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VESTED AND CONTINGENT INTEREST ANALYSIS AS

TO THE TITLE IN THE PROPERTY


INTRODUCTION
The Transfer of Property Act deals with two kinds of interest vested interest
and contingent 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 depends upon a condition precedent. When the condition is 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 French
law. According to Salmond, title is the fifth element of legal right. Every 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. However, Holland does not include title as an element of
a legal right. Austin does not approve of the use of title for right. His 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.
Legal rights are created by title. A person has a right to a thing because he has a
title to that thing. According to Justice Holmes, Every right is a consequence 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. It is these
special facts that create a title. Title means any fact which creates a right or duty. If 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 acquire right on account of his birth or he may acquire

the same by personal efforts later on but in both cases title is essential. Title is the root
from which the rights proceed.
Holland does not approve of the use of the term title as it does not indicate the
facts which transfer or extinguish rights. A fact giving rise to a right has long been
described as a title, but no such well-worn equivalent can be found for a fact through,
which a right is transferred or for one by which a right is extinguished. Bentham also
objects to the use of the term title and suggests the term dispositive facts. He divides
the dispositive facts into three parts: investitive facts, divestitive facts and translative
facts. He re-divides the investitive facts into collative facts and impositive facts.
The main rights in the title bundle are usually:

Exclusive possession
Exclusive use and enclosure
Acquisition
Conveyance, including by bequest
Access easement
Hypothecation
Partition

The rights in real property may be separated further, examples including:


Water rights, including riparian rights and runoff rights
In some U.S. states, water rights are completely separate from landsee prior

appropriation water rights


Mineral rights
Easement to neighboring property, for utility lines, etc.
Tenancy or tenure in improvements
Timber rights
Farming rights
Grazing rights
Hunting rights
Air rights
Development rights to erect improvements under various restrictions
Appearance rights, often subjected to local zoning ordinances and deed
restrictions

In countries with a sophisticated private property system, documents of 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. In some cases, a title can also serve as a
permanent legal record of condemnation of property, such as in the case of an
automobile junk or salvage title. In 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 expensive property. In several
counties and municipalities in the US a standard title search is required under the law
as a part of ownership transfer.
Title is the sum total of legally recognized rights to the possession and
ownership of property. This means whereby the owner of lands hath the just
possession of his property. This is the definition of title to lands only. There are
several stages or degrees requisite to form a complete title to lands and tenements. The
degrees are:
1. The lowest and most imperfect degree of title is the mere possession, or actual
occupation of the estate, without any apparent right to hold or continue such
possession.
2. The next step to a good and perfect title is the right of possession, which 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.
3. The mere right of property, the jus proprietatis without either possession or the
right of possession.
A title is good, marketable, doubtful, or bad. A good title is that which entitles
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 equity 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
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titles being either good or bad, the former would be considered marketable, the latter
non-marketable. But this is not the way they are regarded in courts of equity, 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 only that it is subject to so much doubt that a purchaser ought not to be
compelled to accept it. In 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 equitable 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 subject to so much doubt that a purchaser ought not to be 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 acquired by two methods, namely, by descent and by purchase.
Title to personal property may accrue in three different ways.
1. By original acquisition.
2. By transfer, by act of law.
3. By transfer, by, act of the parties.

A.TITLE BY ORIGINAL ACQUISITION IS ACQUIRED,


1. By occupancy- This mode of acquiring title has become almost extinct in civilized
governments, and it is permitted to exist only in those few special cases, in which it
may be consistent with the public good. First. Goods taken by capture in war were, by
the common law, adjudged to belong to the captor, but now goods taken from enemies
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in time of war, vest primarily in the sovereign, and they belong to the individual
captors only to the extent and under such regulations, as positive laws may prescribe.
Secondly. Another instance of acquisition by occupancy, which still exists 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.
2. By accession: Title by original acquisition is acquired by accession.
3. By intellectual labour: It is acquired by intellectual labour- It consists of literary
property as the construction of maps and charts, the writing of books and papers. The
benefits arising from such labour are secured to the owner. 1. By patent rights for
inventions. 2.By copyrights.
B.THE TITLE BY ACT OF LAW
The title to personal property is acquired and lost by transfer, by act of law, in various
ways.
1.
2.
3.
4.
5.
6.

By forfeiture.
By succession.
By marriage.
By judgment.
By insolvency.
By intestacy.

C.TITLE BY, ACT OF THE PARTIES.


Title is also acquired and lost by transfer by the act of the party.
1. By gift.
2. By contract or sale.
In general, possession constitutes the criterion of title of personal property, because no
other means exist by which a knowledge of the fact to whom it belongs can be
attained3. A seller of a chattel is not, therefore, required 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
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chattels, will not be secure against the claims of those entitled in remainder.4 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 subject of the transfer.
D.EXCEPTIONS.
But to this general rule there are EXCEPTIONS.
1. The lawful coin of the United States will pass the property along with the
possession.
2. A negotiable instrument endorsed in blank is transferable by any person holding it,
so as by its delivery to give a good title to any person honestly acquiring it.
PARAMOUNT TITLE: Paramount title is the best title in Fee 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 Quiet 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 persons title.
QUIET TITLE : A Quiet title action is a lawsuit to settle competing claims or rights
13to real property, for example, missing heirs, tenants, reverters, remainders and lien
holders all competing to get ownership to the house or land6. Each of the United
States has different procedures for a quiet title action.
However, most personal property items do not have a formal document of title. For
such items, possession is the simplest indication of title, unless the circumstances give
rise to suspicion about the possessors ownership of the item. Proof of legal
acquisition, 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
required.
ABORGINAL TITLE

