Section 127 of The Transfer of Property Act, 1882
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 done 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 done is at liberty to accept one of them and refuse the others, although the former may be beneficial and the latter onerous. Onerous gift to disqualified person.-- A done 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. Illustrations
- (a)A has shares in X, a prosperous joint stock company, and also shares in Y, a joint stock company, in difficulties. Heavy calls are expected in respect of the shares in Y. A given B all his shares in joint stock companies. B refuses to accept the shares in Y. He cannot take the shares in X.
- (b)A, having a lease for a term of years of a house at a rent which he and his representatives are bound to pay during the term, and which is more than the house can be let for, given to B the lease, and also, as a separate and independent transaction, a sum of money. B refuses to accept the lease. He does not by his refusal forfeit the money.
Summary
- An onerous gift is a gift that comes with a burden, debt, or financial obligation.
- If a gift consists of multiple items given in a single transfer, where some items have a financial burden and others do not, the receiver must accept everything or get nothing at all.
- If a giver uses separate and independent transfers to give different items to the same person, the receiver can choose to accept the beneficial items and reject the burdened ones.
- A receiver who is legally disqualified from signing contracts is not bound by accepting a burdened gift.
- If a minor accepts a burdened gift, they only become legally bound by the obligation if they keep the property after reaching the age of majority and becoming aware of the burden.
Practical examples
FAQ
1. What is an onerous gift under Section 127 of the Transfer of Property Act, 1882?
Under Section 127 of the Transfer of Property Act, 1882, an onerous gift is a transfer of property where the gift itself is burdened by an obligation, debt, or liability that the receiver must bear.
2. Can a receiver accept only the profitable parts of a single joint gift under the 1882 property Act, Section 127?
No, under Section 127 of the Transfer of Property Act, 1882, if a gift is made in a single transfer containing both burdened and unburdened items, the receiver must accept the entire transfer, they cannot accept only the beneficial parts.
3. Is a minor bound by accepting an onerous gift under Section 127 of the Transfer of Property Act, 1882?
Under Section 127 of the Transfer of Property Act, 1882, a minor or person incompetent to contract is not bound by their acceptance of a burdened gift, but they will become bound if they retain the property after they become competent and learn of the obligation.
4. How does a separate transfer change a receiver's right to reject burdened gifts under Section 127 of the Transfer of Property Act, 1882?
Under Section 127 of the Transfer of Property Act, 1882, if several things are transferred through separate and independent transactions, the receiver can freely accept the beneficial gifts and refuse the onerous ones.
Test yourself
Q1.Under Section 127 of the Transfer of Property Act, 1882, if a donor transfers a debt-free plot of land and a heavily mortgaged apartment to a donee in one single transaction, what must the donee do to receive the land?
Q2.Under Section 127 of the Transfer of Property Act, 1882, if a minor accepts a house that has an outstanding property tax debt, when does the minor become personally liable for that debt?
Q3.Under Section 127 of the Transfer of Property Act, 1882, if a donor makes two separate and independent gifts to the same donee on the same day, one being a profitable business and the other a debt-ridden farm, what is the donee's legal option?
Q4.Under Section 127 and Section 128 of the Transfer of Property Act, 1882, how does the rule on onerous gifts apply to a universal donee who receives a person's entire property?