Property Law
Property Law
Introduction
The Transfer of Property Act was enacted in the year 1882. Before the commencement of this
Act, the transfer of immovable property in India was governed by the principles of English
law and equity.
The Preamble of the Act sets out the objectives that the legislation intends to achieve. The
purpose of the Act as set out in the Preamble is to define and amend certain parts of the law
of transfer of property. This Act is not exhaustive of a complete Code. It leaves room for
other legislations to form provisions relating to transfer of property. The object of the Act is
to bring rules which regulate the transmission of property between two living persons into
harmony with rules affecting its devolution and thus act complementary to the law of
testamentary and intestate succession. The second purpose set out in the Act is to complete
the code of law of contract in so far as it related to immoveable property.
Illustration
‘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.
This illustration states that A transfers property to B in trust for A's lifetime, and upon A's
death, for A's intended wife during her lifetime. After the death of the surviving spouse, the
property is to be held in trust for the eldest son of A and his intended wife for his lifetime.
Subsequently, upon the eldest son's death, the property will be transferred to A's second son.
However, the interest created for the benefit of the eldest son fails to take effect because it
does not cover the entirety of A's remaining interest in the property.
No direct transfer
Section 5 of the TP Act clearly lays down that the property can be transferred only between 2
living persons.
Therefore, transfers to an unborn person can be made only by creating a trust for such a
person. This is due to a basic principle of real estate law that a property must have an owner.
Thus, if property is transferred to an unborn person, it will remain vacant from the date of
transfer until the date of existence of the unborn person.
Illustration
A marries Z and has 3 children B, Y and M. B has 2 children C and D. Y has 2 children W
and X. M is expecting his first child. A can divide the property among B, Y, M, C, D, W and
X and can start a trust for M’s child to which his/her portion of the property can be
transferred. If M’s child is born during the lifetime of A, the title of the property will
automatically be vested in the child but will gain possession only up on the death of A.
Illustration
A marries B and has 2 children R and S. R marries U and has a son C and a daughter D. S
marries V and has a daughter E. S and V are expecting another child F. Since direct transfer
to an unborn child cannot be made, A, while dividing his property can transfer the property to
V for the benefit of F whenever F is born. Thus, the transfer is being effected from one living
person to another.
Absolute interest
Section 13 enacts that interest given to the Unborn person must be the whole of the remaining
interest of the transfer in the property. When a property is transferred in favour of an unborn
the transferor first gives the life interest to an existing person. After transferring this he
retains with him the remaining interest of the property. This remaining interest with the
transferor must be given to the unborn so that after the termination of prior life interest the
Unborn gets the whole absolute interest in the property. Such transfer confers all rights up on
the unborn person including the right of alienation.
Illustration
In case Girijesh Dutt v. Data Din
The facts are 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 nephew B died issueless. It was held by the gift for life to B was
valid as B was a living person at the date of the transfer. The 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; she had not been given absolute interest further since this transfer was invalid the
subsequent transfer depending on it also failed.
In Rukhamanbai v. Shivram it was held that a person who is entrusted with life interest of
an agricultural land can lease out the land unless any contrary intention arises.
The conditions for transfer to unborn under Section 13 are as follows:
Taking into consideration the illustration A transfers the life interest of his property in the
favour of B. On unborn (UB) being born, title, as well as absolute interest, is transferred to
UB the conditions are—
1. If UB is never born. The property will go back to B. If B dies the property will go
back to A and if A is dead, the property will go to the legal heirs of A. It must be kept
in mind that once a property is reverted back it cannot be transferred again in the same
transaction. A new transaction is to take place.
2. When UB is born after the death of B. On the death of the B the property will revert
back to A. Hence, a new transaction is to take place.
3. If UB dies before the death of B. The property will go to the legal heirs of UB on the
death of B. If UB transfers the property to someone, the person will gain possession
only on the death of B.
In F.M. Devaru Ganapathi Bhat v. Prabhakar Ganapathi Bhat, the transferor had
gifted the property to the appellant with the condition that if any male children are born to
her brother that they shall be joint holders of the property along with the appellant. It was
held that there is no ban on the transfer of interest in favour of an unborn person the
present situation will remain unaffected by Section 13. Section 20 of the Act permits an
interest being created for the benefit of an unborn person who will acquire absolute
interest upon his birth. The Court also held that there is no provision which states that
absolute interest cannot be created in favour of an unborn person. Creation of such a right
is permissible was held to be permissible.
Conclusion
The difference between life interest, vested interest, and absolute interest is as follows; life
interest is transferred to a person who is living on the date of such transfer. He will enjoy
possession of the property and will be entitled to the benefits from the property. The same can
be enjoyed by his legal heirs till his death. Vested interest is transferred to an unborn on being
born. It includes title to the property and the right to alienate property but does not include the
right to possession. Under normal circumstances, the unborn will be immediately entitled to
vested interest on birth. Absolute interest includes the right of alienation. But under Section
13 once the unborn is born and the absolute interest is transferred, the unborn will not be
entitled to possession of the property.