Prior to the establishment of the United States title to Indian lands in lands controlled
by Britain in North America was governed by The Royal Proclamation of October 7,
1763. This proclamation by King George III reserved title in land to the Indians,
subject to alienation only by the Crown. This continued to be the law of Canada
following the American Revolution. In the United States Indian title is the subservient
title held by Native Americans in the United States to the land they customarily
claimed and occupied as in Johnson v. M'Intosh
It very early became accepted doctrine in this Court that although fee title to lands
occupied by Indians when the colonists arrived became vested in the sovereign - first
the discovering European nation and later the original states and the United States - a
right of occupancy in the Indian tribes was nevertheless recognized. That right,
sometimes called Indian Title and good against all but the sovereign, could be
terminated only by sovereign act. Once the United States was organized and the
Constitution adopted, these tribal rights to Indian lands became the exclusive province
of the federal law. Indian title, recognized to be only a right of occupancy, was
extinguishable only by the United States as in Oneida Indian Nation v. County of
Oneida
Aboriginal title refers to the Indians exclusive right to use and occupy lands they have
inhabited from time immemorial, but that have subsequently become discovered by
European settlers. Aboriginal Indian title derived from the doctrine of discovery
provided that discovering nations held fee title to these lands, subject to the Indians
right of occupancy, and use. After conquest, Indians were permitted to occupy
portions of territory over which they had previously exercised sovereignty. This
aboriginal title, however, was not inviolable. Specifically, Indians were secure in their
possession of aboriginal land until their aboriginal title was extinguished by the
sovereign discoverer. No one could purchase Indian land or otherwise terminate
aboriginal title without the consent of the sovereign. The sovereign possessed
exclusive power to extinguish the right of occupancy at will.
E. CLASSIFICATION OF TITLES

Titles are also called investive facts or facts as a result of which a right comes to be
vested in its owner. Salmond divides the vestitive facts in to two parts, viz., investitive
facts or titles and divestitive. Investitive facts or titles are divided into original titles
and derivative titles. Divestitive facts are divided into alienative facts and extinctive
facts. Vestitive facts are those which have relation to right. They relate to the creation,
extinction and transfer of rights. Investitive facts create and divestitive facts destroy
them. A right created may have no prior existence; such a right is called original title.
Examples of original title are my catching fish from the river, my writing a new book,
my invention of a new machine, etc. If a right is created by the transfer of an existing
right, it is called a derivative title. If I buy fish from fisherman who has caught the
same from a river, my title is a derivative one. If the author of a book assigns the
copyright of his book to another person, the latter acquires a derivative title. The facts
of which the legal result is to destroy rights are called extinctive divestitive facts. The
facts of which legal result is to transfer rights from the owner are called alienative
divestitive facts.
It is to be noted that in case of a transfer of a right, the same facts are derivative
investitive facts and alienative divestitive facts. If I sell my fish to X, it is derivative
title so far as X is concerned and alienative divestitive fact so far as I am concerned.
The main features of vestitive facts are that they either create a right or extinguish it or
transfer it from one person to another.
According to Bentham, dispositive facts can be divided into three parts, viz.,
investitive facts, divestitive facts and translative facts. Translative facts refer to the
transferring of rights and duties. Investitive facts are divided into two parts: collative
and impositive facts. Collative facts confer rights and impositive facts impose duties.
Divestitive facts are subdivided into destructive and exonerative facts. Destructive
divestitive facts end rights and exonerative 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
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bilateral acts unilateral acts are either subject to dissent or independent of the same.
Bilateral acts or agreements are of four kinds, viz., contracts, grants, assignments and
releases. Contracts and grants are either creative or extinctive. Those are also valid or
invalid. Legal Status of Perfect and Imperfect Title in Property: A Historical Analysis
II. OWNERSHIP IN PROPERTY
A.CONCEPT OF OWNERSHIP
The concept of ownership is one of the fundamental juristic concepts common to all
systems of law. It has it origin in the ancient Roman law. Perhaps of all the rights,
right to ownership is the most important right. The earlier legal systems didnt
recognize the distinction between ownership and possession. It was with the
advancement of the civilization that the two were considered as separate and distinct
concepts. In Roman law ownership and possession were respectively termed as
dominium and possessio. The term dominium denoted absolute right to a thong,
while possession implied only physical control over it. In the ancient and the medieval
English law also the concept of ownership developed much later than possession. The
term ownership was used in English law for the first time in 1583, when it was
distinguished from possession. Holdsworth observed that the English law accepted the
concept of ownership have an absolute right through gradual development in the law
of possession.
Jurists 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 exercised over
anything.
According to Hibbert ownership includes within it four kinds of rights.
1) Right to use a thing.
2) Right to exclude others from doing a thing.
3) Disposing a thing
4) Right to destroy it.
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In Blacks Law Dictionary, ownership has been defined as collection of rights to use
and enjoy property, including right it to transmit it to others. Therefore, ownership is
dejure recognition of a claim to a certain property.
Austin defines ownership as a right which avails against everyone who is subject to
the law conferring the right to put thing to user of indefinite nature. He 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 to Salmond, ownership, in its most comprehensive signification, 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 object
of ownership. It consists in a complex of rights which are rights in rem. In Salmonds
view ownership exhibits the following incidents.
1. An owner shall have a right to possess a thing which he owes. He may however not
necessarily, in actual possession of it.
2. He has normally the right to use and enjoy the thing owned.
3. The owner has a right to use, consume enjoy or alienate the thing.
4. Ownership has the characterics of being in determinate in duration.
5. Owner has a residuary character
The right to ownership was also recognized under ancient Indian law. The great
commentators notably, Narada, Yagnavalika,Vyas etc. and emphasized that right of
ownership of property was to be used good noble cause and good motives. The
ancient Hindu 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 Hindu jurists mentioned seven modes of acquisition of ownership of property
namely1) Inheritance
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2) Gain
3) Purchase
4) Conquest
5) Investment of wealth
6) Employment
7) Acceptance of Gifts
According to Manu, only property of king or estate could be acquired by conquest, but
the kings had no right to inerter or acquire private property of the subject of the
conquered territory14. As regard the property of no ones land. Manu 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. In 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 acquire only half of it. Even under the present Indian law no person can
have absolute ownership of property because this right has been restricted by statues
and regulations. Such as ceiling laws, rent control enactments, company regulations
etc.
B.CHARACTERICS OF OWNERSHIP
1) Ownership may either is absolute or restricted. That is it may be exclusive or
limited. It 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.
2) The right of ownership can be restricted at the time of emergency. For
instance. Building or a land hold by a private individual can be requisitioned
and used for lodging army personnel during the war.
3) An owner is not allowed to use his land or property in a manner that it is
injurious to others. In this sense his right of ownership is not unrestricted.

