Transfer of Property for the benefit of an Unborn Person

TRANSFER FOR THE BENEFIT OF AN UNBORN PERSON

Introduction

As we know there cannot be any direct transfer in the favour of an unborn person as his existence is unknown as well as uncertain. Unborn person is the one who doesn’t exists even in the mother’s womb. When a child has an existence in his mother’s womb or if he is a en ventre sa mere, then he can be considered to be a competent transferee. When a child is in his mother’s womb, the property can be transferred in his favour but the one who has no existence cannot get the property transferred for his benefit.

If we refer to Section 5 of the Transfer of Property Act, 1882, a transfer of property can only be done between two ‘living’ persons who simply mean both of the parties must have existence at the time of transfer. In legal words, transfer of property means transfer of interest and the transferor needs to transfer his vested interest immediately in the transferee.

There must not be any delay in between. If the transferor transfers his interest to an unborn person, his interest will be divested and the transfer will become void as then the transferor has to wait for transferring his interest to the unborn person and he can only vest his interest when the unborn will come in existence and this situation will be contrary to the very concept of interest. For example A gifts his property to the eldest son of B and B is unmarried at that time, so this gift will be declared as void.

Since property cannot be transferred to an unborn person directly, so it can be transferred for the benefit of the unborn person. Section 13 of the Transfer of Property Act, 1882 states that the property can be transferred for the benefit of an unborn person if two conditions are satisfied-
(i) Transfer for the unborn person must be first made by a life interest in the favour of a person in existence at the time of transfer, and,
(ii) Only absolute interest can be transferred in favour of the unborn.

See also  Case Comment: MC Mehta vs Kamal Nath - Public Trust Doctrine

Provision given in the Act

Section 13. Transfer for benefit of unborn person- 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.

Illustration- A transfers his property to B and to A’s intended wife successively for their lives and after their death, to the survivor, the eldest son of both B and his intended wife for life and after his death to A’s second son. The interest made for the benefit of A’s eldest son doesn’t take effect because it does not extend to the whole of A’s remaining interest in the property.

Necessary Conditions for the Transfer

1. Prior Life Interest

When the transfer is made for the benefit of an unborn person, a prior life interest should be made for life to the person who is in existence at the time of transfer. When a transferor intends to transfer his interest to the unborn person, he should be the ultimate beneficiary. Since that unborn is not in existence at the time of transfer, interest cannot be transferred to him. A prior transfer of interest for life should be made to the living person so that he holds the interest during his lifetime and till that time the unborn person would come in existence. When that person who was holding the property for life, will die the transfer of property will directly be transferred in favour of the ultimate beneficiary. Thus there should be an intermediary between the transferor and an unborn person who will hold the property during his lifetime for the benefit of the ultimate beneficiary.

See also  Effect of Adoption under Hindu Law

Illustration- A transfers his property to A for life then to B for life and then to C for life and ultimately to the unborn child of C. Here A, B and C are all living persons at the time of transfer. This transfer is valid as an interest can be transferred to more than one living persons successively ‘for life’ before it is ultimately transferred to the unborn(C’s unborn child).

2. Only Absolute Interest may be transferred

Transfer made should be absolute, limited or interest for life cannot be vested to an unborn person. Transfer for life to an unborn person is void and ineffective. Section 13 states that interest vested to the unborn person must be the whole of the remaining interest of the transferor in the property. When a transferor transfer his property in favour of an unborn person, he first makes prior transfer for life to a living person in existence at that time and holds the remaining interest so that he transfer the absolute interest to the unborn person who may be come into existence at the time when the transfer of interest for life will be terminated or when the intermediary will die.

So whole of the remaining interest means the whole interest of the transferor less prior interest transferred out of ownership. The transfer made in favour of the unborn person plus the prior life interest must dispose the entire interest of the transferor in the property transferred by him. If there is one more limitation which doesn’t let the grant of favour of the unborn complete, the transfer will be void. In short, a life-interest or any other limited interest cannot be transferred to the unborn.

Illustration- X transfers his property to Y for his life who is unmarried and then to the child of Y absolutely. The transfer in favour of the child of Y is valid.

Case Law- Girjesh Dutt v. Data Din

A made a gift of her property to her nephew’s daughter B for life and then completely to B’s male child, if she should have any. But if B didn’t gave birth to a male child then to her daughter without power of alienation and if B had neither male or female child then the property would be transferred to A’s nephew. B died childless. The Court held that the gift made to B for life was valid because B was a living person at the time of the transfer but transfer made to B’s daughter was void according to the provisions of Section 13 of the Transfer of Property Act because the gift had limited interest only (condition of gift without power of alienation); she was not given absolute interest and the prior transfer was invalid so transfer made successively to A’s nephew was also void.

See also  Contingent Contracts - Law of Contracts

Gift to Unborn under Hindu Law and Muslim Law

Gift made to an unborn person was void under Hindu law but after the enactment of Transfer of Property Act, 1882 and its applicability to Hindus made such transfer valid if it is created according to the Section 13 of Transfer of Property Act.
Section 2 of TPA states that nothing shall be deemed to affect any rule of Muslim Law and so Section 13 does not apply to Muslim law and gift made to unborn is void under Muslim Law.

Conclusion

So we can see that a transfer cannot be made to the unborn person directly because transfer must be made to the person who is in existence at the time of transfer. But Section 13 gives the relaxation that a transfer can be made in favour of the unborn before creating the prior interest for life to a living person existing at the time of transfer and then to the unborn person absolutely who will be known as ultimate beneficiary, only condition is that unborn person shall be in existence at the time when the person holding prior interest for his life will die.
Thus, the transfer should be in accordance of the provisions of Section 13 of the Transfer of Property Act otherwise the transfer will be considered as void.

Author: Samiksha Mehta,
Invertis University/ Student ( LL.B 3rd year

Leave a Comment