TRANSFER OF PROPERTY ACT

PROJECT ON:

TRANSFER OF PROPERTY TO UNBORN PERSON

SUBMITTED TO:

MS. RUJHITA MAM (ASST. PROFESSOR OF LAW)

SUBMITTED BY:

HEMANT PRAJAPATI

2014(R)/ BA.LLB./017

SEMESTER – VII

FOURTH (IV) YEAR

 TABLE OF CONTENTS

1. Introduction ……………………………………………………………………………3

2. Section 13 – Transfer of property for the benefit of an Unborn Person ……………….3

3. Section 14 – Rule against Perpetuity …………………………………………………..8

4. Explanation of the Term Perpetuity…………………………………………………...11

5. Conclusion ……………………………………………………………………………16

6. Bibliography…………………………………………………………………………..17
 INTRODUCTION

SECTION 13: TRANSFER OF PROPERTY FOR THE BENEFIT OF AN UNBORN

PERSON

SECTION 5 OF THE TRANSFER OF PROPERTY ACT, 1882 provides that a transfer can
occur only between two living persons i.e. inter vivos transfer. Section 13 is an exception to this
general rule on which the entire Transfer of Property Act is based.

SECTION 13 of the Transfer of Property Act, 1882 talks about the transfer of property made for
the benefit of an unborn child & states that:- Where a transfer of property is made, in order to
create an interest for the benefit of a person who is not born at the date of transfer, subject to the
condition that a prior life interest is created in that property by the same transfer, the interest
created for the benefit of such unborn person shall take effect only when it extends to the whole
of the remaining interest of the transferor in the property.

The following illustration explain this section very clearly:

1. A, owner of property X, transfers the property to B, his daughter, in trust for A, and after
her death, for A’s intended grandchildren. Therefore, B holds a life interest in the
property while A’s grandchildren hold absolute interest in the property. This is a valid
transfer.

Thus, from the above explanation, following INGREDIENTS can be drawn with respect to
Section 13.

1. UNBORN PERSON: The transfer of interest in the property is made for the benefit of
an unborn person, that is, the person is not in existence at the date of transfer. It includes
both a child in the womb and a child not even in the womb of a mother.

A child in mother’s womb [En ventre sa mere: (French word meaning child in the
mother’s womb)] is deemed to be in existence after taking birth. So in the womb, he is
 considered still to be an unborn for the purposes of transfer of property. As per Section
20 of the Transfer of

Property Act, Property so given to an unborn/child in mother’s womb would vest on his
birth.

2. NO DIRECT TRANSFER: The interest is not transferred directly to the unborn, but via
medium or trust, that is, a prior life interest has to be created in favor of another person.
Thus, the transferor first has to create a life estate in favor of a living person. If a property
is transferred directly to an unborn person, there would be an abeyance (suspension) of
ownership from the date of transfer till the coming into existence of the unborn person.
Section 13 uses the expression “for the benefit of” and not “transfer to” unborn person.

3. PRIOR LIFE INTEREST: For life interest two conditions need to be fulfilled:

 Person is acting as a trustee till the unborn is born i.e. creating a “machinery of
interest.” Unborn, after being born, becomes absolute owner of the property
without possession which lies with the trustee.

 Possession will only be given when life interest has exhausted i.e. after the death
of the trustee.

If the unborn does not come into existence, property will revert back to transferor and
his legal heirs. If the unborn is born even for a minute and dies, property will go to
his legal heirs after the death of the person enjoying life interest and not to the
transferor.

Illustration: A transfer’s life interest in a property to B i.e the power to possess,

enjoy and use the income of the property, not absolute ownership. And then after

B, A transfer’s absolute interest to B’s unborn child, C.

 Girijesh Dutt v. Data Din AIR 1934 Oudh 35: 147 I.C. 991.

