Instrument Dated 26.06.1985 Is a Settlement; Unilateral Cancellation and Subsequent Sale Are Void, Supreme Court Affirms

A Bench of Justices R. Mahadevan and J.B. Pardiwala heard an appeal against the Kerala High Court judgment which had set aside concurrent findings of the trial and first appellate courts and declared that a 1985 instrument vested title in the daughter as a gift/settlement and that a 1993 cancellation deed and sale deed executed by the father would not bind the plaintiff. The primary issue concerned whether the 1985 document was a gift/settlement or a testamentary will and whether the legal requirements for vesting and acceptance were satisfied.

The Court dismissed the appeal and confirmed the High Court decree declaring the plaintiff’s right, title and interest in the suit schedule property. The Bench held that the substance of the 1985 instrument showed a disposition in praesenti with reservation of life interest and therefore constituted a settlement (with the element of gift), not a revocable will. The Court observed that registration and conduct of the parties could establish acceptance and that unilateral revocation was impermissible under Section 126 of the Transfer of Property Act. The Court, in its reasoning, observed: “The element of voluntary disposition is common to all the three deeds. The element of gift is traceable to both ‘settlement’ and ‘will’. As settled in law, the nomenclature of an instrument is immaterial and the nature of the document is to be derived from its contents. While so, a voluntary disposition can transfer the interest in praesenti and in future, in the same document. In such a case, the document would have the elements of both the settlement and will. Such document, then has to be registered and by operation of the doctrine of severability, becomes a composite document and has to be treated as both, a settlement and will and the respective rights will flow with regard to each disposition from the same document. It is pertinent to mention here that the reservation of life interest or any condition in the instrument, even if it postpones the physical delivery of possession to the donee/settlee, cannot be treated as a will, as the property had already been vested with the donee/settlee.” The Court further stated that “the unilateral cancellation of the document is void” and that the sale deed executed thereafter was invalid.

Background The suit arose from an instrument dated 26.06.1985 executed by the father in favour of his daughter, described in the record as “Dhananischayaadharam”. The instrument recited, inter alia, “In consideration of my love and affection towards you, the schedule below properties are herein conveyed to you … Till my lifetime, I shall be in possession of the schedule properties and shall take the yields from it … After my lifetime, Janaki Amma … shall have the right to possess the property and take income from the property … Now onwards, you have every right to make the necessary constructions in the scheduled property, pay taxes to the Government and obtain Purchase Certificate for the same.” The daughter presented the deed for registration and relied on Section 122–126 of the Transfer of Property Act to claim an immediate vesting in praesenti subject to reserved life interest.

The father subsequently executed a cancellation deed and a sale deed in favour of his son on 19.10.1993. The daughter filed O.S. No. 27 of 1994 seeking declaration of title and injunction. The trial Court and the First Appellate Court treated the 1985 instrument as a will and dismissed the suit; the High Court in R.S.A. No.1338 of 2004, by judgment dated 10.06.2019, set aside the concurrent findings and granted a declaratory decree in favour of the plaintiff treating the instrument as a settlement/gift. The son appealed to the Supreme Court.

The Supreme Court reviewed legal distinctions among gift, settlement and will, reiterated that nomenclature was not decisive and that acceptance may be inferred from conduct including registration and custody of the deed. Relying on precedents, the Court held that a reservation of life interest did not render the transfer testamentary where the document vested rights in praesenti. Finding that the daughter had accepted the instrument and acted upon it, the Court held the purported unilateral cancellation and subsequent sale to be void. The appeal was dismissed and the High Court decree was confirmed; the parties were directed to bear their own costs. The record noted the death of one respondent during proceedings and consequent amendment of cause title.

Case Details: Case No.: CIVIL APPEAL NO. 4312 OF 2025 (Arising out of SLP (C) No. 698 of 2023) Case Title: N.P. Saseendran v. N.P. Ponnamma & Ors. Appearances: For the Petitioner(s): [Not indicated in the judgment] For the Respondent(s): [Not indicated in the judgment]