INTRODUCTION
The Transfer of Property Act deals with two kinds of interest vested interest and contingent interest. interest. Vested interest is to be distinguished from contingent interest. When an interest is vested, the transfer is complete but when the interest is contingent, the transfer transfer depends upon a condition precedent. precedent. When the condition condition is fulfilled fulfilled the transfer takes effect and that the interest becomes vested. I.TITLE IN THE PROPERTY
The term Title is derived from the term Titlus of Roman law and Titre of rench law. According to !almond, title is the fifth element of legal right. "very legal right has a title, that is to say, certain facts or events by reason of which the right has become vested in the owner. #owever, #olland does not include title as an element of a legal right. Austin does not approve of the use of title for right. #is contention is that title is not the right itself but merely an element of right. While title indicates the idea of an investitive fact, right is a power$ faculty or capacity conferred on a person and is founded in the title. The party entitle is invested with right by the investive fact. %egal rights are created by title. A person has a right to a thing because he has a title to that thing. According to &ustice #olmes, "very right is a conse'uence attached by the law to one or more facts which the law defines and wherever the law gives anyone special right, not shared by the body of the people, it does so on the ground that certain special facts not true of the rest of the world are true to him. (t is these special facts that create a title. Title means any fact which creates a right or duty. (f a law confers a right upon one man which it does not confer upon another, the reason is that certain facts are true of him who are not true of the other and these facts are the title of the right. A person may ac'uire right on account of his birth or he may ac'uire
1
the same by personal efforts later on but in both cases title is essential. Title is the root from which the rights proceed. #olland does not approve of the use of the term title as it does not indicate the facts which transfer or e)tinguish rights. A fact giving rise to a right has long been described as a title, but no such well*worn e'uivalent can be found for a fact through, which a right is transferred transferred or for one by which a right is e)tinguished. e)tinguished. +entham +entham also obects to the use of the term title and suggests the term dispositive facts. #e divides the dispositive facts into three parts- investitive investitive facts, facts, divestitive divestitive facts and translative facts. #e re*divides the investitive facts into collative facts and impositive facts. The main rights in the title bundle are usually
")clusive possession ")clusive use and enclosure Ac'uisition onveyance, including by be'uest Access easement #ypothecation Partition
The rights in real property may be separated further, e)amples including
Water rights, including riparian rights and runoff rights (n some /.!. states, water rights are completely separate from land0see prior
appropriation water rights 1ineral rights "asement to neighboring property, for utility lines, etc. Tenancy Tenancy or tenure in improvements Timber rights arming rights 2ra3ing rights #unting rights Air rights 4evelopment rights to erect improvements under various restrictions Appe Appear aran ance ce righ rights, ts, ofte often n sube subecte cted d to loca locall 3oni 3oning ng ordin ordinan ance cess and and deed deed restrictions
2
(n countri countries es with with a sophisti sophisticat cated ed private private property property system system,, docume documents nts of title title are commonly used for real estate, motor vehicles, and some types of intangible property. When such documents are used, they are often part of a registration system whereby ownership of such property can be verified. (n some cases, a title can also serve as a permanent legal record of condemnation of property, such as in the case of an automobile unk or salvage title. (n the case of real estate, the legal instrument used to transfer title is the deed. A famous rule is that a thief cannot convey good title, so title searches are routine for purchases of many types of e)pensive property. (n several counties and municipalities in the /! a standard title search is re'uired under the law as a part of ownership transfer. Title is the sum total of legally recogni3ed rights to the possession and owner ownershi ship p of prope propert rty y. This This mean meanss wher whereb eby y the the owne ownerr of lands lands hath hath the ust ust possession of his property. This is the definition of title to lands only. There are several stages or degrees re'uisite to form a complete title to lands and tenements. The degrees are5. The lowest lowest and most imperfec imperfectt degree of of title is the mere mere possession, possession, or actual actual occupation of the estate, without any apparent right to hold or continue such possession. 6. The ne)t ne)t step to a good and perfect perfect title title is the right of possess possession ion,, which may may reside in one man, while the actual possession is not in himself, but in another. This right of possession is of two sorts$ an apparent right of possession, which may be defeated by proving a better$ and an actual right of possession, which will stand the test against all opponents. 7. The mere mere right of property property,, the us us proprietatis proprietatis without without either possessio possession n or the right of possession. A title is good, go od, marketable, doubtful, or bad. A good title is that which entitles ent itles a man by right to a property or estate, and to the lawful possession of the same. A marketable title is one which a court of e'uity considers to be so clear that it will enforce its acceptance by a purchaser. The ordinary acceptation of the term marketable title would convey but a very imperfect notion of its legal and technical import. All
3
titles being either good or bad, the former would be considered considered marketable, marketable, the latter non*marketable. +ut this is not the way they are regarded in courts of e'uity, the distinction taken there being not between a title which is absolutely good or absolutely bad, but between a title, which the court considers to be so clear that it will enforce its acceptance by a purchaser, and one which the court will not go so far as to declare a bad title, but bu t only that it is subect s ubect to so much doubt d oubt that a purchaser ought not to be compelled to accept it. (n short, whatever may be the private opinion of the court, as to the goodness of the title yet if there be a reasonable doubt either as to a matter of law or fact involved in it, a purchaser will not be compelled to complete his purchase$ and such a title, though it may be perfectly secure and unimpeachable as a holding title is said, in the current language of the day, to be unmarketable. The doctrine of marketable titles is purely e'uitable and of modern origin. At law every title not bad is marketable. A doubtful title is one which the court does not consider to be so clear that it will enforce its acceptance by a purchaser, nor so defective as to declare it a bad title, but only subect to so much doubt that a purchaser ought not to be compelled compelled to accept it. At common law, doubtful titles are unknown$ there every title must be either good or bad. A bad title is one which conveys no property to a purchaser of an estate. Title to real estate is ac'uired by two methods, namely, by descent and by purchase. Title to personal property may accrue in three dierent !ays.
5. +y original ac'uisition. 6. +y transfer, t ransfer, by act of law. 7. +y transfer, by, act act of the parties.
".TITLE #Y ORI$IN"L "C%UI&ITION I& "C%UIRED' (. #y occupancy* This mode of ac'uiring title has become almost e)tinct in civili3ed
governments, and it is permitted to e)ist only in those few special cases, in which it may be consistent with the public good. irst. 2oods taken by capture in war were, by the common law, adudged to belong to the captor, but now goods taken from enemies 4
in time of war, vest primarily in the sovereign, and they belong to the individual captors only to the e)tent and under such regulations, as positive laws may prescribe. !econdl !econdly. y. Another Another instanc instancee of ac'uisi ac'uisition tion by occupa occupancy ncy,, which which still still e)ists e)ists under under certain limitations, is that of goods casually lost by the owner, and unreclaimed, or designedly abandoned by him$ and in both these cases they belong to the fortunate finder. ). #y accession* Title by original ac'uisition is ac'uired by accession. +. #y intellectual la,our - (t is ac'uired by intellectual labour* (t consists of literary
property as the construction constructio n of maps and charts, the writing of books and papers. The benefits arising from such labour are secured to the owner. 5. +y patent rights for inventions. 6.+y copyrights. #.THE TITLE #Y "CT O- L"
The title to personal property is ac'uired and lost by transfer, by act of law, in various ways. 5. 6. 7. 8. 9. :.
+y forf forfei eitu ture re.. +y succ succes essi sion on.. +y marri arriaage. ge. +y udg udgm ment. ent. +y inso insolv lven ency cy.. +y inte intest stac acy y.
C.TITLE #Y' "CT O- THE P"RTIE&.
Title is also ac'uired and lost by transfer by the act of the party. 5. +y gift. 6. +y contr contrac actt or or sal sale. e. (n general, possession constitutes the criterion of title of personal property, because no other means e)ist by which a knowledge of the fact to whom it belongs can be attained7. A seller of a chattel is not, therefore, re'uired to show the origin of his title, nor, in general, is a purchaser, with*out notice of the claim of the owner, compellable to make restitution$ but, it seems, that a purchaser from a tenant for life of personal 5
chattels, will not be secure against the claims of those entitled in remainder.8 To the rule that possession is the criterion of title of property may be mentioned the case of ships, the title of which can be ascertained by the register. To convey a title the seller must himself have a title to the property which is the subect of the transfer. D.E/CEPTION&.
+ut to this general rule there are E/CEPTION&. 5. The The lawf lawful ul coin coin of the the /nit /nited ed !tat !tates es will will pass pass the the prop proper erty ty alon along g with with the the possession. 6. A negotiable negotiable instrument instrument endorsed in blank is transferable transferable by any person holding it, so as by its delivery to give a good title ;to any person honestly ac'uiring it.< P"R"0OUNT P"R"0OUNT TITLE* Paramount title is the best title in ee simple available for
the true owner. The person who is owner of real property with paramount title has the higher right in an action to =uiet title. The concept is inherently a relative one. Technically, paramount title is not always the best title, since it is necessarily based on some other person>s title. lawsuit to settle competing competing claims or rights %UIET TITLE - A =uiet title action is a lawsuit 57to real property, for e)ample, missing heirs, tenants, reverters, remainders and lien holders all competing to get ownership to the house or land:. "ach of the /nited !tates has different procedures for a 'uiet title action. #owever, most personal property items do not have a formal document of title. or such items, possession is the simplest indication of title, unless the circumstances give rise rise to suspi suspicio cion n about about the poss possess essor> or>ss owner ownershi ship p of the the item item.. Proo Prooff of lega legall ac'uisition, such as a bill of sale or purchase receipt, is contributory. Transfer of possession to a good faith purchaser will normally convey title if no document is re'uired. "#OR$IN"L TITLE
6
Prior to the establishment of the /nited !tates title to (ndian lands in lands controlled by +ritain in ?orth America was governed by The Royal Proclamation of @ctober , 5:7. This proclamation by Bing 2eorge ((( reserved title in land to the (ndians, subect to alienation only by the rown. This continued to be the law of anada following the American Revolution. (n the /nited !tates (ndian title is the subservient title held by ?ative Americans in the /nited !tates to the land they customarily v. M'Intosh M'Intosh claimed and occupied as in Johnson v.