A, owner of X property, gifted it to her nephew C’s daughter as life interest stating
that if she has a male descendant, he will have absolute interest in the property. And
if female, she will have limited or life interest in the property. After her, property will
absolutely pass to A’s nephew C. Nephew’s daughter died issueless. It was held that
the property will revert back to A or his heirs as the gift made to C has failed because
the moment limited interest is given to an unborn person, it will be void. Therefore,
the transaction failed there and then. Life interest is given prior to a living person is
valid (A’s nephew’s daughter) but the transaction involving limited interest to the
unborn is void.

4. NO LIMIT ON NUMBER OF LIFE INTERESTS: There is no limit to the number of

successive interests in favor of living persons. Property may be given to more than one
living person ‘for life’, before it ultimately vests in the unborn. For example, A transfer’s
life interest in a property to B, then to C, and then to D, and after D an absolute interest to
D’s unborn child E. This is a valid transaction, the only precondition is all persons to
whom successive life interest is given must be alive at the time of transfer because life
interest cannot be given to unborn or dead.

5. ABSOLUTE INTEREST: Only absolute or whole interest can be transferred in favor of

unborn person and not life or limited interest. That means entire property needs to be
conveyed to the unborn child and not a limited estate.
EXCEPTION ALLOWED UNDER ENGLISH LAW: RULE OF DOUBLE POSSIBILITY

Section 13 allows transfer of only an absolute interest to the unborn person. But under English
Law the situation is not the same. The rule followed under English Law is the DOCTRINE OF
DOUBLE POSSIBILITY “or” the OLD RULE AGAINST PERPETUITIES (Whitby’s Rule)
according to which first unborn child is allowed to have limited interest in the property under
common law. But the second unborn must have an absolute interest. Therefore, the second
illustration mentioned under Section 13 will be valid under English Law whereas void from the
beginning in India, because under Indian Law, no limited estate can be transferred in favor of
unborn child.

Whitby’s rule was laid down in the case of Whitby v. Mitchell. It can be stated as follows:

“If an interest in the reality is given to an unborn person, any remainder to his issue is void,
together with all subsequent limitations. Thus, if land was limited to A, a bachelor for life,
remainder to his son for life and then to A’s son’s son in fee simple, the remainder to the
grandson would be void under this rule.”

If no child is born, property will revert back to the transferor or his legal heirs. First child, even if
born for a minute and dies, would get limited interest and pass on absolute interest to the child
who is born next. This explained with the help of the following situation:

A transfer’s property to B’s unborn children. Limited interest to first unborn and absolute
interest to the second unborn. If first unborn is not born, the second unborn will not get absolute
but limited interest as the first unborn child and any child born after that would get absolute
interest in the property as second unborn. And if the second unborn is not born, the first unborn
would still not get the absolute interest in the property, the property will revert back to tranferor
or his legal heirs after the life interest of first unborn expires.
Section 13 of Transfer of Property Act, 1882 is similar to Section 113 of Indian Succession
Act, 1925 except that Section 113 of the Indian Succession Act, 1925 is applicable only to
the concept of wills whereas Section 13 of Transfer of Property Act, 1882 applies to any
mode of transfer of property to the unborn person.

Section 113 of the Indian Succession Act, 1925 provides that:

113. Bequest to person not in existence at testator’s death subject to prior bequest.—Where a
bequest is made to a person not in existence at the time of the testator’s 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.

Illustrations

(i) 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 the 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 void.

PRINCIPLE UNDERLYING SECTION 13: The rule is that a person disposing of property to
another should not fetter the free disposition of that property in the hands of more generations
than one (by virtue of the condition that life interest cannot be created in favor of an unborn
person). The rule is quite distinct from the “rule against perpetuity” although the effect of these
two rules is often the same
SECTION 14: RULE AGAINST PERPETUITY

SECTION 14 is basically an extension of Section 13. Free flow of property is a major

component of public policy. “Perpetuity” is a limitation which places the property forever out of
reach of the exercise of power of alienation. Section 14 prevents property from being tied up
forever since law believes in alienation rahter than accumulation.

ANALYSIS OF SECTION 14:

The vesting of property absolutely cannot be postponed beyond the lifetime of any one or more
persons living at the date of transfer i.e no interval between the termination of the precedent
interest of the living person and the vesting of the interest in the unborn person.

