Chapter: III

Transfer to Unborn Person

I. Introduction:
Section 5 of the Transfer of Property Act, 1882 provides it very clearly that
transfer of property should take place only between living persons. So both the parties
must be present (alive) i.e. in existence at the time of transfer. Hence property cannot
be transferred to an unborn child i.e. he cannot be a valid transferee.

II. Who is Unborn child?

Under TP Act, An unborn person means a person not in existence even in the
mother’s womb. A child in the mother’s womb or a ‘child en ventre sa mere’ is
considered to be in existence and hence he is a competent transferee. Hence the person
who is not in existence even in mother’s womb is an unborn person and he only cannot
be a competent transferee.
Reasons for unborn person to be incompetent transferee:
Every transfer of property involves transfer of interest. As soon as the property is
transferred, the transferor is divested of that interest and the interest is vested in the
transferee. For vesting of interest, therefore, it is necessary that the transferee must be
in existence. Otherwise the interest will remain in abeyance till the transferee comes
into existence.
Exception:
However there is an exception, whereby there can be transfer of property for the
benefit of unborn child as provided in section 13 through indirect transfer. Section 13
clearly states that there can be transfer to unborn child indirectly but not directly.

III. Transfer for benefit of unborn person:

Sec. 13:
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.
Illustrations:
a) ‘A’ makes a gift of his property to the eldest child of B who is yet unmarried, the gift
is void.
b) 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.

IV. Analysis:
Section 13 states that property cannot be transferred directly to an unborn
person but, subject to following conditions:
(i) prior life interest must be created in favour of a person in existence at the date of the
transfer, and
(ii) absolute interest must be transferred in favour of the unborn person.

1. Prior Life-Interest:
For a valid transfer to an unborn child, there must be prior life interest created in
favour a living person who is in existence at the date/time of transfer. Since such unborn
who is the ultimate beneficiary is not in existence at the date of the transfer, the
property cannot be given to him directly. There must be a prior life interest in favour of
living person, so that such living person holds the property during his life and till the
time the unborn would comes into existence.
After the termination of his life interest i.e. after the death of the living person
who is holding property for life, the interest would ultimately pass on to such unborn
child who by that time comes into existence. Thus, in between the transferor and the
unborn there must be an intermediary living person who may hold the property in trust
for the benefit of the unborn. In this manner successive prior life interests may be
created preceding (prior to) the interest in favour of the unborn person.
Illustrations:
(i) A transfers his house to X for life and thereafter to U.B (Unborn son of A). The
transfer of house in favour of U. B is valid. Here since U. B is not in existence at the
date of the transfer, A could not transfer the house directly to him. So, A had to
make a direct transfer of life interest in favour of X who is a living person at the date
of the transfer. After the death of X the interest of the house shall pass on to U. B
who is the ultimate beneficiary.
(ii) A transfers his properties to X for life and then to Y for life and then to Z for life and
thereafter to the unborn child of Z. Here, X, Y and Z are all living persons in existence
at the date of the transfer. This disposition of property is Valid. The property may be
given to more than one living persons successively for life before it ultimately vests
in the unborn (X’s unborn child).

2. Only Absolute Interest may be given:

The Prior interest created in favour of an living person has to be limited i.e. only
for his life and that to only the right to enjoy; but the absolute interest (i.e. ownership)
 in the property must be transferred in favour of an unborn person. Limited or life
interest cannot be given to an unborn person. Transfer of property for life of an unborn
person is void and cannot take effect.
Section 13 states that interest given to the unborn person must be - whole of the
remaining interest in the property of the transferor. When a property is transferred in
favour of an unborn, the transferor first gives a ‘life interest’ to an existing person. After
transferring this, he retains with him the ‘remaining interest’ of the property. This
‘remaining interest’ with transferor must be given to the unborn so that after the
termination of prior life interest, the unborn gets the whole i.e. absolute interest in the
property.
If there is any other limitation which derogates or cuts short the completeness of
the grant in favour of the unborn, the transfer is void. Thus, a life-interest or other
limited interest cannot be given to the unborn.
Illustrations:
A transfers his properties to X for life who is unmarried and then to the eldest
child of X absolutely. The transfer in favour of eldest child of X is valid.