(t very early became accepted doctrine in this ourt that although fee title to lands occupied by (ndians when the colonists arrived became vested in the sovereign * first the discovering discovering "uropean nation and later the original states and the /nited !tates * a right right of occupa occupancy ncy in the (ndian (ndian tribes tribes was nevert neverthel heless ess recogni recogni3ed 3ed.. That That right, right, someti sometime mess call called ed (ndi (ndian an Title Title and and good good agai agains nstt all all but the the sover sovereig eign, n, coul could d be terminated only by sovereign act. @nce the /nited !tates was organi3ed and the onstitution adopted, these tribal rights to (ndian lands became the e)clusive province of the federal law. (ndian title, recogni3ed to be only a right of occupancy, was e)tinguishable only by the /nited !tates as in Oneida Indian Nation v. County of Oneida
Aboriginal title refers to the (ndians> e)clusive right to use and occupy lands they have inhabited from time immemorial, but that have subse'uently become discovered by "urope "uropean an settler settlers. s. Aborig Aboriginal inal (ndian (ndian title title derived derived from from the doctri doctrine ne of discove discovery ry provided that discovering nations held fee title to these lands, subect to the (ndians> righ rightt of occup occupan ancy cy,, and and use. use. Afte Afterr con'u con'ues est, t, (ndi (ndian anss were were perm permit itted ted to occu occupy py portions of territory over which they had previously e)ercised sovereignty. This aboriginal title, however, was not inviolable. !pecifically, (ndians were secure in their possession of aboriginal land until their aboriginal title was e)tinguished by the soverei sovereign gn discov discovere ererr. ?o one could could purchas purchasee (ndian (ndian land land or otherw otherwise ise termin terminate ate abor aborigi igina nall title title witho without ut the cons consen entt of the sove sovere reig ign. n. The The sover soverei eign gn posse possesse ssed d e)clusive power to e)tinguish the right of occupancy at will. E. CL"&&I-IC"TION O- TITLE&
7
Titles are also called investive facts or facts as a result of which a right comes to be vested in its owner. !almond divides the vestitive facts in to two parts, vi3., investitive facts or titles and divestitive. (nvestitive facts or titles are divided into original titles and derivative titles. 4ivestitive facts are divided into alienative facts and e)tinctive facts. Vestitive facts are those which have relation to right. They relate to the creation, e)tinction and transfer of rights. (nvestitive facts create and divestitive facts destroy them. A right created may have no prior e)istence$ such a right is called original title. ")amples of original title are my catching fish from the river, my writing a new book, my invention of a new machine, etc. (f a right is created by the transfer of an e)isting right, it is called a derivative title. (f ( buy fish from fisherman who has caught the same from a river, my title is a derivative one. (f the author of a book assigns the copyright of his book to another person, the latter ac'uires a derivative title. The facts of which the legal result is to destroy rights are called e)tinctive divestitive facts. The facts of which legal result is to transfer rights from the owner are called alienative divestitive facts. (t is to be noted that in case of a transfer of a right, the same facts are derivative investitive facts and alienative divestitive facts. (f ( sell my fish to C, it is derivative title so far as C is concerned and alienative divestitive fact so far as ( am concerned. The main features of vestitive facts are that they either create a right or e)tinguish it or transfer it from one person to another. Acco Accord rding ing to +enth +entham am,, dispo disposit sitiv ivee fact factss can can be divide divided d into into three three part parts, s, vi3. vi3.,, investitive facts, divestitive facts and translative facts. Translative facts refer to the transferring transferring of rights and duties. (nvestitive (nvestitive facts are divided into two parts- collative collative and impositive facts. ollative facts confer rights and impositive facts impose duties. 4ivestitive facts are subdivided into destructive and e)onerative facts. 4estructive divestitive facts end rights and e)onerative divestitive facts release persons from duties. According to another classification, vestitive facts operate in pursuance of a human will or independently of the same. They are divided into two categories- acts of the law and acts in the law. Acts in the law are further divided into unilateral acts and 8
bilateral acts unilateral acts are either subect to dissent or independent of the same. +ilateral acts or agreements are of four kinds, vi3., contracts, grants, assignments and releases. ontracts and grants are either creative or e)tinctive. Those are also valid or invalid. %egal !tatus of Perfect and (mperfect Title in Property- A #istorical Analysis Analysis II. ONER&HIP IN PROPERTY ".CONCEPT O- ONER&HIP
The concept of ownership is one of the fundamental uristic concepts common to all systems of law. (t has it origin in the ancient Roman law. Perhaps of all the rights, righ rightt to owne ownersh rship ip is the most most impo import rtan antt right right.. The The earl earlier ier lega legall syste systems ms didn> didn>tt recog recogni ni3e 3e the disti distinc nctio tion n betwe between en owne owners rship hip and and posse possessi ssion on.. (t was was with with the the advancement advancement of the civili3ation civili3ation that the two were considered considered as separate separate and distinct distinct concep concepts. ts. (n Roman Roman law owners ownership hip and posses possession sion were were respec respective tively ly termed termed as Ddominium> and Dpossessio>. The term dominium denoted absolute right to a thong, while possession implied only physical control over it. (n the ancient and the medieval "nglish law also the concept of ownership developed much later than possession. The term ownership was used in "nglish law for the first time in 59E7, when it was distinguished from possession. #oldsworth observed that the "nglish law accepted the concept of ownership have an absolute right through gradual development in the law of possession. &urists have defined ownership in different ways. All of them however accept that the right of ownership is most complete or supreme right that can be e)ercised over anything. According to Hi,,ert ownership includes within it four kinds of rights. 5F Right to use a thing. 6F Right to e)clude others from doing a thing. 7F 4isposing a thing 8F Right to destroy it. 9
(n +lack>s %aw 4ictionary, ownership has been defined as ;collection of rights to use and enoy property, including right it to transmit it to others<. Therefore, ownership is deure recognition of a claim to a certain property. Austin defines ownership ;as a right which avails against everyone who is subect to the law conferring the right to put thing to user of indefinite nature. #e further says that, ownership is a ;a right indefinite in point of user unrestricted in point of disposition and unlimited in point of duration<. According According to !almond, !almond, ;ownership, in its most comprehensive comprehensive signification, signification, denotes denotes the relation between a person and right that is vested in him<. Thus, in its generic sense ownership signifies the relation between the person of inherence and the obect of ownership. (t consists in a comple) of rights which are rights in rem. (n !almonds view ownership e)hibits the following incidents. 5. An owner shall have a right to possess a thing which he owes. #e may however not necessarily, in actual possession of it. 6. #e has normally the right to use and enoy the thing owned. 7. The owner has a right to use, consume enoy or alienate the thing. 8. @wnership has the characterics of being in determinate in duration. 9. @wner has a residuary character The right to ownership was also recogni3ed under ancient (ndian law. The great commentators notably, ?arada, Gagnavalika,Vyas etc. and emphasi3ed that right of ownership of property was to be used good noble cause and good motives. The ancient #indu law ordained man to behave in particular manner in relation to a person or property of other. They were warned that misuse of the right of ownership would entail them moral or public indignation and they would be liable for punishment. The ancient #indu urists mentioned seven modes of ac'uisition of ownership of property namely* 5F (nheritance 10
6F 2ain 7F Purchase 8F on'uest 9F (nvestment of wealth :F "mployment F Acceptance of 2ifts According to 1anu, only property of king or estate could be ac'uired by con'uest, but the kings had no right to inerter or ac'uire private property of the subect of the con'uered territory58. As regard the property of no one>s land. 1anu says that it belong to it first who reclaimed it under cultivation. Where a thing has no previous owner such as bird or a fish, the rule of res nullius was to apply and the one who took it first was its owner. (n case of some treasure was discovered the person who founded took the whole of it, if it was found on his land and if it was found on some others land, he could ac'uire only half of it. "ven under the present (ndian law no person can have absolute ownership of property because this right has been restricted by statues and regulations. !uch as ceiling laws, rent control enactments, company regulations etc. #.CH"R"CTERIC& O- ONER&HIP
5F @wners @wnership hip may either either is absolute absolute or restricte restricted. d. That is it may be e)clusive e)clusive or limited. (t can be limited by agreements or by operation of law. When a land or a thing is owned by one own, they are called co*owners and the right of each co*owner is limited to the right of other co*owners. 6F The The righ rightt of owne owners rshi hip p can can be rest restri rict cted ed at the the time time of emer emerge genc ncy y. or or instance. +uilding or a land hold by a private individual can be re'uisitioned and used for lodging army personnel during the war. 7F An owner owner is not not allowe allowed d to use use his land or proper property ty in a manne mannerr that it is inurious to others. (n this sense his right of ownership is not unrestricted.
