, it falls within Section 17(1)(b) and must be registered. If it only narrates a transaction already completed by some other act, it is outside Section 17 and needs no registration. The gift deed stands apart for a different reason: Section 123 of the Transfer of Property Act, 1882 makes registration a condition of the gift itself, without any monetary threshold at all.

The same test applied to each instrument, and the two comparisons that are most often confused

1. The Gift Deed

Sections 122 and 123, Transfer of Property Act, 1882

122. Gift defined. "Gift" is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee.

Acceptance when to be made. Such acceptance must be made during the lifetime of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void.

123. Transfer how effected. For the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses.

For the purpose of making a gift of movable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery.

Registration is compulsory whatever the value. The threshold of one hundred rupees in Section 17(1)(b) has no application, because Section 123 imposes its own requirement and Section 17(1)(a) of the Registration Act separately makes instruments of gift of immovable property compulsorily registrable without any value limit.
Attestation by two witnesses is an additional and independent requirement. A gift deed that is registered but not attested by two witnesses is bad, and registration does not cure the want of attestation.
There must be no consideration. A recital of natural love and affection is a motive, not consideration. If consideration passes, the document is a sale or an exchange, whatever it calls itself.
The subject matter must be existing property. A gift of future property is void under Section 124.
Delivery of possession is not essential to the validity of a gift of immovable property, provided the deed is registered and accepted. The donor may lawfully reserve a life interest to himself.

📖 Renikuntla Rajamma v. K. Sarwanamma, (2014) 9 SCC 445

Facts. A donor executed and registered a gift deed of immovable property in favour of the donee, but retained possession and the right to enjoy the income of the property during her lifetime. The gift was later sought to be revoked, and it was argued that the transaction was incomplete because possession had not been delivered.

Held. The Supreme Court held that delivery of possession is not a condition precedent to the validity of a gift of immovable property under Section 123. What Section 123 requires is a registered instrument signed by the donor and attested by two witnesses, together with acceptance by the donee under Section 122. A donor may reserve to herself the right of enjoyment during her lifetime without affecting the validity of the gift.

Ratio. Section 123 prescribes the mode of transfer exhaustively for immovable property. Once the deed is registered, attested and accepted, the gift is complete, and the reservation of a life interest goes to the extent of what was given, not to the validity of the giving.

2. Acceptance and Registration Distinguished

These are two different requirements, imposed by two different sections, and the presence of one does not supply the other. Section 122 requires acceptance by the donee during the donor's lifetime; Section 123 requires a registered and attested instrument. A gift fails if either is missing.

	Acceptance, Section 122	Registration, Section 123
Whose act	The donee's	The parties', completed by the registering officer
When	During the lifetime of the donor and while he is capable of giving	Within the time allowed by Sections 23 to 26
How proved	Express acceptance, or inferred from conduct: taking possession, accepting the title deeds, mutation, or the donee joining in the deed	The endorsements and certificate under Sections 58 to 60
If missing	The gift is void; if the donee dies before acceptance, Section 122 makes it void expressly	The gift is not effected at all; no title passes
Can the other cure it?	No. A registered deed that was never accepted is not a gift	No. An accepted but unregistered gift of immovable property transfers nothing

Acceptance may precede, accompany or follow registration, so long as it is during the donor's lifetime and while he retains capacity.
Registration alone is not acceptance. The donor may get a deed registered without the donee ever knowing of it, and there is then no gift.
A donee who is a minor may accept through a guardian.
Once complete, a gift cannot be revoked at the donor's pleasure. Section 126 allows revocation only on an agreed event not depending on the donor's will, or on a ground on which a contract could be rescinded.

3. The Settlement Deed

A settlement is a disposition of property, usually in favour of family members or dependants, made to provide for them. The Registration Act does not define it; the definition that is generally used comes from the stamp legislation.

Section 2(24), Indian Stamp Act, 1899, in substance

"Settlement" means any non testamentary disposition, in writing, of movable or immovable property made: (a) in consideration of marriage; (b) for the purpose of distributing property of the settlor among his family or those for whom he desires to provide, or for the purpose of providing for some person dependent on him; or (c) for any religious or charitable purpose.

And includes an agreement in writing to make such a disposition, and, where any such disposition has not been made in writing, any instrument recording, whether by way of declaration of trust or otherwise, the terms of any such disposition.

