Thanks for your question. My name is Greg and I'm going to help you with your question.
Whilst a child can travel alone on a passport from 14 onwards and a child can apply for an adult passport from the age of 16 (without the requirment for any parental consent), there are no general provisions that would expressly permit a minor to keep a passport if someone with parental responsibility asked that minor to surrender it to them.
I'm sorry that's its bad news but it's important that I give you honest advice, so that you know where you and your grandaughter stand.
Let me know if I can help further.