3. Legal consequences:
The above-mentioned two conditions namely, the transfer in favour of an unborn
must be preceded by a life interest and that only absolute interest may be given to the
unborn has following legal consequences:
(a) The intermediary person living at the date of the transfer is to be given only life
interest. Giving life interest or creating life-estate in favour of a person means giving
him only the right of enjoyment and possession. He has to preserve the property like
a trustee during his life-time on behalf of the unborn. If absolute interest is given to
this living person, he may be entitled to dispose it off to anyone. If he retains it, the
property after his death shall go to his legal heir and not to the unborn for whose
ultimate benefit the disposition was made.
(b) The unborn must come into existence before the death of the person holding
property for life. If the unborn comes into existence say, after one month after the
death of the last living person (i.e. after termination of the preceding interest), the
property is to revert back to the transferor or his heirs. This is obvious because after
termination of the life-interest, it cannot remain in abeyance and cannot wait even,
for a moment for the next person to come into existence.
For example, A transfers property of which he is the owner to B 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. Here, the
successive life interests in favour of B and his intended wife is a valid transfer. But,
the eldest son of the intended marriage who is unborn, has been given the property
 only for life and not an absolute interest. Therefore, the transfer in his favour is void
and does not take effect.
 Case: Girjesh Dutt v. Data Din
The facts were as under. A made a gift of her properties to her nephew’s
daughter B for life and then absolutely to B’s male descendants/ if she should have any.
But, in the absence of any male child of B, to B’s daughter without power of alienation
and if B has no descendants male or female then to her (A’s) nephew. B died issueless.
The Court held that the gift for life to B was valid as B was a living person at me
date of the transfer. But gift in favour of B’s daughter was void under Section 13 of the
Transfer of Property Act because it was a gift of only limited interest (gift without power
of alienation); she had not been given absolute interest. Further, since this (prior)
transfer was invalid, the subsequent transfer depending on it (i.e. to A’s nephew) also
failed.

V. Conclusion:
 Chapter: IV
Rule against perpetuity

I. Introduction:
Law never wants property to be tied up permanently and being prevented from
transfer. Law prohibits from making property inalienable. Hence Transfer of Property
Act provides for a period for which a person can regulate the ownership of the property
and not beyond that. It is stated under section 14 as Rule against Perpetuity. It is an
extended provision of Sec 13. Sec. 14 of the Transfer of Property Act corresponds to Sec.
114 of the Indian Succession Act, 1925.

II. Principle behind Sec. 14:

There may be some people who wish to retain their properties in their own
family from generations to generations i.e. perpetually. But it is the policy of the law to
prevent the creation of perpetuities.
Law never wants property to be inalienable and being tied up permanently.
Hence Property cannot be tied up for a longer period than the ‘life in being’ and ‘beyond
minority’.
Perpetuity may arise in two ways:
1) By taking away from the owner of property the power of alienation thereof (Sec. 10
of this Act); and
2) By creating future remote interest in the property.
The object of the Rule against Perpetuity is to restrain the creation of future
conditional interest in property.

III. Rule against perpetuity:

Sec. 14:
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.

IV. Essentials:
Section 14 of the Transfer of Property Act provides that in a transfer of property,
vesting of interest cannot be postponed beyond the lifetime of last preceding living
person (or persons) and the minority of the ultimate beneficiary.
The essential elements of the rule against perpetuity as given in this section are
as follows:
 1) There is a transfer of property,
2) The transfer is for the ultimate benefit of an unborn person who is given absolute
interest,
3) The vesting of interest in favour of ultimate beneficiary is preceded by life or limited
interests of living person(s),
4) The ultimate beneficiary must come into existence before the death of the last
preceding living person,
5) Vesting of interest in favour 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.

V. Analysis:
Section can be analyzed through following points -
1) Transfer in Perpetuity -
Perpetuity means indefinite period. It also means continuous or unending
transaction. Transfer involving generation after generation is known as creating
perpetuities.
Rule against perpetuity is the rule which is - against a transfer making the
property inalienable for an indefinite period or forever. Where a property is transferred
in such a way that it becomes non-transferable in future for an indefinite period, the
property is tied up forever. This disposition would be a transfer in perpetuity. Hence
In any transfer, perpetuity may arise in two ways:
(a) by taking away from the transferee his power of alienation and,
(b) by creating future remote interest.
Section 10 makes provision that a condition restraining the transferee’s power of
alienation is void. A disposition (transfer) which tends to create future remote interest
has been prohibited under Section 14 which incorporates the ‘rule against perpetuity’.
However, a better name of the rule may be the rule against remoteness of vesting.

