TRANSFER OF PROPERTY ACT, 1882

ASSIGNMENT ON TRANSFER OF
PROPERTY ACT, 1882

NAME: HARSHIT AGARWAL

Roll no.: 22
SUBMITTED TO: PROF. QAZI USMAN SIR
TOPIC OF ASSIGNMENT: CONTINGENT INTEREST

Submitted on
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 TRANSFER OF PROPERTY ACT, 1882

TABLE OF CONTENTS

S.no Topic Page No.

1. Acknowledgement 3

2. Introduction 4

3. Contingent Interest 5

4. Test to determine the Interest 6

5. Future Interest 7

6. Spes-successionis 8

7. Nature of Contingent Interest 9

8. Section 23 10

9. Distinction between Vested & Contingent 11-12

Interest
10. Conclusion 13

11. Bibliography 14

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 TRANSFER OF PROPERTY ACT, 1882

ACKNOWLEDGEMENT

It gives me immense pleasure and gratitude to thank my property law teacher,

Prof. Qazi Usman Sir, who gave me opportunity to do this wonderful project
which helped me in doing a lot of research and I came to know about so many
new things. I am really thankful to him.

Secondly, I would like to give thanks to all my seniors who have guided
throughout the research process.

Lastly, I feel that my project would not have been completed without the help of
my parents and friends.

YOURS SINCERELY,

HARSHIT AGARWAL

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 TRANSFER OF PROPERTY ACT, 1882

INTRODUCTION

The Transfer of Property Act, 1882 is an Indian legislation which regulates the transfer of
property in India. It contains specific provisions regarding what constitutes transfer and the
conditions attached to it. It came into force on 1 July 1882.

According to the Act, 'transfer of property' means an act by which a person conveys property
to one or more persons, or himself and one or more other persons. The act of transfer may be
done in the present or for the future. The person may include an individual, company or
association or body of individuals, and any kind of property may be transferred, including the
transfer of immovable property.

Interest in property: An ownership consists of a bundle of rights, the various rights and
interests in different persons, e.g., a mortgagor and a mortgagee, a lessor and a lessee, or a
tenant for life and a remainder man. Absolute ownership is an aggregate of component rights
such as the right of possession, the right of enjoying the usufruct of land, and so on. Any
transaction not involving the interest in property will make the transaction voidable at the
instance of the parties and there shall be no effective transaction.

The word ‘contingent’ ordinarily means ‘subject to chance’. In the Indian Contract Act, 1872,
this word has been used to mean conditional, just the way we use it generally. Uncertainty is
the hall-mark of the future. Estimating the chances of an uncertainty becoming certain,
calculating the results if the event doesn’t happen and then measuring the potentiality to deal
with its consequences are all about Contingent interest. The chance of the vesting of the
interest in the favour of transferee depends upon the happening or non-happening of the event
which the above stated part signifies.

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 TRANSFER OF PROPERTY ACT, 1882

CONTINGENT INTEREST (SEC.21)

Where, on a transfer of property, an interest therein is created 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 acquires a Contingent Interest in the property. Such
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.

Exception: Where, under a transfer of property, a person becomes entitled to an interest

therein upon attaining a particular age, and the transferor also gives to him absolutely the
income to arise from such interest before he reaches that age, or directs the income or so
much thereof as may be necessary to be applied for his benefit, such interest is not
contingent.

A Contingent Interest is one in which neither any Proprietary Interest nor a right of
enjoyment is given at present, but both depend upon Future uncertain Events.

Three Characteristics of Contingent Interest:

1. It depend upon the Fulfilment of condition.

2. If the Transferee dies before obtaining possession, the Contingent Interest fails and the
property Reverts to the Transferor.

3. It is Transferable. It is quite different from a mere chance (spes succession).

The section defines what a contingent interest is and when such interest becomes vested. The
word “is created in favour of a person to take effect only on the happening of a specified
uncertain event”, etc., show that an estate or interest is contingent when the vesting is to
accrue on an event which is dubious or uncertain. Where a right accrues immediately but the
enjoyment of the enjoyment of the interest is postponed to a future day, the interest is vested
and not contingent. The test, therefore, to see whether an interest created is vested or
contingent is to see whether there is an immediate right of present or future enjoyment, or
whether right itself is to accrue on the happening of uncertain event.