11
8F Restrictions Restrictions may may also be imposed imposed by law on the the owners right right of disposable disposable of the thing owned. Thus any alienation alienation of property made with intent to defeat or delay the claim of creditors can be set aside. The power of disposition can also be limited by the e)istence of rights of encumbrance such su ch as a mortgagee etc. the owners in (ndia and in most of the countries are not free to sell their property to aliens. 9F The owner has right to possess possess a thing thing which he owns, owns, it is immaterial immaterial whether whether he has actual possession of it or not. The most common e)ample is an owner leaving his house to a tenant, where tenant is an actual possession but the ownership still remains with the landlord. Again when a car is hire or stolen, the possession remain s with the person who has hired or stolen it, but the owner of it. :F %aw %aw does does not not conf confer er owner ownersh ship ip on an unbo unborn rn child child or an insa insane ne perso person n because they are incapable of conceiving the nature and conse'uence of their acts. F @wnership @wnership is is residuary residuary in charact character. er. EF The right right to ownersh ownership ip does not end with with the death death of the owner, owner, instead instead it is transferred to its affairs.
C.&U#1ECT 0"TTER O- ONER&HIP
@rdinarily the subect matter of ownership consists of material obects like land, chattels etc. the wealth and assets of a person such as interests in the land, debts due to him, him, share share ina comp compan any y, pate patent nts, s, copyr copyrigh ights ts etc. etc. may may also also be subec subectt matt matter er of ownership. Thus, intangible rights may alo constitute subect matter of ownership. !almond also supports this view that besides material obects, right may also be subect matter of ownership though a man is said Dnot to own, but to have a right>. rom this point of view many rights cannot be considered as subect matter of ownership, like everyone has a right of freedom of speech or right of reputation but it is never said that he owns these rights, nor can he alienate them.
12
D."C%UI&ITION O- ONER&HIP
rom the point of view of ac'uisition of ownership, things may be of two kinds namely things over which no one has ownership, they are called res nelus and their ownership can be ac'uire by possession5. +ut there are things which are already owned by someone, the ownership over them can be ac'uired by derivative method. According to !almond ownership can be ac'uired in two ways* 5F +y operation of law. 6F +y some act or event. A person can become the owner of certain property by the operation of law, such as the late of intestacy or bankruptcy5E. (t can also be ac'uired by reason of an act or event such as taking or making a thing for the first time. +oth these cases involve orig origin inal al ac'u ac'uis isit itio ion n of owne owners rshi hip$ p$ nice nice new new owne ownerr deri derive vess the the titl titlee from from his his predecessor. E.DI--ERENT 2IND& O- ONER&HIP
The The right right to owner ownersh ship ip is gene genera rally lly e)cl e)clusi usive ve,, imme immedi diat ate, e, uncon uncondi ditio tiona nall and and beneficial. (t is however not necessary that all these elements must be present in ownership. Therefore there may be different kinds of ownership depending on the e)istence or absence of any elements in it. or instance, if a person doesn>t have e)clusive right of ownership over a thing and there are more than one owner of that thing than each of such owners would be its co*owner. %ikewise if the ownership is dependent on a certain condition, than it would be a conditional ownership. 4ifferent types of ownership can be e)plained under the following heads. (3 Corporeal and Incorporeal O!nership
The ownership of material obect is called corporeal ownership whereas ownership of a right is called incorporeal ownership. Thus, the ownership of a house, land, table, machinery etc. is a corporeal ownership and the ownership of a copy right, patent, trade mark, is in (ncorporeal @wnership.
13
)3 &ole o!nership and Co4o!nerhip Co4o!nerhip
(t means a single person has the authority to sign a deed to sell, rent, or lease a property and no one else can do the same with the property. ?ormally, there is no chance of conflict in transaction of individual ownership properties. +ut the ownerHs not staying in the same town may lead to a trouble. (n such cases a power of attorney may be given to a trustworthy person to handle and take decision on the property related issues. The owner can decide his successor of the property and make a will in favor of the successor accordingly. (n &oint ownership any one of the owners has the right to decide on a property, and it eliminates the need of a power of attorney if one of the owners is absent. The surviving owner becomes the sole owner of the property in case of the death of the other owner. Therefore, the survivor ship and the security come . +3 Trust and #eneicial O!nership
Get anothe anotherr peculia peculiarr specie speciess of duplic duplicate ate owners ownership hip is trust trust ownersh ownership ip in which which property is owned by two persons at same time. The relation between them is such that one of them is under an obligation to use his ownership for the benefit of another. The right of a party to some profit, distribution, or benefit from a contract or trust. A beneficial interest is distinguished distingu ished from the rights of someone like a trustee t rustee or official who has responsibility to perform andIor title to the assets, but does not share in the benefits. 53 Le6al and E7uita,le O!nership
!ometimes one person may be the legal owner and another e'uitable owner of the same thing or right at the same time. or e)ample, when a debt is verbally assigned by A to +. a remains the legal owner of it, but become the e'uitable owner of it. Thus the debt is only one although now it has two owners. 83 ",solute and Limited O!nership
14
(f all the rights of ownership, i.e. possession, enoyment and disposal are vested in a person without any restriction, the ownership is absolute. +ut when there are retractions as to user, duration or disposal, the ownership is limited ownership. 93 :ested and Contin6ent O!nership
(n vested ownership the title of owner is already perfect, while in contingent his title is yet imperfect, but is capable of becoming perfect on fulfillment of some conditions. %egal !tatus of Perfect and (mperfect Title in Property- A #istorical Analysis
III.PER-ECT TITLE ; CONCEPT O- :E&TED INTERE&T ".DE-INITION O- :E&TED INTERE&T &ection (< o Transer Transer o Property "ct "ct deines =ested interest as ollo!s...
JWhere, JWhere, on a transfer of property, property, an interest therein is created created in favour of a person without specifying the time when it is to take effect, or in terms specifying that it is to take effect forthwith or on the happening of an event which must happen, such interest is vested, unless a contrary intention appears from the terms of the transfer.J A vested interest is not defeated by the death of the transferee before he obtains possession. PER-ECT > I0PER-ECT TITLE ; CONCEPT O- :E&TED >CONTIN$ENT INTERE&T
15
Rights of Property Point of Views
Quantu of Right !"so#ut e
%ie of Right
$onting ent
Postpone nt or ,e#aye' rights
&e'i ate Veste' Rights (e)tion 19
(oetie with )on'iton 'epen's on )ertain e*ents $ertain future e*ents or whi)h "oun' to happen+ for ea"#e any future 'ate or 'eaths 'eaths et)+ &t is natura##y *este' or a"so#ute in nat in nature
$ontingent Rights %his is non )ertain )ertain e*ent whi)h ay or ay not happen (e)ton 21
(oe tie with )on'ition
#. :E&TED IN DI--ERENT -OR0& KiF:ested in possessi when it is a right right to pres presen entt poss posses essi sion on for for e)* e)* our our possession on* when
residential house. Vested in possession is a term used to indicate an interest which gives a right to immediate enoyment of an interest in property as opposed to an interest vested in remainder. or e)ample, an estate is vested in possession when there e)ists a right of present present enoyment$ and an estate is vested in interest, when there is a present fi)ed right of future, enoyment. ;The phrase Jvested in possessionJ is well understood as meaning a right of present enoyment. ontrasted with these terms is the phrase Jvested in interest,J which means a present fi)ed right of future enoyment. Thus any given interest may first be vested in interest, interest, then vested in possession, possession, and finally reduced to possession.
