Hiba-bil-iwaz is a peculiar concept of the Muslim personal law. Hiba means gift and Iwaz means consideration or return. Hiba-bil-iwaz, is, therefore, a ‘gift with an exchange’ or a ‘gift for consideration’. Under all the systems of law there cannot be any consideration or exchange in the transaction of gift.
But Muslim law recognises a gift with an exchange as a kind of Hiba. If a gift has duly been made and completed, but subsequently the donee also gives something to the donor in lieu of this gift, then the gift is called Hiba-bil-iwaz.
For example, where a makes a gift of his house to B, and subsequently В also makes a gift of a car to A saying that the car was being given in return of the gift made to him, then the gift of the house from A to В is a Hiba-bil-iwaz.
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Thus, the second gift is actually not any gift; it is consideration for the first gift. In the Hiba-bil-iwaz, as accepted and recognised in India, there is a direct reference that the second gift is return (Iwaz) of the original gift.
Therefore, this is a Hiba only for the name’s sake. The legal nature of this transfer is that it is either a sale or an exchange, depending on whether the consideration is money or some property. The result is that the rules of Muslim law of Hiba do not apply on it.
As a matter of fact Hiba-bil-iwaz is a gift in its inception, but it becomes sale or exchange afterwards when the donee takes possession of the property and donor takes possession of the Iwaz.
Essentials of Hiba-bil-iwaz:
The essential feature of Hiba-bil-iwaz is that it is a gift for something in return. The following two conditions are therefore, necessary to render a transfer as Hiba-bil-iwaz:
(a) A valid and complete gift by the donor:
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There must be a gift, valid and complete in all respects. The three essential conditions namely, the declaration, acceptance and delivery of possession must be fulfilled. It is necessary that there is a bonafide intention on the part of the donor to transfer the ownership of the property. The property owned by the donor must be an existing property and must also be made presently i.e. immediately.
In other words, the original transfer by the donor in favour of the donee must be duly completed gift according to the provisions of Muslim law. Every Hiba-bil- iwaz is pure gift in its inception. Even if the declaration of this original gift mentions that it is being made for some consideration, it remains a pure gift.
But, as soon as the donee also makes a gift in return of the original gift, the original gift becomes Hiba-bil-iwaz.
(b) Actual payment of consideration (iwaz) by the done:
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The donee must pay something to the donor after the completion of the gift. A mere declaration in the gift that it is being made for some consideration is not sufficient; the consideration referred in the gift must be actually transferred by the donee to the donor.
If donee pays the consideration, the gift is Hiba-bil-iwaz. If the donee does not pay, the gift continues to be pure Hiba. In Ranee Khujooroonnissa v. Mst. Roushan Jehan, the facts were that Raja Deedar Hossein executed a gift-deed under which he gave one-third of his properties of his Zamindari to his eldest son Inayat Hossein in consideration of Rs. 10,000.
But the consideration was never paid. Moreover, there was neither actual nor constructive delivery of possession in favour of the donee. It was held by the Privy Council that although the deed referred the transaction to be gift for consideration yet, it could not be treated as Hiba-bil-iwaz because there was no proof that the consideration was ever paid to the donor Raja Deedar Hossein.
The Court further observed that in a gift for consideration two conditions at all events must concur, namely, an actual payment of the consideration on the part of the donee, and a bona fide intention on the part of the donor to divest himself of the property and to confer it upon the donee.
As the consideration was not paid to the donor the deed was not a transfer by way of Hiba-bil-iwaz. The Court observed that it was a simple gift in which delivery of possession is necessary. Moreover, as there was neither actual nor constructive delivery of possession, the gift too was held to be void.
It is significant to note that the donee must mention it clearly that he is transferring the property to donor in return of a gift made to him. An independent transfer of property by the donee to donor cannot be regarded as a consideration for the original gift. There is no Hiba-bil-iwaz if the return (iwaz) is independent of the original gift.
However, the consideration (iwaz) paid by the donee to the donor, need not be equal to the value of the property gifted. It may be a nominal consideration or less in value as compared to the subject matter of the gift. In Khujooroonnissa’s case, their Lordships of the Privy Council rightly observed.
“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.”