Section 13 does not specify age until which unborn child gets interest in the property. Section 14
specifies age of majority for the same.

MAXIMUM REMOTENESS OF INTEREST THAT CAN BE CREATED: As provided

above, according to Section 20 of the Act, the unborn child, after coming into worldly existence,
acquires absolute interest in the property so transferred to him (even if he takes birth for just five
minutes). However, maximum remoteness of such interest of the unborn in the property that can
be created by the transferor is uptil the age of majority i.e. 18 years, after which the interest
becomes vested, even if an age more than 18 years is mentioned in the agreement by the
transferor.

Section 14 allows delay of the vesting of interest in the unborn person (who was not born at the
date of transfer of interest) during his minority period i.e. interest vested beyond 18 years of age
would be void. Thus, the maximum remoteness of interest (absolute interest) that can be created
in an unborn child is till the age of majority i.e. 18 years. After 18 years, the interest would
become vested.
PERPETUITY PERIOD: Maximum period during which the property may be rendered
inalienable. The extent of property is the life of any person who is alive at the moment when the
deed which creates the interest begins to operate, plus period of 18 years from the time when
such designated person dies. The total period of perpetuity i.e, the period for which the vesting
of property can be postponed where the unborn person has come into existence either at or
before the expiry of the last prior interest is his minority period. Where the unborn person is in
womb at the expiry of the last prior interest, the period of gestation plus minority.

Therefore, the main essentials of Section 14, in addition to essentials of Section 13, can be
drawn as:

1.) The ultimate beneficiary must come into existence (either into the world or in the
womb) before the death of the last preceding living person.
2.) Vesting of interest in favor of ultimate beneficiary may be postponed only up to the
life or lives of living persons plus minority of ultimate beneficiary; but not beyond
that.

For example: - A transfers certain propertied to B for life and then to C for life and then to an
unborn person when he attains the age of majority. B and C are living at the date of transfer and
unborn, the ultimate beneficiary is not in existence even in mother’s womb. The last prior life
interest is with C. When C dies, the contemplated unborn must be in existence either as a
born child or unborn in mother’s womb. The maximum period up to which vesting of
property in unborn can be postponed would be, in case of born child, life of C plus till the child
attains the age of majority, and in case of a child in mother’s womb, life of C plus period of
gestation plus period of majority.
POSITION UNDER ENGLISH LAW:

Under English Law, the specified age for an unborn for acquiring interest in the property is 21
years. If an age more than 21 years is specifically mentioned by the transferor, the transaction is
still valid. However, the interest becomes vested when the person turns 21.

In English Law, vesting of perpetuity may be postponed for any number of lives in being and an
additional term of 21 years afterwards, irrespective of the minority of the person entitled.

Under Indian Law, however, as required under Section 13, such ultimate beneficiary must be
borne before the termination of the last preceding interest. Accordingly there should not be any
interval between the termination of preceding interest and its consequent vesting in the ultimate
beneficiary; vesting of interest cannot be postponed even for a moment. By way of relaxing this
strict rule of section 13 it is provided in section 14 that vesting of interest may be postponed but
not beyond the life of preceding interest and minority of the ultimate beneficiary. Where
property is made to vest within the period prescribed in this section, the transfer is valid. Any
delay beyond this period would make the transfer void. Accordingly where a property is
transferred to A for life and then to unborn person when he attains the age of 19 years, the
transfer to Unborn is void under Section 14.

Additional period is confined to the minority of the person concerned. For example, a grant is
made to A for life and remainder to A’s eldest son, three years after death of A. Suppose on A’s
death, son is major. In this case, vesting is postponed for three years in gross. But in Indian Law,
it is void since the beneficiary was not a minor on expiry of life (in being).
PERPETUITY EXPLAINED WITH THE HELP OF A DIAGRAM:

Beyond Stage 4 the property goes

to the ultimate beneficiary

STAGE 1 STAGE 2 STAGE 3 STAGE 4

(Birth of the
(life time of (living persons or time ultimate (Minority of
given to prior estate ultimate
Transferor) holders) transferee) transferee)

At Stage 1 and 2, the transferor is free to put any condition and may transfer the property to one
or many; concurrently or consecutively, for a day, month, year or life (maximum prior estate is
life estate).

