RESEARCH INTERN FOR LAW LEARNERS

Time period- 1st june -1st july

AUTHOR’S NAME- Deeba faryal

Subject- transfer of property act 1882

Sections- 12-22
 INTRODUCTION

Transfer of property act came into force 1st July 1882. There are 2 objects of this
act - to regulate the transfer of property between living persons and complete the
code of Contract law for immovable property. This act does not purports to be
exhaustive, it also didn’t cover each and every aspect of transfer of property. It
deals with immovable property. Transfer of property means an act by which a
person conveys a property to one or more persons. The act of transfer may be done
in present or in future. The person may include an individual, company or
association or body of individuals.

SECTION- 12: CONDITION MAKING INTEREST DETERMINABLE ON

INSOLVENCY OR ATTEMPTED ALIENATION

Where property is transferred subject to a condition or limitation making any

interest therein, reserved or given to or for the benefit of any person, to cease on
his becoming insolvent or endeavoring to transfer or dispose of the same, such
condition or limitation is void. Nothing in this section applies to a condition in a
lease for the benefit of the lessor or those claiming under him.

MEANING- When a property is being transferred from one person to another then
one cannot put conditions for the benefit of one person, to cease the property once
he is insolvent i.e. a transferor cannot put such conditions to transferee or
attempted to transfer such interest is failed, such conditions shall be void. For
example, if A transfers his property to B on a condition that his property will
remain till B becomes insolvent. This type of transfer will be valid but the
conditions will be void.
EXCEPTION- If any property which has to be transferred on lease with certain
conditions that if transferee will be insolvent then property will revert back to
transferor such conditions will be valid.

NEED & IMPORTANCE- The exception clause of sec. 12 prevents the transferee
from defrauding his creditor by allowing the property to revert back to grantor.
This sec. allows a lessor to impose condition for the benefit of his lease.

LANDMARK JUDGMENTS- In Rosher v. Rosher1 a person, A died leaving

behind his wife W and a son S. He left his entire property to S, under his Will. The
will provided that S had to first offer the property for sale and also had to sell her
at L 3000 while the market price was L 15000. The court held that these
restrictions amounted to an absolute restraint on S’s and his heir’s power of
alienation and were therefore void.

In Gayashi Ram v. Shahabuddin2, the sale deed contained a clause that the
transferee would not transfer the property to any person either by way of sale, gift
or even mortgage except the transferor or his heirs. The court held that this
condition is void and therefore invalid.

SEC 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

1
(1884) 26 Ch. D. 801
2
AIR 1935 All 493(India).
take effect, unless it extends to the whole of the remaining interest of the transferor
in the property.

MEANING OF UNBORN PERSON- A person not in existence has a specific

reference to one who may be born in the future doesn’t have current existence.
Child in mother’s womb regarded as already born in accordance with the maxim-
nasciturus pro jam nato habetur.

MEANING OF SEC.13- Sec. 13 talks about transfer of property to unborn person.

This sec. states that property can’t be transferred directly to unborn person because
every transfer of property involves transfer of interest when property is transferred
and transferor divest himself of that interest and vest it immediately to transferee.
So if property is transferred directly to unborn person interest will remain in
abeyance i.e. void.

ESSENTIALS-

 Person doesn’t have existence

 Prior interest
 Unborn person must come into existence before the death of the last life
estate holder
 All the rights should vest in the unborn child as soon as he
comes into existence

EXAMPLE- A transfers his property to B as a trust and asked him to transfer the
property to C who is unborn child of A. So here B is the prior interest holder.

NEED AND IMPORTANCE- This sec. gives power to transferor to transfer his
property to the unborn person according to his will but firstly he has to create a life
interest. According to Hindu law, property transferred to unborn child is valid but
in Muslim law, a gift in favor of Muslim unborn person is void. Earlier gift and
bequest in favour of unborn child was void but transfer of property made it valid.
Now one can transfer his property even to unborn child.

RELEVANT CASES- In Girish Dutt v. Data Din3, A made a gift of her property
to B for her life and then to her sons absolute. B had no child on the date of
execution of the gift. The deed further provided that in case B had only daughters,
then the property would go to such daughters but only for their life. In case B had
no child then after the death of B, the property was to go absolutely to X.

CRITICAL ANALYSIS:- This section only prevails in India, according to me

every country should adopt this proviso. Also sec 13 recognizes numerous
distinction based on age hence sec 13 is inconsistent to sec. 5 of TPA.

SEC 14:- RULE AGAINST PERPETUITY

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.

MEANING OF PERPETUITY- Perpetuity means continuous or unending

transaction. Tying up property for an indefinite period. It also means transfer
involving generation after generation.

