Transfer of Property to Unborn under TPA PDF

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PROPERTY LAW

Transfer of Property to Unborn

By: Kanika Ahuja

INTRODUCTION UNBORN PERSON: He is one who is not in existence as of now or who will come into existence in future at any time or who is in the womb of the mother. He is basically, a person not yet born.

RIGHTS OF UNBORN: 

According to the Vienna Convention on the Law of Treaties, the rule regarding the protection of life before birth could be considered as 'jus cogens' (final norm of general international law).

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According to Fleming and Hains: "The right to life of all human beings has the nature of an intransgressible norm already contained in the Universal Declaration of Human Rights 1948, the International Covenant on Civil and Political Rights 1966 and the Declaration of the Rights of the Child 1959. Under international law, the unborn child is protected.

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Explicit protection is extended to the unborn child in the International Covenant on Civil and Political Rights 1966, and in the Convention on the Prevention and Punishment of the Crime of Genocide 1948.

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The text (of the Universal Declaration of Human Rights 1948) clearly states that everyone has the right to life, and that what is meant by everyone is 'every member of the human family' - that is all human beings. Here is the nub of the matter."

TRANSFER OF PROPERTY TO UNBORN A child in its mother’s womb is for many purposes regarded by a legal fiction as already born, in accordance with the maxim nasciturus pro jam nato habetur; which means that the legal capacity of the natus is sometimes determined by referring back to a time when he was still nasciturus

(unborn). Thus, in the law of property, there is a fiction that a child en ventre sa mere is a person in being a life chosen to form part of the period in the rule against perpetuities.

TRANSFER OF PROPERTY ACT – SECTION 13 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. Sec 13 TPA Prior Interest: Prior interest is not affected by reason of the subsequent interest being rendered void by this rule. It is neither enlarged or extinguished (Mohamed Shah v. Official Trustee of Bengal, 190936 CAL 431).

Limited Interest: Limited interest cannot be created for the benefit of an unborn person even though it is subject to a prior interest in favor of a living person.

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. ( T. Subramania Nadar v. T. varadharajan, AIR 2003 mad 364 at p. 368)

PRE-REQUISITES FOR A VALID TRANSFER OF PROPERTY TO AN UNBORN PERSON

i) No transfer: The transfer of property can be done by way of trusts but not directly. In the absence of trust the property must be created in favor of a living person and then to the minor. ii) Prior Interest: Life interest can be enjoyed by person(s) until the unborn comes into existence. iii) Before the death of last life estate holder: The unborn person must come into existence before the death of the last life estate holder. It is not necessary that he should be born, even if he is in the mother’s womb that is enough. A child en ventre sa mere is equal to child in essence meaning a child in the mother’s womb is equal to a child in existence. iv) Immediate transfer of rights: All the rights should vest in the unborn child as soon as he comes into existence. He will the absolute owner of the property vested in him. The pertinent fact here is that the transfer can be made to an unborn person but not to the issue of an unborn person. Where the gift made in favor of the unborn grand children was not in respect of the whole interest in the property, the gift was held to be a valid document In the case of Isaac Nissim Silas v. Official trustee of Bengal, A.I.R 1957, Cal 118, the trust was a family trust created for the benefit of settlor and his wife, his two sons and their children to be born. At the date of the trust the settlor’s family consisted of his wife and his three children. The trust deed provided that the trustee after making provisions for meeting the necessary expenses, the property will remain in lifetime of settlor, thereafter to his wife, thereafter to his three sons in equal shares. Remainder in favor of the sons children that may be born and remain alive at a certain period subject to certain restrictions. The legality of the gift made in favor of the grandsons was questioned. It was held that the trust in favor of the grand-children in deed of trust was void.

ORIGINS The origin of rule against perpetuity stems from the days of feudal England as far back as in 1682 from the case of Duke of Norfolk's, wherein, Henry (the 22nd Earl of Arundel), tried to create a shifting executory limitation in a way that one of his titles would pass to his eldest son (who was mentally deficient) and thereafter to his second son, and another title would pass to his second son and thereafter, to his fourth son. The estate plan also included provisions for shifting

the titles many generations later, if certain conditions were to occur. It was held by the House of Lords that such a shifting condition could not exist indefinitely and that the tying up of property too long beyond the lives of people living at the time was wrong. The concept of trying to control the use and disposition of property beyond the grave was often referred to as control by the "dead hand". The rule against perpetuity, in England, was later codified in the form of the Perpetuities and Accumulations Act, 1964.

