Mihir Prasanna Kelkar
BBA LLB 2016
TRANSFER FOR THE BENEFIT OF UNBORN PERSON
Property Law in India has undergone tremendous changes in the past few decades. From the whole issue about women being denied property rights to the emergence of a new branch in property law, that is, intellectual property rights, it has come a long way. One such aspect is the transfer of property in the favor unborn persons. This is one of the most interesting aspects of the whole branch of transfer of property, as it shines light on the transfer for the benefit of an individual who does not yet born into the world. This subject still has a lot of disputed and grey areas, which need to be critically analyzed. Through this research paper, I have attempted to explain in detail the provisions laid down in Section 13 of the Transfer of Property Act, along with some leading case laws related to the provision as well. This paper also attempts to analyze the relationship between S.13 and other related provisions as given under the Transfer of Property Act, 1882 (hereby referred to as the TP Act.)
A transfer of property cannot be made for the benefit of an unborn person as the definition in Section 5 of the TP Act is limited to living persons. However, the transfer to an unborn person can be made complete if the following conditions are followed, which are given in Section 13 of the TP Act: –
1. Interest of the unborn person must be preceded by a prior interest.
2. When the prior interest comes to an end, the unborn person must be in existence and he must have the interest as soon as he gains majority.
3. The interest created in favor of the unborn person must be the whole of the remaining interest of the transferor, that is, a life interest cannot be created in favor of the unborn person.
The major legal provisions, which put light on the question at hand, are as follows:
Section 13- Transfer for benefit for an unborn person:
Section 14- Rule Against Perpetuity:
Section 15- Transfer to class some of whom come under sections 13 and 14:
Section 16- Transfer to take effect on failure of prior interest:
Section 20- When unborn person acquires vested interest on transfer for his benefit:
Section 113- Bequest to person not in existence at testator’s death subject to prior bequest (Indian Succession Act, 1925):
There have been many cases which have given us a clearer idea about how the courts have interpreted these certain provisions. A few of the cases which have set a very strong precedent are as follows.
F.M. Devaru Ganapati Bhat v. Prabhakar Ganapathi Bhat
The donor who was issueless (Mahadevi) purchased all the properties from her brother (Ganapathi) on account of his helpless conditions (in the year 1936). A gift deed (of ancestral properties) was executed in 1947 and when the gift was made, the parents of the parties were still alive. The appellant was minor and the respondent was not even born. According to the appellant, a certain property under the gift deed was given to him absolutely and on true construction of the gift deed, the respondent has no right to claim partition of said property. It was also contended that creation of the interest in favor of the respondent who was not born when the gift deed was executed was invalid in view of Section 13 of the TP Act, 1882. Both the assertions were rejected by the Trial Court and the High Court. The appellant then approached the Supreme Court.
It was hence held by the Court that there is no ban on the transfer of interest in favor of an unborn person. Section 20 permits an interest being created for the benefit of an unborn person who acquires interest upon his birth. No provision was brought to the notice of the court which stipulated that full interest in a property cannot be created in favor of an unborn person. In the present case, the donor gifted the property in favor of the appellant, then living, and also stipulated that if other male children are later born to her brother then they shall be joint holders with the appellant. Such a stipulation is not hit by Section 13 of the TP Act. Creation of such a right is permissible under Section 20. The respondent thus, became entitled to the property on his birth.
The decision solidified the principle that an interest can be created for the benefit of an unborn person who acquires interest upon his birth.
Raj Bajrang Bahadur Singh v. Thakurain Bakhtraj Kuer
Raja Bisheshwar Bux Singh, father of the plaintiff and the defendant’s husband, was a taluqdar of Oudh, and his estate was known as the Gangwal Estate, to which he succeeded in 1925 to which the Oudh Estates Act (I of 1869) applies.
Shortly before his death, Raja Bisheshwar executed a will dated 11th September, 1929 by which five properties, described in lists A and B (attached in plaint) were bequeathed to Dhuj Singh, the younger son, by way of making provisions for the maintenance of the said sons and his heirs. Raja Bisheshwar died in 1930, leaving behind Bajrang Bahadur, who is the plaintiff, while the younger, whose name is Dhuj Singh has died since then, being survived by his widow, Bakhtraj Kuer, who is the defendant. It was averred by the plaintiff that Dhuj Singh had only a life interest in the properties bequeathed to him by Bisheshwar, and on the termination of his life interest, the property vested in the plaintiff as the heir of late Raja. It was also put forward was that even if Dhuj Singh had an absolute interest created in his favorunder the terms of his father’s will, the plaintiff was entitled to succeed to the taluqdari properties at any rate, under the provision of Section 14 (b) to be read along with section 22 (5) of the Oudh Estates Act.
The defendant resisted the plaintiff’s claim solely on the ground that Bisheshwar Bux Singh, as the full owner of the properties, was competent to dispose of them in any way that he liked and under his will it was the defendant and not the plaintiff in whom the properties vested after the death of Dhuj Singh. The contention, in substance, was that the will created a life interest for Dhuj Singh followed by a device in favorof the widow as his personal heir.
The Court held that, though no interest could be created in favorof an unborn person but when the gift was made to a class or a series of persons, some of whom are in existence, and some are not, it does not fail in its entirety; it is valid with regard to the persons who are in existence at the time of the testator’s death and is invalid as to the rest (S.15 of the TP Act). The widow, who is the heir of Dhuj Singh, was in existence when the testator died, and the life interest created in her favor should certainly take effect. She thus acquired under the will an interest in the suit properties after the death of her husband, commensurate with the period of her natural life and the plaintiff consequently had no present right to possession. The appeal was dismissed with costs.
