Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 15
PETITIONER:
KU. SONIA BHATIA
Vs.
RESPONDENT:
STATE OF U.P. & ORS.
DATE OF JUDGMENT17/03/1981
BENCH:
FAZALALI, SYED MURTAZA
BENCH:
FAZALALI, SYED MURTAZA
VARADARAJAN, A. (J)
ERADI, V. BALAKRISHNA (J)
CITATION:
1981 SCR (3) 239 1981 SCC (2) 585
1981 SCALE (1)491
ACT:
U.P. Imposition of Ceiling on Land Holdings Act 1960-
Section 5(6)-Scope of-Gift of property for love and
affection-If could be said to be a transfer for
consideration.
Words and phrases-"Consideration."-’Adequate"-"Gift"-
"Transfer"-Meanin of.
Interpretation-Words of everyday use-How interpreted.
HEADNOTE:
Sub-section 6 of section 5 of the U.P. Imposition of
Ceiling on Land Holdings Act, 1960 as it stood at the
relevant time provided that in determining the ceiling area
any transfer of land made after January, 24, 1971 should be
ignored and not taken into account. Clause (b) of the
proviso to sub-section 6 which carves out an exception
states that the sub-section shall not apply to a transfer
proved to the satisfaction of the Prescribed Authority to be
in good faith and for adequate consideration under an
irrevocable instrument. Explanation II to this proviso
places the burden of proof that a case fell within clause
(b) of the proviso is on the party claiming its benefit.
On January 28, 1972 the donor gifted away certain lands
in favour of his grand-daughter, the appellant, daughter of
a pre-deceased son.
The gift having been made after the prescribed date,
the Prescribed Authority ignored the gift for purposes of
section 5 (6) of the Act.
On appeal, the District Judge gave a finding in favour
of the appellant holding that the gift was bona fide having
regard to the circumstances in which it was made and that it
could not be held invalid merely because it was executed
after the due date of January 24, 1971.
Purporting to follow one of its earlier decisions, the
High Court held that a gift not being a transfer for
consideration, had to be ignored under the provisions of the
Act and that a gift being a gratuitous transfer made out of
love and affection fell outside the purview of clause (b) of
the proviso.
On behalf of the appellant it was contended that a gift
could not be said to be a transfer without consideration
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 15
because even love and affection may
240
provide sufficient consideration and hence the condition
regarding adequate consideration would not apply to a gift.
Dismissing the appeal
^
HELD: It is a well settled rule of construction of
statutes that where the definition of a word has not been
given in an enactment it must be construed in its popular
sense if it is a word of every day use, that is, the sense
in which people conversant with the subject-matter with
which it deals would attribute to it. Similarly if the
language used is clear and explicit, the provision cannot be
reduced to a nullity by reading into it a meaning which it
does not carry. [246B]
In the instant case therefore, the word "transfer"
being a term of well-known legal significance with well
ascertained incidents the legislature did not consider it
necessary to define it separately. It is used in the sense
in which it is used in the Transfer of Property Act. [245 G]
C.I.T., Andhra Pradesh v. M/s. Taj Mahal Hotel,
Secunderabad [1972] 1 S.C.R. 168 and Union of India v.
Sankal Chand Himatlal Sheth and Anr. [1978] 1 S.C.R. 423
applied.
Keats v. Lewis [1911] A.C. 641 referred to.
A conspectus of the meaning of the term "gift" is that
it is a transfer which does not contain an element of
consideration in any shape or form. Where in respect of a
gift there is a benefit measurable in terms of money the
transaction ceases to be a gift and assumes a different
colour. Yet another salient feature of a gift is that love,
affection and many other factors may constitute the motive
for the gift and may enter into the intention of the donor
making a gift, but none of these can be held to be legal
consideration, as understood by law. [251 G-H; 252F]
"Consideration" means a reasonable equivalent or other
valuable benefit passed on by the promisor to the promisee
or by the transferor to the transferee. When the term
consideration is qualified by the word "adequate" it makes
it sufficient and valuable having regard to the facts,
circumstances and necessities of the case. [251 F]
The word "transfer for adequate consideration" used in
clause (b) of the proviso excludes a transaction, which is
in the nature of a gift and which is without consideration.
