The Supreme Court has ruled that a gift of property made out of natural love and affection, which includes reservation of life interest in favor of the donor, constitutes a valid settlement deed and cannot be unilaterally revoked. The decision was delivered in the case N.P. Saseendran vs. N.P. Ponnamma & Ors., Civil Appeal No. 4312 of 2025, upholding a daughter’s rights over property settled in her favor by her father.
A bench comprising Justice JB Pardiwala and Justice R Mahadevan held that the presence of life interest, conditions on use, or restrictions on possession do not negate the immediate transfer of ownership when the core elements of a settlement are met—namely, voluntary transfer, no consideration, and vesting of rights in praesenti.
“Reservation of life interest and imposition of conditions do not alter the character of a settlement, especially when the donor has expressed love and affection as the basis of the transfer,” the Court said.
Case Background
The appellant, N.P. Saseendran, challenged a Kerala High Court decision that had favored his sister, N.P. Ponnamma, in a dispute over property originally owned by their father, N.P. Narayana Pillai. In 1985, Pillai executed a registered document (Ext.A1) transferring property to Ponnamma, citing love and affection, while reserving the right to enjoy the income and mortgage up to ₹2,000.
However, in 1993, he executed a cancellation deed and a sale deed in favor of Saseendran, attempting to revoke the earlier document. Ponnamma sued, claiming that the 1985 deed was a gift/settlement and could not be unilaterally cancelled.
Her suit was dismissed by the trial and first appellate courts, which held the document was a Will, not a gift. But the Kerala High Court reversed those findings, declaring the document a settlement and granting her full ownership.
Key Legal Issues
- Was the 1985 document a Will, Gift, or Settlement?
- Can a gift/settlement deed with life interest be revoked unilaterally?
- What is the legal effect of love and affection as consideration in property transfer?
Supreme Court’s Analysis
Justice Mahadevan analyzed the content of the 1985 document and noted that while the father reserved certain rights—like enjoyment of income and temporary mortgage—he also clearly transferred ownership to Ponnamma “in consideration of love and affection.”
Quoting from the document:
“The schedule below properties are herein conveyed to you, for your subsistence and for residence after constructing a house… Now onwards, you have every right to make the necessary constructions… pay taxes… and obtain Purchase Certificate.”
The Court observed:
- The document transferred ownership in praesenti.
- The retained life interest did not override the vesting of rights.
- The intention of the donor was to settle the property in favor of the daughter.
- The deed was registered and accepted by the donee, making it legally effective.
Relying on precedents like P.K. Mohan Ram v. B.N. Ananthachary and K. Balakrishnan v. K. Kamalam, the Court said:
“The nomenclature of the document is irrelevant. What matters is the substance, intent, and legal effect. A gift or settlement once validly executed and accepted cannot be revoked unilaterally.”
What the Court Held
- The 1985 deed was a settlement deed, not a Will.
- It involved a valid transfer of ownership with immediate effect.
- Love and affection is a recognized form of consideration in family settlements.
- The cancellation deed and subsequent sale executed in 1993 were invalid.
- The daughter’s title over the property stands confirmed.
Key Takeaways from the Judgment
- A settlement deed may include conditions and life interest without losing its legal validity.
- A gift or settlement, once made and accepted, cannot be revoked unilaterally under Section 126 of the Transfer of Property Act.
- Delivery of possession is not essential for the validity of a gift or settlement of immovable property.
- Natural love and affection is a valid ground for executing such transfers among family members.