16
KiiF :ested in interest L when it is not a right to present possession but a right to future possession. ")ample* a land M building is given to Ramesh for his life with a remainder to + , in that case >s right invested in possession ,+>s right is vested in interest .i.e. after >s death property will come to + without anycondition.A vested interest is transferrable and heritable.A vested interest is a ;right that so completely and definitely belongs to a person that it cannot be impaired or taken away without the personHs consent. The event or time frame that triggers vesting vestin g is typically defined by contract, such as employee pension benefits vesting after a certain number of years. KiiiF =ested 6it*A vested gift refers to an absolute gift. 2enerally, a vested gift is free from contingencies. Although a vested gift is unconditional, its use or enoyment might not occur until sometime in the future. #ence, a vested gift can be made for the purpose of present or future usage. KivF=ested estate*Vested estate is an absolute, unconditional, and indefeasible interest. (t is an estate which is not contingent or e)pectant. Vested estate carry a fi)ed right of present or future enoyment. (t gives a certain and fi)ed right of present or future enoyment$ that is, an interest clothed with a present legal and e)isting right of alienation. An estate is vested in possession when there e)ists a right of present enoyment, and vested in interest when there is a present right of future enoyment. KvF=ested uture estate*Vested future estate is an estate which e)ists when there is a person in being who would have an immediate right to the possession of the lands upon the ceasing of the intermediate or precedent estate. KviF=ested lia,ilities *Jvested liabilitiesJ means ;the present value of the immediate or defe deferr rred ed benef benefits its avail availab able le at norm normal al retir retirem emen entt age age for for part partic icipa ipant ntss and and thei their r beneficiaries which are no forfeitable. KviiF=ested ri6ht*A vested right is commonly defined as a ;right that so completely and definitely belongs to a person that it cannot be impaired or taken away without the personHs consent. Kvii KviiiF iF =ested interest ,y !ill*property given to window in lieu of her maintenance during her life time and after her death surviving right ,if any ,was to vest in daughter ,
17
enactment enactment of #indu succession succession act, act, 5N9: deprived deprived daughter of their legal legal right as widows interest enlarged into an absolute estate estate ,no right vested in daughters will. C. THE TITLE IN :E&TED ONER&HIP-
(n vested ownership the title of the owner is already perfect. @wnership is absolute, it creates an immediate right and it does not depend upon fulfillment of any condition. (t is transferable and heritable. (n case of vested ownership, the investitive fact from which he derives the right is complete in all its parts. (n "nglish law, an estate may be vested even though it does not give a right to immediate possession. @n a devise to C for life with remainder to G in fee simple, the interest of y is vested because there is nothing but the prior interest of C to stand between him and the actual enoyment of the land. Technically Technically speaking, the interest of G is vested in interest, though not vested in possession. (t becomes vested in possession only on the death of C. (f a #indu widow adopt a son but there is an agreement postponing the estate of the son during the lifetime of the widow, the interest created in favour of the adopted son is vested right. (t does not depend upon the condition precedent. (f it is to take effect on the happening of an event which is certain Kthe death of the widowF, the adopted son has a present proprietary right in the estate, the right of possession and enoyment being deferred. #e can transfer the property even during the lifetime of the widow. /nder a deed of gift, a done is not to take possession of the gifted property until after the death of the donor and his wife. The done is given a vested interest subect only to the life interest of the donor and his wife. The done can transfer the property during the lifetime of the donor and his wife. /nder a compromise decree, it was settled that C was to hold an estate till his death after which it was to go to G. the interest ac'uired by G under the decree is a vested interest as it was bound to take effect from the death of C which was a certain event. A vested interest is regarded as a property which is divisible, transferable and heritable.
18
Thus under section 5N of the Transfer of Property Act, Act, 5EE6 on a transfer of property, an interest therein is created in favour of a person without specifying the time where it is to take effect forthwith or on the happening of an event which must happen, such interest is vested, unless a contrary intention appears from the terms of the transfer Illustration A #indu widow adopted son but there is an agreement which postpones the sons estate during the lifetime of widow. #ere an interest created in favour of adopted son is vest ve sted ed ri right ght,, whi which ch doe doess not de depe pend nd upo upon n co cond nditi ition on pr prec eced eden ent, t, fo forr e) e)am ample ple.. .. performance of any act , it is not to take effect on happening of the event which is certain i.e. the death of widow. widow. The adopted son has Present proprietary right in the estate. The right of possession and enoyment being deferred and therefore he can transfer the property even during the widows lifetime. !imilarly, a Transfer of Property in favour of a person simply creates vested interest with an immediate right to the possession and enoyment of the property. !uch vested interest is not defeated by the death of the transferee even before getting possession of the property. Illustration A transfers property to + in trust for and direct + to give possession of the property to when attains age of 69 years. (n this problem the enoyment in the property is postponed but this does not prevent the interest vesting immediately, but such transfer trans fer is itself void when attains maority. Therefore has vested interest and entitled to a possession of property at the age of 5E. An intention that an interest shall not be vested is not to be inferred merely from a provision whereby the enoyment thereof is postponed, or whereby a prior interest in the same property is given or reserved to some other person, or whereby income arising from the property is directed to be accumulated until the time of enoyment arrives, or from a provision that if a particular event shall happen the interest shall pass to another person. D."nalo6ous la!
!ection !ection 5N and the corresponding corresponding section section 55N of the !uccession !uccession Act, 5N69 deals with the 'uestion under what circumstances a person obtains a vested interest or immediate
19
right on a transfer of property. (t provides that unless a contrary intention appears from the terms of trade of transfer, a person gets a vested interest when it is created in his favour* 5. Without specifying the time, when it is to take effect. 6. (n terms specifying, that it is to take effect forthwith 7. (n term of specifying, that it is to take effect, on the happening of an event, which must happen i. Time not mentioned* (f a property is transferred by A to + and the deed of transfer
does not mention, the e)act time from which the transfer shall come into effect, it is normal construction of law, that in such a case the transferee gets vested interest. or e)ample, A sells his house to +. + gets vested interest from the day of sale. #e get right at once through possession may not be given to him immediately. ii. -orth!ith4 the second situation giving birth to vested interest consists in those
cases, when the deed of transfer mentions clearly that the transfer is to take effect at once and forthwith. With such a thing being clearly mentioned, the deed conveys vested interest alone. iii. Certain e=ent* the third situation of a vested interest occurs in those cases when
the operation of the transfer is made to depend upon some specified certain event. The event must be clearly e)plained and legibly fi)ed and its occurrence occurrence should be only a matter of time. (t should be of a nature as to ;must happen<. (nterest that is dependent upon such event is classed classed as a vested one. or e)ample, transfer transfer to + if A dies, or at sunset or sunrise. There are events which are both 5. !pecified, 6. And certain. Therefore, transfer to + creates vested interest. E.PO&TPONE0ENT O- EN1OY0ENT
!ection 55 states a condition postponing enoyment cannot prevent the interest vesting immediately$ but it is itself void for repugnancy after the transferee has attained maority. or e)ample, A transfers property to + in trust for , and directs + to give 20
possession of the t he property to when he attains the age of 69. has a vested interest and is entitled to possession at the age of 5E. (n the case of Gosling v. Gosling , Vice* Vice* hancellor Wood said$ ; the th e practice of this court has always been to recogni3e the right of all persons who attain the age of 65 to enter upon the absolute use and enoyment of the property given to them by Will, notwithstanding any direction by the testator to the effect that they are not to enoy it until a later age unless, during the interval, the property is given for the benefit of another.< another.< (n (ndia the similar rule has been accepted e)cept that there th ere is no limit numerically fi)ed as above. The period up to which the enoyment of a vested interest may be postponed ( matter of fact for the parties to decide. (n another case, A e)ecuted a deed of gift in favour of +, but directed that + was not to take possession of a portion of the property until after the deaths of A and A>s wife. + has vested interest, enoyment only being postponed. Sundar Bibi vs Raendra Narayan (n this case the Allahabad #igh ourt held that in a vested interest the title passes
absolutely absolutely from the transferor transferor to the transferee transferee at the date of the transfer, transfer, though the enoyment may be postponed. -.PRIOR -.PRIOR INTERE&T INT ERE&T
!ection 57 states that, a prior interest does not postpone the vesting of the subse'uent interest. !ection 57 provides a specific e)ample of such rule. or e)ample, A fund is given to A for life, and after his death to +, on the testator>s death, the legacy to + becomes vested interest in +. the e)pression ; after his death> refers to the time when the gift becomes reduced to possession and not to the time when the interest interest vests. (n the case of Rewun Prasad>s case the testator gave hi wife a life estate and after her death one share of the estate to his brother +, and the other share to his sons and 4. + and die during the lifetime of the widow, but as their shares were vested, and as and 4 took as tenants in common >s widow was entitled to succeed to >s share. Property is settled in trust to A for life with a direction to the trustees to pay A Rs. 6,OOO a year out of the rents and profits and to apply the balance to the discharge of a 21
mortgage$ and after A> A>s death to convey the land to +. Although, + may not n ot survive A, yet +>s interest is vested in A>s lifetime as in !"oe v. Ma Mya (n Raes #anta Roy v. Santi $evi% a 'uestion arose, as to whether the interest which deve develop loped ed upon upon two mino minorr sons sons unde underr sett settle leme ment nt made made by the fath father er veste vested d or contingent. The settlement provided in substance that sons would obtain an absolute interest upon the death of the father and after discharging the debts of the father. The court observed that the settler clearly contemplated that there would be, as in fact, there was, a surplus after the payment of the debts and held that there can be no doubt about the rule that where the enoyment of the property is postponed but the present income thereof is to be applied for the benefit of the done, the gift is vested and not contingent7O. This rule operates normally where the entire income is applied for the benefit of the done. $."CCU0UL"TION O- INCO0E
!ection 5 states that, a direction for accumulation of income if in e)cess of the period sanctioned sanctioned by section 5 is invalid for the e)cess. Within Within the limits sanctioned sanctioned by the section, it is a provision for the postponement of enoyment, and as such it does not postpone the vesting of the interest. H.CONDITION"L LI0IT"TION LI0IT"TION
!ection 6E states that, a provision that if a particular event shall happen, the interest shall pass to another person is what is called in "nglish law a conditional limitation. A conditional limitation divests an estate which has vested and vests it in another person. A condition subse'uent divest an estate which has vested and revests it in the grantor. !ection 6E deals with conditional limitations, whereas conditions subse'uent are dealt with in section 75. I.Test to determine !hether is =ested or not
Whether an interest is vested or otherwise, depends on the intention of the person crating the interest. !uch intention must, however, be gathered from the language employed by the grantor in the grant, giving the plain and natural meaning to the 22
words used by him. The document must be constructed as a whole giving attention to every previous therein. An interest is vested when it is subected to any condition precedent, when wh en it is to take effect on the happening of the event which is certain. A person takes a vested interest in the property when he ac'uires a proprietary p roprietary right in it but the right of enoyment is only deferred till ti ll a future event happens which is certain to happen. (f a #indu widow adopted a son but there was an agreement postponing the son>s estate during the lifetime of the widow, the interest, created in favour of the adopted son is a vested right, it does not depend upon condition precedent, i.e., the performance of an act$ it is to take on the happening of an event which is certain, i.e., widow>s death, the adopted son has a present proprietary right in the estate, the right to enoyment and possession being deferred and therefore, he can transfer the property during the lifetime of widow. Time o =estin6* as soon as the transfer is complete the interest vests. Words are to be
construed according to their ordinary meeting and no particular form of words is necessary to effect a vesting. Contrary intention* the grantor has liberty to specify the time of vesting for under
section 9, a transfer may not be only in present but also in future. +ut the time of vesti vesting ng canno cannott be beyo beyond nd the peri period od allow allowed ed by the the rule rule agai against nst perp perpet etuit uity y. (n Wrightson>s case, the testator by a codicil to his will directed that no devise should have a vested interest or be entitled to possession until attainment of the age of 68. This provision invalidated the future interests given in the will. Death Death o transer transeree ee* when an interest is vested it becomes the property of the
transferee and is under section :, transferable by him even before he has attained possession$ for a transfer of property p roperty not in possession is effective. (f a transferee dies his interest ( vested in his representatives even if he has not obtained possession. (n the case of Raes h #ant Roy v. Santi $evi % father settled the property on his two minor sons. The
settlement provided that the sons would take absolute interest in the property upon the
23
death of the transferor and after discharging all his encumbrances. The !upreme ourt held that the sons got a vested interest, though enoyment was temporarily postponed. (n case case of Sreenivasa &ai .Saras(ati )**al A by a settlement deed transferred property to P for life , then to !. ! predeceased P .@n the death of P, the heir of ! claims the property .(t was held that since the interest was not subect to any condition precedent .!o it is a vested interest and is not liable by the death of its owner before he becomes entitled to possession .!o on the death of ,the heir of ! can claim the property. N"TURE N"TURE O- -UTURE INTERE&T?E&T"TE INTERE&T?E&T"TE DE -UTURE
(t is "'ually important to describe the future interests to clearly understand vested interest .They are 5.The Re=ersion ).The Remainder i. ii. ii. iii. iii.
