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Transfer of Property For The Benefit of Unborn Child

General Rule
Section 5 of the transfer of property act provides 1882, provides transfer between the living persons.

Exception-
There are certain section in this act which lay down certain rules regarding transfer for the benefit of an unborn person.

Section 13

Transfer for the benefit of unborn person-
Where, on a transfer of property, an interest therein created for the benefit of an person not in the 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 underlying principle in section 13 is that a person disposing of property to another shall not fetter the free disposition of that property in the hands of more than one generation.

Rules underlying section 13
No direct transfer
Property cannot be transferred directly to an unborn person but property can be transferred for the benefit of an unborn person. Sec 13 provides that property can be transferred for the benefit of an unborn person subject to following conditions:

  • Transfer for the unborn must be preceded by a life interest in favor of a person existing at the date of transfer.
  • Only absolute interest may be transferred in favor of an unborn person.


Prior life interest
The transfer for the benefit of an unborn person must be preceded by a life interest in favour of person living person in existence at the date of the transfer. So that such living person holds the property during his life and till the time the unborn would come in the existence. After the termination of this life interest the property would pass on ultimately to the unborn person who, by that time comes into the existence.

Absolute interest
Only absolute interest may be transferred in favor of an unborn person. Limited interest cannot be given to unborn person. sec 13 says that interest given to an unborn must be the whole of the remaining interest of the transferor in the property .When a property is transferred in favor of an unborn person The transferor first creates the life interest and after transferring the property, he retains with him the remaining interest of the property. After termination of the life interest the unborn gets the absolute interest in that property.

This has following legal consequences:

  • The intermediary person living at the date of transfer is to be given only life interest. Giving the life interest means giving him a right to enjoyment or possession. He has to preserve the property like a trustee. After the termination of life interest the whole property or interest would be given to unborn person who came in existence.
  • The unborn must come in existence before the death of the person holding the property for life. If the unborn person come in the existence after one month he property would be revert back to transferor or his legal heirs.
  • This is obvious because after the termination of life interest, it cannot remain in abeyance.


Leading case law
Girjesh Dutt vs. Data din

Facts:
A made a gift of her property to her nephew’s daughter B for life and then absolutely to B’s male descendants if she should 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 nephew. B died issueless.

Held:
The court held that the gift for life to b was valid because B was living person at the date of transfer but gift in favor of B’s daughter was void under sec 13 of transfer of property act because it was given only limited interest she had not given absolute interest .since this transfer was invalid the subsequent transfer depending on it also failed.

Applicability under 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 on Hindus, the transfer in favor of an unborn person is valid if it is made subject to the provision of section 13 of the act.

Since section 2 of TPA 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.

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 formal relates to transfer inter vivo, 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 section read together.

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