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Amisha Bhandari, Analysis on Vested and Contingent Interest under the Transfer of
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Transfer of Property Act, 1887. Indian Journal of Law and Legal Research, 4, 1-9.

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Property Act, 1887" (2022) 4 Indian JL & Legal Rsch 1.

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Indian Journal of Law and Legal Research Volume IV Issue I ISSN: 2582-8878

ANALYSIS ON VESTED AND CONTINGENT INTEREST

UNDER THE TRANSFER OF PROPERTY ACT, 1887

Amisha Bhandari, Delhi Metropolitan Education, GGSIPU

Introduction

Transfer and exchange of property is extremely normal in the everyday existence of a person.
There are different laws under the Indian Law connected with property matters. Yet, initially,
what do we mean by the term property? Property might be characterized as any physical or
virtual substance claimed by an individual or a gathering of people who hold the possession
and privileges on the property. Property can be moved or sold starting with one individual then
on to the next by different means as indicated by the laws in India. The Transfer of Property
Act, 1882 (ToPA) manages the exchange of properties between one individual to another.

As per The Transfer of Property Act, 1882, the parties involve for the agreement of move of
property are Transferor and Transferee. The transferor is somebody who moves his property to
the other person while the transferee is an individual who gets the property. Rules of the Indian
Contract Act, 1872 are appropriate in the exchange of property.

Vested Interest and Contingent Interest are two key interests that are considered while
transferring a property. They are clarified under The Transfer of Property Act, 1882 alongside
the fundamental circumstances connected with the property. Vested interest is referenced in
Section 19 and Contingent Interest is referenced in Section 21 of the Transfer of Property Act,
1882. When a condition exists for the occurrence of a specific event, vested interest is generated
whereas, contingent interest only takes effect after the condition is met; if the requirement isn't
met, the transfer will be voided.

Vested Interest

Vested interest is defined under Section 19 of the Transfer of Property Act of 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

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Indian Journal of Law and Legal Research Volume IV Issue I ISSN: 2582-8878

intention appears from the terms of the transfer. A vested interest is not defeated by the death
of the transferee before he obtains possession. 1

"
Vested Interest is an interest that is generated in a person's favour when the condition
mentioned in the contract of property transfer is certain and the event will occur in the future.
The transferer and the transferee go into an agreement of transfer of property and the transferer
makes a specific condition for the satisfaction of transfer of property and upon the finish of the
condition, the transferee gets the ownership of the property. The transferee may not receive
possession of the property immediately after signing the contract, but he can expect it after the
specific conditions are met.

There are two phases to vested interest. The right to enjoyment is postponed to a future date
when the transferee is in immediate and present possession of the property, and when the
transferee has acquired an interest in the property but is not in current possession of the
property.2

For example,

An individual A guarantees individual B to move the property and come into an agreement.
Here A is the transferer and B is the transferee of the property. For moving the property A puts
a condition that B can get the ownership of his property solely after A's demise. A's passing,
here, is a sure occasion which will clearly happen in future thus B can guarantee A's property
after A's demise. On the off chance that B passes before A, the property will be moved to the
lawful successors to B after A's demise. Here, B has Vested Interest over A's property.

After his death, X, Y's father, agrees to give an ancestral property to Y. The interest in the
ancestral property in Y's favour is contingent on the death of his father X, which is certain. As
a result, when X passes away, Y will inherit the ancestral property.

Vested Interest can be possible in various circumstances too. For example, on the off chance
that an individual P who is transferer of the property and individual Q who will take the
property from P, as a transferee comes into an agreement of move of property. P who has
indisputably the directly over his property chooses to give the ownership of the property to Q

1 Transfer of Property Act, 1882; section 19

2 Dhruvi Dharia, Contingent and Vested Interest, available at:
https://lawtimesjournal.in/contingent-and-vested-interest/#_ednref2 (Last Modified Feb 06,2020)

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Indian Journal of Law and Legal Research Volume IV Issue I ISSN: 2582-8878

just when he achieves the age of 40. In this agreement, Q will have the ownership of the
property when he accomplishes the ideal age, for example, 40 as indicated by the agreement of
move of property. The condition in this agreement is sure and it will occur from here on out
and on the off chance that Q bites the dust before the age of 40, the legitimate successors to Q
can guarantee the property of P as indicated by the agreements of the agreement.