[252 E]
The argument that if the legislature intended to
exclude gifts clause (b) of the proviso would have expressly
said so and by not excluding it must be deemed to have
included a gift is without force particularly in the face of
the clear and unambiguous language of the proviso. Every
legislature has its own technical device to express its
intendment. Express exclusion is not the only method of
conveying the legislative intent there may be other methods
or devices by which a legislature expresses its intent;
namely, by using expressions, which would exclude a
particular transaction by necessary intendment. This is what
is done in enacting clause (b) of the proviso. [252 G-H]
241
The legislature has made its intention clear that a
gift is excluded by qualifying the word "consideration" with
the adjective "adequate". [252 H]
By using the word "adequate" to qualify the word
"consideration" the legislature has ruled out gifts from the
ambit of clause (b) of the proviso. [253 C]
The words "adequate consideration" clearly postulate
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 15
that consideration must be capable of being measured in
terms of money, having regard to the market price of the
property, the value that it may fetch if sold, the value of
similar lands situate in the vicinity and so on. [253 B]
The argument that since in the case of a gift there is
no question of consideration, the words for "adequate
consideration" in the 3rd part of clause (b) of the proviso
are inapplicable and should, therefore, be ignored is
opposed to the well known rule of interpretation that
Courts, while interpreting statutes, must not legislate. A
legislature does not use words without any intention and
every word used by the legislature must be given its due
import. The intention of the legislature in using the words
"adequate consideration" is to exclude any transaction which
is not for adequate consideration. Even if a sale is bona
fide if to but consideration is inadequate, the transaction
would fall beyond the protection of clause (b) of the
proviso. [253 E-F]
Debi Saran Koiri and Anr. v. Nandlal Chaubey and Ors.
A.I.R. 1929 Patna 591 and Kulasekaraperumal v. Pathakutty
Thalevanar and Ors. A.I.R. 1961 Madras 405 approved,
The words "adequate consideration" carry a well-known
legal significance and, therefore, convey the same meaning
and import in whichever statute they are used unless a
contrary intention appears from the language employed by the
legislature in a particular Act. [256 E-F]
Tulsidas Kilachand v. The Commissioner of Income-tax
Bombay City I, [1961] 3 S.C.R. 351, referred to
Fateh Mohammed v. District Judge [Civil Writ Petition
No. 915 of 1975, decided on 10-7-78] overruled.
An explanation merely widens the scope of the main
section and is not meant to carve out a particular exception
to the main section. The words admission, acknowledgment,
relinquishment or declaration used in Explanation I, do not
absolve the party concerned from proving that the transfer
should be executed in good faith and for adequate
consideration. [256 E-F]
However laudable the object of the donor in gifting the
property to his grand-daughter (particularly in the
circumstances of this case) may be and whatever hardship
might ensue to the donee by applying the provision, the gift
fails if it does not fulfil the other essential requirements
of the section. The act was enacted to implement one of the
Directives contained in Part IV of the Constitution and if
in this process a few individuals suffer that cannot be
helped, for, individual interests must yield to the larger
interests of the community. [258 D-F]
242
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 775 of
1981.
Appeal by Special Leave from the Judgment and Order
dated 21.12.78 of the High Court of Allahabad in C.M.W.P.
No. 12602/77.
S. N. Kacker and Prem Malhotra for the Appellant.
O. P. Rana and S. Dikshit for the Respondent.
The Judgment of the Court was delivered by
FAZAL ALI, J. This appeal by special leave is directed
against a judgment dated December 21, 1978 of the Allahabad
High Court allowing the writ petition filed by the State of
U.P. before the Court.
The case arose out of an order passed by the Prescribed
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 15
Authority under the U.P. Imposition of Ceiling on Land
Holdings Act, 1960 (hereinafter referred to as the ’Act’),
as amended uptodate, by which the said Authority rejected
the claim of the petitioners on the basis of a gift which
had been executed by her grandfather by a registered
document dated January 28, 1972. The Act was passed as far
back as 1960 but by virtue of an amendment, being U.P. Act
No. 18 of 1973, section 5 was introduced which placed a
ceiling on any tenure holder to hold land in excess of the
ceiling area fixed under the Act. Section 5 contained
various sub-sections but in the instant case we are
concerned only with sub-section (6) as also clause (b) of
the proviso to the said sub-section. By another amendment,
being U.P. Act No. 2 of 1975, which was given retrospective
operation with effect from 8.6.1973 Explanation I, alongwith
its sub-clauses, was added to sub-section (6) of section 5.
The decision in the present case turns upon the
interpretation of sub-section (6) of s. 5 and the proviso
therein in order to determine the validity of the deed of
gift said to have been executed by Chunni Lal Bhatiya, the
grandfather of the petitioner Sonia and respondent No. 4
before the District Judge.
To begin with, we might like to state here that the
facts of the case undoubtedly reveal that if the provisions
of the said sub-section (6) were to apply it would work
serious hardship to the petitioner but as we are concerned
with interpretation of an important statute the mere fact
that a correct interpretation may lead to hardship would not
be a valid consideration for distorting the language of the
statutory provisions.
