The term “transfer of property” specifically refers to this act. The provision clarifies that a living entity can be either a corporation or a group of individuals, regardless of incorporation. However, this provision doesn’t alter any existing Indian legislation. A preliminary understanding of this section suggests that both parties involved should be alive, but an exception under Section 13 allows property to be bequeathed to an unborn person.
CASE BACKGROUND:
In a case where A transferred her property to B, her nephew’s daughter, for her lifetime, and subsequently to B’s male descendants if any, a limitation on alienation power was imposed in the absence of male heirs of B. If B had no male or female descendants, the property would then go to A’s nephew, creating a limited interest.
After B’s demise without any children, the case explored Section 13 of the Transfer of Property Act.
SECTION 13: TRANSFER TO UNBORN PERSON
This section specifies that if an interest in property is created for the benefit of a person not yet in existence at the time of transfer, subject to a prior interest by the same transfer, it will not take effect unless it encompasses the entirety of the transferor’s remaining interest in the property.
The general rule of only transferring property between living individuals is reinforced by Section 13, which emphasizes creating an interest “for the benefit of” an unborn person rather than “to” them.
SECTION 14: RULE AGAINST PERPETUITY:
Section 14 extends the principles of Section 13, prohibiting property transfers that create interests taking effect after the lifetime of living individuals at the transfer date and the minority of someone who will exist at the end of that period.
The court’s judgment emphasized that if a transfer in favor of a person is void, subsequent transfers taking effect upon the failure of such a transfer would also be void.
CASE ANALYSIS:
To comprehend the concept of transferring property to an unborn person, Sections 13 and 14 must be read together, as they are practically applied in tandem.
Direct transfers to unborn children are not allowed under the property act. Property must first be transferred to a living person, establishing a prior life interest before being transferred to the unborn child. Section 14 prevents property from being perpetually inaccessible, favoring alienation over accumulation.
Creating successive interests is permitted, but limited interests to unborn children are prohibited. In this case, the gift to B was valid, but the gift to B’s daughter was void as it created a limited interest, contrary to Section 13’s requirement for an absolute interest in favor of unborn persons. Subsequent transfers to A’s nephew would also fail under Section 16 of the Transfer of Property Act, 1882.