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TEST:

Whether an interest is vested or contingent depends on the intention of the creating the
interest. Such intention must, however, be gathered from the language employed by the
grantor in the grant, giving the plain and natural meaning to the words used by him. The
document must be construed as a whole giving attention to every provision therein. 1 An
interest is said to be vested when it is subject to any condition precedent- when it is to take
effect on the happening of an event which is certain, whereas an estate is contingent when the
right to enjoyment depends on the happening of an uncertain event which may or may not
happen. A person takes a vested interest in the property when he acquires a proprietary right
in it but the right of enjoyment is differed till a future event happens which is certain to
happen, but contingent interest is one in which neither any proprietary right nor a right of
enjoyment is given at present, but both depend upon future uncertain events which may or
may not happen. Thus, if a Hindu widow adopted a son but there was an agreement
postponing the son’s estate during the lifetime of the widow, an interest, created in favour of
the adopted son is a vested right, it doesn’t depend on any condition precedent i.e. the
performance of an act, it is to take effect on the happening of an event which is certain (i.e.
widow’s death) the adopted son has the present proprietary right in the estate, the right of
enjoyment and possession being differed, and therefore, he can transfer the property during
the widow’s lifetime,2unless otherwise prohibited to do so by any other law to which he
might be answerable. But where an estate is conveyed to A until he shall marry, and after that
event to B, B’s interest in the transfer is contingent because it depend upon the condition
precedent, viz., the marriage of A, an event which may or may not happen. B has at present
no proprietary interest in the estate, and he cannot alienate it. But as soon as A marries, the
contingent interest of B becomes the vested interest. In a contingent interest, the transfer is
not complete until the specified event happens or do not happen. In a vested interest it is
complete but on the happening of a specified event it may be vested. 3 A vested interest is
heritable,4 divisible or transferable.5 

1
In re, Dean, (1899) 41 Ch. 55.
2
40 All. 692.
3
Festing v. Allen, 5 Hare 573.
4
Blokasee Dasee v. Darponarain, 5 Cal. 49.
5
Soorjeemoney v. Denobandhu, 9 M.I.A.123

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 TRANSFER OF PROPERTY ACT, 1882

FUTURE INTEREST

 In property law and real estate, a future interest is a legal right to property ownership that
does not include the right to present possession or enjoyment of the property. Future interests
are created on the formation of a defeasible; that is, an estate with a condition or event
triggering transfer of possessory ownership. A common example is the landlord-tenant
relationship. The landlord may own a house, but has no general 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. As a slightly more complicated example,
suppose O is the owner of Black acre. Consider what happens when O transfers the property
"to A for life, then to B." Person A acquires possession of Black acre. Person B does
not receive any right to possess Black acre immediately; however, once person a dies,
possession will fall to person B (or his estate, if he died before person A). Person B has a
future interest in the property. In this example, the event triggering the transfer is person A’s
death. Because they convey ownership rights, future interests can usually be sold, gifted,
willed, or otherwise disposed of by the beneficiary. Because the rights vest in the future, any
such disposition will occur before the beneficiary actually takes possession of the property.

A future interest is contingent where the person to whom or the event upon which it is limited
to take effect in possession or become a vested estate is uncertain. If the condition upon
which a future interest depends is precedent, the interest is contingent; if the condition
is subsequent, the interest is vested, subject to defeasance.

SPES-SUCCESSIONIS

Clause (a) of section 6 of the Transfer of Property Act excludes mere chance of an heir
apparent of succeeding to an estate from the category of transferable property. The technical
expression for such a chance is ‘Spes Successionis’. During the lifetime of a person,the
chance of his heir apparent succeeding to the estate or the chance of a relation obtaining a
legacy under his will is a ‘Spes Successionis’(chance of succession). Such an expectancy
does not amount to an interest in property and cannot be made the subject matter of a transfer.