:ested sted Rema emaind nder er @&e &ecc .( .(<3 cont contin in6e 6ent nt rem remaind ainder er@& @&ec ec.) .)(3 (3 eAec eAecut utor ory y inte interrest@ est@&e &ecc )8B) )8B)4 4+5 +533
5.The Re=ersion The two most common situations in which a reversionary interest is created are in a lease of property, or when a life estate is estate is granted in a property. (n both cases, the original ownerHs interest and possession of the property will eventually return to him or her. (n the case of a lease, when it e)pires, all the rights to the property return to the original owner. (n the case of a life estate, upon the death of the grantee, all interest and rights of possession also return to the original owner. ).The Remainder
;To A for life, remainder to + and his heirs.< ;To A for life, remainder to + an eighteen*year*oldQ and his heirs, if + shall have reached the age of 65.< The two grants
24
above differ obviously in their wording. (n both grants, it is a necessary condition to +>s interest becoming possessory that A> A>s life estate es tate e)pire. (n the first case, however, this necessary condition is also sufficient$ in the second case it is not$ in that case + must also have reached the age of twenty*one. The first type of remainde remainderr is called called a =ested remainder. This term does not mean that the remainderman has a present possessory interest$ rather, it means that there is no precedent condition to be met for the remainder to t o become possessory possess ory other than the e)piration of the preceding estateKsF. The fact that a remainder is vested does not mean necessarily that it is likely to become possessory. (f 2 grants ;to A for life, remainder to + for life,< + has p8OEQ a vested remainder, but if + is eighty years old and A twenty, the chances that + will ever enoy en oy the remainder are slim. sli m. The second second type of remainder remainder is a contin6ent remainder' which means that some precedent condition in addition to the e)piration of the prior estates must be fulfilled in order that the remainder may become possessory. (n many instances the additional precedent condition will be the identification of the taker. (n the grant ;to A for life, remainder remainder to the first son of A and his heirs,< heirs,< the remainder remainder is contingent if A has no sons. As soon as he has a son, the remainder becomes a vested remainder$ it is said to vest in the son. (n other instances a known taker may be re'uired to do something to fulfill the added condition, e.g., ;to A for life, remainder to + and his heirs if + survives A.< (n this situation the remainder will not vest until the e)piration of the preceding life estate because only on ly then will we know whether + will survive A. Thus, in this situation the remainder will vest and become possessory at the same time This is third type of future interest interest in a third party grantee grantee Ktransferee KtransfereeFF that must, in order to become possessory, either 5F divest or cut short some interest in another grantee KtransfereeF KtransfereeF Ka shifting shifting e)ecutory e)ecutory interest, possibly shifting from one grantee to anotherF Ksuch as ;Whiteacre to my eldest son A and his heirs, but if A inherits +lackacre Kthe family manorF, then Whiteacre is to go to my second son + and his heirs.< K?otice that this is a future interest in a third party grantee, following a fee simple subect to a condition subse'uent. That future interest is called ;fee simple subect to an e)ecutory limitation. F or 6F divest the grantor KtransferorF in the future Ka springing eAecutory interest, possibly springing out of the 2rantor>s 2rantor>s estateF Ksuch as ;to A and her heirs when A marries marries +<, read this as 2rantor 2rantor to 2rantor, 2rantor, but to A and 25
her heirs Kif andF when A marries +F. ")amples that ( like is 2rantor to + and his heir, but to A if A comes home from war alive KshiftingF and 2rantor to 2rantor, but to A if A comes home from war alive KspringingF.
:.HINDU L" "ND 0U&LI0 L"
The amendment of section 6 makes section 5N applicable to #indus. (n a case of Ram #u*ar v. )t*a Singh the testator devised his estate to his sons and directed that the
widow should manage it during her lifetime. (t was held, that the estate vested immediately in the sons and as the widow was given no prior interest they were entitled to immediate possession. (n another case of !rinivasa v. 4anapani7:, there was a transfer to a daughter with a direction to enoy the income and pass the corpus intact to her son. The daughter took a vested interest but the direction was ineffective and the son who predeceased her took no interest at all. (t has also been held that under #indu law the creation of partial trusts and charges will not postpone the vesting in possession. !unni law does not recogni3e an estate for life with a vested remainder. There is some doubt as to whether the law on this point has been altered by the decision of the Privy ouncil. (t led to a difference of opinion from that of held in an another case of Rasool Bibi v. +usuf +usuf )a* in this case such estates were held as recogni3ed in !hia
law. A life estate with a vested remainder is recogni3ed both by !hia>s and !unni>s and by the 1uslim Wa'f Wa'f Validating Validating act,5N57, in the case case of wa'fs. :ested interest o an un,orn person* According to section )' where on a transfer of
property an interest therein is created for the benefit of a person not then living, he ac'uires upon his birth, unless contrary intention appears from the terms of the transfer, a vested interest, although he may not be entitled to the enoyment thereof immediately on his birth. An interest created for the benefit of an unborn person vests as soon as the person is born. Thus if a settles property on himself and his intended wife for their oint lives and then on the eldest son of their marriage , the son takes a vested interest as soon as he is born. (t matters not that he is not entitled to possession during the lifetime of his parents. ?or will the vesting be affected by the provision that 26
if his parents die during his minority the trustees should not deliver possession to him until he attains attains maority. maority. $evaru Gana,athy Bhat .&rabha-ar Gana,athy Bhat (t was given that interest in property can be created in favour of unborn child. (n a case, a be'uest is made made in favour of T for life and thereafter to the children of T absolutely. T is married and a daughter, named B, is born to him. The daughter, B predeceased T. thereafter, T by a will be'ueaths the property absolutely to C. in such s uch a case, B ac'uires a vested interest in the property by birth. T, being B>s heir gets abso absolu lute te titl titlee to the the prop proper erty ty and, and, ther theref efor ore, e, the the be'u be'ues estt by T is vali valid d as in .This section makes clear that child in the womb is not a Nusser(ani v. Gur/her .This living person. !o to him property cannot be given direct. 1echanisms of prior and absolute interests are needed. hild not even in womb can get property only when re'uirement of section 58 in addition to section 57 are met. hild in womb is a person in e)istence but not a living person. I:.I0PER-ECT TITLE4 CONCEPT O- CONTIN$ENT INTERE&T ".DE-INITION O- CONTIN$ENT INTERE&T &ection. )( deines deines Contin6ent Contin6ent interest as ollo!s ollo!s 4 Where,, on a transf Where transfer er of proper property, ty, an intere interest st there therein in is creat created ed in favour of a
person to take effect only on the happening of a specified uncertain event, or if a specified uncertain event shall not happen, such person thereby ac'uires a contingent interest in the property. !uch interest becomes a vested interest, in the former case, on the happening of the event, in the latter, when the happening of the event becomes impossible.. impossible.. EAception4 where, under a transfer of property, a person becomes entitled to an interest therein upon attaining a particular age, and the transfer also gives to him absolutely absolutely the income to arise from such interest before before it reaches reaches that age, or directs directs the income or so much thereof as may be necessary to be applied for his benefit, such interest is not contingent. Illustration HCH be'ueathed his property i.e. estate estate to HGH until he shall marry to HSH. HGHs interest in
the be'ueath is contingent because it depends upon a condition precedent i.e. a 27
marriage of HGH with HSH. An event has no proprietary interest in the estate and cannot alienate alienate it. +ut as soon as HGH marries marries with HSH his contingent contingent interest interest becomes vested vested interest. This section also defines defines what interest interest is and when such interest interest is and when such interest becomes vested. The words ;is created in favour of a person to take effect only on a happening of a specified uncertain event<, etc., show that an estate or interest is contingent when the vesting is to accurse on an event which is dubious or uncertain. Where a right accurse immediately but the enoyment of the interest is postponed to a future day, the interest is vested and not contingent. Vested interest does depend upon fulfillment of a condition and takes effect from the date of the transfer. (n vested interest there is present, immediate right even if the enoyment is postponed. A vested interest is heritable and transferable. A contingent interest depend solely upon the fulfillment of the condition. (n contingent interest there is no present right, there is a promise to give right upon the fulfillment of a condition. A contingent (nterest is (nterest is inalienable and not transferable The test, therefore, to see whether an interest created is vested or contingent is to see whether whether there is an immediate immediate right of present present or future enoyment, enoyment, or whether whether the right itself is to accrue on the happening of an uncertain event. or e)ample* 5F A grant provided that on the death of the last surviving widow of the late Raa of Tanore, his daughter or failing her ne)t heir, if any, should inherit the property. (t was held by Privy ouncil that until the death of the last surviving widow, the interest created in favour of the daughter was only contingent on her surviving the last widow as in Mahitai v. v. Sundara* )yyar. yyar. . 6F C promised promised A, +, and , Rs 5,OOO each to be paid to them on the occasion of their marriage. (t was held that the gift was contingent upon their marriage taking place. A and married married before the C>s C>s death, they did not take. + married married after the death, death, and on such marriage, the gift becomes a vested one. 7F A transfer was made ;to A for life, then, to her adopted son$ if she dies without adopting anybody$ then to + and her son<. + predeceased A. (t was held that + had
