Transfer of Benefits: An Unborn Person

Putting restrictions on property transferability is against the socio-economic policy and detrimental to the property itself. Section 13 to 18 provides creation for the Transfer of Property Act. And by large, deals with transfers as between living persons, but their interests.

There are certain sections in the Act that lays down certain rules and rights regarding transfers for the benefit of an unborn person.

Section 13

This section is one of those sections that deal with the interests created for the benefits of the person not existing at the date of the transfer. Such interests can be created subject to certain rules contained in this section.

As per Section 13, on the transfer of a property, an interest for the benefit of an unborn person is created. It should not take effect unless it extends to the remaining interest of the transferor in the property.

Principle: The principle in this section is that the liberty of alienation shall not be exercised to its own destruction and that all contrivances shall be void, which tend to create perpetuity or tend to place the property forever out of reach of the power of alienation.  If the property has been transferred to an unborn person with limited power, there is every likelihood that the property may be rendered inalienable for an indefinite period, which will ultimately hamper the economic growth of the country and public at large.

Scope of Section 13

  1. It is an exception to the general scheme of TPA, which deals with transfer inter Vivos only.
  2. No direct transfer can be made for the person, not in existence.
  3. An unborn person’s interest should be preceded by creating a prior interest in favor of a living person.
  4. No limit to the number of successive interests in favor of a living person.
  5. The absolute interest of the transferor in the property must be conveyed to the unborn person.

Applicability of Section 13

It is required that, on the transfer of the property, the interest created for the benefit of the person not in existence at the date of the transfer, subject to a prior interest created by the same transfer in favor of another transferee, to be valid, must extend to the whole of the remaining interest of the transferor in the profit. The vested interest of an unborn person lies under Section 20 of the Act.

The Supreme Court, in the case of F.M. Devaru v. Prabhakar, said that the donor gifted the property in favor of the appellant living at the time of transfer and also mentioned that if other male children are born later to her brother, they shall be joint holders with the appellant. Such vestibule right is permissible under Section 20 of the Act.

 

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