2 Fianl Sec 13 & 14
2 Fianl Sec 13 & 14
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.
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).
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.
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.
VI. Conclusion: