Transfer of Property to Unborn Children: Legal Insights Under Sections 5 and 13 of TOPA, 1882
Section 5 of the Transfer of Property Act, 1882 defines the phrase "transfer of
property". The section provides that "transfer of property" means an act by
which a living person conveys property, in present or in future, to one or more
other living persons, or to himself and one or more than one living persons; and
"to transfer property" is to perform such act.
It mentions that "living person" includes a company or association or body of individuals, whether incorporated or not, but nothing mentioned here shall affect any law which is operational in India relating to transfer of property to or by companies, associations or bodies of individuals
Ex: A wants to transfer his 3 buildings to B (his daughter), C (his son) and E (his wife). Therefore, under Sec 5 of this act, the above transaction performed by A can be held valid.
However, Sec 13 of this act do act as an exception for the definition explained in Sec 5 of the same act. Sec 13 of TOPA,1882 discusses about the concept of "Transfer of an immovable property to an UNBORN CHILD". Under this section the phrase "unborn child" means a child or a baby who is present in mother's womb.
A child who isn't born yet there is an existence of such child in mother's womb, then an immovable property can be transferred in to that unborn child. As stated in Sec 5, the transfer of property would take place between two or more living individuals. The same concept is applied in Sec 13. The Indian law determines that any living individual can transfer the property to the unborn child only if such unborn child is present in mother's womb.
The unborn child present in mother's womb would be considered as a living individual and hence such transfer is held to be valid. If there is no presence of baby even in mother's womb, then the property can't be transferred to such a child by any living individual. This sec 13 of TOPA act, 1882 is an extract taken from taken from British from the concept called "The rule of Double Possibilities". This rule defines that: "that a person disposing of property to another shall not shackle the free disposition of that property in the hands of more than one generation.
As we have read earlier that both the parties to a transfer of property must be living persons (including juristic person), but Section 13 is an exception to the general rule of transfer. Sec 13 is a transfer by born to the unborn. A property can be transferred to a child in the mother's womb but not to one who's not in the mother's womb[1].
The provisions of Transfer of Property Act, 1882 in general do not allow the transfer of property directly to an unborn person. A person who does not have any current existence but has a specific reference to one and who may be born in the future is considered to be an unborn child or person. Even though a child in mother's womb is simply not a person in existence, but has been treated as a person under both Hindu Law and English Law.
Therefore, it should be noted that the term 'unborn', refers not only to those, who might have been perceived but not yet born, that is a child in womb, but also includes those who are not even perceived. Whether they will be born at all or not is all possibility, but a transfer of property is admissible to be effected for their benefit. After understanding the meaning of the phrase " unborn person"[2]
Provision Under Transfer of Property Act, 1882
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.
In other words it can be said that the interest of the unborn person must in all cases be preceded by a prior interest. Moreover, when an interest is created in favour of an unborn person, such interest shall take effect only if it extends to the whole of the remaining interest of the person transferring the property in the property, thereby making it impossible to confer an estate for life on an unborn person. The interest in favour of the unborn person shall constitute all of the entire remaining interest in the estate.
The underlying principle in section 13 is that a person disposing of property to another person shall not cause obstruction in the free disposition of that property in the hands of more than one generation. Section 13 does not apply restrictions on the successive interest being created in favour of several persons living at the time of operation of the transfer. What is provided as a restriction under section 13 of the Transfer of Property Act, 1882, is the grant of interest, limited by time or otherwise, to 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 favor. However, an important point to note here is that if the interest is to be created in favor of persons who have yet not taken birth, then in that case absolute interest must be granted to such unborn persons [3].
Conditions To be Fulfilled while transferring a property to unborn child
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.
Difference between Indian and English law in terms of Transfer of Property:
Leading Case Law: Girija Dutt V. Data Din Air[4]:
The rule established in this case is known as "Rule against double Possibilities" which is now abolished under British law. This rule states that, "If an interest in the realty is given to an unborn person, any remainder to his issue is void, together with all subsequent limitations. Thus, if land was limited to "A (a bachelor) for life, remainder to his son for life, remainder to A's son's son in fee simple, the remainder to the grandson would be void under this rule[6]"
Raja Bajrang Bahadur Singh v. Thakurain Bakhtaraj Kuer (AIR 1952 SC 7)[7]:
As discussed in the above case, there could be no transfer of property done in the favour of an unborn child if such child isn't even present in mother's womb. This leading case discusses about the transfer of property to an unborn child in the form of gift.
The court in this case laid down that, when a property is transferred in the form of gift to certain individuals who are in existence and to others who aren't, then this transfer wouldn't completely fail. Such transfers are valid with regard to the individuals who are living and rest part of the transaction would be held as void.
Conclusion
It is obvious that property transfers can be carried out in the case of unborn people. Although the transfer cannot be carried out directly, it can be carried out indirectly through the machinery of trusts. In other words, the unborn person's interest shall constitute the full interest in that particular 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 shall not create impediments to the free disposal of such property in the hands of one or more generations.
Thus, for a transfer in favor of an unborn person to be legal, the entire remaining interest of the person transferring must be transferred. It is critical that the entire residual interest of the individual transferring the property be passed to the unborn child. Furthermore, as soon as the property transfer takes effect, the vested interest is passed to the unborn person. Thus, only the provisions outlined above apply to the transfer of immovable property to unborn persons. Otherwise, the transfer will be considered null and void[8].
The distinction between life interest, vested interest, and absolute interest is as follows: life interest is transmitted to a person who is alive at the time of transfer. He will have possession of the property and will be entitled to its benefits. His legal representative can enjoy the same benefits. His lawful heirs can enjoy the same benefits till his death.
When a child is born, he or she acquires a vested interest. It encompasses property title and the right to alienate property, but not the right to possession. Under normal conditions, the unborn is entitled to vested interest upon birth. However, Section 14 allows for the deferral of granting vested interest to unborn children until they reach the age of 18. This means that the transferor might expressly state that the unborn will receive the property only after reaching a set age, such as 16 years.
The regulation states that vested interests can only be deferred until the child reaches the age of 18 in order to avoid the property becoming inalienable for an indeterminate period of time[9]. Unspecified time periods since the life interest holder has no right to alienate the property. On the death of the life interest holder, absolute interest is passed to an unborn child, now an infant.
The right of alienation is included in absolute interest. However, after the unborn is born and the absolute interest is transferred, the unborn is not entitled to ownership of the property under Section 13. The same is true for Section 14: once the unborn is born and the vested interest is transmitted, the unborn cannot own property until the life interest holder dies and will only gain absolute interest at the death of the life interest holder. As a result, creating a transfer to an unborn person is permissible.
End Notes:
It mentions that "living person" includes a company or association or body of individuals, whether incorporated or not, but nothing mentioned here shall affect any law which is operational in India relating to transfer of property to or by companies, associations or bodies of individuals
Ex: A wants to transfer his 3 buildings to B (his daughter), C (his son) and E (his wife). Therefore, under Sec 5 of this act, the above transaction performed by A can be held valid.
However, Sec 13 of this act do act as an exception for the definition explained in Sec 5 of the same act. Sec 13 of TOPA,1882 discusses about the concept of "Transfer of an immovable property to an UNBORN CHILD". Under this section the phrase "unborn child" means a child or a baby who is present in mother's womb.
A child who isn't born yet there is an existence of such child in mother's womb, then an immovable property can be transferred in to that unborn child. As stated in Sec 5, the transfer of property would take place between two or more living individuals. The same concept is applied in Sec 13. The Indian law determines that any living individual can transfer the property to the unborn child only if such unborn child is present in mother's womb.
The unborn child present in mother's womb would be considered as a living individual and hence such transfer is held to be valid. If there is no presence of baby even in mother's womb, then the property can't be transferred to such a child by any living individual. This sec 13 of TOPA act, 1882 is an extract taken from taken from British from the concept called "The rule of Double Possibilities". This rule defines that: "that a person disposing of property to another shall not shackle the free disposition of that property in the hands of more than one generation.
As we have read earlier that both the parties to a transfer of property must be living persons (including juristic person), but Section 13 is an exception to the general rule of transfer. Sec 13 is a transfer by born to the unborn. A property can be transferred to a child in the mother's womb but not to one who's not in the mother's womb[1].
