Property transferred to an Unborn Child under Transfer of Property Act, 1882

The term ‘property’ in its basic sense means anything which is owned by an individual and over which that individual has the right of ownership and/or possession. Basically, property is divided into two heads, i.e., movable property and immovable property – both of which can be transferred.

The Act which is to be dealt with here is the Transfer of Property Act, 1882 which does not apply to Muslims with respect to hiba (gift).

Transfer of Property

Property can be transferred from one person to another. Section 5 of Transfer of Property Act, 1882 defines the term transfer of property as “an act by which a living person conveys property, in present or in future, to one or more living persons, or to himself.”[1]

While transferring property, some essential things are to be kept in mind:

  • There should be consent of the parties.
  • The agreement should be inter vivos i.e. at the time of making the agreement the parties should be alive.
  • At the time of execution of the agreement, the parties should be alive.

As mentioned, the word ‘living persons’ includes an individual, a body of individuals, a company or a corporation whether incorporated or not. When it is mentioned that during the transfer both the persons should be alive, the concept of will does not come under the ambit of Section 5 as a will only takes effect after the death of the testator.

Transfer of Property to an Unborn Child

As stated above that according to Section 5 of Transfer of Property Act, 1882 a property can only be transferred to a living person. However, there is an exception to this under Section 13 & 14 of the Transfer of Property Act where a property can also be transferred to an unborn child. The term ‘unborn child’ means a person that is not in existence at present but is to be born in the future. A child in the mother’s womb will also be constituted as an unborn child under this act.

Section 13 says that “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.” [2]

This means that when a person wants to transfer the property for the benefit of an unborn person (child), he has to create a prior interest in the property by transferring the same to a living person before transferring it in the interest of the unborn. According to Section 13, a property cannot be directly transferred for the benefit of the unborn, first it has to be transferred to a living person who will then transfer the property to the unborn when the unborn shall attain the age of majority.

There are mainly two kinds of ‘interest’ that can be created while transferring the property from one person to another. They are “life interest” and “absolute interest”. The term life interest means that the person in whose favor the property is transferred for life interest, is only a care taker of that property and he does not possess all the rights over that property. He can only have possession over that property but cannot have the ownership right, i.e., he cannot sell the property so transferred to him.  On the other hand the term absolute interest means that the person in whose favor the property is transferred for absolute interest shall have all the rights over that particular property, i.e., he will have the possession as well as the ownership right over the property.

In scenarios where the property is being transferred from one living person to another, any type of interest can be created be it life interest or absolute interest. However, under Section 13 only absolute interest can be created while transferring a property for the benefit of an unborn person.

In the case of Girish Dutt vs. Data Din,[3] A gifted her property to B for life interest and then to her sons for absolute interest. B had no child on the date of execution of gift. The gift deed stated that in case B had a daughter, the property will be transferred to such daughter for life interest and in case B had no child then the property will be transferred to X for absolute interest after the death of B. As Section 13 provides that a property can only be transferred for absolute interest for the benefit of an unborn person so the condition that was put to transfer the property to daughter for life interest was void under this section. Further the court held that when a transfer in favor of an unborn person is void u/s 13, all the subsequent transfers shall also be void. So the property cannot be transferred to X also as it was also void under this section.

Section 14 is a type of extension to Section 13 which states that ‘n’ number of  prior interest can be created before the property is actually transferred for the benefit of an unborn. The person transferring can transfer the property to as many number of living person as he wants, but at the end he has to specify the person’s name (unborn) in whose benefit he will be transferring that property in absolute interest.

For instance, A transfers his property to B for life, after then to C for life, and after them to D for life, and then to the unborn child of C i.e. CB for absolute interest.

A_____________ _ B (life interest)

________________ C (life interest)

________________ D (life interest)

________________ CB (absolute interest)

On B’s death the property will be transferred to C, then on C’s death the property will be transferred to D, then on D’s death the property will be transferred to C’s child (CB) when he will become major. If CB does not come into existence, then the property will be reverted back to A, if he’s alive and if not then to his legal heirs.

Essential Elements of a Valid Transfer to an Unborn

  • There should be transfer of property.
  • The transfer is for the ultimate benefit of unborn who is given absolute interest in the property.
  • The vesting of interest in favor of ultimate beneficiary (unborn) is preceded by life interest of a living person.
  • The ultimate beneficiary must come into existence before the death of the last preceding interest.
  • The property will be transferred to the unborn when he will attain the age of majority.
  • If the ultimate beneficiary dies jut after being born, the property will be vested to him and transferred to his parents.
  • Vesting of interest in favor of ultimate beneficiary may be postponed only up to the lives of living person plus minority of ultimate beneficiary, but not beyond that.

When Unborn Person Acquires Vested Interest

The term vested interest is defined under Section 19 which states that when a property is being transferred, an interest is created in the favor of the person without specifying the time of its effect or the terms specifying that it will take effect on happening of an event, such interest is called a vested interest.

For instance, if A promises that he will transfer his property to B when B will attain the age of 20. B will have a vested interest in A’s property till the time he does not get possession of the property.

Now, Section 20 of Transfer of Property Act, 1882 talks about the provision relating to the transfer when the property is transferred for the benefit of an unborn person by creating a vested interest. Basically, it states the circumstances in which an unborn person acquires a vested interest in the property. When a transfer of property takes place, an interest is created for the benefit of an unborn. However he may not have full possession of such property but shall have a vested interest in that property. Also the mentioned provisions can be waived off in terms of a contrary clause in the agreement of transfer.

Conclusion

A child in a mother’s womb is not a person in existence but has been treated in way that it is just equal to a living person. Thus, it is clear from the above discussion that a property can be created in favor of an unborn person as well. The Transfer of Property Act, 1882 gives the power to a transferor to transfer the property to an unborn person under Section 13 if the act. However, it also provides some essential elements that must be kept in mind while transferring the property such as that the transfer to unborn should be preceded by a living person and the transfer must be absolute in benefit of the unborn.


[1] Transfer of Property Act, 1882 (Act 4 of 1882)

[2] Transfer of Property Act, 1882 (Act 4 of 1882)

[3] AIR 1934 Oudh 34

Kush Bisht from JEMTEC , Greater Noida

“I am a very focused person as my profession asks for it. My goal is to become a good corporate lawyer.”


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