In the Indian Legal System, the property transactions, two commonly used legal instruments are the Deed of Relinquishment and the Gift Deed. Both documents are used for the transfer of property rights without a sale, yet they serve distinct legal purposes. In this post we will discuss about the differences, the essential ingredients of each, the competence of parties involved.
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What is a Deed of Relinquishment?
A Deed of Relinquishment is a legal document through which a co-parcener or co-sharer voluntarily gives up or releases their share or interest in a jointly held property in favor of other co-owners or legal heirs. In general, the relinquishment occurs in cases of inherited property. In simple terms, the term relinquishment means to abandon or give up.
Key Features of a Relinquishment Deed:
- Applicable only among legal heirs & co-sharers.Used for ancestral or jointly owned property.
- Must be without consideration
- Cannot be executed by one in favour of any individual (explained later in ithe llustration section)
- Once executed and registered, it becomes irrevocable and the party who executed the deed of relinquishment cannot claim equity with respect to the property already relinquished in the competent court of law, unless he proves fraud in executing such document.
What is a Gift Deed?
A Gift Deed is governed under Section 122 of the Transfer of Property Act, 1882. It is a document through which a person (the donor) voluntarily transfers ownership of a property to another person (the donee) without any monetary consideration. It can be executed between any two individuals, not restricted to the legal heirs or co-sharers, or co-parceners.
Key Features of a Gift Deed:
- Must be voluntary and without coercion.Must be without consideration.
- Must be accepted by the donee during the donor’s lifetime.
- Becomes irrevocable once executed and registered.
- If one wants to cancel the executed gift deed, he/she must have to approach the Civil Court and as such it cannot be cancelled unilaterally
Essential Ingredients of a Relinquishment Deed:
- Parties to the deed must be co-owners or co-parceners.
- A clear and unambiguous description of the property.
- Statement of voluntary relinquishment of rights.
- Must be in writing and duly signed by all parties to the deed.
- Cannot be executed in favour of a particular person.
- Registration under Section 17 of the Registration Act, 1908 is mandatory.
Essential Ingredients of a Gift Deed:
- Donor and donee must be clearly identified.
- Voluntary and unconditional transfer of property.
- Acceptance of the gift by the donee is a must, or else the gift loses its value.
- Must be executed on a stamp paper of appropriate value.
- Must be registered under Section 17 of the Registration Act, 1908 and Section 123 of the Transfer of Property Act.
Who is Competent to Execute These Deeds?
For a Gift Deed:
The donor must be competent to contract (i.e., of sound mind and above 18 years).The donee can be anyone, be it a minor or major. However, if the donee is a minor, the gift must be accepted by a guardian on their behalf.
For a Relinquishment Deed:
The person relinquishing their right must be a co-sharer or co-owner. The person in whose favor the relinquishment is made must also be a co-owner or co-parcener.
Governing Laws and Provisions under Indian Law
Transfer of Property Act, 1882
Section 122: Governs the legal concept of gift.
Section 123: Requires that a gift of immovable property it to be registered.
Registration Act, 1908
Section 17: Mandates registration of gift deeds and relinquishment deeds involving immovable property.
Section 49: Deals in those cases, where the deeds are not registered and their evidentiary value.
Indian Stamp Act, 1899
Specifies the stamp duty payable on the execution of both types of deeds, which varies from state to state.
Hindu Succession Act, 1956
Plays a crucial role in determining legal heirs for the purpose of relinquishment.
Illustration:
- For Example, let us assume there are 5 brothers and sisters (a,b,c,d & e) in a joint family property, which they have purchased together. Here they are called as co-sharers to the joint family property. The property is of 10 Acres, and each co-sharer has 2 Acres each in their respective share. Due to some reason or other, 'c' does not want to possess or hold his part of the property and wants his share to be relinquished. Here, 'c' have to execute a deed of relinquishment stating his intention to relinquish his share of property (2 Acres) in favour of other co-sharers. Be it noted here that, 'c' cannot execute the relinquishment deed in favour of 'a' or 'b' or 'd' etc, rather on being executed, his share of 2 Acres would be equally distributed among other four (4) co-sharers. In this case, 'a' to 'e' except 'c' would possess 2.05 Acres each (2+ 2/4).
- Let us take the aforesaid example and assume that instead of buying the property jointly, 'a' to 'e' had inherited the property from their ancestors. In such cases, they would be called as co-parceners instead of co-sharers. Then also the same principle is applicable in case of deed of relinquishment and if 'c' wants, he has to execute the relinquishment deed in favour of all other co-parceners and not just any particular co-parcener.
- Suppose, 'c' does not want to hold his share and want it to be given to a particular person, for e.g. 'e'. In that case, 'c' has to execute a gift deed in favor of 'e'. After the gift deed is executed and registered, 'e' would possess 4 Acres of land (own 2+gifted 2). Be it be noted here that, it is the discretion of 'c' to gift his entire share or a part of it. In this case, 'c' cannot execute the deed of relinquishment in favor of 'e' and if any such deed of relinquishment is executed and registered, that would be void in the eye of law.
- On the contrary, if 'c' wants to execute gift deed with respect of his share with any other person or stranger to his property, then he is competent to do so.
Conclusion
While both a Deed of Relinquishment and a Gift Deed are non-sale modes of transferring property, their legal essence, parties involved, and procedural requirements differ significantly. A relinquishment is limited to legal heirs and co-owners, while a gift deed can be executed in favor of any individual. Knowing these distinctions is a must for ensuring legally sound and dispute-free property transactions.
Reference
The High Court of Delhi distinguishes a relinquishment deed from a gift-deed
Difference between transferability of will gift and relinquishment deed/
Relinquishment deed meaning importance and format
Gift deed and relinquishment deed in real estate,whats-the-difference