The ultimate transferee was not in existence till Stage 1 or 2. Now at Stage 3 he must be born,
otherwise he loses. If he is born on or before Stage 2, the property would vest in him under
Section 20 of the Transfer of Property Act but if the transferor so wants, vesting can be
postponed till he is minor, not a second thereafter, perpetuity which was valid up to Stage 4, will
be allowed. After that the property will go as the law prescribes.

The rule against perpetuity is applicable to both movable and immovable property. This was held
in the case of Cowasji v. Rustomji 20 Bom 511.
EXCEPTIONS:

There are two exceptions to the rule against perpetuity:

1. PERSONAL AGREEMENTS:

The Rule against Perpetuity does not apply to personal agreements; that is the agreements
which do not create an interest in the property. Rule against perpetuity is only applicable
to transfer of property. If there is no transfer of property i.e no transfer of interest, the rule
cannot be applied. Contracts are personal agreements even though contracts relate to
rights and obligation in some property. This is a reciprocal to English Law.

Examples of personal agreements under Indian Law:

 Ram Newaz v. Nankoo (1926) 92 I.C. 401.

While examining the transfer of property under Section 14, courts look at the possible
events according to the terms of the deed and not on actual events on the date of transfer.

In Ram Newaz case,; R had a share in a village which he sold to the defendant reserving
two bighas of land to himself under the following condition: “Two bighas of land which I
have excluded from sale shall remain in my possession for life, and after my death in the
possession of my lineal descendants……I and my lineal descendants have no right to
transfer the land excluded…… if none of my lineal descendants be alive then land shall
be the own property of the vendee.” This was a transfer to take effect on the date of
vendor’s last lineal descendent. R had only one son who was alive at the date of transfer,
but who died childless. On actual facts, the transfer operated within the period allowed,
but as it was possible that the transfer might have been postponed for 100 or 200 years
until the vendor’s line was extinct, the reservation of the two bighas was not valid.

Agreement in which we are creating a right from generation to generation without

 power of alienation, no interest is created and such agreement also counts as a personal
agreement and is not hit by Section 14 of TPA.

Here X’s interest depended upon male lineal descendant. Interest on male lineal descendant
is void, since you cannot make a transfer withholding the power of alienation, therefore, X’s
interest is void and X cannot claim the property.

In deciding questions of remoteness, regard must be had to be possible and not to

actual events. Where at the time of transfer of property there is possibility or probability that
in future it would be a transfer in perpetuity, the disposition shall be void even if at the time
of actual vesting of interest there is no violation of rule against perpetuity.

 London & S.W. Railway v. Gomm (1882) 20 Ch. D. 562

In London & S.W. Railway v. Gomm, the plaintiff Railway Co. no longer required a piece of
land for the purpose of the railway and by a deed of 1865 conveyed the land to G absolutely.
G covenanted that he and his heirs would at any time, thereafter, whenever the land was
required by the railway and after six months’ notice re-convey the land to railways for 100
pounds. In 1879, the defendant Gomm purchased the land from G’s heir with notice of
covenant. In 1880 the Plaintiff Railway gave notice to

Gomm to re-convey the land and on his refusal sued for specific performance of the
covenant. Kay, J., held, that the covenant did not create an estate or interest in land and was
therefore, not affected by the rule against perpetuity and decreed the suit. This was reversed
in appeal and Jessel, M.R., said that there was no real distinction between a “contract of
purchase” and an “option of purchase” and an option for purchase created an equitable
interest which if unlimited in duration, was void for remoteness as against an assignee of
land.

Under Common Law, there are two types of ownership, Legal & Equitable
 Under English Law, personal agreements like agreement to sell also create an
equitable right or interest in the property. Therefore, rule against perpetuity applies
to it. You cannot create perpetuity in such a manner which goes from generation to
generation. London Railway CO. cannot acquire the property, since equitable
interest is attached to the property. If this case would have been under Indian Law,
Railway Co. could acquire the property since agreement to sell under Indian Law
does not create any interest in the property.

