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Section 13 of Transfer of Property Act (Transfer for the benefit of Unborn Person) | Notes of Section 13 TPA


SECTION 13: BARE ACT
[s 13] Transfer for benefit of unborn person.-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.

SECTION 13: GENERAL EXPLANATION
The term 'unborn' here, refers to not only those, who might have been conceived but are not yet born, i.e., a child in womb, but also includes those who are not even conceived. Section 13 gives effect to the general rule that a transfer can be effected only between living persons. There cannot be a direct transfer to a person who is not in existence or is unborn. This is the reason why section 13 uses the expression transfer 'for the benefit of' and not transfer 'to' an unborn person.

There are two condition to transfer property for benifit of unborn person :-

(i) Prior Interest : First the Property is given to living person for life and after his death to the person for whose benifit the interest is created.

(ii) Absolute Interest : The entire property must be transferred to unborn person. It is not permissible to confer a life-interest on an unborn person.

Two types of Interest :-
  • Absolute Interest : Absolute interest refers to someone having a complete right to, or ownership of, a property or an asset. After the death of the owner the property will be divided into his legal heirs.
  •  Life Interest : Aright to property that a person holds for life but cannot dispose of further. After the death of life holder the Property will go to that person who is mentioned in title deed.
So Absolute Interest must be created in favour of Unborn.

PROCEDURE OF TRANSFER TO UNBORN
Section 13 provides for a specific mechanism for transferring property validly for the benefit of unborn persons. The procedure is as follows :

(i) No Direct Transfer : The person intending to transfer the property for the benefit of an unborn person, should first create a life estate in favour of a living person and after it, an absolute estate in favour of the unborn person.

(ii) Enjoyment by person having Life Interest : Till the person, in whose favour a life interest is created is alive, he would hold the possession of the property, enjoy its usufruct i.e enjoy the property.

(iii) Possession of Unborn (Now born): During his lifetime if the person, (who on the day of creation of the life estate was unborn) is born, the title of the property would immediately vest in him, but he will get the possession of the property only on the death of the life holder.

Illustrations :-
(1) A, on 1 January 1980 executes a deed by which he creates a life interest in his property in favour of B and further provides that this property is to vest absolutely in favour of his B's first child UB. B, on the date of the transfer, was unmarried. He took the possession of the property, got married and a child
was bom to him in 1985. The moment the child was bon, the child took a vested interest in the property. The possession continues with B, till his death in 2000, upon which the life estate will come to an end and UB would take the possession of the property.

(2) In the same example, take a situation, where B's child(UB) is born in 1985 but dies in 1987, i.e., during the lifetime of B. Here, since UB takes a vested interest in the property, he becomes the owner at the time of the birth. The possession of the property will continue with B, till 2000 and on his death,
upon which the property will go to the heirs of UB.

CREATION OF PRIOR OR LIFE INTEREST
As far as the creation of a prior interest is concemed, first, the property is given for life to a living person. It is not necessary that life interest should be created in favour of only one living person. The transferor is competent to create successive life interests in favour of several living
persons at the same time.
For instance, A transfers property to B for life, and after him, to C, and then to D again for their lives and then absolutely to B's unbom child UB. This transfer is valid because B.C and D are living here and there is no limit to confer life interest on living persons.
On B's death, the possession would be taken by C and on C's death, by D. On D's death, the possession would go to B's child, who should have come in existence by this time. 
If he is not there, the property would revert back to A, if he is alive, else, to his heirs.


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