Case Comment: Usha Subbarao v. B.E.

Vishveswariah, 1996 SCC (5) 201, 1996 (6) 60

4.2 Property Law

            

Submitted by

Tisha Agrawal
UID No. 19-111
B.A.LL.B. (Hons.) Semester- IV

Submitted to

Dr. Shuvro Prasun Sarkar

Assistant Professor of Law

February, 2021
MAHARASHTRA NATIONAL LAW UNIVERSITY, NAGPUR

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Table of Contents
Introduction......................................................................................................................................1

Facts of the case...............................................................................................................................2

Procedural History...........................................................................................................................2

Understanding Vested Interest and Contingent Interest..................................................................4

Reasoning........................................................................................................................................6

Judgement........................................................................................................................................7

Introduction

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The given case is a very important judgement in the history of property rights as it sets a
precedent. And it also makes clear the definition of vested legacy and contingent legacy. Usha
Subbarao v. B.E. Vishveswariah, 1996 SCC (5) 201, 1996 (6) 60 decided in 1996. The bench
consisted of, AGRAWAL, S.C. (J), NANAVATI G.T. (J). This appeal  by the  plaintiff arises
out  of  a  suit wherein the  appellant claimed  1/5 share  of  her  deceased husband in the
properties left by her father-in-law. The question of vested and contingent legacy has been
clarified in the judgement. The sections of Transfer of Property Act and Indian Succession Act
regarding the same has been discussed extensively.
Sections 19 and 20 of Transfer of Property Act, 1882 directly deal with a vested interest.  Under
section 19, it is created on registration of transfer deed/instrument of registration.  The same
specifies the name(s) of the person/company/association in whose favor it is created, along with
terms and conditions, and the next important thing is when it comes into effect.  There are three
possibilities, (a) does not specify the time that it is to take effect, (b) states that it is to take effect
forthwith (c) or comes into effect on happening of a specific event that must happen. Vested
interest creates an immediate right and is not subject to any condition. It is both transferrable and
heritable right. Even if transferee dies before actual possession or enjoyment, it passes on to his
heirs.
Whereas contingent interest is directly governed by sections 21-24 of Transfer of Property
Act.  Whereby, on the transfer of property an interest is created that is to take effect only if a
specified uncertain event takes place or the specified uncertain event does not take place, such
interest shall qualify it to be called contingent interest.  Analogous section 120 of The Indian
Succession Act explains contingent interest.  That a legacy bequeathed shall not come into
operation unless specified uncertain event happens, or if the specified uncertain event is not to
happen then until it becomes impossible. Such an interest is called contingent
interest. Contingent interest is acquired on the happening of a specified uncertain event or on it
becoming impossible if that is the required contingency. In the following case, it was held by the
court that there was a vested interest in the properties. After construing the will carefully, the
Hon’ble Court decided the case and allowed the appeal.

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Facts of the case
1. This appeal by the plaintiff arises out of a suit wherein the appellant claimed 1/5 share of her
deceased husband in the properties left by her father-in-law, Dr. N.S. Nanjundiah, on the basis
of a Will executed by Dr. Nanjundiah on March 13, 1935. The said suit was decreed in full by
the trial Court. But on appeal, the Karnataka High Court, by the judgment dated April 15,
1994, has set aside the said judgment of the trial Court in respect of properties mentioned in
Schedules ‘A’, ‘B’ and ‘D’ to the said will and has confined the decree to properties
mentioned in Schedule ‘C’ to the Will. The questions that fall for consideration in this appeal
relate to construction of the Will.
2. Dr. N. S. Nanjundiah (hereinafter referred to as the testator) died on July 28, 1938 leaving
behind his wife Smt. Nadiga Nanjamma and five sons.The appellant is the wife of B.N. Subba
Rao died on February 21, 1954 without leaving any issue. Smt. Nadiga Nanjamma died on
March 28, 1959.

