Gift deed and promissory note
Drafting, Pleading and Conveyance · Unit IV · Topic 15 of 19 · 6 min read
Cases checked to exist. Read the judgment before quoting a holding.
Every case cited here has been checked to exist — the citation resolves and names the right parties. The propositions attributed to each case have not been verified line by line against the judgment. Case names link through to the full judgment: read it before quoting a holding in an examination answer, and never carry a proposition from notes into court on trust.
1. Gift: the essentials
Section 122 of the Transfer of Property Act, 1882 (TPA) defines a gift as the transfer of certain existing movable or immovable property made voluntarily and without consideration by the donor to the donee, and accepted by or on behalf of the donee. Acceptance must be made during the donor’s lifetime and while he is still capable of giving; if the donee dies before acceptance, the gift is void.
- Existing property only. A gift of future property is void (section 124).
- Mode (section 123). A gift of immovable property must be effected by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. Movable property may be given by such an instrument or by delivery. Section 17(1)(a) of the Registration Act, 1908 makes registration of a gift of immovable property compulsory whatever its value.
- Revocation (section 126). The parties may agree that the gift is suspended or revoked on a specified event not depending on the donor’s will; a gift revocable at the donor’s mere will is void to that extent. A gift may also be revoked where, if it were a contract, it could be rescinded (fraud, coercion, undue influence), except for want of consideration.
- Muslim gifts. Section 129 saves the rules of Muhammadan law; a hiba may be oral, completed by declaration, acceptance and delivery of possession.
Drafting points: state the relationship and the motive (“out of natural love and affection”), which explains the absence of consideration; record acceptance in the deed itself, with the donee signing; record delivery of possession; and if the donor wants to keep a life interest, say so expressly (the gift is then of the remainder).
GIFT DEED executed at Mysuru on 28 November 2026
BY: Smt. Kamala R. Rao, widow of late Raghavendra Rao, aged about 72 years, residing at No. 41, Kuvempunagar, Mysuru (the “Donor”) IN FAVOUR OF: Smt. Deepa S. Murthy, her daughter, aged about 44 years, residing at No. 12, Jayanagar, Mysuru (the “Donee”).
- The Donor is the absolute owner of the Schedule Property, which she purchased under a registered sale deed dated 6 June 1995, Document No. 1832 of 1995-96, Sub-Registrar, Mysuru South.
- Out of natural love and affection for the Donee, her daughter, and without any consideration, the Donor hereby gives the Schedule Property to the Donee absolutely.
- The Donor makes this gift voluntarily, in sound health and of her own free will, without any pressure.
- The Donor has this day delivered possession of the Schedule Property to the Donee, together with the original title deeds.
- The Donee accepts the gift, in token of which she signs this deed.
- The Donor declares that the Schedule Property is free from encumbrances and that she has not previously transferred or agreed to transfer it.
- The Donee may have the khata transferred to her name. The market value of the Schedule Property for stamp duty is Rs. 62,00,000.
Schedule: residential house at Site No. 41, Kuvempunagar, Mysuru, measuring 30 × 40 feet, with boundaries.
Sd/- Donor. Sd/- Donee (accepting). Attesting witnesses (at least two): 1. … 2. …
2. Promissory note: the essentials
Section 4 of the Negotiable Instruments Act, 1881 defines a promissory note as an instrument in writing (not a bank note or currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer. The illustrations to section 4 show what fails: “I promise to pay B Rs. 500 seven days after my marriage with C” is conditional; “I promise to pay B Rs. 500 and all other sums which shall be due to him” is not a certain sum; “Mr. B, I O U Rs. 1,000” is a mere acknowledgment, not a promise. By contrast, “I acknowledge myself to be indebted to B in Rs. 1,000, to be paid on demand, for value received” is a promissory note.
- Stamp. A promissory note must be stamped; an unstamped note cannot be received in evidence or acted on, and the defect cannot be cured by paying penalty in the way allowed for most instruments. In practice a revenue stamp is affixed and signed across.
- Presumption. Section 118 presumes, until the contrary is proved, that every negotiable instrument was made for consideration and on the date it bears.
- Witnesses are not legally required but are useful to prove execution.
- Limitation. A suit on a note payable on demand lies within three years from the date of the note (Article 35 of the Limitation Act, 1963); on a note payable by instalments, from the due date of each instalment (Article 36).
- Material alteration without consent (for example, changing the amount) renders the note void against any party who did not consent to it (section 87).
ON DEMAND PROMISSORY NOTE
Place: Dharwad. Date: 10 January 2025. Rs. 4,00,000.
On demand I, Mahesh S. Kulkarni, son of Shankar Kulkarni, residing at No. 7, Saptapur, Dharwad, promise to pay Sri Anil V. Desai, son of Vasant Desai, residing at No. 18, Malmaddi, Dharwad, or order, the sum of Rs. 4,00,000 (Rupees Four Lakh only) with interest at 9 per cent per annum from this date, for value received by bank transfer this day.
[Revenue stamp, signed across] Sd/- Mahesh S. Kulkarni (Maker)
Witnesses: 1. … 2. …
Consideration receipt (separate document): “Received from Sri Anil V. Desai Rs. 4,00,000 by RTGS on 10 January 2025, for which I have executed an on-demand promissory note of this date. Sd/- Mahesh S. Kulkarni.”
Had the parties used this note, the plaint in the earlier note could have sued on the instrument itself, with the section 118 presumption of consideration, and the defendant’s “advance for work” defence would have had to overcome it.
How this is examined
The syllabus names both the gift deed and the promissory note, so each should appear among the 15 conveyancing exercises (3 marks each). A settlement deed in favour of a family member and a release deed are useful companions to the gift deed. At the viva: the essentials of a gift; acceptance and the effect of the donee’s death before it; section 123 formalities; when a gift can be revoked; the definition of a promissory note and the illustrations to section 4; and the limitation for a suit on a demand note.