The chance of an heir apparent to succeed to the property of an intestate therefore cannot be
transferred. This chance is also referred to as spes successionis. If person transfers
this chance, the status of this transfer in law is void ab initio. It does not convey any right

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in favour of the transferee, even if the transferor who transfers a chance may, in fact,
become the owner of the same property in future. In Official Assignee, Madras v Sampath
Naidu6, a mortgage executed by an heir apparent was held as void by the court even
though he subsequently acquired the property as an heir.

Contingent Interest and Spes Successionis

The contingent interest and spes-successionis both are future possible interests. In both, there
is a possibility that it may become a perfect title in future. However, this degree of possibility
is lesser in contingent interest. In case of contingent interest, the property is transferred
subject to certain contingencies which may or may not happen. But spes-successionis i.e.,
mere chance of heir apparent depends upon several possibilities like the heir apparent
survives the deceased person, i.e., the propositus, etc. In M.A. Yait v. Official Assignee, 7 the
Privy Council gave the distinction between a contingent interest and spes-successionis and
observed:
“The contingent interest which the children took was something quite different from a
mere possibility of a like nature of an heir – apparent succeeding to the estate, or the chance
of a relation obtaining a legacy, and also something quite different from mere right to sue. It
is a will ascertained form of property it certainly has been transferred in this country for
generation- in respect of which it is quite possible to raise money and dispose of it in anyway
the beneficiary chooses.”

NATURE OF CONTINGENT INTEREST

(a) Future possible interest. - Contingent interest is a future possible interest. In a
transfer of property where the transferee’s interest is contingent, he has only a future
possible right in respect of property transferred to him. It is neither a present right nor
a certain right. Since the happening or not happening of the event, is uncertain, the
interest dependent on it is also uncertain. In a contingent interest the right of
enjoyment is also dependent on some event or condition which may or may not
happen or be performed.8

6
(1933) 65 MLJ 588.
7
AIR 1930 PC 17: 57 Ind App 10.
8
Shashi Kantha v. Promode Chandra, (1932) Cal. 600.

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(b) Not heritable. -A contingent interest is not a heritable interest. Where a person
having contingent interest dies (i.e. dies before vesting) his legal heirs do not get
anything, not even the contingent interest. After the death of the person his legal heirs
are entitled to inherit only those properties in which he had a vested interest at the
time of his death. In Rajesh Kanta Roy v. Smt. Shanti Devi 9 the supreme court
observed thus:

“In the case a contingent interest, one of the features is that if a person dies before
the contingency disappears and before the vesting occurs, the heirs of such person don not
get the benefit of the gift (transfer).
(c) Transferable interest. -Contingent interest is a transferable interest. However, since
a contingent interest is itself an uncertain interest in the property and transferor’s own
title is not perfect, the transferee’s too get an imperfect title. If the contingent interest
subsequently becomes vested, the transferee’s interest also becomes vested. But, if the
contingency could not happen the transferee doesn’t get any title in the property. In
the other words, although a contingent interest is transferable, the transferee’s title is
subject to the same contingency as it was before the transfer was made.

SECTION 23 OF TRANSFER OF PROPERTY ACT

23. Transfer contingent on happening of 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 of that event, the interest fails
unless such event happens before, or at the same time as, the intermediate or precedent
interest ceases to exist.
This section contemplates a prior interest and a subsequent contingent interest. The case put
in this section is that of a prior interest followed by a subsequent contingent interest. The
contingent interest cannot vest until the event on which it is contingent happens. If that
happens sometime after the prior interest has determined, there is a gap or interval during
which the estate would be in suspense and would be a res nullius. The 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. Thus, if there is a gift for life to A, and then to B

9
AIR 1957 SC 255

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in case B gets called to the Bar, the gift to B fails, unless he is called to the Bar in the lifetime
of A or at the same time as A dies.10

The rule in this section corresponds to the English real property rule that every contingent
remainder must vest during the continuance of the particular state which supports it or so
instant that such particular estate determines. In Madras case, 11the testator disinherited his
son, and left his estate to the grandson and grandsons who might be born within 10 years after
his death. Justice Ramesam said that the result was that there would be an interval of 10 years
after testator’s death during which the estate is not vested in any person, and that for this
reason the disposition was void. In Gadadhar Mullick v. Official Trustee of Bengal, 12it was
held that the artificial rule of English real property law that every contingent gift must be
supported by a prior estate, and that it must vest at least eo instanti the determination of the
particular estate which supports it, ought not to be imported to India for Hindu law.
Soorjeemoney’s case13 and Gadadhar Mullick’s case,14 though cases of contingent bequests in
a will are, it is submitted, applicable, to contingent gifts inter vivos governed by Hindu law as
unmodified by legislation.15