Procedural History
1. After the death of Smt. Nadiga Nanjamma, the appellant filed the suit giving rise to this
appeal. The case of the appellant is that the respective shares in the various properties of the
testator vested in the five sons of the testator as per the Will, on the death of the testator and
that after the death of her husband, B. N. Subba Rao, the appellant is entitled to the share in
the properties that had vested in him prior to his death in accordance with the Will. The trial
Court, namely, the XVII Additional City Civil Judge, Bangalore City, by his judgment
accepted the said plea of the appellant and held that the succession opened on the death of the
testator by virtue of which all the sons of the testator became entitled to equal shares in the
properties and the recital in the Will that the partition should take place amongst the
surviving children after the death of Smt. Nadiga Nanjamma is really intended to refer to the
children surviving the testator.
2. The said view of the trial Court has been reversed by the High Court in appeal by the
impugned judgment. The High Court has held that the right was given to the children
surviving the testator to demand partition after the death of the testator subject to the
conditions imposed in the Will and in the absence of such a demand, the division was to take

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 place after the death of Smt. Nadiga Nanjamma among the children surviving Smt. Nadiga
Nanjamma.
3. The High Court further held that since after attaining majority B.N. Subba Rao did not
demand partition during his life and Smt. Nadiga Nanjamma continued to manage the
properties during her lifetime and since B.N. Subba Rao had already expired when Smt.
Nadiga Nanjamma died, it could not be held that B.N. Subba Rao and a right title or interest
in the properties except to demand partition by metres and bounds which specified event did
not happen during lifetime of Smt. Nadiga Nanjamma.
4. On that view the High Court held that the appellant could not claim any right in respect of
properties specified in Schedules "A", "B" and "D", but she was held entitled to her
husband's interest in schedule "C" properties.
5. In view of the said decision of the High Court it is necessary to determine the date when the
bequest made in favour of the sons of the testator under the Will vested in the legatees. If it
is found that the legacy vested in the legatees on the death of the testator, the appellant, as
the legal representative of one of the legatees who died after the death of the testator, would
be entitled to claim the interest of her deceased husband as per the said bequest. But if it is
found that the bequest was to vest in the legatees only after the death of Smt. Nadiga
Nanjamma, the appellant would not be entitled to claim any interest because her husband
had pre-deceased Smt. Nadiga Nanjamma.

Understanding Vested Interest and Contingent Interest

For the purpose of determining the date of vesting of the interest in the bequest it is necessary to
bear in mind the distinction between a vested interest and a contingent interest. An interest is
said to be vested interest when there is immediate right of present enjoyment or a present right
for future enjoyment. An interest is said to be contingent if the right of enjoyment is made
dependent upon some event or condition which may or may not happen. On the happening of the
event or condition a contingent interest becomes a vested interest. The Transfer of Property Act,
1882 as well as the Indian Succession Act, 1925 recognise this distinction between a vested
interest and contingent interest.

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Vested interest has been thus defined in Section 19 of the Transfer of Property Act, 1882. 1 A
vested interest is not defeated by the death of the transferee before he obtains possession. An
intention that an interest shall not be vested is not to be inferred 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.
Contingent interest is defined in Section 21 of the said Act 2. there is an exception, Where, under
a transfer of property, a person become 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.
In the Indian Succession Act provision with regard to date of vesting of a legacy when payment
or possession is postponed is contained in Section 119.3 Explanation, An intention that a legacy
to any person shall not become vested in interest in him is not to be inferred merely from a
provision whereby the payment or possession of the thing bequeathed is postponed, or whereby a
prior interest therein is bequeathed to some other person, or whereby the income arising from the
fund bequeathed is directed to be accumulated until the time of payment arrives, or from a
provision that, if a particular event shall happen, the legacy shall go over to another person.

1 Section 19 of the TRansfer of Property Act,1882, “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.”
2 Section 21 of the Transfer of Property ACt,1882, “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”
3 Section 119 of the Transfer of Property,1882, “Date of vesting of legacy when payment or possession postponed. -
Whereby the terms of a bequest the legatee is not entitled to immediate possession of the thing bequeathed, a right to
receive it at the proper time shall, unless a contrary intention appears by the will, become vested in the legatee on the
testator's death, and shall pass to the legatee's representatives if he dies before that time and without having received
the legacy, and in such cases the legacy is from the testator's death said to be vested in interest.”

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Section 120 of the Indian Succession Act 4 makes the provision for vesting date of vesting when
legacy is contingent upon specified uncertain events. Where a fund is bequeathed to any person
upon his attaining a particular age, and the will also gives to him absolutely the income to arise
from the fund before he reaches that age, or directs the income, or so much of it as may be
necessary, to be applied for his benefit, the bequest of the fund is not contingent.
By virtue of Section 119, in a case where bequest is a of vested interest and by the terms of the
bequest the legatee is not entitled to immediate possession of the thing bequeathed, the right to
receive it at the proper time becomes vested in the legatee on testator's death and in the event of
the death of the legatee without having received the legacy the said right to receive it passes to
the legal representatives of the legatee. This is, however, subject to a contrary intention being
expressed in the Will. But in the case of a contingent bequest, Section 120 prescribes that the
legacy vests in the legatee only after the happening or not happening of the contingency which
means that in the event of the legatee dying prior to happening of that contingency no interest
passes to his legal representatives. Although the question whether the interest created is a vested
or a contingent interest is dependent upon the intention to be gathered from a comprehensive
view of all the terms of the document creating the interest, the Court while construing the
document has to approach the task of construction in such cases with a bias in favour of vested
interest unless the intention to the contrary is definite and clear.5
As regards Wills the rule is that, “where there is doubt as to the time of vesting, 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 context”6