MEANING OF SEC. 14- That property cannot be transferred which is tying up

the whole property or which is restricting the further transfer. It provides that

3
AIR 1934 Oudh 35(India).
where an interest is created for the benefit of an unborn person 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 favour the prior interest is created as required under section 13.The
unborn person, in whose favour 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
favour the prior interest is created as required under section 13.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.

EXAMPLE- A transfer his property to B who is living at the date of the transfer
and after that he has to transfer the property to C and then to C’ son who is
unborn. Thus C’s son has to born before the death of C.

NEED AND IMPORTANCE- This sec. prevent the property from being tied up
forever and this is the strongest point of this section. It applies both movable
and immovable property.

EXCEPTION-

 Provision for payment of debt (sec.17)

 Charity (sec.18)
 Creation of charge
 Personal agreement
 Agreement of sale
 Mortgages
RELEVANT CASE- Anand Rao Vinayak v.Administrator general of
Bombay4, In this case Bombay High Court declared that the gift void as offering
against perpetuity when a gift was made of movable property to a son with gift of
shares in the property to son's sons son when they should attend the age of 21.

SEC 15:- TRANSFER TO SAME CLASS SOME OF WHOM COME

UNDER SECTIONS 13 AND 14

If, on a transfer of property, an interest therein is created for the benefit of a class
of persons with regard to some of whom such interest fails by reason of any of the
rules contained in sections 13 and 14, such interest fails [in regard to those persons
only and not in regard to the whole class].

MEANING- Here in this sec. ‘CLASS’ is referred as a group of person among

them some comes under the provision of sec 13 and 14. If a property which is
transferred and an interest is created for the benefit of class of persons among them
some person interest ends by any of the reason contained in sec. 13 &14 then only
those person interest will end and other transfer will be valid and continues.

EXAMPLE- A transfers his property to B and created life interest, then after the
property will be transferred to B’s children with the condition that the female will
get the life interest and not the male. So the transfer will remain valid for female
and not for male.

4
(1896) ILR 20 Bom 450(India).
IMPORTANCE AND NEED- This sec. applies only in case in which the whole
class is interested to be benefitted and it does not apply where there is no benefit to
a class. This sec. supports the doctrine of cypress which is an equitable policy.

RELEVANT CASE- In the case Raj Bajrang Bahadur Singh v. Thakurain

Bakhtraj Kuer5, it has been held by the Supreme Court that although no interest
could be created in favour of an unborn person but if gift was made to a class of
series of person some of whom were in existence and some were not, it was valid
with regard to the former and invalid as to the latter.

SEC 16:- TRANSFER TO TAKE EFFECT ON FAILURE OF PRIOR

INTEREST

Where, by reason of any of the rules contained in sections 13 and 14, an interest
created for the benefit of a person or of a class of persons fails in regard to such
person or the whole of such class, any interest created in the same transaction and
intended to take effect after or upon failure of such prior interest also fails.

MEANING- when prior interest has been created for benefit of person or class for
the transfer of property but the prior interest somehow fails therefore the
subsequent transfer will also fails it will not take effect further.

EXAMPLE- If A transfers his property to B for life interest then after the property
will be transferred to B’s children who will complete their age as 25 years. If no
one will complete the age then property will not be transferred to B and then
property will be revert back to A.

5
1953 AIR 7(India).
NEED AND IMPORTANCE- According to this section a valid transfer which
subsequent to and dependent upon a void transfer is itself rendered as void. As it
also ensures the rule of law.

EXCEPTION- The restrictions contained in section 14, 15, 16 and 17 do not

however apply to the Transfer of Property for the benefit of public and object
beneficial to mankind.

SEC 17 :- DIRECTION FOR ACCUMULATION

(1) Where the terms of a transfer of property direct that the income arising from the
property shall be accumulated either wholly or in part during a period longer
than—
(a) The life of the transferor, or
(b) a period of eighteen years from the date of transfer, such direction shall, save as
hereinafter provided, be void to the extent to which the period during which the
accumulation is directed exceeds the longer of the aforesaid periods, and at the end
of such last-mentioned period the property and the income thereof shall be
disposed of as if the period during which the accumulation has been directed to be
made had elapsed.
(2) This section shall not affect any direction for accumulation for the purpose of—
(i) The payment of the debts of the transferor or any other person taking any
interest under the transferor; or
(ii) The provision of portions for children or remoter issue of the transferor or of
any other person taking any interest under the transfer; or
(iii) The preservation or maintenance of the property transferred, and such
direction may be made accordingly.
MEANING- Sec 17 state that if there is some direction mentioned in terms of
transferring property, the income arising from the same property is to be acquired
or gathered either wholly, partly or period not longer than
 The life of the transferor
 period of eighteen years from the date of transfer
if any of these conditions take place the transfer will be void.
This sec. will not effect the direction of accumulation-
 Payment of debt
 Provision of portion for children
 Maintenance of property transferred

THELLUSON RULE- It’s a denial of another way to create rule of perpetuity of

another kind.