The provisions of Transfer of Property Act, 1882 in general do not allow the transfer of property directly to an unborn person. A person who does not have any current existence but has a specific reference to one and who may be born in the future is considered to be an unborn child or person. Even though a child in mother's womb is simply not a person in existence, but has been treated as a person under both Hindu Law and English Law.
Therefore, it should be noted that the term 'unborn', refers not only to those, who might have been perceived but not yet born, that is a child in womb, but also includes those who are not even perceived. Whether they will be born at all or not is all possibility, but a transfer of property is admissible to be effected for their benefit. After understanding the meaning of the phrase " unborn person"[2]
Provision Under Transfer of Property Act, 1882
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.
In other words it can be said that the interest of the unborn person must in all cases be preceded by a prior interest. Moreover, when an interest is created in favour of an unborn person, such interest shall take effect only if it extends to the whole of the remaining interest of the person transferring the property in the property, thereby making it impossible to confer an estate for life on an unborn person. The interest in favour of the unborn person shall constitute all of the entire remaining interest in the estate.
The underlying principle in section 13 is that a person disposing of property to another person shall not cause obstruction in the free disposition of that property in the hands of more than one generation. Section 13 does not apply restrictions on the successive interest being created in favour of several persons living at the time of operation of the transfer. What is provided as a restriction under section 13 of the Transfer of Property Act, 1882, is the grant of interest, limited by time or otherwise, to 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 favor. However, an important point to note here is that if the interest is to be created in favor of persons who have yet not taken birth, then in that case absolute interest must be granted to such unborn persons [3].
Conditions To be Fulfilled while transferring a property to unborn child
-
Prior Interest: A property shall be transferred to an unborn child only via trusts and not directly. If there is no such presence of trust, then such a property shall first be transferred to any living individual and later the same shall be forwarded to the child.
Ex: For instance, A transfer property to B for life, and after him, to C, and then to D again for their lives and then absolutely to B's unborn child UB. On B's death, the possession would be taken by C and on C's death, by D. On D's death, the possession would go to B's child, who should have come in existence by this time. If he is not there, the property would revert back to A, if he is alive, else to his heirs.
- Before the death of the estate holder: The baby must come into the world prior to the death of the last estate holder. Once the child is born, the child would be allotted with vested interest. Though the possession of the property isn't with the child immediately, yet there would be a vested interest created in the favour of the born child.
-
Immediate transfer of rights: All the rights shall be vested with the unborn child as soon as he comes into existence. Once the baby is born, he shall be the "Absolute owner" of that transferred property. In other words, it can be stated that once the baby's birth has taken place, he/she shall be the sole owner of that property even though there is no immediate possession.
- Absolute Interest: The property which is transferred to a living individual prior to the birth of the child, the same property shall be completely transferred to the child once he comes into the world. This transfer of the property to the child shall be "absolute" and there shall be no further transfer from him. Also, as per the English doctrine, the transfer of the property to an unborn child shall be accepted only if the absolute interest is transferred and not merely the life estate.
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.
Difference between Indian and English law in terms of Transfer of Property:
- As per Indian law, the minority period ends at the age of 18 whereas, in English law the minority period ends at the age of 21.
- In case of Indian law, the property is to be transferred with the concept of absolute interest, whereas in English law transfer of property with the concept of absolute interest isn't mandatory.
- As per Indian law, the unborn child should come into existence before the death of the last estate holder. This isn't the case in English law. As per English law, the unborn child should come into existence within 21 years from the death of the last estate holder.
Exceptions to the above-mentioned rules and conditions
- Transfer for Public Benefit: Where any kind of property is transferred for the benefit of the general public, then it shall not be termed as invalid. Ex: for the advancement of knowledge, religion, health, commerce, or anything beneficial to mankind.
- Covenants of Redemption: This rule generally applies in the case of mortgages.
- Personal Agreements: Agreements that don't involve the creation of interest shall not be affected by this rule. This rule shall be invoked only in those cases where the transfer of interest is involved.
- Pre-emption: In this, there is an option of purchasing a land and there's no question of any kind of interest in the property, so this rule does not apply.
- Perpetual Lease: It is not applicable to the contracts of perpetual renewal of leases.