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4) Restrictions may also be imposed by law on the owners right of disposable of


the thing owned. Thus any 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 existence of rights of encumbrance such as a mortgagee etc.
the owners in India and in most of the countries are not free to sell their
property to aliens.
5) The owner has right to possess a thing which he owns, it is immaterial whether
he has actual possession of it or not. The most common example 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.
6) Law does not confer ownership on an unborn child or an insane person
because they are incapable of conceiving the nature and consequence of their
acts.
7) Ownership is residuary in character.
8) The right to ownership does not end with the death of the owner, instead it is
transferred to its affairs.

C.SUBJECT MATTER OF OWNERSHIP


Ordinarily the subject matter of ownership consists of material objects like land,
chattels etc. the wealth and assets of a person such as interests in the land, debts due to
him, share ina company, patents, copyrights etc. may also be subject matter of
ownership. Thus, intangible rights may alo constitute subject matter of ownership.
Salmond also supports this view that besides material objects, right may also be
subject matter of ownership though a man is said not to own, but to have a right.
From this point of view many rights cannot be considered as subject 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.

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D.ACQUISITION OF OWNERSHIP
From the point of view of acquisition 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 acquire by possession17. But there are things which are already
owned by someone, the ownership over them can be acquired by derivative method.
According to Salmond ownership can be acquired in two ways1) By operation of law.
2) By 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 bankruptcy18. It can also be acquired by reason of an act or
event such as taking or making a thing for the first time. Both these cases involve
original acquisition of ownership; nice new owner derives the title from his
predecessor.
E.DIFFERENT KINDS OF OWNERSHIP
The right to ownership is generally exclusive, immediate, unconditional and
beneficial. It is however not necessary that all these elements must be present in
ownership. Therefore there may be different kinds of ownership depending on the
existence or absence of any elements in it. For instance, if a person doesnt have
exclusive 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. Likewise if the ownership is
dependent on a certain condition, than it would be a conditional ownership. Different
types of ownership can be explained under the following heads.
1) Corporeal and Incorporeal Ownership
The ownership of material object 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 Incorporeal Ownership.
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2) Sole ownership and Co-ownerhip


It 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. Normally, there is no
chance of conflict in transaction of individual ownership properties. But the owner's
not staying in the same town may lead to a trouble. In 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. In Joint 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 Beneficial Ownership
Yet another peculiar species of duplicate ownership is trust ownership in 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 from the rights of someone like a trustee or official
who has responsibility to perform and/or title to the assets, but does not share in the
benefits.
4) Legal and Equitable Ownership
Sometimes one person may be the legal owner and another equitable owner of the
same thing or right at the same time. For example, when a debt is verbally assigned by
A to B. a remains the legal owner of it, but become the equitable owner of it. Thus the
debt is only one although now it has two owners.
5) Absolute and Limited Ownership

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If all the rights of ownership, i.e. possession, enjoyment and disposal are vested in a
person without any restriction, the ownership is absolute. But when there are
retractions as to user, duration or disposal, the ownership is limited ownership.
6) Vested and Contingent Ownership
In 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.
Legal Status of Perfect and Imperfect Title in Property: A Historical Analysis

III.PERFECT TITLE CONCEPT OF VESTED INTEREST


A.DEFINITION OF VESTED INTEREST
Section 19 of Transfer of Property Act defines vested interest as follows...
"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."
A vested interest is not defeated by the death of the transferee before he obtains
possession.
PERFECT & IMPERFECT TITLE CONCEPT OF VESTED
&CONTINGENT INTEREST

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Rights of Property Point of Views

Quantu
m of
Right
Absolut
e

Time of
Right

Conting
ent

Postponme
nt or
Delayed
rights

Immedi
ate
Vested Rights
Section 19

Sometime with conditon


depends on certain events
Certain future events or which
bound to happen. for eamble any
future date or deaths etc.
It is naturally vested or absolute
in nat in nature

Contingent Rights This is non certain


event which may
or may not happen
Secton 21

Some time
with
condition

B. VESTED IN DIFFERENT FORMS


(i)Vested in possession- when it is a right to present possession for ex- our
residential house. Vested in possession is a term used to indicate an interest which
gives a right to immediate enjoyment of an interest in property as opposed to an
interest vested in remainder. For example, an estate is vested in possession when there
exists a right of present enjoyment; and an estate is vested in interest, when there is a
present fixed right of future, enjoyment. The phrase "vested in possession" is well
understood as meaning a right of present enjoyment. Contrasted with these terms is
the phrase "vested in interest," which means a present fixed right of future enjoyment.
Thus any given interest may first be vested in interest, then vested in possession, and
finally reduced to possession.

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(ii) Vested in interest when it is not a right to present possession but a right to
future possession. Example- a land & building is given to Ramesh for his life with a
remainder to B , in that case s right invested in possession ,Bs right is vested in
interest .i.e. after s death property will come to B 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
person's consent. The event or time frame that triggers vesting is typically defined by
contract, such as employee pension benefits vesting after a certain number of years.
(iii) vested gift-A vested gift refers to an absolute gift. Generally, a vested gift is free
from contingencies. Although a vested gift is unconditional, its use or enjoyment
might not occur until sometime in the future. Hence, a vested gift can be made for the
purpose of present or future usage.
(iv)vested estate-Vested estate is an absolute, unconditional, and indefeasible interest.
It is an estate which is not contingent or expectant. Vested estate carry a fixed right of
present or future enjoyment. It gives a certain and fixed right of present or future
enjoyment; that is, an interest clothed with a present legal and existing right of
alienation. An estate is vested in possession when there exists a right of present
enjoyment, and vested in interest when there is a present right of future enjoyment.
(v)vested future estate-Vested future estate is an estate which exists 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.
(vi)vested liabilities -"vested liabilities" means the present value of the immediate or
deferred benefits available at normal retirement age for participants and their
beneficiaries which are no forfeitable.
(vii)vested right-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
person's consent.
(viii) vested interest by will-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 ,

