The policy of Hindu law and Muslim law has been not to allow an individual to interfere with the natural mode of devolution of property after- his death. The Hindus took this policy principle to its logical end and did not provide for any power of testamentary disposition.
The Muslims did not go that far, but laid down that a Muslim can dispose of only one-third of his property by a will. On the other hand, both systems confer full power of disposing of one’s own property by gift inter vivos.
By and large, the gifts in India are governed by the Transfer of Property Act, 1872. However, the provision of gifts in the Transfer of Property Act does not apply to the Muslims. Thus, gifts made by a Muslim are still governed by Muslim law. In Muslim law gifts are called ‘hiba’.
The English term, ‘gift’ is of a wider connotation and applies to all transactions where one transfers one’s property to another without any consideration. The term ‘hiba’ has a narrow meaning. According to the Durr-ul-Muhtar, hiba is a “transfer of the right of property to another without return”.
According to Ameer Ali, “A hiba is a voluntary gift without consideration of property or the substance of thing by one person to another so as to constitute the donee the proprietor of the subject-matter of the gift.
The Hanafi lawyers define hiba as an act of bounty by which a right of property is conferred in something specific without an exchange.” The Shias hold that a hiba is an obligation by which property in a specific object is transferred immediately and unconditionally without any exchange and free from any pious or religious purpose on the part of the donor. Muslim law allows a Muslim to give away his entire property by a gift inter vivos, even with the specific object of disinheriting his heirs.
Muslim law recognizes certain institutions which appear to be similar to hiba, though they are clearly distinguishable from it. These are aariat, sadaqa, wakf, hiba-bil-iwaz and hiba-ba-shart-ul-iwaz.
The Fatwai Alamgiri defines it as “the giving of the usufruct without any return”. The Durr-ul-Muhtar defines it as “making another owner of the usufruct without any consideration”. In other words, when a person grants another a licence or right of user or enjoyment of a property or a right to the usufruct—without any consideration—then the transaction called aariat or areeat In hiba the transferee acquires a right to the property, while in aariat the transferee obtains its use or beneficial enjoyment for a limited period, and the property does not pass on to him.
Thus, aariat is not a transfer of ownership, but only transfer of a right to usufruct or fruits or profit of property, temporarily, depending upon the will of the transfer who may terminate it at any time.
Since in aariat the ownership is not transferred to the donee, some of the requirements of material validity, such as, the age of the donor, or the subject-matter (prohibition of musa, i.e., gift of undivided portion of property) do not apply.
Thus, when a person says to another, “I have given you the use of this garment or horse” or “My house is in your residence”, the transaction is aariat.’ An aariat has the following characteristic features: (a) it is a transfer of usufruct, without consideration, (b) it is a temporary transfer of usufruct, and (c) it is recovable at any time at the will of the transferor.
Practically, in all essentials, the hiba and sadaqa are similar. What distinguishes them from each other is their objective. When a person makes a gift of some property with the object of acquiring some religious or spiritual benefit or merit, it is called sadaqa or sadaqah Just as in hiba so in sadaqa, the gift is not valid unless accompanied by the delivery of possession.
All requirements of hiba regarding capacity and certainty of subject-matter are applicable to sadaqa. But, unlike hiba, sadaqa is irrevocable, once it is completed by delivery of possession.
A sadaqa is valid even if made to two or more persons all of whom are poor. A sadaqa can also be made to a rich person provided that the object is of acquiring religious merit or spiritual benefit.
The sadaqa is to be distinguished from wakf. Both the sadaqa and wakf are made an object of acquiring religious merit or spiritual benefit. When the subject-matter of the gift is to be consumed, it is sadaqa; when the corpus is made unconsumable and only the usufruct or income is to be used for the purpose, then the transaction is wakf.
When a wakf-deed makes the subject-matter of wakf unalienable, an alienation made of the property is void. Thus, when a person makes a gift of, say, Rs. 5,000/- for the purchase of copies of the Koran for the free distribution to people, the transaction is sadaqa.
But, if the donor says that this amount is to put into a foundation (or put in a fixed deposit) and out of interest of this amount copies of the Koran are to be purchased every year for free distribution to people, then the transaction is wakf.
When the corpus of property is permanently dedicated to God, and the usufruct of which is directed to be spent for a religious, pious, or spiritual purpose, then the transaction is called wakf. In wakf the corpus is immobilized or fixed, while in hiba corpus itself is transferred to the donee who may do anything with it may use it, consume it, or dispose it off.
According to Abu Yusuf and Muhammad, a wakf signifies the extinction of transferor’s ownership in the thing dedicated and the detention of the thing (or property) in the implied ownership of God, in such a manner that its profits may revert to, or applied for, the benefit of mankind. In hiba, too, the ownership of the transferor is extinguished, but then it passes to the donee, and the corpus of the property is not detained (See Chapter XVI of this work).
