REG 068 Release Deed and Gift Deed — Law of Registration Notes for Judiciary

The Release Deed and the Gift Deed Distinguished: Extinguishment Against Transfer, and Why a Release to a Stranger Is Not a Release

A release and a gift both move property from one person to another without a sale, and they are constantly used interchangeably. They are not the same thing. A release operates by extinguishment: the releasor gives up a share he already holds, and it merges in the shares of persons who already have an interest in the same property. A gift operates by transfer: the donor hands property to a donee who need have no interest at all. Everything else follows from that. A gift must have no consideration, must be accepted, and must be attested by two witnesses; a release need satisfy none of those requirements. And the two meet at the point where most mistakes are made: a release in favour of someone with no pre existing interest is a gift, and must satisfy Section 123.

The two compared, and the point at which a release is read as a gift

1. The Gift

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.

It is a transfer. The property moves from the donor to the donee, and the donee takes what the donor had.
The donee may be anyone. Nothing restricts the class, and a gift to a complete stranger is as good as a gift to a son.
There must be no consideration at all. Natural love and affection is a motive and not consideration; if consideration passes the document is a sale or an exchange.
Acceptance is essential during the donor's lifetime and while he is capable of giving.
Attestation by two witnesses is required by statute, and its absence is fatal.
Registration is compulsory whatever the value, under Section 17(1)(a), which carries no threshold.

2. The Release

Section 17(1)(b), Registration Act, 1908

17(1). The following documents shall be registered: (b) other non testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property.

The word "release" appears nowhere in the Act. The transaction is caught by the word extinguish in clause (b), and that is the whole of its statutory basis.
It operates by extinguishment, not transfer. The releasor's share ceases to exist, and the shares of the remaining co-owners are correspondingly enlarged, in proportion to their existing shares unless the deed provides otherwise.
The releasor must have a subsisting interest. A person who has no share cannot release one.
It must be in favour of someone who already has an interest in the same property. This is the defining condition.
It may be with or without consideration. A release for money is still a release, provided it operates by giving up a share among persons already interested.
No attestation is required by statute, and no acceptance.
Registration is compulsory above one hundred rupees, and optional below it under Section 18(a).

3. The Two Compared

	Release deed	Gift deed
How it operates	By extinguishment: the share merges in the shares of the others	By transfer: the property moves from donor to donee
In whose favour	A person who already has an interest in the same property	Anyone, including a complete stranger
Must the executant have an interest?	Yes, a subsisting one	Yes, he must own what he gives
Consideration	May be with or without	There must be none, Section 122
Acceptance	Not a statutory requirement	Essential during the donor's lifetime; the gift is void without it
Attestation	Not required by statute	Two witnesses, Section 123, and its absence is fatal
Registration	Compulsory above Rs. 100, Section 17(1)(b)	Compulsory whatever the value, Section 17(1)(a)
Statutory source	The word "extinguish" in Section 17(1)(b)	Sections 122 to 129 of the Transfer of Property Act
Revocation	Not revocable once executed and registered	Only within Section 126
Number of sharers afterwards	Fewer, in the same property	Not applicable
Stamp duty	A separate article in most State schedules, often concessional among family	Ordinarily conveyance rates, with State concessions for family transfers

4. Where the Two Meet

The distinction between them is not academic, because a document that calls itself a release will be read as a gift wherever it cannot operate by extinguishment, and the requirements of a gift are much stricter.

📖 The principle, stated

The rule. Where the person in whose favour a deed of release is executed 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.

If gratuitous. It is a gift, and Section 123 of the Transfer of Property Act applies: it must be a registered instrument signed by the donor and attested by at least two witnesses, and it must be accepted under Section 122.

If for consideration. It is a sale, and attracts full conveyance duty under the State schedule, not the concessional release rate.

Either way. Calling the instrument a release saves neither the attestation requirement nor the duty, and the registering officer is not bound by the label.