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enactment of Hindu succession act, 1956 deprived daughter of their legal right as
widows interest enlarged into an absolute estate ,no right vested in daughters will.
C. THE TITLE IN VESTED OWNERSHIP:
In vested ownership the title of the owner is already perfect. Ownership is absolute, it
creates an immediate right and it does not depend upon fulfillment of any condition. It
is transferable and heritable. In case of vested ownership, the investitive fact from
which he derives the right is complete in all its parts.
In English law, an estate may be vested even though it does not give a right to
immediate possession. On a devise to X for life with remainder to Y in fee simple, the
interest of y is vested because there is nothing but the prior interest of X to stand
between him and the actual enjoyment of the land. Technically speaking, the interest
of Y is vested in interest, though not vested in possession. It becomes vested in
possession only on the death of X. If a Hindu 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. It does not depend upon
the condition precedent. If it is to take effect on the happening of an event which is
certain (the death of the widow), the adopted son has a present proprietary right in the
estate, the right of possession and enjoyment being deferred. He can transfer the
property even during the lifetime of the widow.
Under 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 subject 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.
Under a compromise decree, it was settled that X was to hold an estate till his death
after which it was to go to Y. the interest acquired by Y under the decree is a vested
interest as it was bound to take effect from the death of X which was a certain event. A
vested interest is regarded as a property which is divisible, transferable and heritable.

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Thus under section 19 of the Transfer of Property Act, 1882 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 Hindu widow adopted son but there is an agreement which postpones the sons estate
during the lifetime of widow. Here an interest created in favour of adopted son is
vested right, which does not depend upon condition precedent, for example..
performance of any act , it is not to take effect on happening of the event which is
certain i.e. the death of widow.
The adopted son has Present proprietary right in the estate. The right of possession
and enjoyment being deferred and therefore he can transfer the property even during
the widows lifetime. Similarly, a Transfer of Property in favour of a person simply
creates vested interest with an immediate right to the possession and enjoyment of the
property. Such vested interest is not defeated by the death of the transferee even
before getting possession of the property.
Illustration
A transfers property to B in trust for C and direct B to give possession of the property
to C when C attains age of 25 years. In this problem the enjoyment in the property is
postponed but this does not prevent the interest vesting immediately, but such transfer
is itself void when C attains majority.
Therefore C has vested interest and entitled to a possession of property at the age of
18.
An intention that an interest shall not be vested is not to be inferred merely from
a provision whereby the enjoyment 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 enjoyment
arrives, or from a provision that if a particular event shall happen the interest shall
pass to another person.
D.Analogous law
Section 19 and the corresponding section 119 of the Succession Act, 1925 deals with
the question under what circumstances a person obtains a vested interest or immediate
19

right on a transfer of property. It 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
favour1. Without specifying the time, when it is to take effect.
2. In terms specifying, that it is to take effect forthwith
3. In term of specifying, that it is to take effect, on the happening of an event, which
must happen
i. Time not mentioned- If a property is transferred by A to B and the deed of transfer
does not mention, the exact 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. For
example, A sells his house to B. B gets vested interest from the day of sale. He get
right at once through possession may not be given to him immediately.
ii. Forthwith- 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 event- 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 explained and legibly fixed and its occurrence should be only a
matter of time. It should be of a nature as to must happen. Interest that is dependent
upon such event is classed as a vested one. For example, transfer to B if A dies, or at
sunset or sunrise. There are events which are both 1. Specified, 2. And certain.
Therefore, transfer to B creates vested interest.
E.POSTPONEMENT OF ENJOYMENT
Section 11 states a condition postponing enjoyment cannot prevent the interest vesting
immediately; but it is itself void for repugnancy after the transferee has attained
majority. For example, A transfers property to B in trust for C, and directs B to give
20

possession of the property to C when he attains the age of 25. C has a vested interest
and is entitled to possession at the age of 18.
In the case of Gosling v. Gosling, Vice- Chancellor Wood said; the practice of
this court has always been to recognize the right of all persons who attain the age of
21 to enter upon the absolute use and enjoyment of the property given to them by
Will, notwithstanding any direction by the testator to the effect that they are not to
enjoy it until a later age unless, during the interval, the property is given for the
benefit of another. In India the similar rule has been accepted except that there is no
limit numerically fixed as above. The period up to which the enjoyment of a vested
interest may be postponed I matter of fact for the parties to decide. In another case, A
executed a deed of gift in favour of B, but directed that B was not to take possession
of a portion of the property until after the deaths of A and As wife. B has vested
interest, enjoyment only being postponed.
Sundar Bibi vs Rajendra Narayan
In this case the Allahabad High Court held that in a vested interest the title passes
absolutely from the transferor to the transferee at the date of the transfer, though the
enjoyment may be postponed.
F.PRIOR INTEREST
Section 13 states that, a prior interest does not postpone the vesting of the subsequent
interest. Section 13 provides a specific example of such rule. For example, A fund is
given to A for life, and after his death to B, on the testators death, the legacy to B
becomes vested interest in B. the expression after his death refers to the time when
the gift becomes reduced to possession and not to the time when the interest vests. In
the case of Rewun Prasads case the testator gave hi wife a life estate and after her
death one share of the estate to his brother B, and the other share to his sons C and D.
B and C die during the lifetime of the widow, but as their shares were vested, and as C
and D took as tenants in common Cs widow was entitled to succeed to Cs share.
Property is settled in trust to A for life with a direction to the trustees to pay A Rs.
2,000 a year out of the rents and profits and to apply the balance to the discharge of a
21