28
only a contingent interest, the contingency being that A should die without making an Nat(arlal Girdharilal Girdharilal v. Ran/hood Bhag(andas% Bhag(andas% adoption in case of Nat(arlal
8F A makes gift in favour of his sons with a condition that of any one of them dies leaving no male issue, his share will be taken by the others, and not by the window or daughter daughter of the deceased son. son. (n such a case, the gift creates creates a contingent interest interest in Sooreee*oney v. $enobandhu%0 Gurus(a*i Gurus(a*i v. v. Sira-a*i Sira-a*i case of Sooreee*oney #.N"TURE O- CONTIN$ENT INTERE&T
ontingent interest is a transferable interest* A contingent interest$ not being a mere possibility is a well recogni3ed recogn i3ed form of property which is capable of being transferred. !uch a transfer would be effectually passed to the transferee, all the interest which the transf transfero erorr posses possessed sed when when the conting contingenc ency y happen happened ed and the intere interest st vested vested in possession. +ut though a contingent interest can be made the subect of a valid transfer inter vivos it cannot be made the subect of a forced sale in attachment proceedings. 1ernando v. Gunatilola-a2 (t has been held that a contingent interest is not an e)isting e)isting right and may never ripen into an e)isting right, and is not a sufficient ground to an action for declaration of S.C. $eb v. v. B.#. $eb $eb Q right. S.C.
A contingent interest is a non inheritable interest. @n the death of a person having conti continge ngent nt inter interes est, t, his lega legall heirs heirs do not not get get anyt anythin hing, g, not even even the the conti continge ngent nt interest. After the death of such a person it is only his vested interest that can be inherited. 3Raesh #anta Roy vs Shri*ati Sunita $ebi -act 4 @ne Ramani Banta Roy e)ecuted a registered trust deed in respect of his
properties. The eldest son Raesh was appointed the sole Trustee to hold the properties under the trust subect to certain power and obligation. After his death his two son Raesh And Ramendra got interest in the property. There was a clause in the trust deed that both of them was to get interest in the properties allotted to each other happening of the two events * 29
5F 4ischarge of all the debts specified in the schedule and death of the settler himself. 6F The trust trust was was to come come to an an end on the death death of settler and the the son were to to get properties allotted to them there after. (ssue before the court was whether the interest created by the trust were vested or con contin tingen gentt 1ud6ement L
(t was observed that the entire scheme of the trust deed was5F !pecified !pecified lots lots were earmarked earmarked for for each each of the the two sons sons 6F The presen presentt income income out of those lots were were to be applied applied for the dischar discharge ge of the debts debts after after paymen paymentt of specif specifie ied d sums sums
ther theree form form by the the way way of monthl monthly y
payment of the two sons and presumably such application was notionally pro rata 7F Any surpluses surpluses which remain remain from out of the income of each of the lots were to go to the very person whom the corpus of the lot itself was belong on the termination of the trust 8F (n the event event of any of the two sons dying dying before before the termina termination tion of the trust trust ,his interest in the monthly payment out of the income was to devolve on his heirs. This arrangement clearly show that what is postponed was not were vesting of the property property in the lot themselves themselves but that the enoyment enoyment of the income income of the income income thereof thereof
was burden burden with certain certain monthly monthly payment paymentss of which which taken
together constituted application of the income for the benefit of the two sons . Therefore Therefore the interest interest taken taken by the the Raes Raes and
Ramendra Ramendra under under the trust deed deed
was vested not contingent. (t nothing but short of spes succession ,and the interest of the life estate holder in the property during his life time was vested interest. Thus !upreme ourt held that the interest taken by the two brothers under the trust deed was vested and not contingent because it was certain event C. &PEC &UCCE&&ION&* the chance of an heir* apartment to succeed to a person as
heir or other mere possibility possibility of like a nature is not a ;contingent ;contingent interest< interest< within the meaning of this section. uncertain event, but survival at death of another is* the death of a D. DE"TH not an uncertain person is not an uncertain event, but is certain one. An interest created to take effect 30
on the death of another person, is therefore, not a contingent one, bit is a vested interest. interest. The survival or being alive of a person at the death of another is, on another another hand, an uncertain event and conse'uently a transfer to a person if he survives or is alive at the death of another creates only a contingent interest. E. TR"N&-ER TO " PER&ON "T P"RTIC P"RTICUL"R UL"R "$E L A transfer to a person
take effect effect upon his attaining a particular age gives him only a contingent interest interest till he attains that age. The 'uestion is to be decided having regard regard to the intention of the transferee as e)pressed by the words used by him and by other circumstances. or e)ample a certain sum of money is transferred to A ; in case he shall attain the age of 5E< and ;when he shall attain the age of 5E<. #eld, in both the cases contingent interest was given. (t is ordinarily a contingent interest given when a transfer is at ;a given age< or upon attaining< or have the transferee shall attain or ;after his attaining creation age<, is made. (n "ngland, it has been held that a gift to such a class of persons as shall attain a particular age, is only a contingent gift. (n 1esting4s /ase where a gift was made to A for life, and then to such of her children children as shall attain the age of 65yeras, it was held that the gift to the children created only a contingent interest. (n another case of o f 1a Gait>s Gait>s were under a settlement, an interest was created in i n favour of all the children of the settler to take effect after the youngest child attained that age the other children too had only a contingent interest in the property. Accord According ing to section )+, transfer contingent on happening of a specified uncertain event where, on a transfer of property, an interest therein is to accrue to a specified person if a specified uncertain event shall happen, and no time is mentioned for the occurrence occurrence for the event, the interest fails unless such event happens happens before, or at the same time as, the intermediate i ntermediate of precedent interest ceases to e)ist. A person is entitled to create an interest in property in favour of another to take effect on the happening of an uncertain event. #e is also entitled to specify the time within which such uncertain event is to happen provided the time* limit so fi)ed does not offend the rule against
31
perpetuities$ person in whose favour the interest is created will take the interest on the happening of the event within the limit so limited. +ut +ut wher wheree no time time is ment mentio ione ned d by the the tran transf sfer eror or for for the the happ happen enin ing g of the the contingency, the law fi)es the time*limit within which the contingency should happen. This section, accordingly, provides the contingency must happen before or at the same time as the intermediate or the precedent happen before or at the same time as the intermediate or at the precedent estate ceases to e)ist. The principal on which this time*limit is fived is that the law is in favour of early vesting and against the indefinite postponement thereof. This section has no application where the interest is to accrue on the happening of a certain event, such as, the death of a person. This section e)pressly refers to a contingent gift to a Dspecified person>. (t has no reference to a gift to a contingent class which falls within the !ection 66 held in #anai 5al v. #u*ar &urendu Nath .(n Bhu,endra4s Bhu,endra4s /ase, the &udicial ommittee observed, with reference to !ection 555 of
the !uccession Act,5E:9 now reproduced in !ection 568 of the (ndian !uccession Act,5N69, which corresponds to !ection 67 of this Act;!ection 555 embodied the rule in case of "dwards v. "dwards. The rule of law laid down in that case has been considerably modified by later "nglish decisions. The (ndian Act, however has given it statutory force. We think that is should be applied only to cases strictly coming within its scope<. The principal behind this section is that property property should never be without any owner, owner, v. Burney it must always vest in some person given in )biss v. &u,se7uent Contin6ent Interest 4 This section deals with the case of a prior interest
followed by a subse'uent contingent interest. The contingent interest cannot vest until the event on which it is contingent happens. (f that event happens sometimes after the prior interest has determined, there is a gap of interval during which the th e estate would be in suspense and would be a res nellius. This section, therefore, enacts that the contingent interest will fail or cannot vest unless the event happens before or at the same time as the prior interest ceases. or e)ample.There is a gift for life to A, and 32
then to + in case he gets called to the +ar. +ar. The gift to + unless he is called to the +ar in the lifetime of A or at the same time as A dies. A legacy is be'ueathed to A when and if he attains the age of 5E and in case of his death to +. A attains the age of 5E. The legacy to + does not take effect. A legacy is be'ueathed to A, and in case of his death to +. (f A survives the testator, the legacy to + does not take into effect. A legacy is be'ueathed to A for for life, and after his death to +, and ; in case of +>s death without children< are to be understood as meaning in case + dies without children during the lifetime of The rule in this section corresponds to the "nglish real property rule that every contingent contingent remainder remainder must vest during the continuance of the particular estate which supports it or co*instant that such particular case determines. The artificial rule of "nglish real property is not to be imported to (ndia was so observed by the &udicial ommittee in Gadahar Mulli/- v. Offi/ial Trustee of Bengal% and Sooree*oney4s /ase.
