Absolute Interest Under Transfer Of Property Act 1882

Introduction

The phrase “transfer of property” is defined under Section 5 of the Transfer of Property Act of 1882. According to the provision, a “transfer of property” is an act by which a live person conveys property to one or more other living persons, or to himself and one or more than one living person, in the present or future; and “to transfer property” is to conduct such an act. A further component of the section states that a “living person” includes a corporation, association, or body of individuals, whether incorporated or not, although nothing in this section affects any Indian legislation dealing to property transfers to or by companies, associations, or bodies of individuals.

Thus, a simple reading of the preceding section reveals that the property must be transferred from one living person to another living person. When it is stated that both individuals must be alive, it is inferred that a transfer by will is not covered by section 5 because such transfers take effect only after the death of the person executing the will. Section 13 is an exception to this rule, as it allows for the transfer of immovable property in the name of an unborn child.

In general, the terms of the Transfer of Property Act of 1882 prohibit the transfer of property to an unborn child. Let us first define the term “unborn person” in relation to this act before moving on to the next step. An unborn child or person is someone who does not have a current existence but has a precise reference to one and may be born in the future. Despite the fact that a kid in a mother’s womb is not a person in existence, it is treated as such under both Hindu and English law.

As a result, it is important to highlight that the term “unborn” refers not just to individuals who have been perceived but have not yet been born, such as a kid in the womb, but also to those who have not yet been recognised. It’s unclear whether they’ll be born at all, but a property transfer for their benefit is legal. Let us now look at the notion established in Section 13 of the Transfer of Property Act, 1882, after comprehending the meaning of the phrase ” unborn person.”

Provision Under Transfer of Property Act, 1882

When an interest in property is created for the benefit of an unborn person at the time of the transfer, a prior interest is to be created in respect of the same transfer, and the interest created for the benefit of such person shall not take effect unless it extends to the entire remaining interest of the person transferring the property in the property to be transferred, according to Section 13 of the Transfer of Property Act, 1882.

Thus, in order to transfer a property for the benefit of an unborn person on the date of transfer, the property must first be transferred through the mechanism of trusts in the name of someone living at the time of transfer who is not the inborn person. In simpler terms, the immovable property must vest in a living person between the date of transfer and the unborn person’s birth, as property cannot be transferred directly to an unborn person.

In other words, it might be claimed that the unborn person’s interest must always be preceded by a prior interest. Furthermore, when an interest is created in favour of an unborn person, it will only take effect if it covers the entirety of the person transferring the property’s remaining interest in the property, making it impossible to confer an estate for life on an unborn person. The interest in the estate in favour of the unborn person shall be the entirety of the estate’s remaining interest.

The essential premise of section 13 is that a person who transfers property to another person must not block the free transfer of that property to subsequent generations. Section 13 does not impose any restrictions on the creation of successive interests in favour of many people who are alive at the time the transfer is made. The grant of interest to an unborn person, limited by time or otherwise, is prohibited by section 13 of the Transfer of Property Act, 1882.

As a result, if the persons for whose benefit the transfer is to take effect remain alive, any number of subsequent life interests in their favour can be created. However, it is vital to emphasise that if the interest is to be generated in favour of people who have not yet given birth, absolute interest must be granted to those who have not yet given birth.

Essential elements of Section 13

1. There is no direct transfer.

A direct transfer to an unborn person is not possible. The mechanism of trusts is the only way to make such a transfer happen. Every property has an owner, which is a fundamental principle of property law. As a result, transferring property to an unborn person will result in a situation in which the property will be without an owner from the time the property is transferred until the unborn person is born.

2. Prior intrest

If the conditions do not allow for the foundation of a trust, the estate must be transferred to someone else between the date of transfer and the date the unborn person is born.To put it another way, any interest generated in favour of an unborn person must always be preceded by an interest created in favour of a live person.

3. The Concept of Absolute Interest

When an unborn child acquires vested interest

Section 20 of the Transfer of Property Act of 1882 mentions the concept of an unborn person acquiring a vested interest in certain circumstances. Although an unborn person will not be able to enjoy the possession of property as soon as he is born, he will have a vested interest in the property from the moment he is born. When a vested interest in immovable property is created for the benefit of an unborn person, he obtains a vested interest upon his birth, even if he may not be eligible to enjoy it immediately on his birth. However, if the agreement’s provisions include a stipulation to the contrary, the specified restriction may be waived.

The provision states that an interest generated for the benefit of an unborn child vests in the child as soon as he is born. Even though he is not entitled to enjoy it immediately upon his birth, such an interest remains vested.

Applicability under Hindu law and Muslim law

A gift or bequest in the name of an unborn child was void under Hindu law. However, as the Hindus are covered by the Transfer of Property Statute, a transfer in favour of an unborn child is permissible if it is made subject to section 13 of the act.

Case law

Girjesh Dutt vs. Data din

Facts:

A gave her property to her nephew’s daughter B for life, and then to B’s male descendants if she had any, but in the absence of any male child of B, to B’s daughter without power of alienation, and if B has no male or female descendants, to her nephew. B passed away without having any children.

Held:

The court found that the gift for life to B was legitimate because B was alive at the time of transfer, but the gift in favour of B’s daughter was void under Sec 13 of the Transfer of Property Act because she was only given a limited interest and not an absolute stake.Because this transfer was illegitimate, all subsequent transfers that were reliant on it were likewise unsuccessful.

Conclusion

As a result of the preceding debate, it is evident that property can be transferred to unborn humans. Though the transfer cannot be carried out directly, it can be carried out indirectly through the trusts’ machinery. In other words, the unborn person’s stake in the immovable property shall constitute the full interest in that immovable property. The underlying fundamental concept contained in Section 13 of the Transfer of Property Act is that a person disposing of property to another person must not obstruct the free disposal of that property by one or more generations.

Thus, for a transfer in favour of an unborn person to be lawful, the residual interest of the person transferring the property must be given to the unborn person in its whole. Furthermore, the vested interest is transmitted to the unborn person as soon as the property transfer is completed. Thus, only the provisions outlined above can apply to the transfer of immovable property to unborn persons. Otherwise, the transfer will be considered null and void.

Reference

Ipleader

https://blog.ipleaders.in/transfer-to-unborn-person/

legal Service India

https://www.legalserviceindia.com/legal/article-1341-transfer-of-property-for-the-benefit-of-unborn-child.html#:~:text=Absolute%20interest,-Only%20absolute%20interest&text=When%20a%20property%20is%20transferred,absolute%20interest%20in%20that%20property.

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