mortgage; and after As death to convey the land to B. Although, B may not survive A,
yet Bs interest is vested in As lifetime as in Uzoe v. Ma Mya
In Rajes Kanta Roy v. Santi Devi, a question arose, as to whether the interest which
developed upon two minor sons under settlement made by the father vested 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 enjoyment 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
contingent30. This rule operates normally where the entire income is applied for the
benefit of the done.
G.ACCUMULATION OF INCOME
Section 17 states that, a direction for accumulation of income if in excess of the period
sanctioned by section 17 is invalid for the excess. Within the limits sanctioned by the
section, it is a provision for the postponement of enjoyment, and as such it does not
postpone the vesting of the interest.
H.CONDITIONAL LIMITATION
Section 28 states that, a provision that if a particular event shall happen, the interest
shall pass to another person is what is called in English law a conditional limitation. A
conditional limitation divests an estate which has vested and vests it in another person.
A condition subsequent divest an estate which has vested and revests it in the grantor.
Section 28 deals with conditional limitations, whereas conditions subsequent are dealt
with in section 31.
I.Test to determine whether is vested or not
Whether an interest is vested or otherwise, depends on the intention of the person
crating 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
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 subjected to any condition
precedent, when 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 acquires a proprietary right in it
but the right of enjoyment is only deferred till a future event happens which is certain
to happen. If a Hindu widow adopted a son but there was an agreement postponing the
sons 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.,
widows death, the adopted son has a present proprietary right in the estate, the right
to enjoyment and possession being deferred and therefore, he can transfer the property
during the lifetime of widow.
Time of vesting- 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 5, a transfer may not be only in present but also in future. But the time of
vesting cannot be beyond the period allowed by the rule against perpetuity. In
Wrightsons 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 24.
This provision invalidated the future interests given in the will.
Death of transferee- when an interest is vested it becomes the property of the
transferee and is under section 6, transferable by him even before he has attained
possession; for a transfer of property not in possession is effective. If a transferee dies
his interest I vested in his representatives even if he has not obtained possession. In
the case of Rajes
h Kant Roy v. Santi Devi , 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 Supreme Court
held that the sons got a vested interest, though enjoyment was temporarily postponed.
In case of Sreenivasa Pai V.Saraswati Ammal A by a settlement deed transferred
property to P for life , then to S. S predeceased P .On the death of P, the heir of S
claims the property .It was held that since the interest was not subject to any condition
precedent .So it is a vested interest and is not liable by the death of its owner before he
becomes entitled to possession .So on the death of ,the heir of S can claim the
property.
NATURE OF FUTURE INTEREST/ESTATE DE FUTURE
It is Equally important to describe the future interests to clearly understand vested
interest .They are
1.The Reversion
2.The Remainder
i.
ii.
iii.

Vested Remainder (Sec .19)


contingent remainder(Sec.21)
executory interest(Sec 25;28-34)

1.The Reversion
The two most common situations in which a reversionary interest is created are in a
lease of property, or when a life estate is granted in a property. In both cases, the
original owner's interest and possession of the property will eventually return to him
or her. In the case of a lease, when it expires, all the rights to the property return to the
original owner. In the case of a life estate, upon the death of the grantee, all interest
and rights of possession also return to the original owner.
2.The Remainder
To A for life, remainder to B and his heirs. To A for life, remainder to B [an
eighteen-year-old] and his heirs, if B shall have reached the age of 21. The two grants

24

above differ obviously in their wording. In both grants, it is a necessary condition to


Bs interest becoming possessory that As life estate expire.
In the first case, however, this necessary condition is also sufficient; in the second
case it is not; in that case B must also have reached the age of twenty-one. The first
type of remainder is called a vested 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 become possessory other than the
expiration of the preceding estate(s). The fact that a remainder is vested does not mean
necessarily that it is likely to become possessory. If G grants to A for life, remainder
to B for life, B has [p*408] a vested remainder, but if B is eighty years old and A
twenty, the chances that B will ever enjoy the remainder are slim.
The second type of remainder is a contingent remainder, which means that some
precedent condition in addition to the expiration of the prior estates must be fulfilled
in order that the remainder may become possessory. In many instances the additional
precedent condition will be the identification of the taker. In the grant to A for life,
remainder to the first son of A and his heirs, the 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. In other instances a known taker may be required to do something to
fulfill the added condition, e.g., to A for life, remainder to B and his heirs if B
survives A. In this situation the remainder will not vest until the expiration of the
preceding life estate because only then will we know whether B 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 in a third party grantee (transferee) that
must, in order to become possessory, either 1) divest or cut short some interest in
another grantee (transferee) (a shifting executory interest, possibly shifting from one
grantee to another) (such as Whiteacre to my eldest son A and his heirs, but if A
inherits Blackacre (the family manor), then Whiteacre is to go to my second son B and
his heirs. (Notice that this is a future interest in a third party grantee, following a fee
simple subject to a condition subsequent. That future interest is called fee simple
subject to an executory limitation. ) or 2) divest the grantor (transferor) in the future (a
springing executory interest, possibly springing out of the Grantors estate) (such as
to A and her heirs when A marries B, read this as Grantor to Grantor, but to A and
25

her heirs (if and) when A marries B). Examples that I like is Grantor to B and his heir,
but to A if A comes home from war alive (shifting) and Grantor to Grantor, but to A if
A comes home from war alive (springing).

V.HINDU LAW AND MUSLIM LAW


The amendment of section 2 makes section 19 applicable to Hindus. In a case of Ram
Kumar v. Atma Singh the testator devised his estate to his sons and directed that the
widow should manage it during her lifetime. It 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. In another case of Srinivasa v. Danapani36, there
was a transfer to a daughter with a direction to enjoy 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. It has also been held that
under Hindu law the creation of partial trusts and charges will not postpone the
vesting in possession.
Sunni law does not recognize 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
Council. It led to a difference of opinion from that of held in an another case of
Rasool Bibi v. Yusuf Ajam in this case such estates were held as recognized in Shia
law. A life estate with a vested remainder is recognized both by Shias and Sunnis and
by the Muslim Waqf Validating act,1913, in the case of waqfs.
Vested interest of an unborn person- According to section 20, where on a transfer of
property an interest therein is created for the benefit of a person not then living, he
acquires upon his birth, unless contrary intention appears from the terms of the
transfer, a vested interest, although he may not be entitled to the enjoyment 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 joint lives and then on the eldest son of their marriage , the son takes a
vested interest as soon as he is born. It matters not that he is not entitled to possession
during the lifetime of his parents. Nor 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 majority. Devaru Ganapathy Bhat V.Prabhakar Ganapathy Bhat It
was given that interest in property can be created in favour of unborn child.
In a case, a bequest is made in favour of T for life and thereafter to the children of T
absolutely. T is married and a daughter, named K, is born to him. The daughter, K
predeceased T. thereafter, T by a will bequeaths the property absolutely to X. in such a
case, K acquires a vested interest in the property by birth. T, being Ks heir gets
absolute title to the property and, therefore, the bequest by T is valid as in
Nusserwanji v. Gurcher .This section makes clear that child in the womb is not a
living person. So to him property cannot be given direct. Mechanisms of prior and
absolute interests are needed. Child not even in womb can get property only when
requirement of section 14 in addition to section 13 are met. Child in womb is a person
in existence but not a living person.
IV.IMPERFECT TITLE- CONCEPT OF CONTINGENT INTEREST
A.DEFINITION OF CONTINGENT INTEREST
Section. 21 defines Contingent interest as follows 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 transfer also gives to him
absolutely the income to arise from such interest before it 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.
Illustration
'X' bequeathed his property i.e. estate to 'Y' until he shall marry to 'Z'. 'Y's interest in
the bequeath is contingent because it depends upon a condition precedent i.e. a
27

marriage of 'Y' with 'Z'. An event has no proprietary interest in the estate and cannot
alienate it. But as soon as 'Y' marries with 'Z' his contingent interest becomes vested
interest.
This section also defines what interest is and when such 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 enjoyment 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. In vested interest there is present, immediate right even if the enjoyment is
postponed. A vested interest is heritable and transferable. A contingent interest depend
solely upon the fulfillment of the condition. In contingent interest there is no present
right, there is a promise to give right upon the fulfillment of a condition. A contingent
Interest is inalienable and not transferable
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
the right itself is to accrue on the happening of an uncertain event. For example1) A grant provided that on the death of the last surviving widow of the late Raja of
Tanjore, his daughter or failing her next heir, if any, should inherit the property. It was
held by Privy Council 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. Sundaram Ayyar. .
2) X promised A, B, and C, Rs 1,000 each to be paid to them on the occasion of their
marriage. It was held that the gift was contingent upon their marriage taking place. A
and C married before the Xs death, they did not take. B married after the death, and
on such marriage, the gift becomes a vested one.
3) A transfer was made to A for life, then, to her adopted son; if she dies without
adopting anybody; then to B and her son. B predeceased A. It was held that B had

28

only a contingent interest, the contingency being that A should die without making an
adoption in case of Natwarlal Girdharilal v. Ranchood Bhagwandas,
4) 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 of the deceased son. In such a case, the gift creates a contingent interest in
case of Soorejeemoney v. Denobandhu,: Guruswami v. Sirakami
B.NATURE OF CONTINGENT INTEREST
Contingent interest is a transferable interest- A contingent interest; not being a mere
possibility is a well recognized form of property which is capable of being transferred.
Such a transfer would be effectually passed to the transferee, all the interest which the
transferor possessed when the contingency happened and the interest vested in
possession. But though a contingent interest can be made the subject of a valid
transfer inter vivos it cannot be made the subject of a forced sale in attachment
proceedings.[ Fernando v. Gunatilolaka]
It has been held that a contingent interest is not an existing right and may never ripen
into an existing right, and is not a sufficient ground to an action for declaration of
right. [S.C. Deb v. B.K. Deb ]
A contingent interest is a non inheritable interest. On the death of a person having
contingent interest, his legal heirs do not get anything, not even the contingent
interest. After the death of such a person it is only his vested interest that can be
inherited.
#Rajesh Kanta Roy vs Shrimati Sunita Debi
Fact One Ramani Kanta Roy executed a registered trust deed in respect of his
properties. The eldest son Rajesh was appointed the sole Trustee to hold the properties
under the trust subject to certain power and obligation. After his death his two son
Rajesh 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

1) Discharge of all the debts specified in the schedule and death of the settler himself.
2) The trust was to come to an end on the death of settler and the son were to get
properties allotted to them there after.
Issue before the court was whether the interest created by the trust were vested
or contingent ?
Judgement
It was observed that the entire scheme of the trust deed was:
1) Specified lots were earmarked for each of the two sons
2) The present income out of those lots were to be applied for the discharge of the
debts after payment of specified sums

there form by the way of monthly

payment of the two sons and presumably such application was notionally pro
rata
3) Any surpluses which 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
4) In the event of any of the two sons dying before the termination of the 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 in the lot themselves but that the enjoyment of the income of the
income thereof

was burden with certain monthly payments of which taken

together constituted application of the income for the benefit of the two sons .
Therefore the interest taken by the Rajes and

Ramendra under the trust deed

was vested not contingent. It 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 Supreme Court held that the interest taken by the two brothers under the trust
deed was vested and not contingent because it was certain event
C. SPEC SUCCESSIONS- the chance of an heir- apartment to succeed to a person as
heir or other mere possibility of like a nature is not a contingent interest within the
meaning of this section.
D. DEATH not an uncertain event, but survival at death of another is- the death of a
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. The survival or being alive of a person at the death of another is, on another
hand, an uncertain event and consequently a transfer to a person if he survives or is
alive at the death of another creates only a contingent interest.
E. TRANSFER TO A PERSON AT PARTICULAR AGE A transfer to a person
take effect upon his attaining a particular age gives him only a contingent interest till
he attains that age. The question is to be decided having regard to the intention of the
transferee as expressed by the words used by him and by other circumstances. For
example a certain sum of money is transferred to A in case he shall attain the age of
18 and when he shall attain the age of 18. Held, in both the cases contingent
interest was given. It 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.
In England, it has been held that a gift to such a class of persons as shall attain a
particular age, is only a contingent gift. In Festings case where a gift was made to A
for life, and then to such of her children as shall attain the age of 21yeras, it was held
that the gift to the children created only a contingent interest.
In another case of Ma Yaits were under a settlement, an interest was created in 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.
According to section 23, 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 for the event, the interest fails unless such event happens before, or at the
same time as, the intermediate of precedent interest ceases to exist. A person is entitled
to create an interest in property in favour of another to take effect on the happening of
an uncertain event. He is also entitled to specify the time within which such uncertain
event is to happen provided the time- limit so fixed 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.
But where no time is mentioned by the transferor for the happening of the
contingency, the law fixes 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 exist. 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 expressly refers to a
contingent gift to a specified person. It has no reference to a gift to a contingent class
which falls within the Section 22 held in Kanai Lal v. Kumar Purendu Nath .In
Bhupendras case, the Judicial Committee observed, with reference to Section 111 of
the Succession Act,1865 now reproduced in Section 124 of the Indian Succession
Act,1925, which corresponds to Section 23 of this Act:
Section 111 embodied the rule in case of Edwards v. Edwards. The rule of law laid
down in that case has been considerably modified by later English decisions. The
Indian 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 should never be without any owner,
it must always vest in some person given in Abiss v. Burney
Subsequent Contingent Interest - This section deals with the case 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 event happens sometimes after the
prior interest has determined, there is a gap of interval during which the 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. For example.There is a gift for life to A, and
32