Reasoning
If the Will is thus read in a whole, it is found that under the Will Smt. Nadiga Nanjamma was
vested with the management of all the properties specified in Schedules A, B and D but she had
no power to dispose of any of those properties by sale, gift, will, mortgage or hypothecation. As

4 Section 120 of Indian Succession Act “Date of vesting when legacy contingent upon specified uncertain event. -
(1) A legacy bequeathed in case a specified uncertain event shall happen does not vest until that event happens.(2) A
legacy bequeathed in case a specified uncertain event shall not happen does not vest until the happening of that
event becomes impossible.(3) In either case, until the condition has been fulfilled, the interest of the legatee is called
contingent.”
5 Rajes Kanta Roy v. Santi Devi, 1957 SCR 77
6 Halsbury's Laws of England, 4th Edn., Vol.50, para 589 at p. 395

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regards partition of the properties, it was provided that if any of the sons after attaining the age of
majority demands partition during the lifetime of Smt. Nadiga Nanjamma, he would be entitled
to get his share. It was further provided that after the lifetime of the testator and his wife, Smt.
Nadiga Nanjamma, all the properties mentioned in Schedules "A", "B" and "D" shall be divided
equally among “my surviving children”.
Thus according to the Will the right to separate enjoyment of the share in respect of properties
was available to each of the sons of the testator on his attaining the age of majority and that the
right to separate enjoyment of the bequest relating to share in the property mentioned at item
No.1 of Schedule A and properties mentioned in Schedule B is available only after the death of
Smt. Nadiga Nanjamma. But even during the period the right to separate enjoyment was not
available to the legatees the income from the properties was available for the maintenance of the
legatees.
The Explanation in Section 19 of the Transfer of Property Act and Section 119 of the Indian
Succession Act incorporate the rule that where enjoyment of the property is postponed but the
present income thereof is to be applied for the donee the gift is vested and not contingent. In
Rajes Kanta Roy v. Santi Devi, AIR 1957 SC 255 (supra) the Court has pointed out that this rule
operates normally where the entire income is applied for the benefit of the donee. In that case,
however, under the terms of the settlement the entire income was not available to the donee for
their actual use but only a portion thereof was available and the balance was to be used for
discharge of debts. It was held that since the donees were sons of the settlor who were under an
obligation to discharge his debts out of the properties which devolve upon them, the balance of
the income which was meant to be applied for the discharge of the debts was also an application
of the income for the benefit of the donees and, therefore, the entire income is to be applied for
the benefit of the donee. Similarly, in the instant case, we find that the income from the
properties was to be used partly for the maintenance. Since the legatees, as sons, were under an
obligation to maintain their mother, it must be held that the entire income from the properties
was to be applied for the benefit of the legatees and in accordance with the rule referred to
above, the bequest in favour of the legatees must be held to be of a vested interest.
In the present case, the testator in the will has not used words similar to those contained in
illustration (ii) to Section 120. The testator after making the bequest in favour of the legatees has
given the direction that a son on attaining majority could demand partition according to the

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prevailing Hindu law in force at that time to get his portion. This is a case where the testator has
made a distinction between the gift itself and the event denoting the time of payment, division or
transfer, viz., attaining the age of majority. It falls in the same category as illustration (ii) to
Section 119 of The Indian Succession Act and must be held to be a bequest of vested interest in
respect of these properties.

Judgement
We are unable to read the Will as indicating a contrary intention to make a departure from the
rule regarding vesting of the legacy as contained in Section 119 of the Act. In our opinion, the
Will cannot be construed as creating a contingent interest in the sons of the testator so as to
postpone the date of vesting of the legacy till after the death of Smt. Nadiga Nanjamma. On a
proper construction the Will must be construed as containing a bequeath of a vested interest in
favour of the sons surviving the testator which means that the legacy vested in the legatees,
including the husband of the appellant.
The appeal is, therefore, allowed, the impugned judgment of the High Court is set aside to the
extent it denies the appellant one-fifth share in the properties mentioned in Schedules A, B, C
and D.