Introduction
“Property” is a very subjective word, and it is open to different interpretations by different people. For some, it might just be limited to materialistic things and for some, it carries more of an emotional value. Generally, it can be defined as a person’s total wealth. There are many ways to categorize Property it can either be classified as Movable or Immovable, Tangible or Intangible, Private or Public, Corporeal and Incorporeal, etc. It is a well-established fact that one cannot hold the property for perpetuity and transfer of any property is bound to happen.
The term Transfer of property is defined under the Transfer of Property Act, 1882, which defines it as the act by which a living person ( living person includes a person, group of persons, a company, or association) conveys (transfers title of property) property, in present or in future, to one or more living persons, or to himself. That it is clear from the bare reading of the above-mentioned definition that a transfer is allowed only between two living persons. But there is an exception to this rule, though an unborn child is not counted as a living person and can only be termed as a person only post his/her birth, but property can easily be transferred to an unborn child. Let us examine in detail how such a transfer can take place.
What is Immovable Property?
Before understanding how a property can be transferred to an unborn child let us first understand the definition of Immovable Property. As mentioned above property can be classified both as Movable Property and Immovable Property. In layman’s terms, it can be said that any property which can be moved from one place to another can be called movable property; on the other hand, those things which cannot be moved and are attached to earth can be defined as Immovable Property. Legislature has enacted many statutes that have tried to define the term Immovable Property. According to The Transfer of Property Act, 1882, Immovable Property is that which does not include standing timber, growing crops, and grass. This definition given under the act is quite vague. According to the general Clauses Act, 1897 Immovable Property includes land, benefits arising out of the land, things attached to the earth, or permanently fastened anything attached to the earth. The Registration Act, 1908 also defines Immovable Property as anything that includes land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries, or any other benefits arising out of land and things attached to the earth, but not standing timber, growing crops or grass.
What is Life Interest, Absolute Interest, and Vested Interest?
Before understanding the concept of transfer of Property to an unborn child let us first understand in brief the concept of Life Interest and Absolute Interest.
Life Interest: A life interest is transferred to some person which entitles him/her the right to enjoy the property till his/her death. It also permits his/her legal heirs to enjoy the property till his/her death.
Absolute Interest: An absolute interest once transferred to some person confers all rights on the ultimate beneficiary including the right of alienation.
Vested Interest: A vested interest is transferred to a child when he is born and gives the child the rights like the title of the property and right to alienate property but does not include the right to possession.
Transfer for benefit of an unborn person
Section 13 of the Transfer of Property Act, 1882 defines the right of an unborn child while the property. This section is an exception to the general rule regarding the transfer between two living persons. An unborn child is not counted as a living person and can only be termed as a person only post his/her birth. Though, under the law, any Immovable Property can be transferred to such an unborn child. Even though a child in the womb is literally not a person in existence but has been so treated under both Hindu Law and English Law. The transfer is only valid if the following rules are complied with:
No Direct Transfer
A transfer to an unborn person can be made only in an indirect manner i.e. any Property cannot be transferred to an unborn person directly. That is the reason the section uses the expression transfer ‘for benefit of’ and not transfer ‘to’ unborn person. The property must be first transferred to a trust and in case the trust is not present, then the property rights are created in the name of a living person. The immovable property shall vest in the living person till the date of the child coming into existence and becoming a living person itself.
Making a Prior Interest
Before transferring property to an unborn child a prior interest in favor of a living person must be created. A person transferring property for the benefit of an unborn person should create a life estate in favor of a living person and after it, an absolute estate in favor of the unborn person. Such a living person shall hold the possession of the property and enjoy the same till the time he is alive. It is also pertinent to note that the life interest can be created in favor of several living persons.
Vested Interest: Though the living person got just only the life interest in the property and absolute estate in the favour of the unborn person, it does not mean that the unborn child as soon as he is born will get possession of the property. From the time of his birth, the newborn will have a vested interest in the property and the title of property would vest in the child from the day he is born, but he will get possession of the property only after the death of the life-holder. This vested can be delayed till the age of 18. For e.g. transferor can emphasize that the unborn upon being born will get the property after attaining the age of 14. Absolute interest will be transferred to the infant being born on the death of the life interest holder.
Making an Absolute Transfer of Interest
The transferor must convey to the unborn person, whatever interest he had in the property, without retaining anything with him. Thus, no limited estate can be conferred for the benefit of the unborn person. If limited interest in the property is settled for him, the same would be void. Let us try to understand the concept better by using some illustrations:
A creates a life interest in favour of his friend B and then absolutely to B’s first unborn child B1.
Such a transfer is totally valid as the prerequisite condition that before doing an absolute transfer in favour of an unborn child, a life estate must be created in favour of some other living person.
A creates a life estate in favour of his friend B, and a life estate for benefit of B’s unborn child B1 and then absolutely to B’s second child B2.
Here it is clearly visible that no absolute right has been passed to B’s first unborn child and only a life estate has been created in his favour. Thus such a transfer is not valid and would be void. The transfer in name of the second unborn child might seem proper but it is dependent on a void transfer thus it is also void and therefore the property would revert back to the legal heirs of A after B’s death.
What is the view of the Apex Court?
The Hon’ble Supreme Court in the landmark case of Girijesh Dutt v. Data Din made important observations. The facts of the case spare 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 the power of alienation and if B has no descendants male or female then to her nephew. B died without having any children. 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.
Conclusion:
Under the original Hindu law, the gift or inheritance in favour of the Unborn was void. But the Transfer of Property Act, 1882 permitted it by adding the relevant provisions in form of Section 13 of the act. It surely is a progressive step forward by the lawmakers towards securing the rights of even an unborn child. Though the section mandates that the transfer cannot be executed directly but indirectly through the machinery of trusts. Moreover, the unborn child once born gets only the vested rights in the property and only obtains the absolute rights upon the death of the estate holder. Therefore it is pertinent that the provisions laid under the act are followed diligently while making a transfer in favour of an unborn child otherwise the same shall be declared as void.
