By- Aditya Sharma
5th year Law student of Chandigarh University
INTRODUCTION
The Transfer of Property Act, 1882, is an extensive and primary act dealing with the transfer of property among living legal persons. It contains several technical provisions and explanations. The transfer of property is explained in Section 5 of the Act, which states that a living person may transfer property to one or more persons, to himself, or to another person. This section further explains that a living person includes corporations or a group of individuals, whether incorporated or not. In layman’s terms, it is assumed that the transfer should be among living creatures only. However, there is an exception to this rule explained in Section 13 of the Transfer of Property Act, 1882, which states that the transfer of property can be executed to an unborn child, but only with an absolute interest created for it.
Section 1 of the Act deals with the applicability of the Act. It is applicable to the whole of India except for the territories that immediately before November 1, 1956, comprised Part B states or the states of Delhi, Bombay, and Punjab. This means it applies to the whole of India excluding Part B states, and hence, the scope of the Act is limited. As we all know, the Transfer of Property Act is non-exhaustive in nature, as there are several types of properties not included in this Act and not regulated by it. This Act only deals with the transfer of immovable property, while the transfer of movable property is dealt with in the Sale of Goods Act, 1930. Moreover, this Transfer of Property Act does not apply to Muslims, as Muslim law is an exception to this Act.
Under Section 13, an unborn child in its mother’s womb may be granted some benefits under the legal act, such as the Transfer of Property Act. Thus, as per law, it is considered that the child is a person being a life chosen to form part of the period of the rule against perpetuities. This section was taken from the law of England, the concept of double possibilities. The rule states that when a property is disposed of to another, it shall not affect the free disposition of that property in the hands of more than one generation. As mentioned earlier, the transfer of property should be between living persons, but Section 13 is an exception to this rule, allowing the property to be transferred to a child who is in the mother’s womb. However, property cannot be transferred to someone not in the mother’s womb. In simpler words, Section 1 is an exception to Section 5, as Section 5 only deals with the transfer of property between living persons, and in Section 13, an interest is created for the benefit of a person not existing at the date of transfer. This section also explains the contingency that there should be no person other than an unborn who takes for life.
LEGALITY OF AN UNBORN CHILD
An unborn child is a child inside the mother’s womb and gets all the benefits post-birth, meaning after birth, it gets all the benefits. As per the Transfer of Property Act, the rights should be deviated only to the child born alive out of the mother’s womb and can attain definite rights. The unborn child is not well thought of in terms of giving all the rights to that unborn child, although his/her rights are transferred to the hands of their trustees or guardian. Limited interest cannot be given to the unborn child; only absolute interest should be given to the unborn child, even though it is subjected to a prior interest in favor of living persons. Until the unborn is alive, the property is in the name of his/her guardian or trustees.
CONDITIONS REQUIRED FOR VALID TRANFER TO UNBORN CHILD
There are some conditions put forth by the law that must be fulfilled by the transferor before transferring the property; otherwise, the transfer will be considered null and void:
- The transfer cannot be done directly to the unborn. First, a life interest has to be created in the name of the unborn parents or trustees. In the absence of a trust, the first interest should be created for a living person and then to the unborn child. Prior interest or life interest can be enjoyed by the living persons, or we can say the parents or trustees of the unborn until the unborn comes into existence in this world.
- The unborn must come into existence before the death of the estate holder. It is not necessary that the child should be born; even if it is in the womb of the mother, that is enough as per law. The prerequisite is that the unborn should be in the womb of the mother.
- As soon as the unborn comes into this world, absolute rights should be transferred to him/her. This means immediately the rights should be transferred to that newborn. In the view of a gift, the transfer can be absolute, as grandparents gift the property to the unborn with respect to when they are born.
- There should be a prior interest in the property in favour of the unborn child, which must lead to a prior interest in favour of a living person.
- It is not permissible by law to put life interest in favour of an unborn child.
FACTS OF THE CASE
Let us understand the facts in chronology:
- A created a life interest in favour of B and transferred the property as a gift to B’s male descendants, if any.
- A put a condition that if instead of male descendants, B had female descendants, they must have a limited interest without the power of alienation (they could not transfer or sell the property in the future).
- If neither male nor female descendants were born, the property would be transferred to B’s nephew, Dutta Din, who was alive at the time.
- B died without having any child.
SECTION 14: RULE AGAINST PERPETUITY
No transfer of property can create an interest that takes effect after the lifetime of one or more persons living at the date of such transfer and the minority of some person who shall be in existence at the expiration of that period and to whom, if they attain full age, the interest created is to belong. Section 14 is a continuation of Section 13, with perpetuity being the restriction that keeps the property out of reach from alienation authority.
CASE ANALYSIS
To better understand this case, one should review Sections 13 and 14 of the Transfer of Property Act, as these sections work in tandem. According to the law, property should not be directly transferred to the unborn; first, a life interest or prior interest should be created in favour of a living person or the trustee of the unborn person. The interest should include the remainder of the transferor’s interest. The condition restricts the transfer in favour of the unborn in respect of life interest and does not restrict the free disposition. Creating and transferring an interest is not prohibited by law, but the condition is that the transfer should not be a life interest in favour of the unborn child. Section 14 prohibits the interest from vesting in the unborn child after the death of the person on whom the life interest was created or the minority of the unborn child. Additionally, the unborn should come into the world before the death of the person on whom the life interest was created.
In this case, the transfer to B was valid as it created a life interest and made a condition for the absolute transfer in favour of the male descendants, which is accepted by law. However, creating a condition that limited interest would be created in favour of female descendants is prohibited by law. Limited interest cannot be created in favour of the unborn child. As per Section 16 of the Transfer of Property Act, the transfer to B’s nephew, Dutta Din, also fails. If the interest created prior fails, then the subsequent transfer also fails according to Section 16 of the Transfer of Property Act 1882.
JUDGEMENT OF THE COURT
The Supreme Court held that as B died without having any children and Dutta Din claimed interest in the property, his claim was rejected by the court. According to the provisions of Section 16, where the transfer in favor of a person is void, any subsequent transfer effecting on the failure of such transfer is also void. In layman’s terms, if the prior interest fails, then the subsequent interest also fails, even if it is valid by law, and it will be considered void.
CONCLUSION
The interest in favor of the unborn must be transferred as absolute interest in respect to immovable property. Section 13 acts as a progressive step toward securing the rights of the unborn. This section binds two conditions: first, prior interest must be created before transferring the property in favor of the unborn; second, an absolute interest must be transferred to the unborn after they come into existence. Section 16 extends Section 13 by stating that if the prior interest fails, then the subsequent interest automatically fails by default, as per the provisions made by the lawmakers. This case discusses the failure of the prior interest and how the subsequent interest also fails. Consequently, Dutta Din is not eligible to receive the property as the prior interest set by A in favor of B’s male descendants fails, resulting in the subsequent interest failing automatically.
FAQS
- Was the gift to B (her nephew) valid?
Answer: No, it was not. The gift to the unborn failed as per Section 13 due to the lack of prior interest and absolute transfer. The gift to Dutta Din also failed as per Section 16 of the Transfer of Property Act 1882.
- Was the gift to the unborn daughters valid?
Answer: No. A created limited interest towards the unborn daughters, which is prohibited by law. Only absolute interest can be created in favour of the unborn.
