Transfer Of Property For The Benefit Of Unborn Person(Section 13)

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Transfer Of Property For The Benefit Of Unborn Person(Section 13)


Section 13 of the Transfer of Property Act, 1882 provides that when for the transfer of property, an interest therein is created for the benefit of an unborn person at the date 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 whole of the remaining interest of the person transferring the property in the property to be transferred.

Thus, in order to transfer a property for the benefit of an unborn person on the date of the transfer, it is imperative that the property must first be transferred by the mechanism of trusts in favour of some person living other than the inborn person on the date of transfer. In simpler terms, it can be said that the immovable property must vest in some living person between the date of the transfer and the coming into existence of the unborn person as the property cannot be transferred directly in favour of an unborn person.

Thus, it can be said that if the persons for whose benefit the transfer is to take effect are living, any number of successive life interests can be created in their favour. However, an important point to note here is that if the interest is to be created in favour of persons who have yet not taken birth, then in that case absolute interest must be granted to such unborn persons.

Essential Elements of Section 13

The essential elements of section 13 have been discussed below. They are as follows:

 

1. No Direct Transfer

A transfer cannot be directly made to an unborn person. Such a transfer can only be brought into existence by the mechanism of trusts. It is a cardinal principle of property law that every property will have an owner. Accordingly, if a transfer of property is made to an unborn person, it will lead to a scenario wherein the property will remain without an owner from the date of transfer of property till the date the unborn person comes into existence.

 

2. Prior Interest

If the circumstances are such that there is no creation of trust, then in that case the estate must in some other person between the date of transfer and the date when the unborn person comes into existence.In simpler words we can say that the interest in favour of an unborn person must always be preceded by a prior interest created in favour of a living person.

3. Absolute Interest

The entire property must be transferred to the unborn person. The transfer to an unborn person must be absolute and there should be no further transfer from him to any other person.An interest which remains only for the lifetime cannot be conferred on an unborn person. Under the English law, an unborn person can be conferred an estate only for his lifetime. This concept of English law, however, is subject to a restriction known as the rule of double possibilities. This rule was recognised in the case of Whitby Mitchell. The rule states that life interest to an unborn person should not be transferred as doing so will give rise to existence of two possibilities. The first possibility will be the birth of the unborn person to whom the life estate was to be transferred and the second possibility will be the coming into existence of issues of that unborn persons. Thus, the transfer of property to an unborn person can be permitted only if the absolute interest is transferred and not just the life estate.

 

Illustration

“A” owns a property. He transfers it to “B” in trust for him and his intended wife successively for their lives. After the death of the survivor, it is to be transferred to the eldest son of the intended marriage for his life, and after his death, it is to be transferred to 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.

 

When an Unborn Person Acquires Vested Interest

The provisions of section 20 of the Transfer of Property Act, 1882 mention the concept that in what circumstances unborn person acquires vested interest. Unborn person may not be able to enjoy the possession of property as soon as he is born but he may, however, acquire a vested interest in the property since his birth. Where, on a transfer of immovable property interest is created for the benefit of an unborn person, he acquires upon his birth, a vested interest, although he may not be entitled to the enjoyment thereof immediately on his birth.The mentioned provision however may be waived off if the terms of the agreement mention a contrary clause.

The section lays down that an interest created for the benefit of an unborn person vests in that unborn person as soon as he is born. Such interest remains vested interest even though he may not be entitled to the enjoyment thereof immediately on his birth.

For example, if “A” transfers an estate to trustees for the benefit of A’s unborn son with a direction to accumulate the income of such estate for a period of ten years from the date of the birth of A’s son and then to hand over the funds to him. A’s unborn son acquires a vested interest upon his birth, although he is not entitled to take and enjoy the income of the property for a period of ten years.

 

Views of the Apex Court in Reference to the Transfer to Unborn Person

The Supreme Court of India in various cases from time to time has interpreted the provisions of the Transfer of Property Act, 1882 in respect of the transfer of property done for the benefit of unborn persons. In Girish Dutt v. Data Din, A made a gift of her property to B for her life and then to her sons absolute. B had no child on the date of execution of the gift. The deed further provided that in case B had only daughters, then the property would go to such daughters but only for their life. In case B had no child then after the death of B, the property was to go absolutely to X.

 

The deed on paper provided a life estate in favor of B’s unborn daughters: which is contrary to the rule of Sec.13. However, B died without any child, and X claimed the property under the gift deed. The court held that where a transfer in favor of a person or his benefit is void under sec.13, any transfer contained in the same deed and intended to take effect or upon failure of such prior transfer is also void. In determining whether the transfer is in violation of sec.13, regard has to be made with respect to the contents of the deed and not what happened actually.

Here as the transfer stipulated in the contract that was void, the transfer in favor of X also became void. Hence, X’s claim was defeated.

SECTION 11 TPA NOTES 
 

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