243
Before we proceed to examine the relevant provisions,
it may be necessary to give a resume of the facts of the
case. Chunni Lal Bhatiya had two sons, Sudesh and Mahesh and
a daughter Smt. Sarla, On 14.9.1969 Chunni Lal executed a
registered deed of gift in respect of 110 bighas in favour
of his son, Sudesh. A month later, another deed of gift was
executed in favour of his son, Sudhir. So far as these two
gifts are concerned, as they were made before the amendment
of the Ceiling Act, their validity was beyond question and
they are not the subject-matter of any dispute in the
present case. On January 28, 1972 Chunni Lal executed a gift
in respect of 80 bighas in favour of his grand-daughter,
Sonia (daughter of Mahesh.) It appears that a serious
misfortune had befallen Chunni Lal in that he lost his two
sons, Sudesh and Mahesh, who were serving in the Air Force
and died in two different air crashes. As Chunni Lal wanted
to make sufficient provision for his grandsons and grand-
daughter, he executed the three gifts.
The gift executed in favour of Sonia is the subject-
matter of the dispute in the instant case. The Prescribed
Authority held that as the gift was made after the due date,
i.e. 24.1.1971, as prescribed by sub-section (6) of s. 5,
the transfer would have to be ignored. Against the decision
of the Prescribed Authority, the appellant filed an appeal
before the District Judge being the Appellate Authority, and
assailed the finding of the Prescribed Authority. The
District Judge, after hearing the parties, came to a clear
finding that the gift was a bona fide one having regard to
the circumstances in which the transfer was made and merely
because it was executed after the due date (24.1.1971) it
could not be held to be invalid. Thereafter, the State of
U.P. filed a writ petition in the High Court which was
allowed following a Division Bench decision of its Court in
Fateh Mohammad v. District Judge which had held that a deed
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 15
of gift not being a transfer for consideration had to be
ignored under the provisions of the Act. Hence, this appeal
before us.
The finding of the District Judge that the gift was a
bona fide one has not been challenged by Mr. Rana, appearing
for the respondent, who however argued that the said gift
itself was not covered by the Explanations laid down in the
proviso to the said sub-section (6) of s. 5 of the Act. Thus
the only question for determination in the instant case is
the legal effect of the prohibition contained in sub-section
(6) and clause (b) of its proviso. In order to
244
understand the scope and ambit of sub-section (6) and its
proviso, it may be necessary to extract the relevant
portions of sub-section (6) and Explanations concerned:-
"6. In determining the ceiling area applicable to
a tenure-holder, any transfer of land made after the
twenty fourth day of January, 1971, which but for the
transfer would have been declared surplus land under
this Act, shall be ignored and not taken into account:
Provided that nothing in this sub-section shall
apply to:-
... ... ... ...
"(b) a transfer approved to the satisfaction of
the prescribed authority to be in good faith and for
adequate consideration and under an irrevocable
instrument not being a benami transaction or for
immediate or deferred benefit of the tenure-holder or
other members of his family.
Explanation I-For the purposes of this sub-
section, the expression transfer of land made after the
twenty fourth day of January, 1971, includes:-
(a) a declaration of a person as a co-tenure made
after the twenty-fourth day of January, 1971 in a
suit or proceeding irrespective of whether such
suit or proceeding was pending on or was
instituted after the twenty fourth day of January,
1971;
(b) any admission, acknowledgement, relinquishment or
declaration in favour of a person to the like
effect, made in any other deed or instrument or in
any other manner."
"Explanation II-The burden of proving that a case
falls within clause (b) of the proviso shall rest with
the party claiming its benefit."
The substantive provision which is contained in sub-
section (6) clearly provides that any transfer after the
24th of January 1971 would have to be ignored and not taken
into account in determining the surplus area. Clause (b) of
the proviso to sub-section (6) (hereinafter referred to as
’clause (b) of the proviso’) however, carves out an
exception to the general rule contained in sub-section (6)
and
245
Explanation II places the burden of proving the fact, that
the case falls within the protection of clause (b) of the
proviso, on the party relying on the transfer and claiming
its benefit. A careful analysis of clause (b) of the proviso
would reveal that it requires the following conditions to be
fulfilled before a transfer can seek its protection:
(1) that the transfer must be in good faith,
(2) that it must be proved to be in good faith to the
satisfaction of the Prescribed Authority,
(3) that it should be for adequate consideration and
under an irrevocable instrument, and
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 15
(4) that it should not be in the nature of a benami
transaction for immediate or deferred benefit of
the tenure holder or other members of his family.
It is manifest that if these conditions are satisfied
and proved to the satisfaction of the Prescribed Authority
then the burden which lies on the claimant under Explanation
II would have been discharged and the transfer would not be
ignored but would fall under the protective umbrella
contained in clause (b) of the proviso. It may be noticed
that the legislature in its wisdom has neither defined the
word ’transfer’ in any of the definitions of the Act nor has
clarified it. The primary object of the Act is to prevent
the tenure holders from evading the Law of Ceiling by making
fictitious transfers even by registered documents either
before or after the due date so as to evade the provisions
of the Act and thus frustrate the very object and the social
purpose for which the Act had been passed. In these
circumstances, therefore, the word ’transfer’ has obviously
been used by the legislature in the general sense of the
term as defined in the Transfer of Property Act, which is
the statute that governs all transfers of movable or
immovable properties. In other words, the word ’transfer’
being a term of well-known legal significance having well
ascertained incidents, the legislature did not think it
necessary to define the term ’transfer’ separately.