POSITION IN INDIA Before the Transfer of Property Act, 1882, there was practically no law as to real property or, as to personal property, in India. A few points had been covered by regulations, and the Acts, which were repealed either wholly or in part by Section 2 of the Transfer of Property Act but for the rest of the law, the Courts, in the absence of any statutory provision, adopted the English law as the rule of justice equity and good conscience. This was not satisfactory, for the rules of English law were not always applicable to social conditions in India, and the case law became confused and conflicting. To remedy this state of affairs, a Commission was appointed in England to prepare a Code of substantive law for India, and the Transfer of Property Act, though drafted in 1870, was the last of these drafts to become law. By the private laws of Hindus and Mahomedans dispositions of property in favor of unborn persons could not be made, but no such embargo on anticipatory benevolence attached to the private laws of other communities, including Christians, Parsis and Jews, to whom English law was applied, to the extent that estates tail could be created as seen in the Modes of Conveying Land Act, 1854. The Indian Succession Act, 1865, was the first Act, which curtailed the right of the other communities to dispose of property by will to unborn persons, by modifying the English law, but so far as the transfer of property inter vivos was concerned, English law continued to be applied to the other communities, until the passing of the Transfer of Property Act in 1882, and by statutes of 1914, 1916 and 1921. Hindu private law, which prohibited any disposition in favor of an unborn person, was amended so as to bring into operation the two groups of sections concerning dispositions in favor of unborn persons contained respectively in the Indian Succession Act, 1865, and the Transfer of Property Act, 1882.

RULE AGAINST PERPETUITY Section 14 of TPA provides that: "No transfer of property can operate to create an interest which is to take effect after the life time of one or more persons living at the date of such transfer, and the minority of some person who shall be in existence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong." ANALYSIS  The TPA does not permit transfer of property directly in favor of an unborn person. Thus, in order to transfer a property for the benefit of a person unborn on the date of the transfer, it is imperative that the property must first be transferred in favor of some other person living on the date of transfer. In other words, the property must vest in some person between the date of the transfer and the coming into existence of the unborn person since property cannot be transferred directly in favor of an unborn person. In other words, the interest of the unborn person must, in every case, be preceded by a prior interest.  Further, where an interest is created in favor of an unborn person on a transfer of property, such interest in favor of the unborn person shall take effect only if it extends to the whole of the remaining interest of the transferor in the property, thereby making it impossible to confer an estate for life on an unborn person. In other words, the interest in favor of the unborn person shall constitute the entire remaining interest. 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.  Section 13 does not prohibit successive interests (limited by time or otherwise) being created in favor of several persons living at the time of the transfer. What is prohibited

under section 13 is the grant of interest, limited by time or otherwise, to an unborn person.  Further, Section 14 of TPA provides that where an interest is created for the benefit of an unborn person (in accordance with the provisions of section 13), such interest shall not take effect if the interest is to vest in such unborn person after the life time of one or more persons living on the date of the transfer (i.e. the person in whose favor the prior interest is created as required under section 13) and the minority of such unborn person. In other words, the interest created for the benefit of an unborn person shall take effect only if the interest is to vest in such unborn person before he attains the age of eighteen years.  Section 14 further provides that the unborn person, in whose favor the interest is created, must have come into existence on or before the expiry of the life or lives of the person(s) in whose favor the prior interest is created as required under section 13. EXTENT OF PERPETUITY PERIOD Position in India – Life or any number of lives in being + period of gestation + minority period of the unborn beneficiary. English Law – Life or lives in being +period of gestation +minority period. OTHER RELEVANT PROVISIONS 

Sections 113 and 114 of Indian Succession Act, 1925: Sections 113 and 114 of the ISA are almost identical to sections 13 and 14, respectively, of TPA. The main difference between the provisions under the ISA and the provisions under TPA is that the former deals with bequests which take effect only on the death of the testator while the latter relate to transfer of property inter vivos. Section 13 of TPA controls Section 113 of ISA and both of them are to be read together, as opined by the Apex Court in Raj Bajrang Bahadur Singh vs. Thakurain Bakhtraj Kuer (AIR 1953 Supreme Court 7). It was further observed by the Court that:

"It is quite true that no interest could be created in favor of an unborn person but when the gift is made to a class or series of persons, some of whom are in existence and some are not, it does not fail in its entirety; it is valid with regard to the persons who are in existence at the time of the testator's death and is invalid as to the rest."

EXPLANATION 

The effect of these Rules is that a transfer/ gift can be made to an unborn person subject to the following conditions: (i) that the transfer/ gift shall be of the whole of the remaining interest of the transferor/ testator in the thing transferred/ bequeathed and not of a limited interest; and (ii) that the vesting is not postponed beyond the life in being and the minority of the unborn person.

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In simple terms, while section 13 of TPA lays down the mechanism for transfer of property for the benefit of unborn person and "what property" is required to be ultimately transferred in favor of an unborn person in order to validate such transfer, section 14 of TPA provides the "maximum period as to when" such property can be vested upon such unborn person.

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Section 14 of TPA supplements section 13 of TPA and thus, it is pertinent to note that when an interest in any property is intended to be transferred in favor of an unborn person, sections 13 and 14 of TPA are required to be read together and the provisions contained thereunder are required to be duly complied with, in order to give effect to the intended transfer in favor of such unborn person.

DIFFERENCE BETWEEN INDIAN AND ENGLISH LAW 1) The minority period in India is 18 years whereas it is 21 years under English law. 2) The period of gestation should be an actual period under Indian Law but it is a gross period under English law.

3) Under Indian law, property should be given absolutely to the unborn person whereas in English law, need not be absolutely given. 4) The unborn person must come into existence before the death of the last life estate holder as per Indian law whereas he must come into existence within 21 years of the death of the last life estate holder in case of English law.

