Dr.

Shakuntala Misra National

Rehabilitation University ,
Lucknow

PROPERTY LAW

TRANSFER OF PROPERTY FOR THE

BENEFIT OF UNBORN PERSON

SUBMITTED TO: SUBMITTED BY:

Mrs. Vijeta Dua Shubham Oberai
B.com LL.B (Hons.)
Roll No. -54
Vth Sem
 TABLE OF CONTENTS

1. INTRODUCTION

2. SECTION 13:
PRIOR INTEREST

ABSOLUTE INTEREST

INDIAN SUCCESSION ACT, 1925

3. SECTION 14:
ANALYSIS

4. SECTION 15

5. BIBLIOGRAPHY

INTRODUCTION
Under the transfer of property Act, the transfer of a property means an act by which a living
person conveys property, in present or in future, to one or more other living persons, or to
himself and one or more other living persons; and "to transfer property" is to perform such
act.

The concept of property law is one that has been constantly developing for a very time.
Property law is the area of law that governs the various forms of ownership in real
property (land as distinct from personal or movable possessions) and in personal property,
within the common legal system. In the civil law system, there is a division between movable
and immovable property. Movable property roughly corresponds to personal property, while
immovable property corresponds to real estate or real property, and the associated rights and
obligations thereon.

The concept, idea or philosophy of property underlies all property law. In some jurisdictions,
historically all property was owned by the monarch and it devolved through tenure or
other feudal systems of loyalty and fealty. Though the Napoleonic code was among the
first government acts of modern times to introduce the notion of absolute ownership
into statute, protection of personal property rights was present in medieval Islamic
law and jurisprudence, and in more feudalist forms in the common law courts of medieval
and early modern England.

The guiding principle of transfer of property is that a transfer must take place between two
living person. The Transfer of Property Act, 1882 has laid down certain rules regarding
transfers for the benefit of unborn persons. Interest may be created in favour of an unborn
person but no transfer can be made directly to such a person.

A transfer can be made through a trust or the ownership of the estate must be vested in some
person between the period of transfer and coming into existence of the unborn person. An
absolute interest in the property must be transferred to the unborn person. Such interest
remains a vested interest, even though the unborn person may not be entitled to enjoy the
property soon after his birth1.

Generally speaking, property cannot be transferred nor an interest created therein in favour of
a person not in existence. However, there are certain exceptions to this general principle.
They are dealt with, in Section 13, 14 and Section 20 of the Transfer of Property Act, 1882.

1
http://www.lexuniverse.com/property-laws/india/Transfer-for-benefit-of-Unborn-Person.html
Section 13, Transfer of Property Act

Section 13 of Transfer of Property Act, 1882, deals with the transfer of property for the
benefit of an unborn person. What this section states is that:

Where, on a transfer of property, an interest therein is created for the benefit of a person not
in existence at the date of the transfer, subject to a prior interest created by the same transfer,
the interest created for the benefit of such person shall not take effect, unless it extends to the
whole of the remaining interest of the transferor in the property.

An illustration has also been provided in the Transfer of property Act. And that goes as
follows:

A transfers property of which he is the owner to B in trust for A and his intended wife
successively for their lives, and, after the death of the survivor, for the eldest son of the
intended marriage for life, and after his death for A's second son. The interest so created for
the benefit of the eldest son does not take effect, because it does not extend to the whole of
A's remaining interest in the property.

Section 13 deals with the transfer of property for the benefit of unborn persons. According to
this section where, on the transfer of property, an interest therein is created for the benefit of
a person not in existence at the date of the transfer, subject to a prior interest created by the
same transfer.

The interest created for the benefit of such a person shall not take effect, unless it extends to
the whole of the remaining interest of the transferor in the property. Thus, the interest of the
unborn must be for the whole remainder and it is not permissible to confer an estate for life
on an unborn person.

Further, the intended transfer in favour of As first and second son is opposed to public policy
since it could prejudice other relations. To make a transfer in favour of unborn persons valid,
the prior interest created by the transfer should not be contingent but vested interest. In the
example that was given, the possibility of A getting male children could be a remote
possibility and can only be termed as a contingency.

Take another example, under a deed of settlement if an interest is created in favour of the
children of a person and the interest too would take effect on the death of that person, then till
the death of that person the interest of the children would be contingent. To make a transfer
of property in favour of unborn persons to be valid there has to be a prior interest created by
the very transfer. It may be noted that a vested interest does not imply immediate enjoyment.
It is not permissible under law to change the rule of succession under the colour of fictitious
endowment2.