2) Object of Rule Against Perpetuity:

The object of the rule against perpetuity is to ensure free and active circulation of
property both for purposes of trade and commerce as well as for the betterment of the
property itself. Frequent disposition of property is in the interest of the society and also
necessary for its more beneficial enjoyment.
A transfer which renders property inalienable for an indefinite period is
detrimental to the interests of its owners who are unable to dispose it of even in urgent
needs or for any higher value. It is also a loss to society because when property is tied
up from one generation to another in one family, the society as such would be deprived
of any benefit out of it. Free and frequent disposal ensures wholesome circulation of
 properties in society. Rule against perpetuity is, therefore, based also on broad
principles of public policy.
In case of absence of this rule - there might come a time when almost all the
properties of a country would have become static properties. This would cause great
hardship in the easy enforcement of law, detrimental to trade, commerce and
intercourse and may also result into the destruction of property itself. The social
consequences of creating perpetuity would, therefore, be devastating.

3) Maximum remoteness of vesting (Perpetuity period):

Under Section 14, the ‘Perpetuity period’ (i.e. the maximum permissible
remoteness of vesting) is the life of the last preceding interest plus minority of the
ultimate beneficiary.
Accordingly a property may be transferred to A for life and then to B for life and then to
the U.B. (unborn) when he attains the age of majority. A and B hold property
successively for their lives, therefore, the property is tied up for their lives one after the
other. After the death of B (the last preceding interest) although it should vest in the
ultimate beneficiary U.B. immediately but/ under this section the property may be
allowed to vest in the U.B. when he attains the age of majority. Minority in India
terminates at the age of eighteen years or, when the minor is under supervision of
Court, at the age as twenty one years.

4) Ultimate beneficiary in mother’s womb:

Where the ultimate beneficiary is in the mother’s womb, then the maximum
period up to which vesting may be postponed, (after the last preceding interest) is the
minority + the period during which the child remains in mother's womb.
It may be noted that minority is counted from the date of worldly birth whereas.
The period during which a child remains in womb after being conceived is called
gestation. When the ultimate beneficiary is in mother’s womb at the time of death of
last person, then the property vests immediately in him even if he is in mother’s womb.
Maximum permissible remoteness of vesting would be =
a) life of the last preceding interest +
b) Period of gestation of ultimate beneficiary +
c) Minority of the ultimate beneficiary.
Where the ultimate beneficiary is already a born person, then the gestation
period will not be counted in addition to minority. However, in cases where gestation
period is to be added, only normal period of gestation (which is about nine months or
280 days) can be allowed to be added in the period of remoteness of vesting of interest
Illustrations:
a) A transfers certain properties to X for life and then to Y for life and then to U.B.,
when he attains the age of majority. X and Y are persons living at the date of the
 transfer and U.B. is the ultimate beneficiary not in existence even in mother's womb.
Here, the last preceding life interest is with Y. When Y dies the U.B. must be already
in existence either -
(i) in mother's womb as a child of say, six months or,
(ii) a born child of say, six years.
In case (i) the maximum period up to which vesting of property in U.B, can be
postponed would be; life of Y + six months (period of gestation) + 18 years.
In case (ii) the maximum period upto which vesting may be postponed would be:
life of Y +18 years.

5) Exceptions to Rule Against Perpetuity:

The rule against perpetuity is not applicable in the following cases -
(a) Transfer for the benefit of public:
Where a property is transferred for the benefit of public in the advancement of
religion, knowledge, commerce, health, safety or any other object beneficial to
mankind, the transfer is not void under the rule against perpetuity. This exemption is
necessary because transfers of property for the benefit of public generally are made
through the medium of religious or charitable trusts. In the trusts, the property
settled is tied up for an indefinite or perpetuity period so that its income may be
utilised for ever for the object for which the trust is created. Application of the rule
against perpetuity on trusts would render every trust void and it would be
impossible to create any trust for the benefit of public.
(b) Personal agreement:
Personal agreements which do not create any interest in property are exempted
from the rule against perpetuity. Rule against perpetuity is applicable only to a
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 the
contracts relate to rights and obligations in some property.

VI. Conclusion: