While the question is transfer of property to an unborn person valid? appears to be objective in nature with only two possible answers – yes or no, in reality, there are three concepts around it which need to be addressed before we go forward and answer it which are –
1. What is the rule against Double Possibilities?
2. What is a valid transfer of property?
3. Who is an unborn child?
Rule against Double Possibilities
The rule against double possibility has its origin in the United Kingdom common law and was established in the case of Whitby v. Mitchell. This rule has been transplanted in the Indian Transfer of Property Act, 1882 during the British rule and is practiced to this date. The rule basically restricts the owner of a property from free disposition of his property in the hands of more than one generation as it bases the occurrence of a possible condition on the occurrence of another possibility (as a necessary contingent).
Illustration 1-
If A wants to transfer his property to B, his unborn child for life but adds a condition that the property must be transferred to C, B’s unborn child on his death. This creates double possibilities i.e.
1st possibility – the birth of A’s son, B (independent in nature)
2nd possibility – the birth of B’s son, C (impossible without the occurrence of 1st possibility)
In order to avoid this situation, there exists a common-law rule against double possibilities which makes transfers to unborn without absolute interest (and/or interest in the hands two generations) in the property were considered void.
Valid Transfer of Property –
Section 5 of the Transfer of Property Act, 1882 defines Transfer of Property as “In the following sections “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 property” is to perform such act.”
Hence, according to the Transfer of Property Act 1882, the transfer must be made only to a legally living person. The section further goes on define a living person as “a company or association or body of individuals, whether incorporated or not,”
Who is an unborn child?
The term “unborn child” even though used in Transfer of Property Act, 1882 it has not been defined anywhere in legal terms. Even though there is ambiguity of whether the term only includes children who have been conceived at the time of conveyance or it also includes the legal successors of a living person who have not yet been conceived. While there is no law to define it, the Supreme Court has taken a more inclusive definition and included children who have not yet been conceived as can be inferred from F.M. Devaru Ganapathi Bhat v. Prabhakar Ganapathi Bhat. In this case, the property was transferred to the defendant (alive at the time of transfer) with the limitation that the property would be jointly owned if he had any younger brothers in the future (defendant, not conceived at the time), this transfer was held valid by the Supreme Court when contested.
The Exception: Provision for Transfer for benefit of unborn child –
Considering the definition of transfer of property and the definition unborn child on the face of it, it may look impossible to transfer the property to an unborn child as an unborn child is not a living person, but section 13 of the same act provides for an exception.
Section 13 states –
“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.”
Conditions to successfully transfer property to an unborn child laid by section 13
- Establishment of prior interest
- Absolute interest
Establishment of prior interest
Direct transfer of property for the benefit of an unborn person is not possible. A prior interest must be established either in the form of a trust under the Indian Trust Act, 1882 or in the hands of a living person at the time of transfer. The prior interest shall hold the property temporary until it can be legally transferred to the child.
Illustration 2
If A, wants to transfer his property to his nephew’s unborn son and attempts to do so directly without the creation of a prior interest, then the transaction will become void transfer due to lack of a name under Section 2(9) of the Prohibition of Benami Property Transactions Act, 1988].
But if A, first established a trust under the Indian Trusts Act, 1882 for the benefit of the unborn, then he can successfully do so.
Absolute interest
This is where the common law rule against Double possibilities of the UK has influenced the Indian system. Similar to the rule, any property transferred for the benefit of an unknown has to be absolute in nature and cannot be in favour of more than one generation i.e. life interest. The child once in possession should not be met with any additional interests created in the original transfer and shall have absolute rights of alienation of property.
Illustration 3
If A, a pregnant woman decides to transfer her property to the child B, who is in her womb for life and further adds a condition that after his death the property should go to the child of B. The condition of life interest and restraint of rights to alienate the property of B renders this transaction invalid.
*The provisions for the actual transfer from prior interest of the property to the child have been laid out in section 20 of the Transfer of Property Act, 1882.*
[Please note that Section 13 of the Transfer of Property Act, 1882 is not applicable to Mohammedans. A gift to an unborn other than wakf is void for Mohammedans]
Conclusion
Even though direct transfer to an unborn child is not possible, valid transfer can be made for the benefit of an unborn if the conditions of section 13 of the Transfer of Property Act, 1882 are met i.e. there is a prior interest of the property should be established and absolute interest must be transferred to the child following the rule against double possibilities.
This article has been authored by Ansha Bhagat, a first year student of B.SW.,LL.B.(Hons.) at Gujarat National Law University, Gandhinagar.
Also Read – What Are the Documents You Need to Check Before Buying Property?