then to B in case he gets called to the Bar. The gift to B unless he is called to the Bar
in the lifetime of A or at the same time as A dies.
A legacy is bequeathed to A when and if he attains the age of 18 and in case of his
death to B. A attains the age of 18. The legacy to B does not take effect.
A legacy is bequeathed to A, and in case of his death to B. If A survives the testator,
the legacy to B does not take into effect.
A legacy is bequeathed to A for life, and after his death to B, and in case of Bs death
without children are to be understood as meaning in case B dies without children
during the lifetime of
The rule in this section corresponds to the English real property rule that every
contingent 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
English real property is not to be imported to India was so observed by the Judicial
Committee in Gadahar Mullick v. Official Trustee of Bengal, and Soorjeemoneys
case.
In Chunni Lal v. Samarth, the testator bequeathed 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 Council held that the gift over was effective
although the other son died two years after the testator. This was a case to which the
Hindu Wills Act did not apply; but in other cases in which Section111 of the Indian
Wills Act, it was held that the prior gift was an absolute and indefeasible on the death
of the testator[ Narendranath v. Kamalbasini Dasai, Nistarini Debya v. Behari Ll]
CASE LIST
#Usha Subbarao vs B.E. Vishveswariah & Ors [1996 SCC (5) 201, JT 1996 (6) 607]
In order to determine whether the appellant can claim any right in the properties
of the testator, it is, therefore, necessary to examine the nature of the bequest that was
made by the testator in favour of his five sons including the deceased husband of the
33

appellant. If it is found that the bequest is in the nature of vested interest, it


would vest 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 husband's interest in the properties. But in case the bequest is found to be in
the nature of a contingent interest which was to vest in the legatees only after the
death of Smt. Nadiga Nanjamma, the appellant would not be entitled to claim any
interest in the properties since her husband had pre-deceased Smt. Nadiga Nanjamma.
As regards Wills the rule is that "where there is doubt as to the time ofvesting, the
presumption is in favour of the early vesting of the gift and, accordingly it vests at the
testator's death or at the earliest moment after that date which, is possible in the
contest."
#In Thimmi Chetty y. Govindan alias Muniappa Gounder (1978) 91 L.W. 570 a
Division Bench of this Court (to which one of us was a party) had to consider the
question in a case where a vestedinterest was created under an instrument, whether
the follow-up recitals, which militated against such vesting of absolute title, would
belittle the force and legality of such entitlement. No doubt, in that case, the deed
provided that on and from the date of the instrument the settlee should enjoy the
property absolutely 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
Court expressed the view that the terms used in a deed should be interpreted in their
strict and primary acceptation and should not be viewed with reference to the
secondary motives referred to by the settlor in an instrument of settlement.
#Ramaswami Naidu vs M.S. Velappan And Ors. [(1979) 2 MLJ 88]
In the instant case the first plaintiff was already in charge of the properties as
trustee to perform the obligations created under it and continued them after the
lifetime of Meenakshi Ammal. There are also positive words whereby it was made
clear that the properties should bevested in Velappan and his heirs for them to enjoy
the same absolutely. The words used are: These two dispositive Clauses create
an interest in praesenti. The question is whether the postponement of such proprietary
rights already vested in Velappan and his heirs, to the lifetime of Meenakshi Ammal,
would make any difference. The Explanation to Section 19 of the Transfer of Property
34

Act, providing that a vested interest is not defeated by the death of the transferee
before he obtains possession, makes the legislative intent clear that such
a vested interest, merely for the reason that it becomes vested 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, the first plaintiff, obtained
under the instrument is not a vested one and that it could be defeated because it is
postponed till after the lifetime of Meenakshi Ammal.
# In Bhagabati Barmani v. Kalicharan Singh [(1911) I.L.R. 38 Cal. 468], a Hindu
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 existence and also those who might be born there' after, who should hold the
properties in equal shares. The testator died the day following the execution of the
will. It was held that the will gave to the sons of the sisters avested interest in their
respective shares at the testator's death, though it postponed their possession and
enjoyment until the deaths of the mother and widow.
#In Hilaso v. Munilal [(1911) I.L.R. 33 All. 558], one Sewaram executed a will
whereby he gave all his properties, after the death of himself and his wife, Mst.
Mandu to his daughter Bilaso and his nephew Dulichand. Dulichand survived the
testator, but predeceased Mst. Mandu. A suit was brought by the heirs of Dulichand to
recover his share of the properties of Sewaram from Mst. Hilaso. The sole question
that was raised in the appellate Court was whether Dulichand did not get
a vested interest in

the

properties

disposed

of

by

the

will,

but

merely

a contingent interest, and he having died before his aunt, Mst. Mandu, whether his
sons were not entitled to succeed to the property. Following the decision in Bhagabati
v. Kalicharan (1911) I.L.R. 38 Cal. 468, it was held that the nephew Dulichand took
a vested interest in the properties, which-was transmissible to his heirs.
#In Phillip Graham Greenwood v. Phillip Graham Greenwood [181 I.C. 35 : A.I.R.
1939 P.C. 78] a testator, by his will, appointed his wife and nephew as his trustees and
executors and gave all his properties to the trustees, upon certain trusts under which
the wife was to enjoy 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, 1/3rd share in the
whole estate in favour of any person, and as regards the 2/3rds of the estate remaining
undisposed of at the time of the wife's death, the will directed that the surviving
trustees should divide the 2/3rds share equally 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. In that case, one of the sisters of the testator,
who bad survived the testator, died unmarried and without issue during the lifetime of
the testator's widow. On the death of the widow, the period for the distribution of the
2/3rds of the residuary estate given to the testator's brother and sisters having arrived,
the question arose whether the estate of the deceased sister was entitled to a share in
the distribution. In was held that the deceased sister's share of the residue vested in
her on the death of the testator subject to the divestiture only in the event of her
predeceasing the testator's 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 2/3rd share of the residuary estate vested 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 testator's widow.
#Sreehchand Sawcar v. Kasi Chetti (38) L.W. 860 : 147 I.C. 383 : A.I.R. 1933
Mad. 885, where the testator bequeathed his property to two persons for life and the
remainder absolutely in favour of a specified class of persons on the termination of the
life estate. It was held by their Lordships, that on the death of the testator the property
became vested in that class and that the mere fact that they were not entitled to an
immediate possession did not make it a contingent bequest.
#P.K. Mohanram vs B.N. Ananthachary & Ors on 15 March, 2010(scc)
Having noticed the distinction between vested interest and contingent interest, we
shall now consider whether Exhibit was a Settlement Deed or a Will. Although, no
strait-jacket formula has been evolved for construction of such instruments, the
consistent view of this Court and various High Courts 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 executant or it is an instrument creating a vested interest in
praesenti in favour of a person, the Court has to very carefully examine the document
as a whole, look into the substance thereof, the treatment of the subject by the
settlor/executant, the intention appearing both by the expressed language employed in
the instrument and by necessary implication and the prohibition, if any, contained
against revocation thereof. It has also been held that form or nomenclature of the
instrument is not conclusive and the Court is required to look into the substance
thereof.
#Ramaswami Chettiar and Anr. v. Venkatammal and Ors. I.L.R .The point

