Transfer of Property Act (TPA)
Transfer of Property vs Will: Gift Deed and Testament Compared, and How a Court Decides Which It Is
A gift deed and a will can dispose of the same property to the same person. They are nevertheless governed by different statutes, executed in different forms, and produce opposite consequences the moment they are signed. A gift takes effect at once and cannot ordinarily be recalled; a will takes effect only on death and can be torn up any afternoon. Because litigants frequently draft one and call it the other, the courts have developed a settled test for deciding which a document really is — and the answer never turns on what the document is headed.
Figure 1: The seven questions that separate a gift deed from a will, and how each instrument answers them
1. Why a Will Falls Outside the Act
Section 5 requires a conveyance by a living person to a living person. A will satisfies neither end of that requirement at the moment it operates: it speaks from the death of the testator, when he is no longer a living person, and until then it passes no interest to anyone. Two further provisions confirm the exclusion. Section 3 defines an 'instrument' for the purposes of the Act as a non-testamentary instrument; and the whole field of testamentary disposition is occupied by the Indian Succession Act, 1925, section 2(h) of which defines a will as the legal declaration of the intention of a testator with respect to his property, to be carried into effect after his death.
2. The Two Instruments Side by Side
Point | Gift deed — TPA, ss. 122 to 129 | Will — Indian Succession Act, 1925 |
|---|---|---|
Nature | A transfer inter vivos, complete on execution, registration and acceptance | A declaration of intention, ambulatory and inoperative until death |
When it operates | Immediately, or from the date it stipulates during the donor's life | Only on the death of the testator |
Revocation | Section 126 — only on an agreed condition not depending on the donor's will, or on grounds on which a contract may be rescinded | Freely revocable at any time before death, expressly or by a later will, and any number of times |
Acceptance | Essential, and must be during the donor's lifetime and while he is capable of giving (s. 122) | Not required during the testator's life; the legatee assents afterwards |
Form | Registered instrument signed by or on behalf of the donor, attested by at least two witnesses (s. 123) | In writing, signed by the testator, attested by two or more witnesses (s. 63) |
Registration | Compulsory for immoveable property; absence is fatal | Optional under section 18 of the Registration Act; an unregistered will is perfectly valid |
Subject matter | Only property the donor owns at the date of the gift | The estate as it stands at death, including property acquired after the will was made |
Stamp duty | Payable as on a conveyance | None |
Effect on the maker | He divests himself at once and retains nothing | He remains full owner, free to sell, mortgage or give away the same property |
Proof after death | The deed proves itself once registered | Must be proved in the manner required by sections 63 and 68; probate where the law requires it |
3. How the Court Decides Which Document It Is
The question arises constantly, because deeds are drafted by hand in the villages and the nomenclature is unreliable. The settled approach is as follows.
- The label is irrelevant. A document headed 'Will' may be a gift, and one headed 'Gift Deed' may be a will. The court reads the whole instrument.
- *The test is whether an interest passed in praesenti.* If the document divests the executant of an interest immediately, it is a transfer, however the enjoyment may be postponed. If it reserves everything until death, it is testamentary.
- A postponed enjoyment does not make a gift testamentary. A donor may give the property today and reserve a life interest to himself; the gift is complete, and only possession is deferred.
- A power of revocation points to a will. A reservation of an unrestricted power to cancel the document is inconsistent with a completed gift, because section 126 forbids a gift revocable at the mere will of the donor.
- Registration and attestation are indicators, not answers. A registered document is not necessarily a gift, and an unregistered one is not necessarily a will — though the fact that registration was thought necessary is some evidence of an intention to pass an interest at once.
The leading modern authority In Mathai Samuel v. Eapen Eapen, (2012) 13 SCC 80, the Supreme Court held that the nomenclature given by the parties is not decisive, and that the court must gather the intention from the entire document read as a whole. If the instrument transfers an interest in favour of another in praesenti, it is a settlement or gift; if it takes effect only after the death of the executant and is revocable until then, it is a will — whatever the parties may have called it. |
4. Where the Confusion Usually Arises
Clause in the document | Its likely effect |
|---|---|
'I hereby transfer, but I shall enjoy the property during my lifetime' | A gift with a reserved life interest — a completed transfer, enjoyment postponed |
'This shall take effect after my death' | Testamentary; nothing passes now |
'I may cancel this document at any time I please' | Points strongly to a will, since an unrestricted power of revocation is inconsistent with s. 126 |
'I have this day delivered possession to the donee' | Strong indication of a completed gift |
'My son shall take the property, and I shall have no right after execution' | A gift, whatever the document is headed |
A document reciting a gift but registered only after the executant's death | Cannot operate as a gift; registration after death does not complete an incomplete transfer |
5. Practical Consequences of Choosing One Over the Other
- Control. A testator keeps his property and his freedom to change his mind; a donor loses both the moment the gift is complete.
- Cost. A gift attracts stamp duty and registration charges immediately; a will costs nothing until probate, where probate is required.
- Creditors. Property gifted away is out of the estate, subject to challenge under section 53 as a transfer to defeat or delay creditors. Property left by will remains in the estate and answers to the debts before the legatees take.
- Litigation risk. A registered gift, once complete, is difficult to unsettle. A will invites disputes about execution, attestation, capacity and suspicious circumstances, all of which must be proved after the only witness who mattered is dead.
- Certainty of the subject matter. A gift can cover only what the donor owns today; a will automatically carries whatever the testator owns at death.
Retention aid Ask when the executant stops being the owner. Today, and it is a gift governed by the Transfer of Property Act. At his funeral, and it is a will governed by the Succession Act. Nothing else — not the heading, not the registration, not the stamp — answers the question. |
6. Landmark Cases
📖 Kale v. Deputy Director of Consolidation, (1976) 3 SCC 119 Held: A family arrangement is a transaction between members of a family who have an antecedent title or claim, by which the disputes among them are settled. It is not a transfer of property; each party is regarded as having received what was already his under the arrangement, and such a settlement does not require registration where it merely records what has been agreed. Ratio: A family arrangement recognises pre-existing rights; it neither conveys property nor operates as a will. |
7. Related Topics and Provisions
- Sections 122 to 129, TPA — the full law of gift, including onerous gifts and the universal donee
- Inter Vivos Transfer — the requirement in section 5 that a will cannot satisfy
- Transfer of Property vs Succession — the wider comparison of which this topic is one half
- Section 63, Indian Succession Act, 1925 — execution and attestation of an unprivileged will
- Section 126, TPA — when a gift may be suspended or revoked
- Section 53, TPA — transfers made to defeat or delay creditors