(n Chunni 5al v. Sa*arth , the testator be'ueathed his property to his two sons with a proviso that in case of their dying without male issue his share was to go to the survivor. The gift over to the surviving son was contingent on the death of the other son without the male issue. The Privy ouncil held that the gift over was effective although the other son died two years after the testator. This was a case to which the #indu Wills Act did not apply$ but in other cases in which !ection555 of the (ndian Wills Act, it was held that the prior gift was an absolute and indefeasible on the death Narendranath v. #a*albasini #a*albasini $asai% Nistarini Nistarini $ebya v. v. Behari 5l 5l Q of the testator Narendranath C"&E LI&T 3!sha Subbarao vs B.6. ishves(ariah 7 Ors 89::; SCC <=> ?@9% JT 9::; <;> ;@A2
(n order to determine whether the appellant can claim any right in the properties of the testator, it is, therefore, necessary to e)amine the nature of the be'uest that was made by the testator in favour of his five sons including the deceased husband of the 33
appe appell llan ant. t. (f it is foun found d that that the the be'u be'ues estt is in the the natu nature re of =ested interest, it would =est in the husband of the appellant on the death of the testator and after the death of her husband the appellant as his legal representative, would be entitled to claim her husbandHs interest in the properties. +ut in case the be'uest is found to be in the nature of a contingent interest which which was to =est in the legatees only after the death of !mt. ?adiga ?anamma, the appellant would not be entitled to claim any interest in the properties since her husband had pre*deceased !mt. ?adiga ?anamma. =estin6, the As regards Wills the rule is that Jwhere there is doubt as to the time of =estin6
presumption is in favour of the early =estin6 of the gift and, accordingly it =ests at the testatorHs death or at the earliest moment after that date which, is possible in the contest.J In Thi**i Chetty y. Govindan alias Munia,,a Gounder @(
4ivision +ench of this ourt Kto which one of us was a partyF had to consider the 'uestion in a case where a =estedinterest was created under an instrument, whether the follow*up recitals, which militated against such =estin6 of absolute title, would belittle the force and legality of such entitlement. ?o doubt, in that case, the deed provided that on and from the date of the instrument the settlee should enoy the property absolutely absolu tely and that possession of one half of the property was also delivered over to the settlee since the settlee was already in possession of the other half. This ourt e)pressed the view that the terms used in a deed should be interpreted in their strict strict and and prim primar ary y acce accepta ptatio tion n and shou should ld not be view viewed ed with with refe refere renc ncee to the the secondary motives referred to by the settlor in an instrument of settlement. 3Ra*as(a*i Naidu vs M.S. ela,,an )nd Ors. 8<9:A:> ? M5J 2 (n the instant case the first plaintiff plaintiff was already already in charge charge of the properties properties as
trustee to perform the obligations created under it and continued them after the lifetime of 1eenakshi Ammal. There are also positive words whereby it was made clear that the properties should be=ested in Velappan and his heirs for them to enoy the same same absol absolut utel ely. y. The The word wordss used used areare- Thes Thesee two dispo disposit sitive ive laus lauses es crea create te an interest in praesenti. The 'uestion is whether the postponement of such proprietary rights already =ested in Velappan and his heirs, to the lifetime of 1eenakshi Ammal, would make any difference. The ")planation to !ection to !ection 5N of 5N of the Transfer of Property 34
Act, providing that a =ested interest is not defeated by the death of the transferee before he obtains possession, makes the legislative intent clear that such a =ested interest , merely for the reason that it becomes =ested after the lifetime of the settlor, would not make it a settlement not being in praesenti. We are therefore unable to agree with the contention that the interest that Velappan, Velappan, the first plaintiff, obtained under the instrument is not a =ested one and that it could be defeated because it is postponed till after the lifetime of 1eenakshi Ammal. Ammal. Singh G@(<((3 I.L.R. + Cal. 59 , a #indu U (n (n Bhagabati Bar*ani v. #ali/haran Singh G@(<((3
testator, left a will, giving possession of the properties, movabe and immovables, to his wife and mother for their lives and on their death to the sons of his sisters who were in e)istence and also those who might be born thereH after, who should hold the properties in e'ual shares. The testator died the day following the e)ecution of the will. (t was held that the will gave to the sons of the sisters a =ested interest in their respective shares at the testatorHs death, though it postponed their possession and enoyment until the deaths of the mother and widow. In ilaso v. Munilal G@(<((3 I.L.R. ++ "ll. 88 , one !ewaram e)ecuted a will
whereby he gave all his properties, after the death of himself and his wife, 1st. 1andu to his daughter +ilaso and his nephew 4ulichand. 4ulichand survived the testator, but predeceased 1st. 1andu. A suit was brought by the heirs of 4ulichand to recover his share of the properties of !ewaram from 1st. #ilaso. The sole 'uestion tha that was was raise aised d in the the appe appell llaate our ourtt was was whe whether ther 4uli 4ulicchand hand did did not not get get a =ested interest in
the
properties
disposed
of
by
the
will,
but
merely
a contin6ent interest , and he having died before his aunt, 1st. 1andu, whether his sons were not entitled to succeed to the property. ollowing the decision in +hagabati v. Balicharan K5N55F (.%.R. 7E al. 8:E, it was held that the nephew 4ulichand took a =ested interest in the properties, which*was transmissible to his heirs. U(n &hilli, Graha* Green(ood v. &hilli, Graha* Green(ood 5E5 (.. 79 - A.(.R. 5N7N P.. EQ a testator, by his will, appointed his wife and nephew as his trustees and e)ecutors and gave all his properties to the trustees, upon certain trusts under which the wife was to enoy the free use and income of his estate during his life. The will 35
further empowered the wife to dispose of, at the time of her death, 5I7rd share in the whole estate in favour of any person, and as regards the 6I7rds of the estate remaining undisposed of at the time of the wifeHs death, the will directed that the surviving trustees should divide the 6I7rds share e'ually among all the brothers and sisters of the testator alive when the will was made and that should any of them predecease his wife, then the share which the deceased would have received if alive should be given to the child or children of the deceased. deceased. (n that case, one of the sisters of the testator, testator, who bad survived the testator, died unmarried and without issue during the lifetime of the testatorHs testatorHs widow. widow. @n the death of the widow, widow, the period for the distribution of the 6I7rds of the residuary estate given to the testatorHs brother and sisters having arrived, the 'uestion arose whether the estate of the deceased sister was entitled to a share in the distribution. (n was held that the deceased sisterHs share of the residue =ested in her on the death of the testator subect to the di =estiture only in the event of her predeceasing the testatorHs widow, leaving child or children, and such event not having occurred, her representative was entitled to her share. Thus, it is clear that the right to the 6I7rd share of the residuary estate =ested in the brother and sisters of the testator upon his death in spite of the fact that the distribution of the said share among them was to take effect only after the death of the testatorHs widow. &reehchand &a!car =. 2asi Chetti @+3 L.. 9 * (5F I.C. ++ * ".I.R. (<++
testator be'ueathed be'ueathed his property property to two persons for life and the 0ad. 8' where the testator remainder absolutely in favour of a specified class of persons on the termination of the life estate. (t was held by their %ordships, that on the death of the testator the property became =ested in that class and that the mere fact that they were not entitled to an immediate possession did not make it a contin6ent be'uest. 3&.#. Mohanra* vs B.N. )nantha/hary 7 Ors on (8 0arch' )(@scc3 #aving noticed the distinction between =ested interest and contin6ent interest, we
shall now consider whether ")hibit was a !ettlement 4eed or a Will. Although, no strait* strait*ac acket ket formul formulaa has been been evolve evolved d for constru constructio ction n of such instrum instruments ents,, the consistent view of this ourt and various #igh ourts is that while interpreting an instrument to find out whether it is of a testamentary character, which will take effect
36
after the life time of the e)ecutant or it is an instrument creating a =ested interest in praesenti in favour of a person, the ourt has to very carefully e)amine the document as a whole, look into the substance thereof, the treatment of the subect by the settlorIe)ecutant, the intention appearing both by the e)pressed language employed in the instrument and by necessary implication and the prohibition, if any, contained against revocation thereof. (t has also been held that form or nomenclature of the instrument is not conclusive and the ourt is re'uired to look into the substance thereof. - Ra*as(a*i
.The point point Chettiar and )nr. )nr. v. en-ata**al and Ors. I.5.R .The
regarding the nature of the interest taken by the legatee came up for consideration more directly in this case. There was a partition in the said case between Alagarsami hettiar, the father and !ubbiah hettiar, the son. (t was provided that a certain portion of the properties should be enoyed by Alagarsami with a right to create mortgage and lease but with no power of sale or gift, that if Alagarsami were to marry again and get heirs by the second marriage, those heirs alone were to take his share after his lifetime and that if Alagarsami were to marry but have no male heir by that marriage, marriage, !ubbiah should after AlagarsamiHs AlagarsamiHs lifetime perform his obse'uies obse'uies and take over his share of the property. !ubbiah died during the lifetime of Alagarsami, and Alagarsami did not marry again. #e, however, made a be'uest of his share to a third party. (t was pointed out that though a valid disposition dispo sition could be made in favour of an unborn person Kthe issue of Alagarsami by the contemplated marriageF, it did not mean that in all cases where interest in property was created in favour of an unborn person, the there was was a =ested interest on him him and and that that the the alte altera rati tive ve prov provis isio ion n was was only only a contin6ent one.
