Adequate Consideration - Definition - Law Dictionary Home Dictionary Definition adequate-consideration

Definition :

Adequate consideration, The condition regarding adequate consideration would not apply to a gift, as a gift is a transfer without consideration, Kumari Sonia Bhatia v. State of U.P., AIR 1981 SC 1274: (1981) 2 SCC 585. [Contract Act, 1872, s. 2(b) (9 of 1872)]

In the absence of a definition of the phrase 'adequate consideration', the common parlance meaning of the term has to be accepted. A reference to the decision of Hidayatullah, J. as he then was in Tulsidas Kilachand v. CIT shows that the words 'adequate consideration' were held to 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, Major V. P. Singh v. State of Uttar Pradesh, 1991 Supp (2) SCC 346 (347): AIR 1991 SC 1502. [U.P. Imposition of ceiling on Land Holdings Act, 1960, s. 5(6) Proviso(b) second clause]

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, Sonia Bhatia v. State of Uttar Pradesh, (1981) 2 SCC 585: AIR 1981 SC 1274 (1281). [Uttar Pradesh Composition of Ceiling on Land Holdings Act, (1 of 1961) s. 5(6) Proviso (b)]

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, Tulsichand Kilachand v. CIT, AIR 1961 SC 1023 (1026): (1961) 3 SCR 351. [Income-tax Act, 1922, s. 16(1) (c)]