Characteristics of vested interest

Following are some of the main characteristics of vested interest:-

1. Vested Interest doesn't rely upon a questionable occasion. It relies upon a specific
occasion which should occur. It makes a present or prompt right however the right to
happiness is deferred.
2. Vested Interest isn't crushed by death. On the demise of the transferee, the interest is
passed to the main beneficiary of such transferee.
3. Vested interest is a transferable right as well as a heritable right. 3

Nature of vested interest

1. Present fixed right: Vested interest is the property's present fixed right. When a vested
interest in property is created in the transferee's favour, the transferee receives a present
fixed right to the property. If the interest is vested, the transferee receives it right away.
The transferee's title is complete as soon as the transfer is accomplished in a vested
interest.

The term "vested in possession" can refer to either "vested in possession" or "vested
not in possession." When an interest is "vested not in possession," the transferee has a
current indefeasible claim to future possession of the interest. Thus, even if the right of
pleasure is postponed or delayed, the vested interest grants the present right to the
property.
2. Transferable and heritable interest: Vested interest can be passed down from
generation to generation. The vested interest is divisible and transferable since it is a
present fixed right and the transferee's title is entire or absolute. A vested interest in a
transferee's present fixed right that is regarded as his property. It is a transferable
interest, which implies that even if the transferee has no ownership or right of

3 Nishant Vimal, Understandingthe concept of Vested and ContingentInterest, available at:

https://blog.ipleaders.in/property-law-vested-contingent-interest/ (Last Modified May 25,2019)

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Indian Journal of Law and Legal Research Volume IV Issue I ISSN: 2582-8878

enjoyment, the interest can be transferred under Section 6 of the Act. Furthermore, in
the execution of a decree, the vested interest can be attached and sold.
3. Time of vesting of interest: On the exchange of property, usually, the interest made in
the blessing of the transferee vests right away. Under Section 19 gives that the interest
made is called vested when no season of its vesting is determined or it is to vest right
away or where however pleasure is delayed yet it is planned to the vest with quick
impact in the interest.

Case laws on Vested Interest

Vested Interest isn't crushed by the demise of the devisee before he gets ownership and his
delegates will be qualified for its advantage. 4

Allahabad High Court held that in a vested interest the title passes totally from the transferor
to the transferee at the date of the exchange; however the satisfaction might be deferred.5

Rajesh Kanta Roy vs Shrimati Sunita Debi AIR1957, S.C.255 6

One Ramani Kanta Roy executed an enlisted trust deed in regard of his properties. The oldest
child Rajesh was named the sole Trustee to hold the properties under the trust subject to specific
power and commitment. After his passing, his two children Rajesh And Ramendra got intrigued
by the property. There was a condition in the trust deed that the two of them was to get keen
on the properties designated to one another incident of the two occasions
-

1. Discharge of the relative multitude of obligations determined in the timetable and

demise of the pioneer himself.
2. The trust was to reached a conclusion on the demise of the pilgrim and the child were
to get properties distributed to them from there on.

The issue under the steady gaze of the court was whether the interest made by the trust was
vested or unforeseen?

4 Pearey Lal Vs Rameshwar Das, AIR 1918 Mad 29.

5 Sundar Bibi vs Rajendra Narayan, AIR1925 A11.389.
6Rajesh Kanta Roy vs Shrimati Sunita Debi, AIR1957, S.C.255
https://indiankanoon.org/doc/1809195/ (Visited on March 06, 2021)

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Indian Journal of Law and Legal Research Volume IV Issue I ISSN: 2582-8878

A Supreme Court held that the interest taken by the two siblings under the trust deed was vested
and not unforeseen on the grounds that it was a sure occasion

"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 a 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.7 "

A vested interest in an unborn child is defined in Section 20 of the Transfer of Property Act of
1882. When he is born, his interest in the property will be transferred to him. After acquiring a
vested interest in the property, the unborn child may not have the right to enjoy it immediately.

Contingent interest

Contingent Interest is defined under Section 21 of the Transfer of Property Act, 18828 as

-
"Where, on a transfer of property, an interest therein is created in favour of a person to take
effect only on the happening of a specified uncertain event, or if a specified uncertain event
shall not happen, such person thereby acquires a contingent interest in the property. Such
interest becomes a vested interest, in the former case, on the happening of the event, in the
latter, when the happening of the event becomes impossible.

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

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

A contingent interest is defined in this section, as well as when it gets vested. The terms "being
formed in favour of a person to take effect only if a specific uncertain event occurs," etc.,
indicating that an estate or interest is contingent when vesting is based on a questionable or
uncertain event. The interest is vested, not contingent, when a right accrues immediately but
the enjoyment of the interest is postponed to a later date. To determine if an interest is vested
or contingent, look to see if there is an immediate right to current or future enjoyment, or if the
right is based on the occurrence of an unpredictable event.

7 Transfer of Property Act, 1882; section 20

8 Transfer of Property Act, 1882; section 21

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In other words, It is an interest which is made for an individual on satisfying a state of occurring
of a predefined unsure occasion. The individual having the unforeseen interest doesn't get the
ownership of the property however gets it after occurring of that occasion yet won't get the
property on the off chance that the occasion doesn't occur. Unexpected interest is altogether
subject to the condition forced on the exchange.

X consents to move the property to Y depending on the prerequisite that he will get 90 % in
his tests. This condition is dubious and the occurrence of the occasion or not happening is in
uncertainty and along these lines Y here procures an unexpected interest in the property. He
will get the property provided that he gets 90 % and when the condition is satisfied.

Krishna and Rajat come into an agreement of move of property where, An is the transferor and
rajat is the transferee of the property and Krishna puts a condition that the property will be
moved to rajat provided that he offers his home to sam here, rajat could possibly offer his home
to sam and accordingly it is an unsure occasion. In the event that rajat offers the property to
sam, the interest becomes vested interest.

An exchanges his ranch of Sultanpur Khurd to B assuming B will pass his own homestead of
Sultanpur Buzurg on to C. Here the interest of B in the ranch of Sultanpur Khurd is unexpected
interest. Furthermore it might become vested assuming B passes his ranch of Sultanpur Buzurg
on to the C.

Anyway whenever an individual who gets an opportunity of turning into the proprietor of a
particular property and before the questionable occasion happens, assuming such an individual
gets any pay emerging from such a property, this interest in the property is definitely not an
unexpected interest. Thus such an interest is an exemption under section 21.

Characteristics of contingent interest

1. The interest in a particular property moved will be dependent upon a condition which
is questionable i.e., it could conceivably happen. Just on satisfaction of such a condition
will the unexpected interest in the property become vested interest in the transferee.
2. In the event that the transferee passes on prior to securing the interest in the property,
the unexpected interest will slip by and the transferor will stay the proprietor of the
property.

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3. The unforeseen interest can be moved for example it is an adaptable right. In any case,
on the off chance that the unforeseen interest is heritable or not relies upon the
unexpected occasion and nature of the exchange.

Case laws on contingent interest

In P.C. choice Mahitai v. Sundaram9 , an award gave that on the passing of the last enduring
widow of the late Raja of Tanjore, his little girl or bombing her the following successor, if any,
ought to acquire the property. The inquiry was the idea of the interest the little girl got? The
privy Council held that until the demise of the last enduring window, the interest made for the
girl was just dependent upon her enduring the last window.