It is non testamentary. This is the whole point of the definition and the key to the comparison with a will. A settlement operates now.
It is compulsorily registrable under Section 17(1)(b), because it creates rights in praesenti in immovable property of the value of one hundred rupees and upwards.
It is ordinarily irrevocable once executed and registered, unless a power of revocation is reserved in the deed itself.
The settlor may reserve a life interest, exactly as a donor may, and the settlement is still a present disposition of the remainder.
The name given to the document is not decisive. A document called a settlement that is to take effect only on death is a will, and a document called a will that operates at once is a settlement. The substance governs, and this is only a particular application of the general rule that the requirement of registration is determined by what the instrument does.

4. Settlement and Will Compared

	Settlement deed	Will
Nature	Non testamentary; a present disposition	Testamentary; a declaration of intention as to property after death
When it operates	At once, on execution and registration	Only on the death of the testator
Revocability	Irrevocable unless a power of revocation is reserved	Revocable at any time before death, however often, Section 62 of the Indian Succession Act, 1925
Registration	Compulsory, Section 17(1)(b)	Not compulsory; expressly excepted by Section 17(2)(b) and made optional by Section 18(e)
Time for registration	Four months under Section 23, with the extensions in Sections 25 and 26	May be presented at any time, Section 27, and after death by the executor or claimant under Section 40
Attestation	Not required by law, though usual in practice	Required: two witnesses, Section 63 of the Indian Succession Act, 1925
Effect on the maker's power over the property	He parts with it to the extent of the disposition	He retains full power to deal with the property during his life
Deposit with the Registrar	Not available	Available under Sections 42 to 46

5. The Release Deed

A release, sometimes called a deed of relinquishment, is an instrument by which a person gives up a right which he already has in property, in favour of another who also has an interest in it. The classic case is one co-owner releasing his undivided share in favour of the other co-owners.

It is compulsorily registrable under Section 17(1)(b) where the value is one hundred rupees or more, because it extinguishes a right in immovable property, and the section covers extinguishment in terms.
The releasor must have a subsisting interest. A person who has no share cannot release one, and a document by which a stranger purports to release is in truth a conveyance or nothing at all.
The release enures to the benefit of the remaining co-owners in proportion to their existing shares, unless the deed provides otherwise.
It may be with or without consideration. A release for consideration is still a release and not a sale, provided it operates by way of giving up a share among persons already interested.
The effect is that the released share merges in the shares of the others; nothing new is created, which is why a release is conceptually different from a gift.

6. Release and Gift Compared

	Release	Gift
Operation	Extinguishes the releasor's existing right, which enures to the others	Transfers property from the donor to the donee
In whose favour	A person who already has an interest in the same property, ordinarily a co-owner	Anyone, including a complete stranger to the property
Consideration	May be with or without consideration	Must be without consideration, Section 122
Acceptance	Not a statutory requirement	Essential; the gift is void without it, Section 122
Attestation by two witnesses	Not required by statute	Required, Section 123
Registration	Compulsory above one hundred rupees, Section 17(1)(b)	Compulsory whatever the value, Section 17(1)(a) and Section 123
Revocation	Not revocable once executed and registered	Revocable only within Section 126

⚠ A release in favour of a stranger is treated as a gift or a sale

Where the document describes itself as a release but the person in whose favour it is made has no pre existing interest in the property, the transaction cannot operate by extinguishment, because there is no share into which the released interest can merge. Such a document is construed according to its substance: a gift if there is no consideration, and a sale if there is. The consequences follow: a gift must be attested by two witnesses under Section 123, and a sale attracts conveyance duty. Calling the instrument a release does not save the stamp duty, and the registering officer is not bound by the label.

7. Relinquishment and Partition Compared

A relinquishment and a partition are both dealings among co-owners, and they are regularly confused because both end with the co-owners holding different quantities than before. The difference lies in what the instrument does.