Therefore, for transfer of property for the benefit of the unborn persons two conditions are
required to be fulfilled:

1. Prior life interest must be created in favour of a person in existence at the date of the
transfer

2. Absolute interest must be transferred in favour of the unborn person3.

Prior Interest:

It is necessary for a valid transfer of property to an unborn person that before the transfer
actually takes place, a prior interest must be created in favour of a living person on the date of
the transfer. The unborn person must be in existence when the prior interest comes to an end.
After the death of the person who had life interest, the property would ultimately pass to the
unborn person, who will by that time have come into existence.

Absolute Interest:

It is necessary that whole of the remaining interest of the transferor in the property must be
given to the unborn person. Only absolute interest may be transferred in favour of the unborn
person and not limited or life interest, that is, the whole of the remaining interest is the entire
interest of the transferor less the prior life interest carved out of the ownership4.

Indian Succession Act, 1925

The principle of Section 13 is akin to Section 113 of the Indian Succession Act. Section 113
of the Indian Succession Act deals with transfer in favour of unborn persons which provides
that where a bequest is made to a person not in existence at the time of the testator's death,
subject to prior bequest contained in the will, the later bequest shall be void, unless it
comprises the whole of the remaining interest of the testator in the thing bequeathed.

2
http://archive.deccanherald.com/Deccanherald/nov32006/realty133172006112.asp
3
Dr. Avtar Singh, The Transfer of Property Act, Second Edition, Universal Law Publishing Co., pg 66
4
Ibid
For example, a property is bequeathed to A for his life and after his death, to his eldest son
for life and after the death of the latter, to his eldest son. At the time of the testator's death, A
has no son. Here, bequest to A's eldest son is a bequest to a person not in existence at the
testator's death. It is not a bequest of the whole interest that remains to the testator. The
bequest to A's eldest son for his life is void5.

If the beneficiary is not in existence at the time of the testator's death, the bequest is void
under sec.113. Similarly, section 113 does not concern itself with any possible diminution of
the extent of the property by addition to the class for whose benefit the bequest is made. The
vesting of property is not affected by postponement of possession.

In the case of a bequest made for the benefit of an unborn person the property is not payable
until the birth of the person and the intermediate income would then accumulate for his
benefit. Creation of successive life estates in favour of persons not in existence is not
permissible in law and the life estate so created in favour of persons in existence and those
not in existence would take effect with reference to those in existence at the time of the death
of the testator and invalid as to the rest6.

Section 113 of the Act reads as follows:

Bequest to person not in existence at testators death subject to prior bequest - Where a
bequest is made to a person not in existence at the time of the testators death, subject to a
prior bequest contained in the will, the later bequest shall be void, unless it comprises the
whole of the remaining interest of the testator in the thing bequeathed.

There are several cases that can be used in this context. The case of Sopher v Administrator
General of Bengal arose under Section 113, Succession Act. The facts were that that the
testator directed his trustees to divide his property into shares equal to number of his children
and grandchildren and to pay the income of those properties to his sons for life and then to his
grandchildren who survive their respective fathers, till they attained the age of 18. The
grandchildren were then entitled to the property absolutely. The Judicial Committee of the
Privy Council held that the unborn grandsons had to survive a double contingency, namely
that they must reach 18 years and also survive their respective fathers, and that therefore the
bequest was void. The Privy Council observed that the exception in Section 120, Succession
Act, does not refer to the contingency of the grandson surviving his father. The Privy Council

5
http://archive.deccanherald.com/Deccanherald/nov32006/realty133172006112.asp
6
ibid
also observed that if a bequest is capable of being defeated either by a contingency or by a
clause of defeasance, the bequest does not comprise the whole of the remaining interest of the
transferor.

In the case of Girish Dutt v Datadin, A made a gift of her property to B for life, who was
her nephews daughter, then to Bs male descendants absolutely. In case she had no male
descendants then to her daughter without power of alienation and if there were no
descendants, male or female, then to her nephew. B died without issue. The gift to unborn
daughters being of limited interest and subject to the prior interest created in favour of B was
held to be invalid under Section 13, while gift to her nephew failed under Section 167.

Section 14, Transfer of Property Act

Section 14 of the Act reads as follows:

No transfer of property can operate to create an interest which is to take effect after the life
time of one or more persons living at the date of such transfer, and the minority of some
person who shall be in existence at the expiration of that period, and to whom, if he attains
full age, the interest created is to belong.

This Section is known as the rule against perpetuity. While under sec l3 of the Act, the
transferor is not permitted to transfer anything less than his whole or entire interest in the
property in favour of unborn persons with prior interest created in the same transfer, the rule
against perpetuity [Sec.14] prohibits the creation of certain remote interest in the immovable
property so as to last for one or more existing lives plus l8 years8.

However, the stipulation relating to renewal of lease is not regarded as transferring any right
in the property and hence is not hit by sec.l4. Similarly, a contract for sale does not create any
interest in favour of the prospective purchaser and does not come within the purview of sec.l4
while a covenant for resale or for redemption of a mortgage stands on a different footing.