EXAMPLE- A transfers property to B in 2000 which is with the direction that the
income arising out of property is to be accumulated till 2030 i.e. for 30 years. A
dies in 2025. The period during which the transferor is alive is more than 18 years
from the date of the transfer but being the longer of the two periods, the direction is
valid till 2025. If however the transferor dies in 2010. Then longer period would be
18 years and accordingly the direction would remain valid till 2018.

EXCEPTION- Such direction for accumulation of income is void as per sec.11 but
sec. 17 is an exception. Sec.11 is applicable where there are absolute transfers
whereas sec. 17 applies to all kinds of transfers.
NEED AND IMPORTANCE- The direction for accumulation of the income is a
particular mode of restraining the enjoyment of the property. According to the
principal laid down in Section 17 such direction for accumulation would be
void and inoperative but this section provides an exception and permits a direction
for accumulation of income to operate in certain cases. This Section allows
accumulation of income up to the life of transferor, or up to the period of 18 years,
from the date of the transfer, whichever is longer.

SEC 18 :- TRANSFER IN PERPETUITY FOR BENEFIT OF PUBLIC

The restrictions in sections 14, 16 and 17 shall not apply in the case of a transfer of
property for the benefit of the public in the advancement of religion, knowledge,
commerce, health, safety or any other object beneficial to mankind.

MEANING- If any transfer has been done in public interest for the purpose of
religious, knowledge institution, commerce, health, safety or other object which is
beneficial for public in large then the transfer will be valid. Sec 14,16 &17 will not
be applicable here.

EXCEPTION- Sec 17 is an exception of sec. 14.

NEED AND IMPORTANCE- This sec. emphasis on the benefit of the general
people for the purpose of public interest. But this section does not talk about the
procedure for fulfillment of the object laying in the exception.
RELEVANT CASE- In Commissioner of IT v. Pamsel6, Lord Macnaghten
classified purposes of charitable trusts for the purpose of accumulation exceeding
the period as mentioned under section 17-
 For the purpose of poverty
 For the advance of education
 For the advancement of religion
 For the purpose beneficial to the community

SEC 19 :- VESTED INTEREST

Where, on a transfer of property, an interest therein is created in favour of a person
without specifying the time when it is to take effect, or in terms specifying that it is
to take effect forthwith or on the happening of an event which must happen, such
interest is vested, unless a contrary intention appears from the terms of the transfer.
A vested interest is not defeated by the death of the transferee before he obtains
possession.
EXPLANATION- An intention that an interest shall not be vested is not to be
inferred merely from a provision whereby the enjoyment thereof is postponed, or
whereby a prior interest in the same property is given or reserved to some other
person, or whereby income arising from the property is directed to be accumulated
until the time of enjoyment arrives, or from a provision that if a particular event
shall happen the interest shall pass to another person.

MEANING- Vested interest is not defeated by the death of transferee before he

obtains possession. An intention that an interest will not be vested is not be
inferred merely from enjoyment of property is postponed, prior interest in same

6
[1891] A.C. 531.
property is given or reserved to some other person, income arising in same
property is directed to be accumulated until time of enjoyment arrives, if particular
event happen then interest shall has to pass to another person. Vested interest is an
immediate right to property, it also creates complete transfer of property.

EXAMPLE- A transfers his property to B by creating life interest and after B’s
death property will be transferred to C. So, A has created vested interest in favour
of C and if C dies before B then property will go to C’s legal heirs.

NEED AND IMPORTANCE- According to this sec. an interest may be vested

even though it does not give a right to immediate possession. The law supports the
property to be vested and in order to secure the vested interest law implemented
this sec.

NATURE-
 Present fixed right
 Transferable and heritable interest
 Time of vesting interest as soon as transfer complete

RELEVANT CASE- In Kokilambal v. Raman kolilambal,7there was a deed of

family settlement in which the settler created a limited interest (right to received
theincome form rents). The property of the settler was to vest in the settlee only on
death of settler.SC held that the family settlement does not create a vested interest
in favour of the settlee and settle cannot be absolute owner during the life of
settlor. Therefore the settlee cannot succeed the property on the settlor’s death.

