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Transfer of Property To An Unborn Child
Transfer of Property To An Unborn Child
Editor’s Note: The paper discusses the transfer of property to an unborn child in the
future. By association, the writer discusses the legal framework involved, the restrictions
placed on such transfers, and then also goes on to present a comparative analysis of
the differences in such practices for Hindus and Muslims, and Indians and Britishers.
UNBORN CHILD
“A person not in existence has a specific reference to one who may be born in
the future but does not have a current existence”. Even thought a child in womb is
literally not a person in existence, but has been so treated under both Hindu Law and
English Law.
TRANSFER OF PROPERTY TO AN –
UNBORN CHILD
Section 13 of Transfer of property Act read as follows:
1) Prior life interest must be created in favor of a person in existence at the date of
transfer, and
1) The person intending to transfer the property for the benefit of an unborn person
should first create a life estate in favor of a living person and after it, an absolute estate
in favor of the unborn person.
2) Till the person, in whose favor a life interest is created is alive, he would hold the
possession of the property, enjoy its usufruct i.e. enjoyment the property.
3) During his lifetime if the person, (who on the day of creation of the life estate was
unborn) is born, the title of the property would immediately vest in him, but he will get the
possession of the property only on the death of the life holder.
As far as the creation of a prior interest is concerned, first, the property is given for life to
a living person. It is not necessary that life interest should be created in favor of only one
living person. The transfer is competent to create successive life interests in favor of
several living persons at the same time.
On B’s death, the possession would be taken by C and on C’s death, by D. On D’s death,
the possession would go to B’s child, who should have come in existence by this time. If
he not there, the property would revert back to A, if he is alive, else to his hiers.
As far as the unborn is concerned, no life interest can be created for the benefit of an
unborn person. Section 13, specifically prohibits that, by the use of the expression, ‘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. It means that the
transfer must convey to the unborn person, whatever interest he had in the property,
without retaining anything with him. Thus, no limited estate can be conferred for the
benefit of the unborn person. If limited interest in the property is settled for him, the same
would be void.
For instance, A creates a life estate in favor of his friends B, and a life estate for the benefit
of B’s unborn first child UB1 and then absolutely to B’s second child UB2.
The second figure is of limited interest in the property for the benefit of an unborn person
and would therefore be void and incapable of taking effect in law. After the death of B,
here, the property would revert back to A or his hiers as the case may be, as even though
the transfer for the benefit of UB2 appears to be proper, as it is dependent on a void
transfer that cannot take effect in law; a transfer subsequent to, or dependent on a void
transfer can also not take effect.
Thus, where a father gave a life interest in his properties to his son and
then to his unborn child absolutely, it was held that the settlement was valid. But where
the interest in favor of the unborn child was a life interest the settlement would be void,
and a subsequent interest would also fail. Similarly, where there is possibility of the
interest in favor of the unborn child being defeated either by a contingency or by a clause
of defeasance, it would not be a bequest of the whole interest, and would be therefore be
void.
In the example cited above, in figure (ii), suppose UB1 dies before B and UB2 is alive
when the life estate in favor of B comes to an end. Even then, the transfer of the benefit
of UB2 will not take effect as the validity of the transfer has to be assessed from the
language of the document and not with respect to probable or actual events that may take
place in future. It is the substance of the transfer that will determine whether it is
permissible under the law or not and not how the situation may emerge in future.
In[20] Girish Dutt V Data Din, A made a gift of her property to B for her life and then to
her sons absolute. B had no child on the date of execution of the gift. The deed further
provided that in case B had only daughters, then the property would go to such daughters
but only for their life. In case B had no child then after the death of B, the property was to
go absolutely to X.
The deed on paper provided a life estate in favor of B’s unborn daughters: which
is contrary to the rule of sec.13. However, B died without any child, and X claimed the
property under the gift deed. The court held that where a transfer in favor of a person or
his benefit is void under sec.13, any transfer contained in the same deed and intended to
take effect or upon failure of such prior transfer is also void. In determining whether the
transfer is in violation of sec.13, regard has to be made with respect to the contents of the
deed and not what happened actually. Here as the transfer stipulated in the contract that
was void, the transfer in favor of X also became void. Hence, X’s claim was defeated.
Case Laws
Sopher’s case
Ardeshir’s Case
In [22]Ardeshir V Duda Bhoy’s case D was a settler who made a settlement. According
to the terms of settlement, D was to get during life, one-third each was to go to his sons
A and R. After D’s death, the trust property was to be divided into two equal parts. The
net income of each property was to be given to A and R for life and after their death to
the son’s of each absolutely. If A and R were each to pre-deceased D without male issue,
the trust were to determine and the trust property were to the settler absolutely. The settler
then took power to revoke or vary the settlement in whole or in part of his own benefit. It
was held that R’s son who was not born either at the date of settlement or his death did
not take any vested interest and the gift to him was invalid. A’s son who was alive at these
dates did not also take a vested interest.