EXCEPTIONS 1) Transfer for public benefit: Where property is transferred for the benefit of the people in general, then it is not void under this rule. e.g. for the advancement of knowledge, religion, health, commerce or anything beneficial to mankind. 2) Covenants of Redemption: This rule does not offend the covenants of redemption in mortgage. 3) Personal Agreements: Agreements that do not create any interest in the property are not affected by this rule. This rule applies only to transfers where there is transfer of interest. 4) Pre-emption: In this there is an option of purchasing a land and there’s no question of any kind of interest in the property, so this rule does not apply. 5) Perpetual Lease: It is not applicable to the contracts of perpetual renewal of leases. This rule is not applicable to mortgages because there is no creation of future interest.

CASE LAWS

GIRJISH DUTT AND OTHERS V. DATA DIN AND OTHERS

The plaintiffs in the suit were Data Din, Sitla Din, Sheo Mangal and Bindeshari Prasad. They brought the suit for possession of certain plots in the village of Purabayum in the district of Partabgarh. The defendants were Girjish Dutt, Rajendra. FactsOne Mt. Sugga was the absolute owner of the property in suit. On 15th January 1919, she executed a deed of gift transferring the property in the first place to Mt. Ram Kali, the daughter of Data Din, who was a son of her real brother. Mt. Ram Kali remained in possession during her life. On her death a dispute arose between Data Din, plaintiff 1, the father, and Girjish Dutt, defendant 1, the husband of Mt. Ram Kali. Data Din transferred some of his interest to the three other plaintiffs, who joined him in instituting the suit. Girjish Dutt also transferred half of the property to his brother Rajendra Dutt, defendant 2. The plaintiffs' case was that the gift in favor of Mt. Ram Kali was of a life interest only, and that under the terms of the gift, the property passed on her death to her father Data Din. The defendants on the other hand contended that Mt. Ram Kali was an absolute owner of the property transferred to her under the gift, and therefore the property on her death devolved on her husband, defendant 1. They also contended in the alternative that if the gift in favor of Mt. Ram Kali was not absolute, even then the gift over in favor of Data Din was void by reason of the provisions of Ss. 13 and 16, TPA. The contention urged on behalf of the defendants was that the gift of a life interest to the unborn daughters of Mt. Ram Kali was void under the provisions of S. 13, T. P. Act, and that the gift over to the first plaintiff was consequently void under S. 16 of the same Act, because he was to take after or on the failure of the daughters. The learned Subordinate Judge held that the gift conveyed to Mt. Ram Kali only a life interest, and that the gift over to plaintiff 1 was not void because it was not dependent on the gift to the daughters, but was an alternative and independent gift. Girjish Dutt and Rajendra instituted the appeal in the High court. The main questions which have been raised in arguments were: (1) Whether the gift to Mt. Ram Kali was an absolute gift or not,

(2) Whether the plaintiffs' case falls under the provisions of Ss. 13 and 16, TPA. The high court was of the opinion that the conclusion to be drawn from the deed as a whole must inevitably be that the gift to Mt. Ram Kali was not an absolute gift, but a gift only of a life interest. S. 13, TPA runs as follows: Where, on a transfer of property, an interest therein is created for the benefit of 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. It is clear that the gift over in favor of the sons or grandsons of Mt. Ram Kali was not in any sense void, and it was a transfer of an absolute interest but on the other hand, the gift over to the daughters of Mt. Ram Kali, who were not born at the time of the transfer, was void because the transfer of the interest to them was subject to the prior interest created by the same transfer in favor of Mt. Ram Kali, and it was a transfer which did not extend to the whole of the remaining interest of the transferor in the property, since it was intended merely to be a life interest. Where by reason of any of the rules contained in S. 13.......an interest created for the benefit of a person......fails in regard to such person.......any interest created in the same transaction and intended to take effect after or upon failure of such prior interest also fails. The question referred by the Division Bench for decision to the Full Bench was: Whether, in the circumstances set forth in our order, the gift over to Data Din under the deed executed by Mt. Sugga in favor of Mt. Ram Kali is void having regard to the provisions of Ss. 13 and 16, T. P. Act. Following were contention taken into consideration. The relevant portion of the deed of gift relating to the gift over runs as follows: “If on her (Ram Kali's) death there be any male descendants, 'whether born of son or daughter, he will be the absolute owner of the property, and if Mt. Ram Kali may have only daughters, thay shall have no power of transfer. If, God forbid, there may not be any issue of Mt. Ram Kali,

whether male or female, living at the time of her death, the gifted property shall not in any way devolve upon her husband or his family, but it shall go to Data Din, father of Mt. Ram Kali, if he be then alive, and if Data Din be not alive, then the person who may be living of the line of Data Din at that time would get it.” The intention of the donor clearly was that Data Din should get the property only in ease the gift in favor of the male-descendants and the daughters of Ram Kali failed. The case therefore seems to be fully covered by the words upon failure of such prior interest. If the taking effect of the subsequent interest is...