The object of rule of perpetuity is to restrain the creation of future conditional interest in
property. The rule of perpetuity is concerned only with the rights of property and does not
affect the making of contracts which do not create rights of property9.

The common law against perpetuities forbids some future interests (traditionally contingent
remainders and executory interests) that may not vest within the time permitted; the rule

7
. Dr. Avtar Singh, The Transfer of Property Act, Second Edition, Universal Law Publishing Co., pg 68
8
http://archive.deccanherald.com/Deccanherald/nov32006/realty133172006112.asp
9
ibid
"limit[s] the testator's power to earmark gifts for remote descendants".[1] In essence, the rule
prevents a person from putting qualifications and criteria in his will that will continue to
control or affect the distribution of assets long after he or she has died, a concept often
referred to as control by the "dead hand" or "mortmain".

Analysis of the Section

1. there should be a transfer of property

2. transfer to create an interest in favour of an unborn person

3. interest created should take effect after the lifetime of one or more persons living at
the date of such transfer and during the minority of the unborn person

4. the unborn person should be in existence at the expiration of the interest of the living
person

The unborn person is the one in whose favour the interest is created. This vesting of interest
in the favour of the ultimate beneficiary is preceded by life interest of one or more living
persons. Life interest is always a limited interest. It is necessary that the ultimate beneficiary
must come into existence before the death of the last preceding living person. The vestng of
the interest in the ultimate beneficiary must be postponed only to the life or lives of the living
persons and the minority of the ultimate beneficiary but not beyond that10.

One of the questions the come up is how much is the perpetuity period, which is the
maximum period for which the property maybe rendered alienable. The maximum
remoteness of vesting is the life of the last preceding interest plus the minority of the ultimate
beneficiary.

In Soundararajan v Natarajan, the Privy Council held that since at the date of the transfer it
is not known whether or not a guardian would be appointed by the court for the minor in the
future, in such a case for the purpose of Section 14 the normal period of minority would be
18 years. Therefore, the vesting maybe postponed up to the life of the last person holding
property for his life and minority of 18 years of the ultimate beneficiary. However a problem
arises when the unborn person does not come into existence when last interest has expired
and he is still in the womb. In this event, the period of gestation has to be included as a period
of grace in the perpetuity period11.

10
Dr. Avtar Singh, The Transfer of Property Act, Second Edition, Universal Law Publishing Co., pg 71
11
ibid
The cases of Ram Nawaz v Nandoo, Brijnath v S.M. Ananthmayi are also those that have
been held in court to be a valid vesting of interest.

Section 20, Transfer of Property Act

This particular Section states that:

When unborn person acquires vested interest on transfer for his benefit. - Where, on a
transfer of property, an interest therein is created for the benefit of a person not then living,
he acquires upon his birth, unless a contrary intention appear from the terms of the transfer, a
vested interest, although he may not be entitled to the enjoyment thereof immediately on his
birth.

There is no ban on the transfer of interest in favour of an unborn person. Section 20 permits
an interest being created for the benefit of an unborn person who acquires interest upon his
birth. No provision has been brought to the notice of the court which stipulates that full
interest in a property cannot be created in favour of an unborn person. For example, where A
settles his property on himself and his intended wife for their joint lives and to their eldest
son in marriage, the son takes vested interest as soon as he is born. He is not entitled to
possession during the lifetime of the parents. This section contemplates the normal condition
that the person is born alive. When an unborn person dies within the womb and is not born
alive, this section does not apply12.

A woman donated property to her brothers only son. She retained one of her properties for
her own livelihood till her demise and thereafter that property was to go the brothers son and
nobody else was to have any right or title over it. There was this further stipulation that if the
brother had any other children, all of them would be holding it jointly. It was held that a
younger brother born was entitled to joint ownership of the whole property including the one
which was retained by the donor for her lifetime. Devaru Ganapathi Bhatt v Prabhakar
Ganapathi Bhatt. 2004 AIR SCW (A)

BIBLIOGRAPHY

Books:

Dr. Avtar Singh, The Transfer of Property Act, Second Edition, Universal Law Publishing Co

Cases:

12
ibid
Devaru Ganapathi Bhatt v Prabhakar Ganapathi Bhatt

Brijnath v S.M. Ananthmayi

Ram Nawaz v Nandoo

Soundararajan v Natarajan

Girish Dutt v Datadin

Sopher v Administrator General of Bengal

Websites:

http://www.legalserviceindia.com/articles/will_hindu.htm

http://www.netlawman.co.in/acts/transfer-property-act-1882.php?p=2

http://www.scribd.com/speedodd/d/17168411-Property-Law-Including-Transfer-of-Property-
Act

http://archive.deccanherald.com/Deccanherald/nov32006/realty133172006112.asp