Onerous Gifts - Legal and Judicial trend in India

Onerous gifts:
Where a gift is in the form of a single transfer to the same person of several things of which one
is, and the others are not burdened by an obligation, the donee can take nothing by the gift
unless he accepts it fully.

Where a gift is in the form of two or more separate and independent transfers to the same person
of several things, the donee is at liberty to accept one of them and refuse the others, although
the former may be beneficial and the latter onerous.

Onerous gifts to disqualified person- A donee not competent to contract and accepting property
burdened by any obligation is not bound by his acceptance. But if, after becoming competent to
contract and being aware of the obligation, he retains the property given, he becomes so
bound.[1]

Based on the Maxim:

Quisntitcommodumsentiredebet et onnus which means that onewho receives benefit must
bear the burden also.

General Principle:
Onerous means “burdened with obligation“. Obligation here means debt, interest etc on the
property. Gift is defined under section 122 which means transfer of existing immovable or
movable property without consideration.

So, Onerous gift is when one person transfer several gifts, i.e., more than one gifts to another in
a single transfer, out of these gifts one is not burdened by obligation but other is burdened with
obligation, so here donee has to accept in full, he cannot accept one which is beneficial and
reject burdened with obligation.

But where gift is in the form of two or more separate and independent gifts to same person off
several things, then donee can accept one and reject other because the gift is not in single
transfer but independent transfer.

The distinguishing feature between the first and the second paragraph is that gift by a single
transfer is to be accepted or rejected by the donee in its entirety, but if several properties are
gifted to a donee through separate transfers, then, he is at liberty to pick and choose the ones he
wants and validly reject the one he does not want.)

Where the donee is a minor he can express his option soon after attaining majority or else he
would lose the option. When a minor has been made a shareholder in a joint stock company, he
cannot repudiate his holding in the company if he has drawn divi- 76 dends after attaining
majority.

Illustrations:

a. Ram has shares in X, a prosperous joint stock company, and also shares in Y, a joint
stock company in difficulties. A great profitis expected in respect of the shares in Y. Ram
gives Raman all shares in joint stock companies. Raman refuses to accept the shares in
Y. He cannot take the shares in X.

b. Raj, having a lease for a term of a house at a rent which he and his representatives are
bound to pay during the term, and which is more than the estimated amount, gives to
Raghav the lease, and also, as a separate and independent transaction, a sum of
money. Raghav refuses to accept the lease. He does not by this refusal forfeit the
money.
First Paragraph: Single Transfer:
The first part of this section elucidate that if a gift is in the form of a single transfer to the same
person of several things of which one is and others are not, burdened by an obligation, the donee
cannot take anything of the gift, unless he accepts it fully.

Illustration (a) appended to the Section explains it fully. Since the share of both the joint stock
companies have been gifted to Raman by the same transaction (instrument), Raman has to
adopt the whole transaction, i.e., either to accept the shares of both the companies, or not to
accept at all. IfRaman refuses to take the shares of company Y then he cannot take shares in X.

For the application of this rule, the following elements are necessary:
 gift must be in the form of a single transfer;
 to the same person;
 of several properties i.e. more than one properties should be conveyed;
 out of the several properties one should be subject to burden or obligation

If these conditions are present, the donee will be required to accept the burden if he desires to
accept the benefit. It will not be permissible to him accept the benefit and refuse the obligation or
burden, because the paragraph self makes it clear by using the following expression... "The
donee cannot take anything of the gift unless he accepts it fully".

The rule underlying this principle is that the entire intention of the donor should be given effect. In
other words, it is not upto the donee to accept what is obligation free and beneficial to him and at
the same time not accept that which is burdened with an obligation.

Effect of Onerous gift:Where there is one indivisible transfer, the donee has to accept or reject
the transaction as a whole. Where a donee accepts an onerous gift, it is implied that he accepted
also the onerous conditions (e.g., debts and other liabilities) attached to some of the properties.

The donee is liable to the extent of the gifted property in his hands to meet the obligation incurred
under the deed of gift.

Section 127 and Section 35Section 127 of the Transfer of Property Act, 1882:
The rule is kind of similar to the doctrine of election mentioned under Section 35, TPA. The
Section set forth that where an instrument pronounce some benefit and through the same
transaction divests the beneficiary of other property, the beneficiary cannot take benefit without
surrendering property.

The donee here is put to election either to accept the whole gift or not to accept anything at all.
He has no right to pick up the benefit of the transaction and reject its burden. When two
properties, one onerous and the other prosperous, are given in gift to a donee in the same
transaction, the donee is put to election. He may accept the gift together with onerous property or
reject it totally. If he elected to accept the beneficial part of gift, he is bound to accept the other
which is burdensome.

The difference, however, between this Section and Section 35 lies in the Act that under this
Section burdened property as well as property free of burden, both come from the donor,
whereas under Section 35 the transferor transfers the property of another person to a third
person and as a part of the same transaction confers some benefit on the person whose property
is transferred to a third person.