DISTINCTION BETWEEN VESTED & CONTINGENT INTEREST

 Definition
 Section 19 defines Vested interest: Where, on a transfer of property, an interest
therein is 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.
 Section 21 defines Contingent interest: Where, on a transfer of property, an interest
therein is created 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 acquires a contingent interest in the property. Such interest becomes a

10
Kanai Lal v. Kumar Purnendu Nath (1946) 51 Cal WN 227.
11
Official Assignee of Madras v. Vedavalli Thayarammal (1926) 51 Mad LJ 182, p 192.
12
AIR 1940 PC 45.
13
(1862) 9 Mad IA 125.
14
Gadadhar Mullick v Official Trustee of Bengal AIR 1940 PC 45.
15
Kanai Lal v. Kumar Purnendu Nath (1946) 51 Cal WN 227.

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vested interest, in the former case, on the happening of the event, in the latter, when
the happening of the event becomes impossible.

 Fulfilment of Condition
 Vested interest does not depend upon fulfilment of any condition. It creates an
immediate right though the enjoyment is postponed to a future date.
 Contingent interest is solely depending upon the fulfilment of any condition. If the
condition is not fulfilled the interest fails.

 Effect of Transferee’s Death

 Vested interest is not defeated by the death of transferee before he obtains possession.
 Contingent interest is defeated by the death of transferee before he obtains possession.

 Whether transferable and heritable?

 Vested interest: It is both Transferable and heritable. If the transferee of the vested
interest dies before actual possession or enjoyment it passes to his heirs.
 Contingent interest: It is Transferable but whether it is heritable, depends upon nature
of condition. It passes not on heir on the death of the transferee received to transfer.

 Present right of enjoyment

 Vested interest: There is present, immediate right even when its enjoyment is
postponed.
 Contingent interest: There is no present right of enjoyment, there is mere a promise
for giving such a right.

In the case of P.K Mohan Ram v. B.N Ananthachary 16 SC held that the interest can be said to
be vested interest where there is immediate right of present enjoyment or a present right for
future enjoyment. An interest can be said to be contingent if the right of enjoyment is made

16
(2010) 4 SCC 161

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dependent upon some event which may or may not happen. On the happening of the event, a
contingent interest becomes a vested interest.

Similarly in the case of Usha Subbarao v. B.N Vishveswaraiah 17SC held the distinction
between vested interest and contingent interest and all depends upon the interest of the
testator.

The above cited case laws mentioned the distinction between the vested and contingent
interest at the time of transfer of immovable property.

17
(1996) 5 SCC 201.

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CONCLUSION

The main finding is that the term property is defined in different ways in each act as to its
use. As in Sale of Goods act 1930 it is defined differently than in Benami Transactions
(Prohibition) Act, 1988. In transfer of property act which is most important act which deals
with property does not have definition of the term property. There are many kinds of property
as to it uses.

Before concluding the present topic in hand we shall take into account following limitation in
the provision of vesting interest in the transfer of any immovable property. An interest
created on a transfer of property and dependent upon a condition fails if the fulfilment of the
condition is impossible, or is forbidden by law, or is of such nature that, if permitted, it would
defeat the provisions of any law, or is fraudulent, or involves or implies injury to the person
or property of another, or the Court regards it as immoral or opposed to public policy.

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BIBLIOGRAPHY

BOOKS REFERRED:

 DR. R.K. SINHA, THE TRANSFER OF PROPERTY ACT,( 17TH ed.,2016)

 GC BHARUKA, MULLA THETRANSFER OF PROPERTY ACT, (10th ed. 2011)
 DR. AVATAR SINGH, THE TRANSFER OF PROPERTY ACT, (4TH ed. , 2016)

SITES REFERRED:

 www.scconline.com
 www.advocatekhoj.com
 www.legalserviceindia.com
 www.manupatra.com

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