Similarly, the word ’consideration’ also being a term
commonly used to denote contracts, sales and transactions,
has been used in the same sense, that is to say, as defined
by s. 2(d) of the Contract Act.
It is well settled that whenever the legislature uses
certain terms or expressions of well-known legal
significance or connotation the courts must interpret them
as used or understood in the popular
246
sense. In the case of C.I.T. Andhra Pradesh v. M/s. Taj
Mahal Hotel, Secundrabad this Court while laying down
guidelines for holding how a particular expression has been
defined, observed as follows:-
"Now it is well settled that where the definition
of a word has not been given, it must be construed in
its popular sense if it is a word of every day use.
Popular sense means "that sense which people conversant
with the subject matter with which the statute is
dealing, would attribute to it".
Lord Atkinson in Keats v. Lewis observed as follows:
"In the construction of a statute it is, of
course, at all times and under all circumstances
permissible to have regard to the state of things
existing at the time the statute was passed, and to the
evils, which as appears from its provisions, it was
designed to remedy. If the words are capable of one
meaning alone then it must be adopted, but if they are
susceptible of wider import, we have to pay regard to
what the statute or the particular piece of legislation
had in view."
These observations are fully applicable to the present
Act which has for its object remedying the evil of evading
the ceiling law by the large landholders by executing sale
deeds or other instruments so as to escape the consequences
of the law. In Union of India v. Sankal Chand Himatlal Sheth
& Anr. Chandrachud, J., as he then was, observed as
follows:-
"The normal rule of interpretation is that the
words used by the legislature are generally a safe
guide to its intention. Lord Reid in Westminster Bank
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 15
Ltd. v. Zang [1966 A.C. 182] observed that "no
principle of interpretation of statutes is more firmly
settled than the rule that the Court must deduce the
intention of Parliament from the words used in the
Act." Applying such a rule, this Court observed in S.
Narayanaswami v. G. Panneerselvam (AIR
247
1972 SC 2284 at 2290) that "where the statute’s meaning
is clear and explicit, words cannot be interpolated."
... ... ... ...
"But, if the provision is clear and explicit, it
cannot be reduced to a nullity by reading into it a
meaning which it does not carry."
Against this background we have now to consider the
real intention of the words "transfer for adequate
consideration" as used in clause (b) of the proviso. The
High Court has held that although the deed of gift is a
transfer but as it is a transfer without any consideration,
therefore such a transfer does not fulfil one of the
essential ingredients mentioned in clause (b) of the
proviso, namely, that it should be for consideration. The
High Court has further held that its view is reinforced by
the word ’adequate’ which qualifies the word ’consideration’
which completely rules out a transfer in the nature of a
gift. The High Court was of the view that a transfer of
property by way of a gift being a purely gratuitous transfer
made out of love and affection or for the spiritual benefit
of the donor, falls completely beyond the ambit of clause
(b) of the proviso and, therefore, has to be ignored under
the provisions of the said sub-section (6) of s. 5 of the
Act.
Mr. Kacker, appearing for the appellant, assailed the
view taken by the High Court on the ground that the High
Court has given a very restricted meaning to the term
’transfer for adequate consideration’ by limiting the import
of the word ’consideration’. He argued in the first place
that a gift cannot be said to be a transfer without
consideration because even love and affection, spiritual
benefit or other factors of similar nature may provide
sufficient consideration for the gift. Secondly, it was
argued that even if a gift was a transfer without
consideration and was intended to be excluded by clause (b)
of the proviso, then there should have been an express
indication of the same in the provisions of clause (b) of
the proviso by expressly excluding gifts. Another facet of
this argument advanced before us by Mr. Kacker was that as
gift has not been expressly excluded by clause (b) of the
proviso, we should be persuaded to hold that the conditions
regarding adequate consideration would not apply to a gift
as a gift, was a transfer without consideration and if other
conditions were satisfied a gift would also fall within the
purview of clause (b) of the proviso. We have given our
anxious consideration to the arguments put forward
248
by Mr. Kacker and although the arguments are extremely
attractive yet we find ourselves unable to agree with the
same.
To begin with, it may be necessary to dwell on the
concept of gift as contemplated by the Transfer of Property
Act and as defined in various legal dictionaries and books.
To start with, Black’s Law Dictionary (Fourth Edition)
defines gift thus:-
"A voluntary transfer of personal property without
consideration. A parting by owner with property without
pecuniary consideration. A voluntary conveyance of
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 15
land, or transfer of goods, from one person to another
made gratuitously, and not upon any consideration of
blood or money."