A copy of Quran or, even a prayer-carpet or rosary (Tasbih) has been held to be a good consideration in the Hiba-bil-iwaz. However, the consideration must be of some monetary value. Where A makes a gift to В saying: “It is a gift in consideration of your being my son,” the gift is not a Hiba-bil-iwaz.
This is pure Hiba. In the same manner, where the consideration is services rendered by the donee or, cordial behaviour or love and affection of the donee towards the donor, it cannot- be regarded as an iwaz of a gift; it will be a case of pure gift.
Similarly, where a gift was made compensating the donee for the good services rendered by his father to the donor, it was held that the gift was pure Hiba and not a Hiba-bil-iWaZ. But in Tajunissa v. Rahmat, the Madras High Court has held that a promise by the donee to marry donor’s son, was a good consideration for a gift and, the transaction was a Hiba-bil-iwaz.
Legal Incidents of Hiba-bil-iwaz:
In India, the Hiba-bil-iwaz is a Hiba only for its name’s sake. Legally speaking, this kind of transfer cannot be a gift because transfer of ownership in return of something of value, can never be regarded as a gift. The legal consequences of Hiba-bil-iwaz are given below:
(1) Hiba-bil-iwaz is either a sale or an exchange, depending on the nature of the property given by donee as consideration (iwaz) for the gift. Where the consideration is money, the transaction is a sale. Similarly, where the iwaz is some property movable or immovable, the transaction is an exchange. Therefore, the rules of Muslim law of Hiba do not apply to the Hiba-bil-iwaz.
This transfer cannot be completed merely by declaration, acceptance and delivery of possession. For a valid Hiba-bil-iwaz, the same requirements and formalities are necessary as are required for a valid sale or exchange.
If the iwaz is money, the transaction is regarded as a sale which must be completed according to the provisions of Section 54 of the Transfer of Property Act, 1882. That is to say, if the gift is of immovable property exceeding Rs. 100 in value, it must be in writing and must also be duly attested and registered.
Where the iwaz is some property, the Hiba-bil-iwaz is treated as an exchange. According to Section 118 of the Transfer of Property Act, 1882, this transaction must be completed in the same manner as that of a sale i.e. only through a registered document if the value of property exceeds rupees one hundred.
(2) Delivery of possession, which is an essential element in Hiba, is not necessary for the validity of a Hiba-bil-iwaz. The gift made by a husband to wife in lieu of her dower is a sale. Delivery of possession is not required. But since a gift in lieu of unpaid dower is sale, its registration is necessary and, such a transfer cannot be made orally.
In Mahabir Prasad v. Mustafa Hussain it was held by the Privy Council that a gift by husband to wife in lieu of dower is a sale, delivery of possession is not needed but registration is necessary. Allahabad, Madras and Patna High Courts have also held that a transfer of property by husband to wife in lieu of her unpaid dower is a sale in which delivery of possession to wife is not necessary.
It may be noted that a gift by husband to wife in lieu of dower is a peculiar form of Indian notion of Hiba-bil-iwaz and is called Bye mukasa which is equated with a sale.
(3) Hiba-bil-iwaz, being a sale or an exchange, is irrevocable. As discussed earlier, except in few cases, a Hiba is revocable. But, Hiba-bil-iwaz is a transfer for consideration therefore it is either sale or exchange and law does not allow its revocation.
(4) The doctrine of mushaa which is applicable to gifts of undivided properties under the Sunni law is not applicable to hiba-bil-iwaz. In other words, where an undivided share in a co-owned property has been gifted in return of some consideration, the gift is perfectly valid even without partition and delivery of possession.
The reason is that a hiba-bil-iwaz is not a gift, it is treated as a sale or exchange, and the doctrine of mushaa is inapplicable on sale and exchange. It is interesting to note that the Indian form of hiba-bil-iwaz was introduced in this country as a legal device for validating the gifts of mushaa properties without effecting any partition and delivery of possession.
(5) Hiba-bil-iwaz is a sale if consideration (iwaz) is money. Therefore the right of pre-emption is exercisable by a pre-emptor. Pre-emption is a right under which a person is entitled to re-purchase an adjoining property which has been sold to some other person.
This right is available only where the transfer is a sale. If it is gift, or any other kind of transfer, this right is not exercisable. In a Hiba the right of pre-emption is not exercisable but, in the case of Hiba- bil-iwaz, the right is exercisable.