TRANSFER FOR THE BENEFIT OF UNBORN PERSON

Introduction
The Transfer of Property Act was enacted in the year 1882. Before the commencement of this
Act, the transfer of immovable property in India was governed by the principles of English
law and equity.
The Preamble of the Act sets out the objectives that the legislation intends to achieve. The
purpose of the Act as set out in the Preamble is to define and amend certain parts of the law
of transfer of property. This Act is not exhaustive of a complete Code. It leaves room for
other legislations to form provisions relating to transfer of property. The object of the Act is
to bring rules which regulate the transmission of property between two living persons into
harmony with rules affecting its devolution and thus act complementary to the law of
testamentary and intestate succession. The second purpose set out in the Act is to complete
the code of law of contract in so far as it related to immoveable property.

Scope of the Act

The Transfer of Property Act does not apply to all transfers of properties which take place in
India. Its scope is limited not only territorially but also in the following manner:
1. The TP Act applies to transfer of property by the act of the parties and does not
regulate transfer due to the operation of law. Transfers by operation of law include
court sale, auction, forfeiture etc.
2. The Act deals with transfer of property inter-vivos which means transfer between
living persons. Therefore, testamentary and intestate succession are not covered under
this ambit. Further, this rule has one exception.
3. A major portion of the Act deals with transfer of immoveable property only. However
certain sections (5 to 37) do deal with transfer of moveable property too.
4. According to Section 2, Chapter II of the Act does not affect the transfer by
Mohemmedans even if it is in contravention to the provisions of Chapter II. Further,
as per Section 129, nothing contained in Chapter VII of the enactment shall affect any
rule of Mohemmedan Law.
5. The Act is limited to the territory of India only.

General rule of transfer of property

Section 5 of the Act defines transfer of property as, “An act by which a living person conveys
property in present or in future, to one or more other living persons, or to himself and one
more other living persons.
Living persons include company or association or body of individuals whether incorporated
or not.
Transfer can be made only between living persons. This is called “inter-vivos” transfer. This
is the general rule of transfer of property. This form of transfer is when the transfer is made
through an act of the parties.
Apart from this, there can be testamentary transfer of property by way of a will. This form of
transfer is made only after the death of the testator. It is not dealt with by the Transfer of
Property Act. Instead, it is dealt with by the personal laws of succession.
Transfers can also be made by creating a trust for an unborn beneficiary.

Exception to the general rule

Section 13 is an exception to the general rule of transfer of property. Under this section,
property can be transferred to an unborn person for his benefit.
‘Unborn person’ in this context refers to a child who has been conceived and is in the
mother’s womb and also to a child who has not even been conceived yet. Whether they will
be born or not is also a possibility but a transfer can be effected for their benefit.
However, it has to be understood that the transfer cannot be made directly to an unborn
person. Only a subsequent transfer of property is allowed.

Section 13 of the Act

Section 13 of the Act reads 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 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.

This illustration states that A transfers property to B in trust for A's lifetime, and upon A's
death, for A's intended wife during her lifetime. After the death of the surviving spouse, the
property is to be held in trust for the eldest son of A and his intended wife for his lifetime.
Subsequently, upon the eldest son's death, the property will be transferred to A's second son.
However, the interest created for the benefit of the eldest son fails to take effect because it
does not cover the entirety of A's remaining interest in the property.

Rules for transfer for the benefit of unborn person

The transfer of property cannot be made directly to a person who is not in existence.
It has to be made to another person who is usually the child’s mother.
The rules for transfer for the benefit of the unborn person are-
1. No direct transfer
2. Transfer for the benefit of an unborn person must be preceded by a life interest in the
favour of a person existing at the date of transfer.
3. Only absolute interest may be transferred in favour of an unborn person.