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
Chettiar, the father and Subbiah Chettiar, the son. It was provided that a certain
portion of the properties should be enjoyed 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, Subbiah should after Alagarsami's lifetime perform his obsequies and take
over his share of the property. Subbiah died during the lifetime of Alagarsami, and
Alagarsami did not marry again. He, however, made a bequest of his share to a third
party. It was pointed out that though a valid disposition could be made in favour of an
unborn person (the issue of Alagarsami by the contemplated marriage), it did not mean
that in all cases where interest in property was created in favour of an unborn person,
there was a vested interest on him and that the alterative provision was only
a contingent one.

VIII.COMPARITIVE ANALYSIS
The distinction between the vested and a contingent interest may seem 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 classes1) By a provision postponing enjoyment or,
2) By the intervention of a prior interest or
3) By the provision for accumulation.
Again an interest may be vested although; it is liable to be divested by a
condition subsequent. The difference between a condition precedent and condition
subsequent is that when the condition is precedent, the estate is not vested din the
grantee until the condition is performed. Substantial compliance is enough for vesting.
But when the condition is subsequent 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 can be. Conditions subsequent are dealt with in Section 28 and 31. For
example, in a case husband transferees his property to his wife for her life and after
her death, the sons born to them will take the property absolutely. In such a case, the
sons would acquire the vested reminder in the property.Adimmoola v. Pavadai
Padayachi
A fund is bequeathed to A for life, and after his death to B. On the testators death the
legacy to be becomes vested. Here a prior interest intervenes, but the legacy is vested
as the determination of that prior interest is a certain event.
A fund is bequeathed to A until B attains the age of 18 and then to B. the legacy
to B is vested interest from the time of testers death. Here it might be supposed that
Bs interest was contingent on his attaining the age of 18, 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
estates known to English lawyers as the rule in Borastons case. It rests on the
principal that the law favors the vesting of the estate.
IX.DISTINCTION BETWEEN CONTINGENT AND VESTED INTEREST

38

These points of distinction between vested and contingent interest need to be


noted
1.

A contingent interest is inalienable. On the other hand, vested interest is

heritable and transferable.


2. A contingent interest depends solely upon the fulfilment of a condition, so that
in case of non-fulfilment of the condition, the interest may fall thorough. On
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.
3. In case of a contingent interest there is no present right. However, 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. Only its use is postponed. In 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.
4. It is to be noted that where, under a transfer of property, a person becomes
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 age, or directs the income to be applied for his benefit,
then such interest is vested interest.
5. 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 defensible estate;
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. Vested interest should
be without any condition

BASIS

VESTED

CONTINGENT

39

Right of

Immediate rights

Merely a future possible rights

No such condition (happening

Condition ( on happening or non

or non happening of future

happening of future event )

event)
It is heritable right
Perfect immediately

Not a heritable right


Imperfect, Perfect on happening

Enjoyment
accrues
Nature of Event

Heritability
Nature of Title

of or non happening of event


Effect of Interest

Immediately form the date of

Condition precedent, which must

Transferability

Transfer
Transferable

in nature
Transferable, may be defeated by
reason of non fulfillment of the

Attachment &

Capable of being attached or

Sale in Execution

sold in Execution of Decreed

condition precedent.
Not Capable.

of Decreed

In a case of, #Sashikantha v. Pramod Chandra, the Calcutta high court pointed
out the distinction between vested interest and contingent interest. It stated that, an
estate of interest in vested as distinguished from contingent either when enjoyment of
it is presently conferred or when its enjoyment is postponed, the time of enjoyment
will certainly come to pass,. In other words, an estate or interest is vested when there
is immediate right of present enjoyment or a present right of future enjoyment. An
estate or interest is contingent if the right of enjoyment 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 enjoyment is to accrue on an event which is dubious or uncertain.
CONCLUSION

40

In the case of a transfer of property, a person may acquire a contingent interest as


against a real interest or vested interest in the property. The relevant provisions are
contained under Section 21 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 acquires
a contingent interest in the property.
For example, assume there is a stipulation that A's property is to be transferred
to C in case A and B die before the age of 18. In such a case, C has a contingent
interest in the property until A and B die, under the age of 18. An interest is contingent
when some contingency is to happen before the person is qualified to take possession
of the property.
It 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 interest. In countries with a
sophisticated private property system, documents of 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. In some cases, a title can also serve as a permanent legal
record of condemnation of property, such as in the case of an automobile junk or
salvage title. In 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 expensive property. In several counties and
municipalities in the US a standard title search is required under the law as a part of
ownership transfer. Ordinarily the subject matter of ownership consists of material
objects 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
subject matter of ownership. Thus, intangible rights may also constitute subject matter
of ownership. Salmond also supports this view that besides material objects, right may
41

also be subject matter of ownership though a man is said not to own, but to have a
right. From this point of view many rights cannot be considered as subject 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 interest

defined under section19 of transfer of property act should be

distinguished from contingent interest as defined in sec.21. when an interest is vested


the transferees 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