Hiba-bil-iwaz (or hiba-bil-iwad), i.e., gift with, a return, is a gift for a consideration. Thus, where a person makes a gift of his property in return for something, the transaction is known as hiba-bil-iwaz.
In its classical form, hiba-bil-iwaz consists of two separate transactions: the original transaction consists of the hiba, and must, therefore, conform to all requirements of a hiba. This is followed by a return gift (iwaz), which constitutes second transaction.
When both the transactions are completed, they are together known as hiba-bil-iwaz. It should be emphasized that when the original transaction, i.e., hiba, is made, the return gift is not in the contemplation of the parties.
It occurs later on to the donee to make a return gift. Thus, A makes a gift of his house to B, without any contemplation that В will make an iwaz. But later on В makes a gift of a plot of land to A by way of iwaz.
Then both the transactions together are known as hiba-bil-iwaz. In both the transactions formalities necessary for a hiba must be complied with.
The classical form of hiba-bil-iwaz is not prevalent in India; instead, there prevails an Indian version under which, there is only one transaction, and not two.
The iwaz is one part of the same transaction of which hiba is another. In this type, iwaz is the direct consideration for hiba. Thus, the Indian version of hiba-bil-iwaz is in reality a sale and has all the elements and incidents of sale. In hiba-bil-iwaz the delivery of possession is not necessary as it is in hiba, nor is there any prohibition for the transfer of musha, i.e., undivided part of property.
In the Indian version of hiba-bil-iwaz, actual payment of consideration is necessary. A bona fide intention on the part of the donor to divest himself in present of the ownership of the property, the subject-matter of hiba, and to confer it on the donee is necessary.
The inadequacy of consideration does not affect the transaction. Thus, howsoever small the consideration may be, the hiba-bil-iwaz will be valid if consideration has been actually and bona fide paid. A mere promise to pay is not sufficient.
A copy of the Koran, or a prayer carpet, or a rosary is a valid consideration. But in every case, the intention to transfer must be in presenti. In Khajoornissa v. Roshan, the Privy Council said: “Undoubtedly the adequacy of the consideration is not the question.
A consideration may be perfectly valid which is wholly inadequate in amount when compared with the thing given. Some of the cases have gone so far as to say that even a gift of a ring may be a sufficient consideration; but whatever its amount, it must be actually and bona fide paid”.
Since the Indian version of hiba-bil-iwaz is equated with sale, it has been held that if it is of immovable property worth Rs. 100 or more, it must be effected by a registered instrument as required by S. 54, Transfer of Property Act.
The Chief Court of Oudh holds that when a husband transfers immovable property to his wife in lieu of her dower, the transaction is not a sale, and therefore, no registration is necessary.
This view has been dissented from by the Allahabad High Court. The Bombay and the Hyderabad High Courts hold that where in lieu of dower land is transferred to the wife at the time of marriage, the transaction is hiba and not sale.
A gift by a person in “consideration of your being my cousin” is not a hiba-bil-iwaz but hiba, and therefore, delivery of possession is necessary. Similarly, a gift made by a person to his employee who had already been paid wages for his services is not a hiba-bil-iwaz but a hiba.
On the other hand, when, after the death of a person, all his brothers relinquish their share in the property of the deceased in favour of the daughter in consideration of the other brothers doing so, or, when on the death of a person, his brother grants by a deed two villages to the widow and the widow executes a deed by which in consideration of the grant of villages she relinquishes her claim to the share in the property of her deceased husband, the transaction is a hiba-bil-iwaz.
Since the Indian version of hiba-bil-iwaz is in effect a sale, it gives rise to the right of pre-emption.
When a gift is made with a condition or stipulation (short) and a return (iwaz), the transaction is called hiba-ba-shart-ul-iwaz. In the classical form of hiba-bil-iwaz, the iwaz is not even in the contemplation of the parties at the time of the original gift; iwaz is an afterthought, a voluntary act on the part of the donee.
In hiba-ba-shart-ul-iwaz, iwaz is not merely in the contemplation of the parties but it is expressly stipulated for. The former retains the character of gift throughout and does not partake of the character of sale even when iwaz is given, while the latter is a gift at the first stage, but the moment the donee gives possession of the subject-matter of iwaz, it becomes a sale. The main distinction between the Indian version of hiba-bil-iwaz and the hiba-ba-shart-ul-iwaz is that in the former, the delivery of possession is not necessary, while it is so in the latter.
A hiba-ba-shart-ul-iwaz is revocable till the delivery of possession of the iwaz is made by the donee to the donor. Once the delivery of possession of the iwaz is made, the transaction becomes irrevocable.
Like hiba-bil-iwaz, the hiba-ba-shart-ul-iwaz is also subject to the right of pre-emption.