A) ABSTRACT / HEADNOTE

This analysis examines N.P. Saseendran v. N.P. Ponnamma & Ors., Civil Appeal No. 4312 of 2025 (Supreme Court, 24 March 2025) and focuses on whether the instrument dated 26.06.1985 (Ext.A1 / “Dhananischayaadharam”) is a gift, settlement or will, and whether legal requirements for vesting a right were satisfied.

The Court held that Ext.A1 must be read as a settlement (gift by settlement): its opening clause effectuates an immediate disposition in praesenti in favour of the daughter (Respondent No.1), while later clauses reserve a life interest and limited mortgage rights to the donor (father).

The judgment applies settled principles:

(i) nomenclature is not decisive substance and intention govern construction;

(ii) delivery of possession is not an absolute requirement for gifts of immovable property where a registered instrument and conduct show acceptance;

(iii) a settlement may contain elements of gift and consideration (often non-monetary) and such consideration may be satisfied by familial care/obligations;

(iv) unilateral revocation of a valid gift/settlement is barred by s.126 of the Transfer of Property Act, 1882; and

(v) later repugnant clauses cannot cut down an earlier absolute disposition (doctrine of repugnancy / priority of earlier clause).

Applying these principles to the facts and recitals, the Court affirmed the High Court’s decree declaring Respondent No.1’s title and holding the 1993 cancellation and sale deeds void as against her. Key authorities and statutory provisions (discussed below) were applied to interpret acceptance, consideration in settlements, life-interest reservations and revocability.

Keywords: Gift; Settlement; Will; Transfer in praesenti; Acceptance of gift; Reservation of life interest; Revocation; Section 122, 123, 126 TP Act; Registration; Doctrine of repugnancy.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arises within a family: the donor (father, Defendant No.1) executed an instrument dated 26.06.1985 in favour of his daughter (Respondent No.1). The instrument (titled Dhananischayaadharam) contains an initial disposition in favour of the daughter, but later clauses reserve to the donor (and his wife) a life interest, the right to take income during their lifetimes, and limited mortgage rights (up to Rs.2,000).

Subsequently the donor executed (on 19.10.1993) a cancellation deed and a sale deed in favour of his son (appellant). The daughter sued (O.S. No.27 of 1994) for declaration of title and to render the cancellation and sale deeds void. Trial and first-appellate courts treated Ext.A1 as testamentary (a will) and dismissed the suit; the High Court reversed and declared Ext.A1 a settlement/gift and decreed title in favour of the daughter.

The appeal to the Supreme Court raised two core questions:

(1) legal character of Ext.A1 gift, settlement or will; and

(2) whether formal and substantive conditions (acceptance, registration, non-revocability) were satisfied so as to bar unilateral cancellation.

The Supreme Court, after reviewing statutory law and precedents (including K. Balakrishnan, Renikuntla Rajamma, Daulat Singh, P.K. Mohan Ram, and recent authorities on “consideration” in settlements) emphasised substance over nomenclature and held that Ext.A1 created an immediate vested interest in the daughter (settlement/gift), accepted by conduct and registration, thereby rendering the later cancellation and sale void as against her.

D) FACTS OF THE CASE

The essential facts (concise and factual): the donor executed Ext.A1 on 26.06.1985 in favour of his daughter, reciting:

(a) the property belonged to him and he was in possession;

(b) he disposes the property in favour of the daughter;

(c) he reserves life interest for himself and his wife;

(d) a limited mortgage right (to raise loan up to Rs.2,000) is recorded;

(e) daughter presented the instrument for registration (Document No.3148 of 1985).

No evidence of the daughter residing on the property, though she had possession of the original deed. In 1993 donor purported to cancel Ext.A1 (Document No.4233 of 1993) and sold the property to his son (Document No.4234 of 1993); mutation followed in the son’s favour and he paid taxes and claimed possession.

Proceedings: suit in 1994 by daughter; donor died in January 1995; courts below construed Ext.A1 as testamentary and dismissed; High Court (2019) held it a settlement/gift and granted declaration to the daughter; appeal was filed to Supreme Court.