⚠ This is the one trap, and it is avoided at no cost

A release deed drawn in favour of a family member who is not a co-owner, for instance a widow releasing in favour of a grandson who has no share, is in truth a gift. If it was drawn as a release it will very likely have no attesting witnesses, because a release does not need them, and it will then fail under Section 123. The defect does not surface at the registration counter, since the officer's enquiry under Section 34 is confined to execution and identity; it surfaces years later when the title is examined or the deed is challenged. The remedy is trivially simple: take two attesting witnesses on every release deed. They cost nothing, they are harmless if the document is a true release, and they save it if it is later read as a gift.

5. Working Out Which It Is

The situation	Its true character	What must be satisfied
One of three brothers who inherited jointly releases his share to the other two, for no consideration	Release	Registration above Rs. 100; no attestation required by statute
The same, for a payment of five lakhs	Release for consideration	Registration; and the State article may charge it as a conveyance on the consideration
A widow with a share releases in favour of her son who is also a co-sharer	Release	Registration
A widow with a share releases in favour of her grandson, who has no share	Gift, if gratuitous	Registration under Section 17(1)(a), two attesting witnesses under Section 123, and acceptance under Section 122
A stranger executes a deed of release of property in which he has no interest	Nothing	There was no interest to extinguish; the document conveys nothing
A mortgagee releases the mortgage on repayment	Release of the mortgagee's interest	Registration under Section 17(1)(b); but a receipt endorsed on the mortgage deed is exempt under Section 17(2)(xi)
One co-owner conveys his share to the other for a price, by a document headed "sale deed"	Sale	Registration and full conveyance duty

6. The Third Instrument: Partition

A release is often confused with a partition as well, and it is worth fixing the difference in one line: a release removes a sharer; a partition divides the property among the sharers.

	Release	Gift	Partition
Direction	One way, from the releasor to the others	One way, from donor to donee	Mutual: every sharer both gives up and receives
After it	Fewer sharers, the same undivided property	The donee owns what was given	The same sharers, each with a separate portion
Consideration	With or without	Must be without	Not required; an adjustment of existing rights
Attestation	Not required	Two witnesses, Section 123	Not required
Registration	Compulsory above Rs. 100	Compulsory, any value	Compulsory where the instrument effects the division
Can it be oral?	Not effectively, if it must be proved	No, for immovable property	Yes; and a memorandum of an oral partition needs no registration

7. Drafting Consequences

1. Recite the releasor's existing interest and how he came by it, because the validity of the instrument depends on his having a subsisting share.

2. Recite the releasee's existing interest too. This is the recital that decides whether the deed can operate as a release at all, and it is the one most often omitted.

3. Use the language of extinguishment, that the releasor gives up, releases and relinquishes all his right, title and interest, rather than the language of transfer.

4. State whether consideration passes, and how much, because the stamp treatment turns on it.

5. Take two attesting witnesses, for the reason given above.

6. Read the State stamp article before drafting, and head the deed to match the article that gives the concession.

7. If the releasee has no interest, draw a gift deed instead, and satisfy Sections 122 and 123 properly: acceptance, two attesting witnesses, and registration.

8. Register within four months under Section 23, at the office of the sub district in which the property lies, under Sections 28 to 30.

8. The Position Stated Shortly

1. A release operates by extinguishment; a gift operates by transfer.

2. A release must be in favour of a person who already has an interest in the same property; a gift may be to anyone.

3. A release may be with or without consideration; a gift must be without any consideration at all.

4. A gift requires acceptance during the donor's lifetime under Section 122, and attestation by two witnesses under Section 123; a release requires neither by statute.

5. A gift of immovable property must be registered whatever its value under Section 17(1)(a); a release above one hundred rupees under Section 17(1)(b).

6. A release in favour of a person with no pre existing interest is construed as a gift if gratuitous, and a sale if for consideration.

7. Calling the instrument a release saves neither the attestation requirement nor the duty.

8. Two attesting witnesses should therefore be taken on every release deed.

9. A gift is revocable only within Section 126; a release is not revocable once executed and registered.

10. A release removes a sharer; a partition divides the property among the sharers.