This case solidified the principle that, validity of a transfer with regard to the persons who are in existence at the time of the testator’s death and with regard to those are not in existence.
Subject to a Prior Life Interest
A person not in existence can neither be a transferee of the property nor a beneficiary under a trust until he comes into existence. But where a transfer or trust is created instantaneously in favor of a living person, there is no legal restraint for the creation, as part of the same transfer, of a successive transfer for the benefit of a person not born at the date of transfer or trust, but who may come into existence before the prior interest ceases. The reason is that the successive interest takes effect only where the prior interest ceases, and at that time, the person for whose benefit it was created would have come into existence. Thus, the estate must vest in some person between the date of the transfer and the person coming into existence of the unborn person. It is necessary that the subsequent interest should extend to the whole of the interest remaining in the transferor, after the prior interest is created. Otherwise, the subsequent interest does not take effect under this section. The principle upon which Section 13 of the TP Act rests is that the liberty of the alienation of the property shall not be exercised to its own destruction, and that all contrivances shall be void which tend to place the property for ever out of the reach of the power of alienation.
For The Benefit Of?
Section 13 uses the words “for the benefit of” and not transfer “to’ unborn persons and hence it is in consonance with the principle that property cannot be transferred to one who is not in existence.
Person Not In Existence
A child en ventre sa mere, is a child in the womb and cannot be said to be a “person in existence” within the natural ambit of words. But such a child has been regarded by Hindu Law and the English law as a person in existence. Such a construction, however, is applied in only cases where it is necessary for the benefit of the presently unborn child.
Section 13 and 14 of the TP Act
The rule against perpetuity is based on the general principle that liberty of the right of the owner of a property to alienate or transfer his property at his will, should not to be so exercised that it ends up being detrimental to the property itself. According to Blackstone, by perpetuities, estates are made incapable of answering those ends of social commerce and providing for the sudden contingencies of private life for which the property was first established. The rule against perpetuity (also known as rule against remoteness) prohibits the non-vesting of interests beyond a certain period, which is not unreasonable. As long as the transferees are living persons, any number of successive estates cannot be created. A transfer could be made to an individual A for life, and then to B for life, and then C for life, and so on provided A, B and C are living persons at the date of the transfer. However, if the ultimate beneficiary is someone who is not in existence at the date of transfer, Section 13 of the TP Act requires that the whole residue of the estate must be transferred to him. If he is not born before the termination of the last prior estate, he takes a vested interest at birth and possession immediately on the last prior estate. The rule against perpetuity does not require that the vesting shall take place at the birth of the ultimate beneficiary. But rather, it prescribes the maximum period within which a future interest must vest and if the vesting is postponed beyond such limitation would be void for remoteness.
In Ram Newas v. Nankoo, a person, A, executed a sale deed of his land in 1884 in favorof B. With this deed, he created a life estate in favorof himself, his son and also their unborn descendants. This was in violation of S.13, as only the absolute interest in the property can be transferred for the benefit of unborn persons. Secondly, according to the term of the document, the property was sought to be made inalienable by creation of life estates for the benefit of unlimited number of generations. This was again in violation of Section 14 of the TP Act.
Under Section 13, the transferor is not permitted to transfer any but absolute interest in the property, i.e. his whole and entire interest in the property in favorof an unborn person, when the transfer is favorof him is to take effect after the determination of prior interest created by the same transfer. Under Section 14, the transfer itself, whether of a whole or limited interest, cannot be created so as to last for one or more existing lives plus 18 years. Section 13, hence, enacts in favorof an absolute transfer after a period and Section 14 enacts against such transfers in perpetuity.
Section 13 ; Section 15 Of the TP Act
Prior to 1929, the rule was that if by the same transfer, an interest was created in favorof a class of persons, with respect to some of which it was void, and for some which was valid, the interest failed with respect to all of them. But the law, presently, makes the transfer valid and effective for those, for whom it is capable for taking effect. The relationship between Section 13 and Section 15 of the TP Act can be explained through the case Raj Bajrang Bahadur Singh v. Thakurain Bakhtraj Kuerwhich has already been explained in detail in 2.3.2.
Difference between English Law and Hindu Law?
Under Indian Law, the estate created for the benefit of the unborn child cannot take effect unless it extends to the whole of the interest in the properties, subject to the creation of a prior interest in favorof a living human being. Only an absolute interest can be granted to an unborn child and the creation of a limited interest would make the transfer void under English Law, however, a limited interest can be created in favorof an unborn being, but not subsequent to that.
For instance, A creates a life interest in favorof his friend B, and on his death, to hi unborn son UB, and then to UB’s unborn son, UUB. This transfer would be valid under the provisions of English Law, but invalid under Indian Law, in favorof the unborn son UB due to Section 13, and in favorof UUB, Section 16 of the TP Act.
1. The person intending to transfer the property for the benefit of an unborn person, should first create a life interest in favor of a living person, and after it, an absolute interest in favor of the unborn person.
2. Till the person, in whose favor the life interest has been created is alive, he would hold possession of the property and enjoy its usufruct, i.e. enjoy the property.
3. During his lifetime, if the person (who, on the day of the life interest was unborn) is born, the title of the property, will immediately vest in him, but he will get the possession of the property only on the day the life holder dies.
This Section, however, cannot be read independently, and has to be read along with S.14, 20, 16 and 20 of the TP Act to gain its full meaning and importance.