No direct transfer
Section 5 of the TP Act clearly lays down that the property can be transferred only between 2
living persons.
Therefore, transfers to an unborn person can be made only by creating a trust for such a
person. This is due to a basic principle of real estate law that a property must have an owner.
Thus, if property is transferred to an unborn person, it will remain vacant from the date of
transfer until the date of existence of the unborn person.
Illustration
A marries Z and has 3 children B, Y and M. B has 2 children C and D. Y has 2 children W
and X. M is expecting his first child. A can divide the property among B, Y, M, C, D, W and
X and can start a trust for M’s child to which his/her portion of the property can be
transferred. If M’s child is born during the lifetime of A, the title of the property will
automatically be vested in the child but will gain possession only up on the death of A.

Precedence of life interest

The transfer for the benefit of an Unborn must be preceded by a life interest in favour of a
living person in existence at the date of the transfer where a person intends to transfer certain
properties for the benefit of an Unborn person. Such an unborn is the ultimate beneficiary but
since such unborn or ultimate beneficiary is not in existence at the date of the transfer
property cannot be given to him directly there must be a prior life interest in favour of living
person so that such living person hold the property during his life and till that time the unborn
would come into existence.

Illustration
A marries B and has 2 children R and S. R marries U and has a son C and a daughter D. S
marries V and has a daughter E. S and V are expecting another child F. Since direct transfer
to an unborn child cannot be made, A, while dividing his property can transfer the property to
V for the benefit of F whenever F is born. Thus, the transfer is being effected from one living
person to another.

Absolute interest
Section 13 enacts that interest given to the Unborn person must be the whole of the remaining
interest of the transfer in the property. When a property is transferred in favour of an unborn
the transferor first gives the life interest to an existing person. After transferring this he
retains with him the remaining interest of the property. This remaining interest with the
transferor must be given to the unborn so that after the termination of prior life interest the
Unborn gets the whole absolute interest in the property. Such transfer confers all rights up on
the unborn person including the right of alienation.

Illustration
In case Girijesh Dutt v. Data Din
The facts are 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 nephew B died issueless. It was held by the gift for life to B was
valid as B was a living person at the date of the transfer. The 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; she had not been given absolute interest further since this transfer was invalid the
subsequent transfer depending on it also failed.

In Rukhamanbai v. Shivram it was held that a person who is entrusted with life interest of
an agricultural land can lease out the land unless any contrary intention arises.
The conditions for transfer to unborn under Section 13 are as follows:
Taking into consideration the illustration A transfers the life interest of his property in the
favour of B. On unborn (UB) being born, title, as well as absolute interest, is transferred to
UB the conditions are—
1. If UB is never born. The property will go back to B. If B dies the property will go
back to A and if A is dead, the property will go to the legal heirs of A. It must be kept
in mind that once a property is reverted back it cannot be transferred again in the same
transaction. A new transaction is to take place.
2. When UB is born after the death of B. On the death of the B the property will revert
back to A. Hence, a new transaction is to take place.
3. If UB dies before the death of B. The property will go to the legal heirs of UB on the
death of B. If UB transfers the property to someone, the person will gain possession
only on the death of B.

In F.M. Devaru Ganapathi Bhat v. Prabhakar Ganapathi Bhat, the transferor had
gifted the property to the appellant with the condition that if any male children are born to
her brother that they shall be joint holders of the property along with the appellant. It was
held that there is no ban on the transfer of interest in favour of an unborn person the
present situation will remain unaffected by Section 13. Section 20 of the Act permits an
interest being created for the benefit of an unborn person who will acquire absolute
interest upon his birth. The Court also held that there is no provision which states that
absolute interest cannot be created in favour of an unborn person. Creation of such a right
is permissible was held to be permissible.

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.

Conclusion
The difference between life interest, vested interest, and absolute interest is as follows; life
interest is transferred to a person who is living on the date of such transfer. He will enjoy
possession of the property and will be entitled to the benefits from the property. The same can
be enjoyed by his legal heirs till his death. Vested interest is transferred to an unborn on being
born. It includes title to the property and the right to alienate property but does not include the
right to possession. Under normal circumstances, the unborn will be immediately entitled to
vested interest on birth. Absolute interest includes the right of alienation. But under Section
13 once the unborn is born and the absolute interest is transferred, the unborn will not be
entitled to possession of the property.