Gift can be completed only when the delivery is taken on minor's behalf by the guardian
A Muslim lady owns half of a commercial shop in a co-operative housing society in Mumbai. She wants to gift it to her one-year-old step-son. How much stamp duty will apply and how can we establish family relationship? Can the father or the real mother become the child’s legal guardian?
A gift is the transfer of existing movable or immovable property by the donor (the person making the gift) to the donee (the recipient of the gift) and accepted by or on behalf of the donee. The provisions of Mohammedan law (Sharia) is applicable to a gift of an immovable property by a Muslim donor, as in the present case. The provisions of the Transfer of Property Act, 1882, (TPA) pertaining to gifts is not applicable since section 129 of the Act makes an exception in favour of Mohammedan personal laws by making the provisions relating to gifts under the act inapplicable to gifts by Muslims. These are some of the essentials for a valid gift under Mohammedan Law:
• The donor must be at least 18 years of age and of sound mind. He may dispose of the whole of his property by gift in favour of any person, including a stranger.
• There must be a declaration of the gift by the donor and an acceptance of the gift by the donee.
• Delivery of possession to and taking possession thereof by the donee actually or constructively.
However, in cases of gifts to a minor, the law does not dispense with the necessity of acceptance of the gift. The gift can be completed only when the delivery is taken on minor’s behalf by the father or guardian of the minor.
The order of persons who can become guardian of such minor donee is first his father, then his father’s executor, then his grandfather, then his executor.
If there is none of these, possession may be taken for the minor by any person under whose guardianship he may happen to be. However, as was observed in Abdul Raheman vs. Mishrimal, (1959) 61 Bom. L.R. 761, the mother cannot become a legal guardian and therefore possession given to her, when one of the aforestated guardians is alive, is ineffectual. Therefore, in this case, only the minor’s father can become his legal guardian to accept the gift; the mother cannot be the child’s legal guardian.
Stamp duty is payable on gift deed. Stamp duty differs across states. In Maharashtra, it is levied on a gift deed and is the same as paid on a conveyance, on the market value of the property that is the subject matter of the gift.
However, if the gift is made to a family member being husband, wife, brother or sister of the donor or any lineal ascendant or descendant of the donor, then the amount of duty chargeable shall be 2% of the market value of the property that is being gifted.
But in the present case, since the donee is a step-son of the donor, we would have to ascertain whether a step-son would be considered a lineal descendant.
Under Mohammedan Law, a step-son cannot inherit from his step-parents. Therefore, a view could be taken that a step-son does not come under the purview of a lineal descendant of a person and hence the stamp authorities and the sub-registrar concerned may take a view that the gift in the present case cannot be said to be a gift to lineal descendant and thus the normal rate of stamp duty will be applicable as applies to conveyance of immovable property. However, it may be worthwhile getting the gift deed adjudicated to ascertain the amount of stamp duty payable in this case.
Please also note that a gift deed, the subject matter of which is immovable property, must also be registered with the applicable sub-registrar of assurances.
Further, one interesting point to note here is that under Mohammedan Law a gift, either of movable or immovable property, need not be made in writing. However the burden of proving that gift, and consequently title to the property in question, will become onerous without a written instrument.