TRANSFER FOR BENEFIT OF UNBORN PERSON [Section 13]

Transfer of Property Act, 1882

TANMOY MUKHERJI INSTITUTE OF JURIDICAL SCIENCE

Dr. Tanmoy Mukherji

[Advocate]

 

 

TRANSFER FOR BENEFIT OF UNBORN PERSON [Section 13]-

Tanmoy Mukherji

    [Advocate]

 

The Transfer of Property Act, 1882 deals mainly with the transfer of immovable properties between two living persons, i.e. transfers inter vivos. According to Section 5 of the Act, the general rule is that, both the parties to a transfer of property must be living persons. The expression 'living person' includes "juristic person" viz. Company or association or body of individuals, whether incorporated or not. Section 13, which deals with transfer by unborn is a special law and is an exception to this general rule i.e. transfer inter vivos.

 Section 13 runs as follows- 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 property of which he is the owner to B in trust for A 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. The interest created for the benefit of the eldest son does not take effect, because it does not extend to the whole of A's remaining interest in the property.

This Section (Section 13 T.P.Act) corresponds to Section 113 of the Indian Succession Act, 1925, which runs as follows-

Section 113— Where a bequest is made to a person not in existence at the time of the testator's death, subject to a prior bequest contained in the will, the latter bequest shall be void, unless it comprises the whole of the remaining interest of the testator in the thing bequeathed.

Illustrations:

(1) Property is bequeathed to A for life, and after his death to his eldest son for life, and after the death of the latter to his eldest son. At the time of the testator's death, A has no son. Here the bequest to A's eldest son is a bequest to a person not in existence at the testator's death. It is not a bequest to the whole interest that remains to the testator. The bequest to A's eldest son for his life is void.

(2) A fund is bequeathed to A for his life, and after his death to his daughters. A survives the testator. A has daughters some of who were not in existence at the testator's death. The bequest to A's daughters comprises the whole interest that remains to the testator in the thing bequeathed. The bequest to A's daughters is valid.

(3) A bequeaths a sum of money to B for life, and directs that upon the death of B the fund shall be settled among his daughters so that the portion of each daughter may belong to herself, for life, and may be divided among her children after her death. B has no daughter living at the time of testator's death. In this case the only bequest to the daughters of B is contained in the direction to settle the fund, and this direction amounts to a bequest to persons not yet born; of a life interest in the fund, that is to say, of something which is less than the whole interest that remains to the testator in the thing bequeathed. The direction to settle the fund upon the daughters of B is void.

Who is an unborn person?

 An unborn person is one, who is not in existence or who is yet to born or who will come into existence in future at any time or who is not even in uterus (in the womb of mother).

Scope of the section-

 A person who is not in existence can neither be a transferee of property, nor a beneficiary under a trust until he comes into existence. There can, therefore, be no immediate transfer of property or trust in favor of a person not in existence. The principle is recognized by this Act as well as by the Indian Trusts Act. Section 5 of this Act provides that 'transfer of property' means a transfer in favor of a living person; and the expression 'living person' will not include a person, not in existence. Similarly Section 9 of the Indian Trusts Act, 1882, provides that a beneficiary under a trust must be a person 'capable of holding property' and this expression also excludes a person not in existence. However, Section 13 of the T.P. Act as stated above is an exception to this general rule.

For every property, there must be an owner. Naturally a person may wish to adopt a device to retain the property in his own family. Section 13 makes provision to such persons to retain/sustain the property within their family members, who will come into existence in future. If a person/testator is allowed to reserve his properties from generation to generations, it leads to certain problems/ complications. The object of Section 13 is to regulate/harmonize such transfers.

Conditions -

For transfer of property to an unborn person, the following conditions are to be satisfied.

(i) No direct transfer- There can be no transfer of property for the benefit of an unborn person directly, but through the machinery of trusts. In case a trust is not created, the interest in favor of an unborn person must always be preceded by a prior interest in favor of a living person. This condition is intended that if it is made directly to unborn person, the property will be leftout without the owner after the death of testator or transferor and before coming into existence of unborn transferee. So it should not be kept in abeyance without ownership.

(ii) Prior Interest- Life interest may be created upon the existing persons till an unborn person comes into existence- in case a trust is not created, the property must be held by some persons who existing at the time of transfer. They can enjoy the limited interest one after another or collectively.

(iii) Unborn person must come into existence before the death of last life estate holder- If the life interest is created one after another or collectively the unborn person must come into existence before the death of the last life estate holder. It is not necessary that the unborn person must come into the actual world, but it is enough that if he is in its mother's womb, it is equals to a child in esse which means a child in the mother's womb is equal to a child in existence.

(iv) The whole remaining interest must be vested to unborn person the moment he comes into existence- When an unborn person gets the actual life, he will be the absolute owner of the property which was created in his favour and the life estate holders cannot retain anything which remains in their hands. So they must give the entire interest to the unborn person.

If the above four conditions are satisfied the enjoyment of property may be postponed during period of minority of unborn beneficiary.

It is clear from the above that the transfer under Section 13 can be made/possible to an unborn person but not to the issue of the unborn person.

Case Reference-

Sopher vs. Administrator General of Bengal (1944 PC 67) –

 In this case, A, a testator executed a will stating that his property shall be divided between the sons to be born, after the death of the testator and his wife. The income of each share was to be paid to each of sons/daughters and thereafter to the grand children until they attained the age of 18 years. The grand children after attaining their majority would only be entitled for the absolute rights on the property.

The Privy Council had considered the effect of Section 113 of The Indian Succession Act, 1925 in this case. Their Lordships had before them will which provided for an ultimate bequest in favor of persons not born at the time of the testator's death, and the question that arose for decision was whether the bequest comprised the whole of the testator's remaining interest in the thing bequeathed. Two clauses in the will provided for the forfeiture of the interests of the unborn beneficiaries in certain contingencies.

Before the passing of the Transfer of Property Act, 1882, transfer in favor of unborn person was not allowed. In 1872, the Privy Council in-

Tagore vs. Tagore (1872 ILR 356 PC) –

laid down that a transfer even to one generation before it reaching to unborn person was not valid.

After the passing of the T.P.Act, transfer in favor of an unborn person is allowed. Section 13 is applicable to Hindus since Hindu Law allows transfers in favor of unborn persons .This Section is not applicable to Mohammedans. A gift to (unborn) a person not in existence is void except in the case of a waqf under Mohammedan Law (Abdul Khadur vs. Turner, ILR 9B 158).

English Law (Rule in Whitby vs. Mitchell (1890) 44 Ch.D.85) or the Rule of Double Possibilities:

The principle laid down in this section differs from the English Law. Before the Law of Property Act, 1925, transfer in favor of an unborn person was governed by the rule laid down in Whitby vs. Mitchell (1890), known as the Rule of Double Possibilities".

The rule laid down in this case provided that if an interest in property is given to an unborn person, any remainder to his issue is void with all subsequent limitations. Thus, if land was limited to A, a living person for life, remainder to his daughter for life, (A having no daughter at the time of transfer), remainder to her children and their heirs, the life estate of A and his daughter were valid but the remainder to the daughter's children was void. After the passing of the law of Property Act, 1925 the rule in Whitby vs. Mitchell has been abolished and transfers in favor of unborn persons are governed by the rule against perpetuity. Now transfer of land in favor of A, a living person for life, then to his daughter for life (A having no daughter at the time of transfer), remainder to her children and their heirs is valid provided there is no infringement of the rule against perpetuity.