The decision in Sopher’s case and Ardeshir’s case were applied by Bombay High
Court in [23]Framroz Dadabhoy v Tahmina, in this case, bai Tahmina settled a certain
sum upon trust in favor of herself for life and after her death and subject to the power of
appointment by codicil or Will among her issues born during her lifetime in trust for all her
children who being sons shall attain the age of 18 or being daughters shall attain that age
or marry under that age being daughter’s, in equal sums. It was held by their Lordships
that the decision in the Sopher’s case could not be applied to the trusts of a settlement
which were transfer inter-vivos. It was held that the words ‘extend to the whole of
remaining interest of the transferor in the property’ in sec.13 of the Transfer of Property
Act were directed to the extent of the subject-matter and to the absolute nature of the
estate conferred and not to the certainty of vesting.
Perpetuity means an uncertain period or time or indefinite period. There are people who
want to retain their property in their own families from generations to generations.
This[24]will be a loss to the society because it will be deprived of any benefit arising out
of that property. Free and frequent circulation is important and the policy of the law is to
prevent the creation of such perpetuity.
Origin: Perpetuity may arise in two ways- (a) By taking away the power of alienation from
the transferor (b) By creating a remote interest in the future property.A[25] condition
restraining the transferee’s power of alienation is void as per S.1O of the Act. And a
disposition to create a future remote interest is prohibited under S.14 of the Act.
Position in India – Life or any number of lives in being + period of gestation + minority
period of the unborn beneficiary.
1. The minority period in India is 18 years whereas it is 21 years under English law.
2. The period of gestation should be an actual period under Indian Law but it is a
gross period under English law.
3. Under Indian law, property should be given absolutely to the unborn person
whereas in English law, need not be absolutely given.
4. The unborn person must come into existence before the death of the last life estate
holder as per Indian law whereas he must come into existence within 21 years of
the death of the last life estate holder in case of English law.
EXCEPTIONS
1. Transfer for public benefit. Where property is transferred for the benefit of the
people in general, then it is not void under this rule. e.g. for the advancement of
knowledge, religion, health, commerce or anything beneficial to mankind.
2. Covenants of Redemption. This rule does not offend the covenants of redemption
in mortgage.
3. Personal Agreements. Agreements that do not create any interest in the property
are not affected by this rule. This rule applies only to transfers where there i transfer
of interest.
4. Pre-emption. In this there is an option of purchasing a land and there’s no question
of any kind of interest in the property, so this rule does not apply.
5. Perpetual Lease. It is not applicable to the contracts of perpetual renewal of leases.
6. This rule is not applicable to mortgages because there is no creation of future
interest.
Prior to the enactment of the TP Act, the rule under Hindu and Muslim law was that a gift
to a person who was not in[27] existence, was void. The [28]position under Muslim law
continues to be the same. However,[29] for Hindus, the rule was modifies by series of
enactments to bring it conformity with sec.13 of the TP Act. Parallel[30] provisions have
also been provided under[31] Indian Succession Act 1925, which permits bequest for the
benefit of unborn person. Section 113 of India Succession Act 1925(IS Act), applies to
legacies [32]created for the person not in existence and contain a provision almost
identical to sec.13 of the TP Act.
Section 17 of the Act speaks about the “Accumulation of Income of property or Direction
for Accumulation”. A[33] direction for the accumulation of income[34] of property amounts
to limiting the beneficial[35] enjoyment of property. Such[36] direction is void as per S.11
of the Act but S.17 is an exception.S.11 is applicable where there are absolute transfers
whereas S.17 applies to all kinds of transfer. e.g., A settler by deed directs
accumulation[37] for 25 years and himself lives for 40 years, from the date of transfer.
The accumulation for 25 years is good.
Illustration: X transfers his property to Z with a direction that the income of the said
properties shall accumulate during X’s life and shall be given to M. The direction here is
valid only up to the life of Z and not after his death.
EXCEPTIONS
1. Payment of Debts. This rule is not applicable where the purpose for accumulation
is the payment of debts incurred by the transferor or any other person having an
interest in the transfer.
2. Accumulation for raising portions. It means providing a share of the income for
maintenance. It does not apply to cases where accumulation of income is for
providing portions to children or for some remote issue of the transferor or any
other person interested in the transfer.
3. Maintenance of property. Accumulation for the proper maintenance and
preservation of the property shall not be void even if it exceeds the life of the
transferor or 18 years from the date of transfer.
CONCLUSION
A child in womb is literally not a person in existence, but has been so treated under both
Hindu Law and English Law child in its mother’s womb is for many purposes regarded
by a legal fiction as already born, in accordance with the maxim nasciturus pro jam nato
habetur. Section 13 provides that the property cannot transfer directly to an unborn
person but it can be transferred for the benefit of an unborn person. For transfer of
property for the benefit of unborn person two conditions are required to be fulfilled: Prior
life interest must be created but not for an indefinite period in favor of a person in
existence at the date of transfer, and Absolute interest must be transferred in favor of
unborn person.
FOOTNOTES
[1] Harvard Law Review, Vol. 26, No. 7 (May, 1913), pp. 638-640
[8] P. H. Winfield,The University of Toronto Law Journal , Vol. 4, No. 2 (1942) , pp. 278-
295
[9] PH Winfield – U. Toronto LJ, 1941
[28] R Maina, VW Muchai, SBO Gutto – Colum. Hum. Rts. L. Rev., 1976