Under Section 127, the property of the donee remains untouched by the donor which is not so in
the case of Section 35.
Gift subject to Conditions: The kind of burden contemplated by Section 127 is that which
attaches to the property gifted, such as shares in a company object to heavy calls. This Section
is not applicable in a case where the burden is not attached to the thing gifted.

And therefore, where gift is madeand the instrument of gift imposes an obligation that the donee
will discharge certain liabilities, in such cases if donee accepts the gift, he takes it subject to
condition and he is bound to perform the condition. But this need to be noted here, that this is not
by virtue of the provisions of Section 127 but under general principles of law.

Where the property itself is not burdened by an obligation, but the instrument of gift imposes a
condition, that the donee should discharge certain liabilities, the donee accepting the gift is
bound to fulfil the condition.

In Panna Lal v. Fulmoni,[2]

In this case Calcutta H.C. held that a condition in the deed of gift whereby properties were
transferred to the son by his deceased father, to provide maintenance to his dependants, is not in
any way repugnant to the interest created by the instrument and the condition is valid and
enforceable and not hit by the provisions of Section 11.
Therefore, it was held that the son was liable to maintain his step-mother under the express
terms of the gift deed

Second Paragraph: Two or more separate transfers:

The first paragraph of this section provides that if a gift may be made of one property or of
several properties to the same person at one time. It may also be made of several things
independently of each other. In any of these cases, any one or more of the things may be
burdened by some obligation.

The question in such a case would be whether the donee can accept the gift in part and reject
what is so burdened. The answer to this question depends on whether the gift of several things is
made by one transfer or different transfers.

If it is by one transfer, then according to first paragraph, the donee must accept the gift in its
entirety, otherwise he cannot take anything at all. The principle laid down in paragraph one shall
not apply if the gift is in the form of two or more separate and independent transfers to the same
person of several things. In a situation like that the donee will be at liberty to accept property free
of burden and refuse the property subject to a burden or obligation.

The principle that the entire intention of the donor should be given effect, shall not apply where
burdened and burden less properties are transferred by separate and independent transfers to
the same person. This is evident from paragraph two of the Section.

Illustration (b) appended to the Section explains it aptly. Since the gifts are independent of each
other, i.e. do not form part of the same transaction, the donee in such cases is not bound to
accept both the gifts.

Onerous gift to Disqualified Persons:

The third paragraph shows that even an onerous gift can be accepted by a person incompetent
to contract, without the intervention of a guardian. If at the time of gift of a burdened property the
donee happened to be a disqualified person viz., a minor, i.e., person incompetent to contract,
the vesting of property in him shall not be postponed. He will become entitled to hold the property
at once but his acceptance shall not be final. He has a right to repudiate the gift on attaining the
age of majority.

He will have option either to accept or to refuse gift on attaining majority. The gift does not
become binding on him unless on attaining majority he ratifies the acceptance. If on attaining
majority, he retain the property, with the knowledge of the burden he will be bound by the burden
as it is an implied acceptance of the gift.

It must, however, be kept in mind that the gift is complete against the donor as soon as it is
accepted by the donee, and he will have no right to revoke the same during the minority of the
donee. Donor cannot take back the property unless the minor on attaining majority rejects the gift
at his option.

And if the donee dies during his minority, the property shall pass on to the legal heirs of the
donee, the donor cannot revoke the gift as being de Incomplete. The gift is complete as soon as
it has been accepted and will not be in abeyance until the donee attains the age of majority.

Case laws:
1. Subramania Ayyarvs Sitha Lakahmi, [3]

The Subordinate Judge has found as a fact that the property given was delivered to and
accepted by the deceased minor, wife of the plain tiff, who now sues for the property
given. It is contended before us that inasmuch as the deed of gift imposed an obligation
on the donee and the donee died a minor, there is no complete gift which binds the
donor.

We think the gift is complete. Section 127 of the Transfer of Property Act, 1882,grants the
minor the 'right to repudiate' on attaining majority; such repudiation became impossible in
the present case. The Subordinate Judge's decision is correct.
Thus, second appeal missed the mark and was dismissed with costs.

2. In PannaLal v. Fulmoni,[4]

In this case Calcutta H.C. held that a condition in the deed of gift whereby properties
were transferred to the son by his deceased father, to provide maintenance to his
dependants, is not in any way repugnant to the interest created by the instrument and the
condition is valid and enforceable and not hit by the provisions of Section 11.

Therefore, it was held that the son was liable to maintain his step-mother under the
express terms of the gift deed.

Conclusion:
Thus, it's not a prerequisite that a gift may always be of a purely beneficial character but may at
time be burdened with obligations. At that instance one cannot approbate and reprobate the
same transaction which means one cannot accept beneficial part of the gift and rejecting the
obligatory part of transaction.

Section 127 is based on a simple principle that one who wants the rose must not fair thorns, i.e.,
The donee has to elect. Either to accept the whole gift or he cannot accept anything at all.

1. Section 127 of the Transfer of Property Act, 1882.

2. AIR 1987 Cal 369
3. on 12 November, 1896 (1897) ILR 20 Mad 147
4. AIR 1987 Cal 369,
Universal Donee | Section 128 of Transfer of Property Act, 1882