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Top court rules out gift riders

New Delhi, Aug. 23: The Supreme Court has ruled that any condition attached to a gift by a Muslim is invalid, including conditions saying the recipient cannot sell or transfer it.

Indian law in general does not recognise conditions attached to gifts but a dispute had arisen over a particular gift made 62 years ago, which the apex court has now settled with a reference to Muslim personal law.

“Under Mohammedan law, a gift has to be unconditional. Therefore, conditions expressed in a gift are to be treated as void. A conditional gift is valid but the conditions are void,” the bench of Justices J.S. Khehar and R.F. Nariman said in a judgment on Friday.

The court clarified that the ruling applied only to “gifts pertaining to the corpus of the property” — where the ownership passes from the donor to the recipient.

“In other words, the gift of the corpus has to be unconditional. Conditions are, however, permissible if the gift is merely of a usufruct,” the court said, drawing a distinction.

Usufruct refers to the legal right of usus (using or enjoying the thing possessed) and fructus (enjoying its fruits or profits, for instance, by selling a field’s harvest or renting out land or a house).

But it does not include the right of abusus (alienating the thing possessed by consuming or destroying it, or by selling or gifting it to someone else).

A gift of usufruct — which is conditional by definition — is rare in India, where the term usually refers to the rights of lessees and tenants, not recipients of gifts.

The court said “the gift of a usufruct can validly impose a limit, in point of time”, such as the gift reverting to the donor or his heirs after the recipient’s death.

The donor in this case, Sheikh Hussain, had in 1952 gifted a house to his wife Banu Bibi with the condition that she would not have the right to alienate the property, which would go to her offspring after her death. If she bore no children, the gift deed said, the house would revert to Hussain or his heirs.

Bibi, however, sold the house to V. Sreeramachandra Avadhani in 1978. Hussain’s legal heirs challenged the sale, pleading that after her death they alone were entitled to the house.

The trial court and the first appellate court dismissed their plea but the second appellate court and then Andhra Pradesh High Court ruled that the 1978 sale was illegal.

Following this, the matter came to the apex court, which had to decide two issues: whether the gift was one of corpus going by the wording of the deed, and whether gifts of corpus could be conditional in the light of Muslim personal law.

Its answers — after interpreting various treatises on Muslim personal law and other texts — were, respectively, yes and no.

“Having concluded that the donor Sheikh Hussain, through the gift deed dated 26.04.1952, had transferred the corpus of the immovable property to his wife Banu Bibi, it is natural to conclude that the gift deed executed in favour of Banu Bibi was valid,” the court said.

“Likewise, while applying the principles of Mohammedan law expressed in recognised texts and the decision of the Privy Council in Nawazish Ali Khan’s case, it is inevitable to hold that all conditions depicted in the gift deedů which curtail use or disposal of the property gifted, are to be treated as void.”

It added that the gift had “irrevocably vested all rights in the immovable property in Banu Bibi”, so the 1978 sale was “legal and valid”.