	Relinquishment or release	Partition
What happens	One co-owner gives up his share; the others take it	The joint property is divided; each co-owner takes a defined portion in severalty
Number of shares after	Fewer sharers, the same property	The same sharers, each with a separate part
Direction	One way: from the releasor to the others	Mutual: every sharer both gives up and receives
Registration	Compulsory above one hundred rupees, Section 17(1)(b)	Compulsory where the instrument itself effects the division, Section 17(1)(b)
Can it be oral?	No, if the instrument is to operate; an oral surrender of a share is difficult to establish and cannot be proved by an unregistered writing	Yes; a partition may be effected orally, and a writing that merely records it needs no registration

8. Family Arrangement and Family Settlement

A family arrangement is an agreement among members of a family, made to preserve the family property, to avoid litigation, or to settle disputed or doubtful claims among themselves. Courts lean strongly in favour of upholding such arrangements, and they are not tested by the ordinary rules about consideration, because the consideration is the peace of the family and the settlement of doubtful rights.

📖 Kale v. Deputy Director of Consolidation, (1976) 3 SCC 119

Facts. Members of a family entered into a compromise or family arrangement over property in the course of mutation proceedings. A memorandum of that arrangement was drawn up and acted upon. It was later objected that the writing was compulsorily registrable and that, being unregistered, the arrangement could not be relied on.

Held. The Supreme Court upheld the arrangement. It laid down that a family arrangement may be oral, in which case no registration is necessary; and that where a memorandum is prepared after the arrangement has already been made, for the purpose of the record or for information of the court, for mutation or for similar purposes, such a memorandum does not create or extinguish any rights and therefore does not require registration. Registration is necessary only where the terms of the family arrangement are reduced into writing and the document itself effects the arrangement.

Ratio. The test is whether the document is the instrument of the arrangement or merely a record of an arrangement already concluded. In the first case it falls within Section 17(1)(b); in the second it does not, because the rights arose from the antecedent oral act and not from the writing.

The Court in that case also set out the conditions on which a family arrangement will be upheld: that it be bona fide, so as to resolve family disputes and rival claims by a fair and equitable division; that it be voluntary and not induced by fraud, coercion or undue influence; that it may be even oral, in which case registration does not arise; that the members must have some antecedent title, claim or interest, or at least a possible claim, in the property; and that a party who has taken a benefit under the arrangement is estopped from resiling from it.

9. The Three Situations Distinguished

The document	What it does	Registration
An oral family arrangement, with no writing at all	The arrangement is effected by the agreement and by conduct	Does not arise; there is no instrument
A memorandum prepared after the arrangement, recording what was already settled	Records a past transaction; creates nothing	Not required, Kale v. Deputy Director of Consolidation
A deed by which the parties make the arrangement and allot the shares	Creates, declares, assigns, limits or extinguishes rights in immovable property	Compulsory, Section 17(1)(b)

⚠ The memorandum must genuinely follow the arrangement

The distinction is real but it is often abused, and courts look at the substance rather than the recitals. A document is not saved from registration merely because it opens with the words "whereas the parties have already partitioned" or "this memorandum records the arrangement arrived at". The court examines whether there was in fact an antecedent oral arrangement, acted upon, and whether the writing came afterwards, or whether the writing is itself the source of the rights claimed. A document executed simultaneously with the arrangement, by which the parties for the first time define and allot their shares, is the instrument of the arrangement, whatever it is called, and it requires registration.

10. The Position Stated Shortly

A gift of immovable property must be made by a registered instrument signed by the donor and attested by two witnesses, Section 123 of the Transfer of Property Act, and it must be accepted during the donor's lifetime, Section 122. There is no monetary threshold.
Delivery of possession is not essential to a gift; the donor may reserve a life interest, Renikuntla Rajamma v. K. Sarwanamma.
Acceptance and registration are separate requirements, and neither supplies the other.
A settlement is a non testamentary disposition that operates at once, and it is compulsorily registrable under Section 17(1)(b).
A will operates only on death, is revocable until then, and is exempt from compulsory registration under Section 17(2)(b) and Section 18(e).
A release extinguishes the releasor's existing share in favour of persons already interested, and is compulsorily registrable above one hundred rupees under Section 17(1)(b).
A release in favour of a person with no pre existing interest is construed as a gift or a sale according to whether consideration passed.
A relinquishment removes a sharer; a partition divides the property among the sharers. Both require registration where the instrument itself does the work.
A family arrangement may be oral, and an oral arrangement needs no registration.
A memorandum recording a family arrangement already concluded creates nothing and needs no registration, Kale v. Deputy Director of Consolidation.
An instrument by which the family arrangement is itself made and the shares are allotted falls squarely within Section 17(1)(b) and must be registered.