Section 14 of the Transfer of Property Act, 1882 is mostly identical to Section 114 of the
Indian Succession Act, 1925. Section 114 of the Indian Succession Act also lays down the
Rule against Perpetuity but only in case of transfer of property to an unborn person
through a will.

Section 114 of Indian Succession Act provides that:

114. Rule against perpetuity.—No bequest is valid whereby the vesting of the thing bequeathed
may be delayed beyond the life-time of one or more persons living at the testator’s death 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 thing bequeathed is to belong. Illustrations

(i) A fund is bequeathed to A for his life and after his death to B for his life; and after B’s death
to such of the sons of B as shall first attain the age of 25. A and B survive the testator. Here the
son of B who shall first attain the age of 25 may be a son born after the death of the testator;
such son may not attain 25 until more than 18 years have elapsed from the death of the longer
liver of A and B; and the vesting of the fund may thus be delayed beyond the lifetime of A and B
and the minority of the sons of B. The bequest after B’s death is void.
A fund is bequeathed to A for his life, and after his death to B for his life, and after B’s death to
such of B’s sons as shall first attain the age of 25. B dies in the lifetime of the testator, leaving
one or more sons. In this case the sons of ‘B’ are person’s living at the time of the testator’s
decease, and the time when either of them will attain 25 necessarily falls within his own lifetime.
The bequest is valid.

(iii) A fund is bequeathed to A for his life, and after his death to B for his life, with a direction
that after B’s death it shall be divided amongst such of B’s children as shall attain the age of 18,
but that, if no child of B shall attain that age, the fund shall go to C. Here the time for the
division of the fund must arrive at the latest at the expiration of 18 years from the death of B, a
person living at the testator’s decease. All the bequests are valid.

A fund is bequeathed to trustees for the benefit of the testator’s daughters, with a direction that,
if any of them marry under age, her share of the fund shall be settled so as to devolve after her
death upon such of her children as shall attain the age of 18. Any daughter of the testator to
whom the direction applies must be in existence at his decease, and any portion of the fund
which may eventually be settled as directed must vest not later than 18 years from the death of
the daughters whose share it was. All these provisions are valid
 CONCLUSION:

The effect of these Rules is that a transfer/ gift can be made to an unborn person subject to the
following conditions:

(i) That the transfer/ gift shall be of the whole of the remaining interest of the transferor/
testator in the thing transferred/ bequeathed and not of a limited interest; and

(ii) That the vesting is not postponed beyond the life in being and the minority of the unborn
person.

In simple terms, while section 13 of TOPA lays down the mechanism for transfer of property for
the benefit of unborn person and "what property" is required to be ultimately transferred in
favour of an unborn person in order to validate such transfer, section 14 of TOPA provides the
"maximum period as to when" such property can be vested upon such unborn person.

Section 14 of TOPA supplements section 13 of TOPA and thus, it is pertinent to note that when
an interest in any property is intended to be transferred in favour of an unborn person, sections
13 and 14 of TOPA are required to be read together and the provisions contained thereunder are
required to be duly complied with, in order to give effect to the intended transfer in favour of
such unborn person
 BIBLIOGRAPHY

 Avtar Singh, “The Transfer of Property Act”, Universal law Publishing CO. PVT. LTD.,
Allahabad, (2006).

th
 Dr. G.P. Tripathi, “The Transfer of Property Act”, Central law Publications, 11 ed,
Allahabad.

th
 Mulla, “The Transfer of Property Act”, Lexis Nexis, Nagpur, 9 Ed.

th
 Dr. R.K. Sinha, “The Transfer of Property Act”, Central law Agency Allahabad, 14
Ed.

 Dr. Poonam Pradhan Saxena, “Property Law”, “Lexis Nexis Butterworths Wadhwa”,

nd
Nagpur, 2 Ed.