Transfer for Benefit of Unborn Person

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transfer for the benefit of unborn person

General Rule –

Section 5 of the transfer of property act 1882, transfer as between living persons.

Exception– There are certain sections in the act which lay down certain rules regarding transfer for the benefit of unborn person.

Section 13 is one of the group of sections which refer to interest created for the benefit of person not existing at the date of transfer.

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 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.

Principle underlying Section 13

The principle underlying the rule is that a person disposing of property to another should not handcuff the free disposition of that property in the hands of more generations than one.

The section provides that there should never be such a person as an unborn one takes for life, because it is an obvious contingency.

Applicability

Hindu Law and Muslim Law

Under pure Hindu law, a gift or bequest in favor of an unborn was void. But now, since Transfer of Property Act is applicable to Hindus, the transfer in favor of an unborn person is valid if it is made subject to the provisions of Section 13 of the Act. 

Since Section 2 of the Transfer of Property Act provides that “nothing shall be deemed to affect any rule of Mohammedan law”, Section 13 is not applicable to transfers made by Muslims. However, under Muslim law too a gift in favor of a person not in existence has been held void[1].

Indian Succession Act, 1925

Section 13 is almost identical with section 113, Indian Succession Act, 1925. The difference between the two sections is that the former relates to transfer inter vivos (between living persons), while the latter deals with bequest which take effect only on the death of the testator.

Section 13 controls section 113 and, therefore, both these sections should be read together[2].

In Sopher v Administrator-General of Bengal[3] , the Privy Council considered the effect of Section 113 of the Indian Succession Act in a will which provided for an ultimate bequest in favor of persons not born at the time of the testator’s death.

Rules underlying Section 13

No Direct Transfer

a. A transfer cannot be made directly to an unborn person.

b. Such a transfer can only be made by the machinery of trusts.

c. It is a fundamental principle of the English common law, that any disposition of land calculated to produce an abeyance of ownership is void.

d. Accordingly, if a transfer were made directly to an unborn person, there would be an abeyance of ownership from the date of transfer till the coming into existence of the unborn person. 

Prior Interest

a. In case a trust is not created, the estate must vest in some person between the date of the transfer and the coming into existence of the unborn person.

b. In other words, the interest in favor of an unborn person must always be preceded by a prior interest in favor of a living person. 

Absolute Interest

a. The entire property must be transferred to the unborn person.

b. It is not permissible to confer a life-interest on an unborn person.

c. In the illustration to the section, the benefit created for the eldest unborn son is only a life-interest and it, therefore, fails.

d. In English Law, it is possible to give an estate to an unborn person for life. But this aspect of English Law was subject to a restriction called the rule against double possibilities, recognized in Whitby v. Mitchell[4].

e. It was called rule against double possibilities for the reason that there existed two possibilities: one, the birth of the unborn person to whom the life-estate was given and, second, the coming into existence of issues of that unborn person. 

Leading Case law

Girivsh Dutt vs. Data Din[5]

a. A made a gift of her properties to her nephew’s daughter, before life and then absolutely B’s male descendants, if she should have any.

b. But, in the absence of any male child of B, to B’s daughter without power of alienation and, if B has no descendants male or female then to her (A’s) nephew.

c. B died issueless.

d. The Court held that the gift for life to B was valid as B was a living person at the date of the transfer.

e. But gift in favor of B’s daughter was void under Section 13 of the Transfer of Property Act because it was a gift of only limited interest (gift without power of alienation); she had not been given absolute interest. Further, since this (prior) transfer was invalid, the subsequent transfer depending on it (i.e. to A’s nephew) also failed.

Illustrations

a. A gives property to B for life, and afterwards to his son (unborn), subject to the condition that if the son changes his religion, the property should be forfeited. Here the condition regarding change of religion fetters the estate, and does not therefore comply with Section 13, which speaks of the whole of the estate.

b. A transfers his properties to X for life and then to Y for life and then to Z for life and thereafter to the unborn child of Z. Here, X, Y and Z are all living persons in existence at the date of the transfer. This disposition of property is valid. The property may be given to more than one living persons successively ‘for life’ before it ultimately vests in the unborn (Z’s unborn child). 

c. A transfers his properties to X for life who is unmarried and then to the eldest child of X absolutely. The transfer in favor of eldest child of X is valid. 

Frequently Asked Questions

Q1. What is the English law relating to transfer in favor of unborn person?

The English law relating to transfer in favor of unborn persons is now governed by the rule against perpetuities as laid down in Section 163 of the Law of Property Act, 1925. Before this Act, the property could be transferred in favor of an unborn subject to “rule against double possibilities.”[6]

a. Under this rule, property could be transferred for life in favor of the first ‘unborn person but to next unborn absolutely.

b. If life estates were granted to two successive unborn persons, the transfer in favor of only second unborn was void because it violated the ‘rule against double possibilities’.

c. Thus, under this rule A could transfer properties to U.B-l for life and then to U.B-2 absolutely.

d. Now, the transfers in favor of U.B-l and U.B-2 (both unborn persons) are valid only if there is no violation of the rule against perpetuity as laid down in Section 163 of the Act of 1925. 

Q2.What are the essential conditions for the transfer in favor of unborn person as per the Property act 1882?

The essential conditions for the transfer in favor of unborn person as per the Property act 1882:

a. There must be a transfer of property.

b. The transfer should be to create an interest in favor of an unborn person.

c. Interest created must take effect after the lifetime of one or more persons living at the date of such a transfer and during the minority of the unborn person.

d. The unborn person must be in existence at the expiration of the interest of the living persons.

e. The vesting of the interest in favor of the ultimate beneficiary may be postponed only up to the life or lives of living persons plus the minority of the ultimate beneficiary but not beyond that.

Q3. What are the legal consequences of ‘Transfer for benefit of unborn person’?

Transfer in favor of unborn person has following legal consequences: 

a. The intermediary person living at the date of the transfer is to be given only life interest. He has to preserve the property like a trustee during his life-time on behalf of the unborn. If absolute interest is given to this living person, he may be entitled to dispose it of to anyone. If he retains it, the property after his death shall go to his legal heir and not to the unborn for whose ultimate benefit the disposition was made. 

b. The unborn must come into existence before the death of the person holding property for life. If the unborn comes into existence say, after one month after the death of the last living person (i.e. after termination of the preceding interest), the property is to revert back to the transferor or his heirs. This is obvious because after termination of the life-interest, it cannot remain in abeyance and cannot wait even for a moment for the next person to come into existence.

c. For example, A transfers property of which he is the owner to B and his intended wife successively for their lives, and after the death of the survivor, for the eldest son of the intended marriage for life, and, after his death for A’s second son. Here, the successive life interests in favor of B and his intended wife is a valid transfer. But, the eldest son of the intended marriage who is unborn has been given the property only for life and not an absolute interest. Therefore, the transfer in his favor is void and does not take effect. 

Edited by Parul Soni

Approved & Published – Sakshi Raje

Reference

[1] Abdul Cadur v. Turner, (1884) 9 Bom. 158.

[2] T Subramania Nadar v T Varadharajan, AIR 2003 Mad 364 , p 368: (2003) 2 MLJ 224.

[3]Sopher v. Administrator-General of Bengal71 IA 93 : 216 IC 53: 46 Bom LR 86 : AIR 1944 PC 67.

[4]Whitby v. Mitchell(1890) 41 Ch. D. 85.

[5]Girivsh Dutt v. Data Din AIR 1934 Oudh 35.

[6]Whitby v. Mitchell (1890) 4 Ch. D. 85.

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