Where there is no gift but only a direction to transfer from and after a given event, the vesting will be postponed till after that event has happened." Are there exceptions of this rule? Explain

Question: Where there is no gift but only a direction to transfer from and after a given event, the vesting will be postponed till after that event has happened." Are there exceptions of this rule? Explain. [UPJS 1987]

Find the answer to the mains question of Property Law only on Legal Bites. [Where there is no gift but only a direction to transfer from and after a given event, the vesting will be postponed till after that event has happened." Are there exceptions of this rule? Explain.]

Answer

Under Section 21 of the Transfer of Property Act , the general rule is that when there is a direction to transfer property from and after a certain event without an actual gift, the vesting of the interest in the property will be postponed until after that event has occurred. In other words, the transferee's interest in the property will not vest until the specified condition or event is satisfied.

Section 21 of the Transfer of Property Act, 1882 lays down the provision regarding Contingent Interest. Contingent interest refers to an interest which is created in favour of a person on a condition of the happening of a specified uncertain event. The person having the contingent interest does not get possession of that property but has the expectancy to receive it upon the happening of that event but will not receive the property if the event does not happen as the condition is not fulfilled. Thus, contingent interest is entirely dependent on the condition imposed on the transfer.

Characteristics of Contingent Interest:-

A) It is entirely dependent upon the condition precedent and only happens when the condition is fulfilled.

B) The property shall continue to belong to the transferor if the transferee dies before taking possession of it.

C) Contingent interest is a transferrable right, but whether it is heritable or not depends on the circumstances surrounding the transfer and the condition.

Exceptions to Contingent Interest:- When a person who has an expectancy in the rights of ownership of a specific property, and he for the time being till the happening of the event, gets any sort of income that arises from that property. This interest in the property does not come under the aspect of contingent interest.

The following sections of the Transfer of Property Act lay down the conditions for contingent interest:-

Section 22 states about the transfer to a group or class of members with a contingent interest. For example, there is a transfer to a group of 5 people, and the condition is that the property will be vested in persons who attain the age of 40 years on this particular date. The persons who have attained this age will get an interest in the property and people who have not, will not get an interest in that property.

Section 23 states about a transfer that happens after happening of an event that was mentioned in the transfer involving contingent interest. This provision simply lays down one of the two branches of Section 21 that talks about contingent interest. The two branches are happening of an event and non-happening of an event. This Section states about what happens after the happening of the specified uncertain event.

Section 24 states about a transfer to a group or class of members who will get the property on the condition that they shall be living at the specified date. This is also a contingent interest as the event mentioned here is an uncertain event. The transfer will only take place for those people who satisfy the condition of surviving at a particular date. The legal heirs of the deceased cannot claim an interest in that property as a transfer involving a contingent interest solely depends upon the fulfilment of the condition.