The evidentiary record includes the registered instrument of 1985, the cancellation/sale deeds of 1993, revenue mutation entries, and witnesses including family members supporting the daughter’s acceptance.

E) LEGAL ISSUES RAISED

i. Whether Ext.A1 dated 26.06.1985 is a gift, a settlement or a will?
ii. If Ext.A1 is a gift/settlement, whether the donee accepted it during the lifetime of the donor so as to make it irrevocable under s.126 TP Act?
iii. Whether reservation of life interest and limited mortgage rights alter the nature of the instrument and permit unilateral cancellation?
iv. Whether registration and possession of the title deed by the donee constitute sufficient acceptance for an immovable gift?
v. Whether a cancellation deed and subsequent sale deed executed by the donor in 1993 can bind the donee where a valid gift/settlement exists.

F) PETITIONER / APPELLANT’S ARGUMENTS

i. The 1985 instrument is a will, not a gift donor retained ownership and possession and never intended an immediate transfer; thus revocation was permissible and the 1993 sale is valid.
ii. The daughter never accepted the alleged gift during donor’s lifetime; a legal notice demanding return of the deed shows she held it against donor’s wishes. Hence the formalities for a valid gift were not satisfied.
iii. The appellant relied on possession, mutation, tax payment and continuous enjoyment post-1993 to support his title.

G) RESPONDENT’S ARGUMENTS

i. The instrument is a settlement/gift — it transfers ownership in praesenti while reserving life interest; it was registered (Document No.3148/1985) which implies handing over and acceptance.
ii. Acceptance can be inferred from conduct — the donee had the original deed, sought registration, and family members corroborated. Delivery of possession is not essential for immovable gifts. Authorities such as Renikuntla Rajamma, K. Balakrishnan and Daulat Singh support this.
iii. Cancellation and subsequent sale were unilateral and void in law insofar as they sought to divest rights already vested in the donee; s.126 TP Act prohibits such unilateral revocation.

H) JUDGEMENT

The Supreme Court affirmed the High Court. Reasoning (condensed but detailed):

(1) Nature of instrument: read as a whole, the initial clause of Ext.A1 conveys the property in unequivocal terms to the daughter; subsequent clauses reserve only life interest and limited mortgage power. Under the settled tests (Ramaswami Naidu; P.K. Mohan Ram), substance whether the executant divested interest in praesenti controls over form. The Court observed that consideration in a settlement need not be monetary and family-care or other non-monetary consideration suffices (citing Ramachandra Reddy). Thus Ext.A1 is a settlement incorporating gift elements.

(2) Acceptance and registration: Registration of a gift of immovable property is mandatory (s.17 Registration Act; s.123 TP Act) and the donee’s presentation of the instrument for registration and possession of the original deed constitute acceptance by conduct. The Court relied on precedents holding that delivery of possession is not essential where registration and conduct show acceptance (Renikuntla Rajamma; K. Balakrishnan; Daulat Singh). Therefore the gift/settlement became complete during donor’s life, barring unilateral revocation.

(3) On reservation of life interest and mortgage right: Reservation of income and life interest does not convert a present transfer into a testamentary disposition; it merely imposes conditions consistent with settlement law. The donor’s continued ostensible possession was held to be limited (ostensible) and not an indication of retained absolute ownership. The limited mortgage right (Rs.2,000) did not resurrect donor’s absolute title. The Court applied the doctrine that later repugnant clauses cannot destroy an earlier clear grant earlier absolute grant prevails.

(4) Revocation and cancellation: s.126 TP Act bars unilateral revocation of a completed gift. Since Ext.A1 was accepted and acted upon, unilateral cancellation and the 1993 sale were void as against the donee; the Registrar’s registration of the cancellation could not confer validity over the settled title. The Court noted that issues of irregularity/fraud in registration are matters for civil adjudication (citing Satya Pal Anand).