A similar definition has been given in Webster’s Third New
International Dictionary (Unabridged) where the author
defines gift thus:
"Something that is voluntarily transferred by one
person to another without compensation; a voluntary
transfer of real or personal property without any
consideration or without a valuable consideration-
distinguished from sale."
(Emphasis ours)
Volume 18 of Words & Phrases (Permanent Edition) defines
gift thus:
"A ’gift’ is a voluntary transfer of property
without compensation or any consideration. A ’gift’
means a voluntary transfer of property from one person
to another without consideration or compensation."
(Emphasis ours)
In Halsbury’s Laws of England (Third Edition-Volume 18)
while detailing the nature and kinds of gift, the following
statement is made:
"A gift inter vivos (a) may be defined shortly as
the transfer of any property from one person to another
gratuitously. Gifts then, or grants, which are the
eighth method of transferring personal property, are
thus to be distinguished from each other, that gifts
are always gratuitous, grants are upon some
consideration or equivalent."
249
Thus, according to Lord Halsbury’s statement the
essential distinction between a gift and a grant is that
whereas a gift is absolutely gratuitous, grant is based on
some consideration or equivalent. Similarly in Volume 38 of
Corpus Juris Secundum, it has been clearly stated that a
gift is a transfer without consideration and in this
connection while defining the nature and character of a gift
the author states as follows:
"A gift is commonly defined as a voluntary
transfer of property by one to another, without any
consideration or compensation therefor. Any piece of
property which is voluntarily transferred by one person
to another without compensation or consideration. A
gift is a gratuity, and an act of generosity, and not
only does not require a consideration but there can be
none; if there is a consideration for the transaction
it is not a gift."
It is, therefore, clear from the statement made in this
book that the concept of gift is diametrically opposed to
the presence of any consideration or compensation. A gift
has aptly been described as a gratuity and an act of
generosity and stress has been laid on the fact that if
there is any consideration then the transaction ceases to be
a gift. Before closing this aspect of the matter we might
also refer to the definition of consideration given in
various books. Black’s Law Dictionary defines
’consideration’ thus:
"Consideration" is not to be confounded with
motive. Consideration means something which is of value
in the eye of the law, moving from the plaintiff,
either of benefit to the plaintiff or of detriment to
the defendant"."
This is the view expressed in 2 Q.B. 851. Similarly, at p.61
in the same volume, the words ’adequate consideration’ have
been defined thus:-
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 15
"One which is equal, or reasonably proportioned,
to the value of that for which it is given. Fair and
reasonable under circumstances."
(Emphasis ours)
Webster’s Third New International Dictionary
(Unabridged) defines, consideration’ thus:
"Something that is legally regarded as the
equivalent or return given or suffered by one for the
act or promise of another."
250
And the word ’adequate’ has been defined in the same volume
at page 25 thus:
"Legally sufficient: such as is lawfully and
reasonably sufficient"
Similarly, in words and Phrases (Permanent Edition-volume 2)
the word ’adequate’ has been defined at p.545 thus:
’Adequate’ means fully equal to requirements or
occasions, commensurate, but in its primary and more
popular significance nothing can be said to be
’adequate’ which is not equal to what is required,
suitable to the case or occasion, fully sufficient,
proportionate, and satisfactory."
And when used to qualify consideration, it has been defined
thus: in the same volume at p.545:
"Fair consideration in money or money’s worth" is
consideration which under all circumstances is honest,
reasonable, and free from suspicion, whether or not
strictly ’adequate’ or ’full’."
(Emphasis supplied)
’Adequate Consideration’ has been further defined as follows
in the same volume at p.553:-
"Adequate consideration" generally is one which is
a fair equivalent in value for benefit
obtained................
’Adequate consideration’ required in action for
specific performance merely means that contract price
must be substantially just and fair valuation under all
circumstances."
(Emphasis supplied)
In Volume 17 of Corpus Juris Secundum (p.420-421 and
425) the import of ’consideration’ has been described
thus:-
"Various definitions of consideration are to be
found in the textbooks and judicial opinions. A
sufficient one, as
251
stated in Corpus Juris and which has been quoted and
cited with approval is, "a benefit to the party
promising, or a loss or detriment to the party to whom
the promise is made...............
At common law every contract not under seal
requires a consideration to support it, that is, as
shown in the definition above, some benefit to the
promisor, or some detriment to the
promisee.................
There is a sufficient consideration for a promise
if there is any benefit to the promisor or any
detriment to the promisee..........It may be laid down
as a general rule, in accordance with the definition
given above, that there is a sufficient consideration
for a promise if there is any benefit to the promisor
or any loss or detriment to the promisee."
The gist of the term ’consideration’ and its legal
significance has been clearly summed up in s. 2(d) of the
Contract Act which defines ’consideration’ thus:
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 15
"When, at the desire of the promisor, the promisee
or any other person has done or abstained from doing,
or does or abstrains from doing, or promises to do or
to abstain from doing, something, such act or
abstinence or promise is called a consideration for the
promise."