7
Appeal (civil) 6994 of 1999(India).
In Sundar Bibi vs Rajendra Narayan8, the Allahabad High Court held that in a
vested interest the title passes absolutely from the transferor to the transferee at the
date of the transfer, though the enjoyment may be postponed.

SEC 20:- WHEN UNBORN PERSON ACQUIRES VESTED INTEREST ON

TRANSFER FOR HIS BENEFIT
Where, on a transfer of property, an interest therein is created for the benefit of a
person not then living, he acquires upon his birth, unless a contrary intention
appears from the terms of the transfer, a vested interest, although he may not be
entitled to the enjoyment thereof immediately on his birth.

MEANING- Sec 20 states that where interest is validly created for the benefit of an
unborn person it becomes vested in the unborn person upon his birth, unless a
contrary intention may appear from the terms of the transfer as where the transferor
states that the unborn person is to take the property on his attaining a particular
age. Vesting of interest created for the benefit of an unborn person may be
postponed till he attains majority but no further.

EXAMPLE- Where A makes a will in favour of B and directs the executors to

handover the funds to B’s trustee, who are to create a trust so that the fund may go
to the children of B and B marries after the death of A and has a daughter, and dies

8
AIR1925 All.389(India).
after a short time after his birth, then the daughter take the vested interest under the
will.

NEED AND IMPORTANCE- The interest containing in this section is a vested

interest of an unborn person as that person is born; here his vesting right will not
be affected by the absence of possession. This sec. puts a scope for the founder to
put in his contrary intention.

RELEVANT CASE- In the case Mamidi Jagannadham v. Yelgani

Shankaraiah9 court held that Sec 20 of the Act makes it clear that the jurisdiction
to decree specific performance is discretionary and there I no obligation on the part
of the court to grant the relief sought merely because it is lawful to do so.

SEC 21 :- CONTINGENT INTEREST

Where, on a transfer of property, an interest therein is created in favour of a person

to take effect only on the happening of a specified uncertain event, or if a specified
uncertain event shall not happen, such person thereby acquires a contingent interest
in the property. Such interest becomes a vested interest, in the former case, on the
happening of the event, in the latter, when the happening of the event becomes
impossible.

MEANING- A contingent Interest is one in which neither any Proprietary Interest

nor a right of enjoyment is given at present, but both depend upon Future uncertain

9
2008 (1) ALD1(India).
events. Specified uncertain event is of two types happening and non-happening of
the event depend upon will and desire of parties like marriage, happening and non-
happening of the event not depend upon will of parties like death of person. It
depend upon the Fulfillment of condition. If the Transferee dies before obtaining
possession, the Contingent Interest fails and the property reverts to the transferor.
It is Transferable. It is quite different from a mere chance (space succession)

EXCEPTION- Where, under a transfer of property, a person becomes entitled to an

interest therein upon attaining a particular age, and the transferor also gives to him
absolutely the income to arise from such interest before he reaches that age, or
directs the income or so much thereof as may be necessary to be applied for his
benefit, such interest is not contingent.

EXAMPLE- A bequeathed his property i.e. estate to B until he shall marry to C.

B's interest in the bequeath is contingent because it depends upon a condition
precedent i.e. a marriage of B with C. An event has no proprietary interest in the
estate and cannot alienate it. But as soon as B marries with C his contingent
interest becomes vested interest.

NEED AND IMPORTANCE- There is indeed a strong presumption that on a

transfer of property transferor intends to confer a vested interest in the transferee
unless a contrary intention appears from the terms of the transfer. On the other
hand where on a transfer of property an interest is therefore created in favour of a
person to take effect only on the happening of an uncertain event such an interest
has been referred as contingent one. But this has been construed very strictly that
when such an event happens or in case the happening becomes impossible then the
interest thereof becomes vested.

RELEVANT CASE- In the case Sundar Bibi vs Rajendra Narayan10, the Allahabad
High Court held that in a vested interest the title passes absolutely from the
transferor to the transferee at the date of the transfer, though the enjoyment may
be postponed.

SEC 22:- TRANSFER TO MEMBERS OF A CLASS WHO ATTAINS A

PARTICULAR AGE
Where, on a transfer of property, an interest therein is created in favor of such
members only of a class as shall attain a particular age, such interest does not vest
in any member of the class who has not attained that age.

MEANING- Where a property is transferred by creating an interest in favour of

those members who had attained a particular age and an interest will not vest who
has not attained the age as prescribed under this act.

NEED AND IMPORTANCE- This sec. lays down the option to choose the
transferor to whom the interest will be vested.

10
AIR1925 All.389(India).
EXAMPLE- If A transfers his property to B by creating life interest and then to C
then until and unless if C has not attained the age as prescribed then the interest
will not vested.