Transfer for benefit of unborn person.-
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 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 so 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.
An unborn person means a person who is not in existence even in mother’s womb. A child in mother’s womb or, a child en ventre sa mere is a competent transferee.
Property can be transferred to a child in mother’s womb.
But, property cannot be transferred to any person who is not even in the mother’s womb because such person is an unborn person.
Accordingly, Section 5 of this Act provides that transfer of property takes place only between two living persons.
This means that transferee must also be in existence at the date of the transfer.
Reason why property cannot be transferred directly to an unborn person.
Legally speaking, every transfer of property involves transfer of interests. When a property is transferred, the transferor divests (or takes out from) himself of that interest and vests it immediately in the transferee.
So, if a property is transferred directly to a person who is not in existence, the interest so transferred shall be divested or be away from the transferor but it would have to remain in abeyance (void) and wait for the transferee to come into existence, in whom it could vest. Such situation would be against the very concept of the interest.
Transfer For the Benefit of an Unborn Person.—
Property cannot be transferred directly to an unborn person but property can be transferred for the benefit of an unborn person.
Section 13 provides that property can be transferred for the benefit of an unborn person subject to following conditions:
i. Transfer for the unborn must be preceded by a life interest in favour of a person in existence at the date of the transfer, and,
ii. Only absolute interest may be transferred in favour of the unborn.
The transfer for the benefit of an unborn must be preceded by a life interest in favour a living person in existence at the date of the transfer.
There must be a prior life interest in favour of living person so that such living person holds the property during his life and till that time the unborn would come into existence.
After the termination of this life interest i.e. after the death of the living person holding property for life, the interest would pass on ultimately to the unborn who, by that time, comes into existence.
Where a person intends to transfer certain properties for the benefit of an unborn person, such unborn is the ultimate beneficiary.
But since this unborn or ultimate beneficiary is not in existence at the date of the transfer, property cannot be given to him directly.
Thus, in between the transferor and the unborn there must be an intermediary living person who may hold the property in trust for the benefit of the unborn.
In this manner successive life interests may be created preceding (or prior to) the interest in favour of the unborn person.
Only Absolute Interest may be given
Only absolute interest of the property may be transferred in favour of an unborn person.
Limited or life interest cannot be given to an unborn person.
Transfer of property for life of an unborn person is void and cannot take effect.
Section 13 enacts that interest given to the unborn person must be the whole of the remaining interest of the transferor in the property.
Illustrations
i. A transfers his properties to X for life who is unmarried and then to the eldest child of X absolutely. The transfer in favour of eldest child of X is valid.
ii. A transfers his properties to X for his life and thereafter to U.B. for life .
X is a living person at the date of the transfer.
U. B. is not in existence at the date of the transfer. Here, the transfer of life- interest in favour of X is valid.
But, transfer of life-interest in favour of U.B. is void because although the transfer in favour of U.B. is preceded by a life interest to X but U.B. himself has not been given an absolute interest.
The result is, therefore, that X shall hold the property during his life but after his death it shall not pass on the U.B. but shall revert back to A or (if A is dead by that time) to A’s legal heirs.
The above-mentioned two conditions namely, the transfer in favour of an unborn must be preceded by a life interest and that only absolute interest may be given to the unborn has following legal consequences:
a. The intermediary person living at the date of the transfer is to be given only life interest. Giving life interest or creating life-estate in favour of a person means giving him only the right of enjoyment and possession. 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 shall 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.
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 As second son.
Here, the successive life interests in favour 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 favour is void and does not take effect.
Girjesh Dutt v. Data Din,
The facts were as under.
A made a gift of her properties to her nephew’s daughter B for life and then absolutely to B’s male descendants, if she should have any.
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.
B died issueless.
The Court held that the gift for life to B was valid as B was a living person at the date of the transfer.
But gift in favour 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.
Hindu Law and Muslim Law.—
Under pure Hindu law, a gift or bequest in favour of an unborn was void. But now, since Transfer of Property Act is applicable to Hindus, the transfer in favour of an unborn person is valid if it is made subject to the provisions of Section 13 of this 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 favour of a person not in existence has been held void.