:III.CO0P"RITI:E "N"LY&I&
The distinction distinction between between the vested and a contingent contingent interest interest may seem simple, simple, but in practice it is not always easy to distinguish one from another. The difficulty
37
arises from the fact that a vested interest is not necessarily in possession. An interest may be vested and not yet in possession in any one of the three classes* 5F +y a provision postponing enoyment or, 6F +y the intervention of a prior interest or 7F +y the provision for accumulation. Again an interest may be vested although$ it is liable to be divested by a condition subse'uent. The difference between a condition precedent and condition subse'uent is that when the condition is precedent, the estate is not vested din the grantee until the condition is performed. !ubstantial compliance is enough for vesting. +ut when the condition is subse'uent the estate vests immediately in the guarantee and remains in till the condition is broken. The breach has to be literal or strict only than divesture divesture can be. onditions onditions subse'uent are dealt with in !ection 6E and 75. or e)ample, in a case husband transferees his property to his wife for her life and after her death, the son>s born to them will take the property absolutely. (n such a case, the son>s son>s would would ac'uire ac'uire the vested vested reminde reminderr in the proper property ty. )di**oola .)di**oola v. &avadai &adaya/hi
A fund is be'ueathed to A for life, and after his death to +. @n the testators testators death the legacy to be becomes vested. #ere a prior interest intervenes, but the legacy is vested as the determination of that prior interest is a certain event. A fund is be'ueathed to A until + attains the age of 5E and then to +. the legacy to + is vested interest from the time of tester>s death. #ere it might be supposed that +>s interest was contingent on his attaining the age of 5E, but it is construed as a gift to A for a term of years with remainder to be. This is applied to device of the real estate>s known to "nglish lawyers as the rule in +oraston>s case. (t rests on the principal that the law favors the vesting of the estate. I/.DI&TINCTION #ETEEN CONTIN$ENT "ND :E&TED INTERE&T
38
These points o distinction ,et!een =ested and contin6ent interest need to ,e noted 5.
A cont conting ingen entt inter interes estt is inali inalien enab able le.. @n the the other other hand hand,, vest vested ed inter interes estt is
heritable and transferable. 6. A contingen contingentt interest interest depends depends solely upon upon the fulfilment fulfilment of of a condition, condition, so that that in case of non*fulfilment of the condition, the interest may fall thorough. @n the other hand, a vested interest does not depend upon the fulfilment of any conditions and takes effect from the date of the transfer of property. 7. (n case of a contingent contingent intere interest st there is no present present right. right. #owever #owever,, there there is a promise for giving one and is altogether dependent upon the fulfillment of the condition. As against this, in case of a vested interest, there is a present and immediate right. @nly its use is postponed. (n case of a contingent interest, the transferee takes an interest of a contingent nature, which may be defeated by reason of non*fulfillment of the precedent conditions. This is not the case in case of a vested interest. 8. (t is to be note noted d that that wher where, e, under under a trans transfe ferr of proper property ty,, a pers person on become becomess entitled to an interest in the property upon attaining a particular age and the transferor also gives to him absolutely the income to arise from such interest before he reaches that t hat age, or directs the income to be applied for his benefit, then such interest is vested interest. 9. (n proper property ty law and real estat estate, e, a futur futuree inte intere rest st is a legal legal right right to prope propert rty y ownership that does not include the right to present possession or enoyment of the property. uture interests are created on the formation of a defensible estate$ that is, an estate with a condition or event triggering transfer of possessory owne ownersh rship ip.. A commo common n e)amp e)ample le is the the land landlor lord* d*te tena nant nt rela relati tion onshi ship. p. The The landlord landlord may own a house, but has no general right right to enter it while it is being rented. The conditions triggering the transfer of possession, first to the tenant then back to the landlord, are usually detailed in a lease. Vested interest should be without any condition
#"&I&
:E&TED
CONTIN$ENT
39
Ri6ht o
(mmediate rights
1erely a future possible rights
?o such condition Khappening
ondition K on happening or non
or non happening of future
happening of future event F
eventF (t is heritable right Perfect immediately
?ot a heritable right (mperfect, Perfect on happening
Enoyment accrues Nature o E=ent
Herita,ility Nature o Title
of or non happening of event Eect o Interest
(mmediately form the date of
ondition precedent, which must
Transera,ility
Transfer Transferable
in nature Transferable, may be defeated by reason of non fulfillment of the
"ttachment >
apable of being attached or
&ale in EAecution
sold in ")ecution of 4ecreed
condition precedent. ?ot apable.
o Decreed
(n a case of, U Sashi-antha v. &ra*od Chandra , the alcutta high court pointed out the distinction between vested interest and contingent interest. (t stated that, ;an estate of interest in vested as distinguished from contingent either when enoyment of it is presently conferred or when its enoyment is postponed, the time of enoyment will certainly certainly come to pass,. (n other words, an estate or interest interest is vested when there is immediate right of present enoyment or a present right of future enoyment. An estate or interest is contingent if the right of enoyment is made to depend upon some event or condition which may or may not happen. An estate or interest is contingent when the right of enoyment is to accrue on an event which is dubious or uncertain. CONCLU&ION
40
(n the case of a transfer of property, a person may ac'uire a contingent interest as against a real interest or vested interest in the property. The relevant provisions are contained under !ection 65 of the Transfer of Property Act. According to the statutory provisions, where on a transfer of property an interest is created in favour of a person to take effect only on the happening or not happening of a specified event, he ac'uires a contingent interest in the property. or e)ample, assume there is a stipulation that AHs property is to be transferred to in case A and + die before the age of 5E. (n such a case, has a contingent interest in the property until A and + die, under the age of 5E. An interest is contingent when some contingency contingency is to happen before the person is 'ualified to take possession of the property. p roperty. (t is to be noted that if under a transfer of property, a person becomes entitled to an interest in a property on attaining a particular age, and the transferor also gives him any income from such an interest before he reaches that age, or directs the income to be used for his benefit, such an interest is not a contingent conti ngent interest. (n countries coun tries with a sophisticated sophisticated private property system, documents documents of title are commonly used for real estate, estate, motor vehicles, and some types of intangible intangible property property.. When such documents are used, they are often part of a registration system whereby ownership of such property can be verified. (n some cases, a title can also serve as a permanent legal record of condemnation of property, such as in the case of an automobile unk or salvage salvage title. (n the case of real estate, estate, the legal instrument instrument used to transfer transfer title is the deed. A famous rule is that a thief cannot convey good title, so title searches are routine for purchases of many types of e)pensive property. (n several counties and municipalities in the /! a standard title search is re'uired under the law as a part of ownership transfer. @rdinarily the subect matter of ownership consists of material obects like land, chattels etc. the wealth and assets of a person such as interests in the land, debts due to him, share in a company, patents, copyrights etc. may also be subect matter of ownership. Thus, intangible rights may also constitute subect matter of ownership. !almond also supports this view that besides material obects, right may 41
also be subect matter of ownership though a man is said Dnot to own, but to have a right>. rom this point of view many rights cannot be considered considered as subect matter of ownership, like everyone has a right of freedom of speech or right of reputation but it is never said that he owns these rights, nor can he alienate them. Vested sted inter interes estt
defi define ned d under under secti section on5N 5N of tran transf sfer er of prop proper erty ty act act shoul should d be
distinguished from contingent interest as defined in sec.65. when an interest is vested the transferee>s title is already prefect. when the interest is contingent his title is yet imperfect, but is capable of becoming prefect on the fulfilment of some condition implied.
42