From a conspectus, therefore, of the definitions
contained in the dictionaries and the books regarding a gift
or an adequate consideration, the inescapable conclusion
that follows is that ’consideration’ means a reasonable
equivalent or other valuable benefit passed on by the
promisor to the promisee or by the transferor to the
transferee. Similarly, when the word ’consideration’ is
qualified by the word ’adequate’, it makes consideration
stronger so as to make it sufficient and valuable having
regard to the facts, circumstances and necessities of the
case. It has also been seen from the discussions of the
various authorities mentioned above that a gift is
undoubtedly a transfer which does not contain any element of
consideration in any shape or form. In fact, where there is
any equivalent or benefit measured in terms of money in
respect of a gift the transaction ceases to be a gift and
assumes a different colour. It has been rightly pointed out
in one of the books referred to above that we should not try
to confuse the motive or the purpose of making a gift with
the consideration which is the subject matter of the gift.
Love, affection, spiritual benefit and many other
252
factors may enter in the intention of the donor to make a
gift but these filial considerations cannot be called or
held to be legal considerations as understood by law. It is
manifest, therefore, that the passing of monetary
consideration is completely foreign to the concept of a gift
having regard to the nature, character and the circumstances
under which such a transfer takes place. Furthermore, when
the legislature has used the word ’transfer’ it at once
invokes the provisions of the Transfer of Property Act.
Under section 122 of the Transfer of Property Act, gift is
defined thus:
"’Gift’ is the transfer of certain existing
movable or immovable property made voluntarily and
without consideration, by one person, called the donor,
to another, called the donee, and accepted by or on
behalf of the donee.
Such acceptance must be made during the lifetime
of the donor and while he is still capable of giving.
If the donee dies before acceptance, the gift is
void."
Thus, s. 122 of the Transfer of Property Act clearly
postulates that a gift must have two essential
characteristics-(1) that it must be made voluntarily, and
(2) that it should be without consideration. This is apart
from the other ingredients like acceptance, etc. Against the
background of these facts and the undisputed position of
law, the words, ’transfer for adequate consideration’ used
in clause (b) of the proviso clearly and expressly exclude a
transaction which is in the nature of a gift and which is
without consideration. Love and affection, etc., may be
motive for making a gift but is not a consideration in the
legal sense of the term. As regards the argument of Mr.
Kacker that if the legislature intended to exclude gifts,
clause (b) of the proviso should have expressly said so; the
answer is very simple. Every legislature has its own
technical or legal device to express its intendment. Some
legislatures may have chosen to expressly exclude gift as
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 15
Mr. Kacker says but that is not the only method of conveying
the legislative intent. There may be other methods or
devices by which the legislative intent can be expressed,
namely, by using such expressions which would expressly or
by necessary intendment exclude a particular transaction.
This method seems to have been adopted by the legislature in
enacting clause (b) of the proviso. In fact, the legislature
has made its intention clear that gift is excluded by
qualifying the word ’consideration’ by the adjective
’adequate’. Assuming that love and affec-
253
tion, spiritual benefit or similar other factors may amount
to a consideration for the gift, the word ’adequate’ is
wholly inapplicable to and inconsistent with the concept of
a gift because it is impossible to measure love and
affection, the sentiments or feelings of the donor by any
standard yardstick or barometer. The words ’adequate
consideration’ clearly postulate that consideration must be
capable of being measured in terms of money value having
regard to the market price of the property, the value that
it may fetch if sold, the value of similar lands situated in
the vicinity, so on and so forth. In the instant case,
therefore, in our opinion, the legislature by using the word
’adequate’ to qualify the word ’consideration’ has
completely ruled out and excluded gift from the ambit of
clause (b) of the proviso. In these circumstances,
therefore, the argument of Mr. Kacker that by not expressly
excluding gift, clause (b) of the proviso includes gift
cannot be accepted particularly in the face of the clear and
unambiguous language used by clause (b) of the proviso in
describing the nature of the transaction as one for adequate
consideration.
We now deal with the second limb of the argument of Mr.
Kacker that as in the case of a gift there is no question of
a consideration, we should hold that the 3rd part of clause
(b) of the proviso which contains the words ’for adequate
consideration’ is inapplicable and ignore the same. This
argument is diametrically opposed to the well-known rule of
interpretation that courts in interpreting statutes must not
interpolate or legislate. It is well settled that a
legislature does not waste words without any intention, and
every word that is used by the legislature must be given its
due import and significance. In the instant case, the words
’adequate consideration’ have undoubtedly a well recognised
concept and, as indicated above, the intention was to
exclude any transaction which is not for adequate
consideration. Not to speak of a gift but even if a sale is
found to be bona fide but the consideration is inadequate,
for instance, where the property has been sold for a nominal
price or below the market value, the transaction would fall
beyond the protection given by clause (b) of the proviso.
