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Topic: Vested and Contigent Interest: Submitted by Manikantan S Kandathil Roll No: 33 7
Topic: Vested and Contigent Interest: Submitted by Manikantan S Kandathil Roll No: 33 7
SUBMITTED BY
MANIKANTAN S KANDATHIL
ROLL NO : 33
7TH B.Com
SUBMITTED TO
ADV. AJAY UNNI
The Transfer of Property Act deals with two kinds of interest vested interest
and contingent interest. Vested interest is to be distinguished from contingent
interest. When an interest is vested, the transfer is complete but when the interest is
contingent, the transfer depends upon a condition precedent. When the condition is
fulfilled the transfer takes effect and that the interest becomes vested.
Section 19 of the Transfer of Property Act, 1882 talks about Vested Interest. It is an
interest which is created in favour of a person where there is a condition of the
happening of a specified certain event and time is not specified. The person having
the vested interest does not obtain the possession of that property but expects to
receive it upon happening of a specified certain event.
Section 21 of the Transfer of Property Act, 1882 states about Contingent Interest. It
is an interest which is created in favour of a person on fulfilling a condition of
happening of a specified uncertain event. The person having the contingent interest
does not get the possession of the property but receives it upon happening of that
event but will not receive the property if the event does not happen. Contingent
interest is entirely dependent on the condition imposed on the transfer.
Illustration
2. Vested interest is not defeated by death. On the death of the transferee, the
interest is passed to the heir of such transferee.
Under the following circumstances, the vested interest remains vested in the
transferee even though–
3. Income arising from the property is accumulated till the right of enjoyment of the
property.
(iii) vested gift-A vested gift refers to an absolute gift. Generally, a vested gift is
free from contingencies. Although a vested gift is unconditional, its use or
enjoyment might not occur until sometime in the future. Hence, a vested gift can be
made for the purpose of present or future usage.
(v)vested future estate-Vested future estate is an estate which exists when there is
a person in being who would have an immediate right to the possession of the lands
upon the ceasing of the intermediate or precedent estate.
(vi)vested liabilities -"vested liabilities" means “the present value of the immediate
or deferred benefits available at normal retirement age for participants and their
beneficiaries which are no forfeitable.
(vii)vested right-A vested right is commonly defined as a “right that so completely
and definitely belongs to a person that it cannot be impaired or taken away without
the person's consent.
CASE LAWS
In Kant Roy v. Santi Devi , father settled the property on his two minor sons. The
settlement provided that the sons would take absolute interest in the property upon
the death of the transferor and after discharging all his encumbrances. The Supreme
Court held that the sons got a vested interest, though enjoyment was temporarily
postponed.
A agrees to transfer his house in favour of B on the condition that B should marry
his daughter ‘X’. Hence such a transfer of property in favour of B is dependent on
the condition of B marrying A’s daughter ‘X’. B may or may not get married to
‘X’. If B gets married to X, the interest in A’s house gets transferred to B
immediately on happening of the specified event.
There are three main characteristics of contingent interest which are as follow-
2. If the transferee dies before acquiring the interest in the property, the contingent
interest will lapse and the transferor will remain the owner of the property.
It has been held that a contingent interest is not an existing right and may never
ripen into an existing right, and is not a sufficient ground to an action for
declaration of right.
CASE LAWS
Usha Subbarao vs B.E. Vishveswariah & Ors [1996 SCC (5) 201, JT 1996 (6)
607]
In order to determine whether the appellant can claim any right in the
properties of the testator, it is, therefore, necessary to examine the nature of the
bequest that was made by the testator in favour of his five sons including the
deceased husband of the appellant. If it is found that the bequest is in the nature
of vested interest, it would vest in the husband of the appellant on the death of the
testator and after the death of her husband the appellant as his legal representative,
would be entitled to claim her husband's interest in the properties. But in case the
bequest is found to be in the nature of a contingent interest which was to vest in the
legatees only after the death of Smt. Nadiga Nanjamma, the appellant would not be
entitled to claim any interest in the properties since her husband had pre-deceased
Smt. Nadiga Nanjamma. As regards Wills the rule is that "where there is doubt as to
the time ofvesting, the presumption is in favour of the early vesting of the gift and,
accordingly it vests at the testator's death or at the earliest moment after that date
which, is possible in the contest."
BIBLIOGRAPHY
www.srdlaws.com/vestedandcontigentinterest
www.scribd.com/vestedandcontigentinterest