(5) Conclusion of law: The High Court’s decree declaring the daughter’s right, title and interest was affirmed; cancellation and sale deeds of 1993 were declared incapable of affecting her vested interest. The judgment reconciled clauses and applied established principles on gifts, settlements and wills.

a. RATIO DECIDENDI

The dispositive ratio is: when an instrument contains an unequivocal earlier clause transferring title in praesenti and later clauses only reserve life interest or impose conditions, the earlier grant controls; registration and the donee’s conduct (receipt/registration of deed) can amount to acceptance under s.122–123 TP Act, making the gift/settlement complete and irremediable by unilateral cancellation under s.126 TP Act. Consideration in a settlement may be non-monetary and does not prevent classification as settlement; nomenclature does not bind construction.

b. OBITER DICTA 

The Court reiterated doctrinal points:

(i) consideration in settlements has a broad meaning (family care, services);

(ii) authorities under the Registration Act cannot cancel documents unilaterally without civil adjudication;

(iii) doctrine of severability permits composite instruments to be treated as settlement and will for different dispositions; and

(iv) delivery of possession is only one mode of proving acceptance for immovable gifts registration and conduct suffice.

These observations develop practical guidance though not strictly essential to the decision.

c. GUIDELINES

1. Read instruments as a whole; identify earlier absolute dispositions and test for repugnancy with later clauses.

2. For immovable gifts/settlements ensure registration under s.17 Registration Act; donee’s presentation/registration and possession of deed may evidence acceptance.

3. Reservation of life interest does not convert a present vesting into a testamentary gift; it is compatible with settlements.

4. Unilateral cancellation of a completed gift/settlement is barred by s.126 TP Act; the aggrieved must seek civil remedy.

5. Consideration in settlements can be non-monetary; courts must evaluate adequacy contextually (family obligations, care).

I) CONCLUSION & COMMENTS

The Supreme Court’s approach is faithful to the long line of precedents that prioritize substance and party intention over labels. Practically, the judgment clarifies that families should be careful in drafting: if the donor intends a revocable arrangement, express reservation of revocation must appear; conversely, donees should ensure registration and documentary control to evidence acceptance.

The Court strengthens protections for bona fide donees who act on registered instruments and confirms the limited role of mere possession/registration irregularities to defeat substantive vested rights those are to be tested in civil courts. The judgment sensibly reiterates that settlements may carry elements of gift and will and that the doctrine of severability and earlier-clause priority are crucial tools of construction.

For practitioners, the case underlines:

(a) the importance of clear drafting,

(b) careful record of acceptance steps (possession/registration), and

(c) the limited efficacy of unilateral cancellation once a valid gift/settlement is completed.

J) REFERENCES

a. Important Cases Referred

1. Ramachandra Reddy (Dead) through LRs & Ors. v. Ramulu Ammal through LRs, 2024 SCC Online SC 3304.

2. K. Balakrishnan v. K. Kamalam & Ors., (2004) 1 SCC 581.

3. Renikuntla Rajamma (Dead) v. K. Sarwanamma, (2014) 9 SCC 445.

4. Daulat Singh v. State of Rajasthan, (2021) 3 SCC 459.

5. P.K. Mohan Ram v. B.N. Ananthachary & Ors., (2010) 4 SCC 161.

6. Naramadaben Maganlal Thakker v. Pranjivandas Maganlal Thakker & Ors., (1997) 2 SCC 255.

7. Satya Pal Anand v. State of M.P., (2016) 10 SCC 767.

8. Daulat Singh / Asokan v. Lakshmikutty and other authorities as cited in judgment.

b. Important Statutes Referred

1. Transfer of Property Act, 1882 — ss.122, 123, 126, 127, 128.

2. Registration Act, 1908/1909 — s.17 (registration of immovable gifts).

3. Indian Succession Act, 1925 — Part VI (wills) — ss.2(h), 59, 61, 62, 63, 70, 89.

4. Specific Relief Act, 1963 — s.2(b) (definition of settlement).