Our attention has been drawn by Mr. Kacker to a single Bench
decision by Banerji, J, in Fateh Singh v. State of Uttar
Pradesh & Ors where the learned Judge had taken the view
that the definition of a transfer given in clause (b) of the
proviso included a gift because a gift also could not be
said to be a transfer without consideration even though
254
consideration may not be weighed in terms of money. The
learned Judge in taking this view had obviously fallen into
error of confusing what was the motive or the reason for the
gift as being a legal consideration of it. It has already
been pointed out that in considering the nature of a gift
one should not confuse the motive, which may be love and
affection, or spiritual benefit, with valuable consideration
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 15
which has to be either in the shape of a money compensation
or equivalent of the same. It is true that in every gift the
donor has a particular motive and objective or a reason to
part with his property in favour of the donee, the reason
being, in some cases, love and affection where the gift is
in favour of a relation or friend, or spiritual benefit in
other cases but this will be the immediate motive for making
the gift and cannot be regarded as a consideration for the
gift because the very concept of gift is based on a purely
gratuitous consideration. The Division Bench of the
Allahabad High Court in the case referred to above has
rightly overruled the view of Banerji, J,, on this count. In
fact the matter has been considered by other High Courts who
have consistently taken the view that a gift is a transfer
without consideration, love and affection being only the
motive for making the transfer. In Debi Saran Koiri & Anr.
v. Nandalal Chaubey and Ors. while elucidating the nature
and character of a gift Sahay, J. made the following
observations:
"Now, S. 122, T.P. Act defines "gift" as a
transfer of certain existing movable or immovable
property made voluntarily and without consideration, by
one person, called the donor, to another, called the
donee, and accepted by or on behalf of the donee."
"To my mind consideration in S. 122, T.P. Act,
means valuable consideration and not consideration in
the shape of conferring spiritual benefit to the donor.
If valuable consideration be not the consideration
referred to in S. 122, I fail to understand how any
gift can be made without consideration at all. There
must be some sort of consideration in every gift, for
instance, a consideration of an expectation of
spiritual or moral benefit or consideration of love and
affection. Such considerations are not considerations
contemplated in S. 122. The consideration there
contemplated must be valuable consideration, that is
consideration either of money of money’s worth".
(Emphasis supplied)
255
In Kulasekaraperumal v. Pathakutty Thalevanar & Ors.
Jagadisan, J. made the classic observations which may be
extracted thus:-
"A gift is essentially a gratuitous transfer.
Complete absence of consideration marks the transfer as
a gift and differentiates it from a grant."
The learned Judge has rightly pointed out that complete
absence of consideration is the main hallmark which
distinguishes a gift from a grant or for that matter other
transactions which may be for valuable or adequate
consideration. We find ourselves in complete agreement with
the observations made by Jagdisan, J. in Kulasekaraperumal’s
case (supra) and Sahay, J. in Debi Saran’s case (supra)
which correctly represent the character and nature of the
gift as contemplated by law. Banerji, J. in Fateh Singh’s
case (supra) seems to have relied heavily on Explanation I
of sub-section (6) of s. (5) of the Act which refers to a
declaration of a tenure holder made in a suit or any
admission, acknowledgement, relinquishment, etc., made in
any other deed or instrument in order to reinforce his
conclusion that clause (b) of the proviso did not exclude a
gift. With due respect, here the learned Judge completely
failed to appreciate the scope of clause (b) of the proviso
and Explanation I. It is well settled that an Explanation
merely widens the scope of the main section and is not meant
to carve out a particular exception to the contents of the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 15
main section. Thus, even if the words ’relinquishment,
admission or declaration’ are used in Explanation I. the use
of such words do not absolve the party concerned from
proving the essential ingredients laid down in clause (b) of
the proviso, namely, that the transfer should be executed in
good faith and should be for adequate consideration.
Whatever be the nature of the declaration, acknowledgement,
relinquishment, adequacy of consideration has to be proved
in any case. Thus, in our view, the Division Bench was fully
justified in overruling the view of Banerji, J. in regard to
the interpretation of the Explanation also.
Finally, we would like to mention that the matter is no
longer res integra but is fully covered in principle by a
decision of this Court in Tulsidas Kilachand v. The
Commissioner of Income-tax, Bombay City 1, where
Hidayatullah J, speaking for the Court observed as follows:-
"It remains to consider whether there was a
adequate consideration for the transfer. Reliance has
been placed
256
only upon love and affection. The words "adequate
consideration" denote consideration other than mere
love and affection which, in the case of a wife, may be
presumed. When the law insists that there should be
"adequate consideration" and not "good consideration",
it excludes mere love and affection. They may be good
consideration to support a contract, but adequate
consideration to avoid tax is quite a different thing.
To insist on the other meaning is really to say that
consideration must only be looked for, when love and
affection cease to exist."