In Abdul Sakur v. Abubakar Raji Abbalo, X vowed to give at the hour of his passing to A, B
and C Rs. 1,000 each to be paid to them on the event of their marriage. What was the idea of
the gift to A, B and C? It was held that the gift was dependent upon their marriage occurring.
An and c marriage before X's passing, and the possibility pondered didn't, consequently, occur,
with the outcome they didn't take. B wedded after the passing, and on such marriage, the gift
turned into a vested one.

In Natwarlal Girdharilalv. Ranchood Bhagwandas", an exchange was made "to A forever,

then, at that point, to her embraced child; in the event that she bites the dust without taking on
anyone; to B and her child." B pre-expired A. It was held that b has just unforeseen interest,
the possibility being that A should bite the dust without making a reception.

In Soorajmani 1 2 case, A makes gift for his children with a condition that assuming any of them
bites the dust leaving no male issue, his portion will be taken by the others, and not by the
widow or girl of the perished child. In such a case, the gift makes an unforeseen interest.

9 Mahitai v.Sundaram, (1936) 38 BOMLR 672

10 Abdul Sakur v. Abubakar Raji Abba, 1930 Bom. 191
" Natwarlal Girdharilal v. Ranchood Bhagwandas, 1920 Bom. 295
12 Soorajmani v. Denobandhu,9 M.I.A 123: Guruswami v. Sirakami, I.L.R. 18 Mad.
347

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 Indian Journal of Law and Legal Research Volume IV Issue I ISSN: 2582-8878

Difference between vested & contingent interest

S.
Basis Vested Interest Contingent interest
No

Contingent interest is given in

Vested Interest is given in Section 19
1. Section Section 21 of the Transfer of
of the Transfer of Property Act, 1882.
Property Act, 1882.

It is an interest which is made for

an individual on a state of the
It is an interest which is made for an
incident of a predetermined
individual where time isn't indicated
questionable occasion. The
or a state of the occurrence of a
individual having the unexpected
predetermined specific occasion. The
interest doesn't get the ownership
2. Definition individual having the vested interest
of that property however has the
doesn't get the ownership of that
hope to get it after occurring of
property however has the hope to get
that occasion yet won't get the
it after occurring of a predetermined
property on the off chance that the
specific occasion.
occasion doesn't occur as the
condition isn't satisfied.

The condition includes a

The condition includes a predefined
predetermined questionable
certain occasion. A specific occasion
3. Condition occasion. There is an opportunity
implies an occasion that will
of the incident or non-occurring of
ultimately occur.
that specific occasion.

Vested Interest doesn't totally rely Contingent interest is totally

Fulfilment of upon the condition as the condition reliant upon the condition forced
4.
conditions includes a specific occasion. It makes on the exchange. Interest is simply
a current right that is active right moved to the transferee on the

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 Indian Journal of Law and Legal Research Volume IV Issue I ISSN: 2582-8878

away, albeit the delight is deferred to satisfaction of the condition

the time endorsed in the exchange. forced.

Right of This right is made when the interest is There is mere chance to be
5.
Ownership vested. having the ownership rights.

Demise of the transferee prior to

Demise of the individual who is
getting the ownership of the
having this interest won't have any
Death of property will bring about the
6. impact over that interest as after the
transferee disappointment of mainland
expired, the interest will vest in his
interest and the property will stay
lawful beneficiaries.
with the transferor.

Contingent interest is a
Transferable right, yet regardless
Transferable and Vested interest is a Transferable and
7. of whether it is heritable, it relies
heritable? heritable right.
on the idea of such any exchange
and the condition.

Conclusion

Vested Interest and Contingent Interest are two significant kinds of interest for the transferee
in the agreement of move of property under the Transfer of Property Act, 1882. Segment 19 to
24 of the Transfer of Property Act 1882 disclose the arrangements connected with personal
stake and unexpected interest. Such interests are obtained in steadfast property for the
transferee on the exchange of such property to him. Such exchange of interest could happen
right away or on the event of a predetermined occasion.

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