Wednesday, March 16, 2011

Transfer of property to unborn person

Who is unborn person? An unborn person means a person who is not in existence even in mother’s womb.
According to section 5 of Transfer of Property Act 1882, transfer of property takes place only between two living persons (see the language of sec 5 of the said Act-“transfer of property” means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, or to himself and one or more other living persons, and “to transfer of property” is to perform such act). This means that transferee i.e. the person to whom it is transferred, must also be in existence at the date of transfer.
In the light of the section 5 of the T.P.Act, property cannot be transferred directly to an unborn person.  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. The unborn must come into existence before the death of the person holding property for life. If the unborn comes into existence after the death of the last living person, the property shall revert back to the transferor or his heirs.
Section 13 of T.P.Act 1882, read as “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 transfer his property to X for life who is unmarried and then to the eldest child of X absolutely. The transfer in favor of eldest child of X is valid.
Giving life interest or creating life-estate in favor 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.
 Further in the light of section 16 of the T.P. Act, if prior interest created under section 13 fails, the subsequent interest depending on it also fails.
In the case of Girish Dutt V/s Data Din, the gift to unborn daughters with no powers of alienation was held to be invalid.

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