Universal Donee - Section 128 of Transfer of Property Act
Universal Donee
“Section 128 – Subject to the provisions of section 127, where a gift consists of the donor’s whole property, the done is personally liable for all the debts due by [and liabilities of] the donor at the time of the gift to the extent of the property comprised therein.”
Universal donee is such a person who gets the whole property of the donor under a gift. Both movable, as well as immovable properties of the donor, are given in a gift to him. English law does not recognise the concept of universal donee. Section 128 provides that the universal donee is liable personally for all the debts due and liabilities by the donor at the time of the gift to the extent of the property comprised therein.
Therefore, the donee which has taken all the properties of the donor in a gift becomes liable to pay all the debts due by the donor and also to discharge all the liabilities of the donor because nothing is left with the donor to discharge them. However, his/her liability is only to the extent of the property comprised in the gift. This section incorporates on the equitable principle that one who gets certain benefits under a transaction must bear the burden also.
The object of this section is to protect the interests of the creditors of the donor. This section is similar to section 53 in protecting the interests if creditors of the donor but section 128 is applicable to both movable as well as immovable properties while section 53 is applicable only to immovable properties. Section 53 lays down a general principle which is applicable to all transfers of the immovable property, whereas section 128 lays down a specific principle which is applicable to onerous gifts only. Section 53 deals with fraudulent transfers also, but this section does not deal with them.
The essential requirement of this section is that all the properties of the transferor (donor) should be transferred to the donee. However, even if a life interest in a part of the property id retained by the donor, the donee is nevertheless a universal donee. Even if only a small, insignificant part of the property is retained by the donor, the donee will be treated as a universal donee.
Where the donor had not included the equity redemption in a property mortgaged by him, it was held that the donee could not be said to be a universal donee.
Where donor executes a pronote in favour of the plaintiff and makes a gift of his/her entire property in favour of the defendant, the defendant cannot retain the benefit and at the same time repudiate the burden; the maxim, ‘he who receives the advantage ought to suffer the burden’ applies to the case. The defendant, as universal donee, becomes liable to pay the debts of the donor out of the estate in his/her hands.
The section applies only where the gift is of the donor’s whole property. Where after such a gift, the donee gives back some property to the donor for which the donor agrees to pay to the donee, this fact does not prevent him from being a universal donee; since—
Where a person seeks to hold a donee liable on the ground that he/she is a universal donee, the onus lies on him to prove that the whole property of the donor has been gifted to the donee.
Disqualified Donee
Section 127 provides that a donee not competent to contract and accepting property burdened by any obligation is not bound by his/her acceptance. But if, after becoming competent to contract and being aware of the obligation, he/she retain the property given, he/she becomes so bound.
When an onerous gift is made to an incompetent or disqualified donee, for example, a minor, he/she has a right to reject or repudiate the gift on attaining competency, i.e., majority. An incompetent person is not bound by the acceptance of the gift after attaining competency. He/her has to exercise his/her option immediately because after becoming competent to contract and being aware of his/her obligation he/her retains the property given to him/her, he/she becomes bound by the option.