Leading Case Law: Girija Dutt V. Data Din Air[4]:
- Facts:
A decided to transfer his property to B (daughter of her nephew), and later to her male descendants (sons) if any of them are born with absolute interest. Also, there was a clause stated that if there are no male descendants born to B, then the same shall be forwarded to B's daughters without any power of alienation. Lastly, it was stated by A that if there are no issues to B (i.e., neither male nor female), then the property shall revert to B herself. B died issue-less.
- Issues:
- The question was raised whether the gift to unborn sons or daughters can be held as valid?
- Whether the property transferred to B via gift can be held valid?
- Decision:
- The court held that the transfer of property to B in the form of a gift shall be held valid since B was a living individual at the time of the transfer.
- However, the court stated that the transfer of property to B's sons or daughters was void under Section 13 of the Transfer of Property Act, 1882, because there was no prior estate and no absolute transfer or interest vested. Hence, any other subsequent transfers depending on this event would also be held void.
The rule established in this case is known as "Rule against double Possibilities" which is now abolished under British law. This rule states that, "If an interest in the realty is given to an unborn person, any remainder to his issue is void, together with all subsequent limitations. Thus, if land was limited to "A (a bachelor) for life, remainder to his son for life, remainder to A's son's son in fee simple, the remainder to the grandson would be void under this rule[6]"
Raja Bajrang Bahadur Singh v. Thakurain Bakhtaraj Kuer (AIR 1952 SC 7)[7]:
As discussed in the above case, there could be no transfer of property done in the favour of an unborn child if such child isn't even present in mother's womb. This leading case discusses about the transfer of property to an unborn child in the form of gift.
The court in this case laid down that, when a property is transferred in the form of gift to certain individuals who are in existence and to others who aren't, then this transfer wouldn't completely fail. Such transfers are valid with regard to the individuals who are living and rest part of the transaction would be held as void.
Conclusion
It is obvious that property transfers can be carried out in the case of unborn people. Although the transfer cannot be carried out directly, it can be carried out indirectly through the machinery of trusts. In other words, the unborn person's interest shall constitute the full interest in that particular 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 shall not create impediments to the free disposal of such property in the hands of one or more generations.
Thus, for a transfer in favor of an unborn person to be legal, the entire remaining interest of the person transferring must be transferred. It is critical that the entire residual interest of the individual transferring the property be passed to the unborn child. Furthermore, as soon as the property transfer takes effect, the vested interest is passed to the unborn person. Thus, only the provisions outlined above apply to the transfer of immovable property to unborn persons. Otherwise, the transfer will be considered null and void[8].
The distinction between life interest, vested interest, and absolute interest is as follows: life interest is transmitted to a person who is alive at the time of transfer. He will have possession of the property and will be entitled to its benefits. His legal representative can enjoy the same benefits. His lawful heirs can enjoy the same benefits till his death.
When a child is born, he or she acquires a vested interest. It encompasses property title and the right to alienate property, but not the right to possession. Under normal conditions, the unborn is entitled to vested interest upon birth. However, Section 14 allows for the deferral of granting vested interest to unborn children until they reach the age of 18. This means that the transferor might expressly state that the unborn will receive the property only after reaching a set age, such as 16 years.
The regulation states that vested interests can only be deferred until the child reaches the age of 18 in order to avoid the property becoming inalienable for an indeterminate period of time[9]. Unspecified time periods since the life interest holder has no right to alienate the property. On the death of the life interest holder, absolute interest is passed to an unborn child, now an infant.
The right of alienation is included in absolute interest. However, after the unborn is born and the absolute interest is transferred, the unborn is not entitled to ownership of the property under Section 13. The same is true for Section 14: once the unborn is born and the vested interest is transmitted, the unborn cannot own property until the life interest holder dies and will only gain absolute interest at the death of the life interest holder. As a result, creating a transfer to an unborn person is permissible.
End Notes:
- https://blog.ipleaders.in/transfer-to-unborn-person/
- https://www.legalserviceindia.com/legal/article-2055-transfer-of-property-to-unborn-child
- https://blog.ipleaders.in/transfer-to-unborn-person/
- AIR 1934 Oudh 35
- https:/www.manupatra.in
- AIR 1952 SC 7
- https://blog.ipleaders.in/transfer-to-unborn-person/
- legalserviceindia.com/legal/article-2055-transfer-of-property-to-unborn-child.html
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