(Emphasis supplied)
It would thus, appear that this Court clearly held that
the words ’adequate consideration’ completely exclude the
concept of love and affection and this decision appears to
be on all fours with the facts of the present case.
Realising this predicament Mr. Kacker submitted that the
words ’adequate consideration’ used in the Income Tax Act
denote a different texture. Mr. Kacker argued that it is not
permissible to interpret or use an expression in one Act as
having the same meaning in another Act which is of a
different kind. Of course, there can be no dispute with this
proposition but then the Act as also the Income Tax Act have
both used the words ’adequate consideration’ which, as we
have already held, are terms of well-known legal
significance having a well recognised popular sense and
hence they would convey the same meaning and import whenever
used in other statutes unless a contrary intention appears
from the language employed by the legislature in the
statute. Moreover, the object of the Income Tax Act as also
the present Act seems to be more or less identical. Whereas
the object of the Income Tax Act in enacting s. 16(3)(b)
which is extracted below, is to circumvent and prevent a
growing tendency on the part of the assessees to avoid or
reduce tax liability by means of settlements:
"16(3)....
(a)
(b) so much of the income of any person or association
of persons as arises from assets transferred
otherwise than for adequate consideration to the
person or association by such individual for the
benefit of his wife or a minor child or both."
257
In the instant case also the avowed object of sub-section
(6) of section 5 of the Act is to prevent the large
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 15
landholders from evading the ceiling law by executing
transfers, instruments or gifts so as to reduce their
surplus area. Where the two statutes have a common and
identical object then the legal terms used in one statute
must be given the same meaning in the other. It cannot be
said that the words ’adequate consideration’ appearing in
sub-section (6) of s. 5 of the Act do not take their colour
from the context but are in conformity with the main object
of the Act, to prevent evasion of the ceiling law by large
tenure holders in anticipation of the passing of the Ceiling
Law. For these reasons, therefore, the argument of Mr.
Kacker on this score must be rejected. We, therefore, hold
that in view of the interpretation placed by this Court on
the words ’adequate consideration’ which fully applies to
the present case and to the same language employed in sub-
section (6) of s. 5 of the Act, a gift is not only impliedly
but expressly excluded by the Act.
In the Division Bench decision of the Allahabad High
Court referred to above, after a consideration of a large
number of authorities the following observations were made:
"The Legislature while enacting the U.P.
Imposition of Ceiling on Land Holdings Act, was alive
to the provisions of the Transfer of Property Act
dealing with the transfer of immovable property. the
terms ’transfer’, sale, ’mortgage’ and ’lease’ have not
been defined in the Act. Therefore, these terms must
have been used only in the sense in which they have
been used in Transfer of Property Act. If the
Legislature intended to use those terms in a different
sense and with a different connotation, it would have
defined those terms in the Act. But that has not been
done....
The legislature, however, thought that there may
be genuine and bona fide transfers for consideration.
To protect such tenure holders and other transfers,
proviso (b) to sub-section (6) of section 5 of the Act
was enacted. It saved transfers for adequate
consideration. Gift is a gratuitous transfer and there
is no consideration which obviously means valuable
consideration. If transfer for love and affection is
taken to be a transfer for consideration then the
purpose of the Act would be
258
completely defeated as the tenure holders would
transfer their land by gift after 24th January 1971."
We fully endorse the observations made by the Division
Bench which lay down the correct law on the subject and we
overrule the decision of Banerji, J. in Fateh Singh’s case
(supra).
Lastly, it was urged by Mr. Kacker that this is an
extremely hard case where the grand-father of the donee
wanted to make a beneficial provision for his grand-daughter
after having lost his two sons in the prime of their life
due to air crash accidents while serving in the Air Force.
It is true that the District Judge has come to a clear
finding that the gift in question is bona fide and has been
executed in good faith but as the gift does not fulfil the
other ingredients of the section, namely, that it is not for
adequate consideration, we are afraid, however laudable the
object of the donor may have been, the gift has to fail
because the genuine attempt of the donor to benefit his
granddaughter seems to have been thwarted by the
intervention of sub-section (6) of s. 5 of the Act. This is
undoubtedly a serious hardship but it cannot be helped. We
must remember that the Act is a valuable piece of social
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 15
legislation with the avowed object of ensuring equitable
distribution of the land by taking away land from large
tenure holders and distributing the same among landless
tenants or using the same for public utility schemes which
is in the larger interest of the community at large. The Act
seems to implement one of the most important constitutional
directives contained in Part IV of the Constitution of
India. If in this process a few individuals suffer severe
hardship that cannot be helped, for individual interests
must yield to the larger interests of the community or the
country as indeed every noble cause claims its martyr.
As this was the only point raised before us, we find no
merit in the same.
For the reasons given above, we hold that the High
Court was right in allowing the writ petition in respect of
the gift in question. The appeal fails and is accordingly
dismissed but without any order as to costs.
P.B.R. Appeal dismissed.
259