Introduction

Section 5 of Transfer of Property Act, 1882 (hereinafter referred as the Act) defines the transfer of
property as an act by which a living person conveys/transfers property to one or more living
persons in the form of sale, exchange, gift, mortgage, lease, actionable claim or charge and for a
transfer to take place in present or in future, the property must be in existence. Such transfer can
be either absolutely or conditionally. In absolute transfer, the transferee becomes an immediate
owner of the property transferred to him without any encumbrances and limitations whereas, in
conditional transfer, an interest is created in the favour of the transferee subject to the fulfillment
of a condition by him attached with the transfer of such property.

For any kind of a conditional transfer to be valid, the condition that is imposed
should not be:

1. Prohibited by law,
2. Should not be an act that involves fraudulent acts,
3. Should not be any act that is impossible,
4. Should not be an act that is termed as violative of public policy,
5. Should not be immoral,
6. Any act that incurs any harm to any person or his property.
For example, X transfers a property ‘B’ to Y stating that he shall murder Z as
a condition for the transfer. Such transfer is void as the condition is prohibited
by law.

CONCEPT OF CONDITIONAL TRANSFER [1]

Any transfer of property that vests an interest, created by a transferor, that happens to be
contingent upon the fulfilment or non-fulfilment of a condition, results in a conditional transfer.

Illustration- A transfers his property to B on a condition that B shall get a job in a reputed company.
The condition of A for B to get a job is known as conditional Transfer.

Types of Conditions on Transfer

There are three specific types of conditions that are imposed in a transfer of
property and there are some more types provided. All these conditions should
also satisfy all the requirements of a condition as mentioned in Section 25 of
the Transfer of Property Act, 1882.
Condition Precedent
It is given in Section 26 of the Transfer of Property Act, 1882. Any
condition that is required to be fulfilled before the transfer of any property is
called a condition precedent. This condition is not to be strictly followed and
the transfer can take place even when there has been substantial compliance
of the condition. For example, A is ready to transfer his property to B on the
condition that he needs to take the consent of X, Y and Z before marrying. Z
dies and afterward, B takes the consent of X and Y so the transfer can take
place as there has been substantial compliance. These facts were from a case
of Dawson v. Oliver-Massey (1).

In the landmark case of Wilkinson v. Wilkinson (2), the condition where one
party was required to desert her husband for the transfer to go through, this
was held by the court as invalid as it was against public policy.

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Condition Subsequent
It is given in Section 29 of the Transfer of Property Act, 1882. Any
condition that is required to be fulfilled after the transfer of any property is
called condition subsequent. This condition is to be strictly complied with and
the transfer will happen only after the completion of such condition. For
example, A transfers any property ‘X’ to B on the condition that he has to score
above 75 percent in his university exams. If B fails to achieve 75 percent marks
then the transfer will break down and the property will revert back to A.

Although it is an essential requirement that the condition needs to lawful and

if it is not then the condition will be held as void and the transfer will not break
down and will be finalized. For example, A transfers the property to B on the
condition that he shall murder C. This condition is void and hence transfer will
go through and the property will be kept by B.

VOID CONDITIONS[3]
Section 25 lays down the following six categories of conditions which should not be imposed while
creating an interest in the transfer of property as it renders the transfer void, namely-

(i) Conditions which are impossible to perform;

Case law- In Rajendra Lal v. Mrinalini Dassi [4], the condition in the bequest was that the legatee
had to excavate a tank, which in fact was already excavated by the testator himself. Therefore, the
condition imposed made the bequest void as the possibility to perform it was impossible.
(ii) Conditions forbidden by law;
Illustration- A transfers a portion of his property to B on a condition that B shall transfer his excise
license to C. This transfer shall be void as the transfer of license is forbidden by law.

(iii) Conditions, if permitted, would defeat the provisions of any law;

Illustration- A, who is in default on the payment of Welfare Fund was ineligible to participate in the
auction and to take any contract in his name. To circumvent this law, he transferred Rs 1 Crore to
B on a condition that he shall buy some shops at the auction and transfer them to A. An action suit
filed by A to realize the money transferred to B as B did not fulfill the condition was held to be void
because the condition imposed defeats the provision of law.

(iv) Conditions involving or implying injury to person and property of another;

Illustration– In Ramalinga Padayachi v. Natesa Padayachi[5], A, the buyer of some property
was aware that the C, the seller, does not have a good title, and he persuades the C to transfer the
property to A, the buyer with the object of giving trouble to the true owner. A later filed an action
suit to claim indemnity from C for loss to the buyer in the litigation of that property. The court held
the suit cannot be maintained A bought the property to imply injury to the true owner.
(v) Fraudulent Conditions;
Illustration- A knew that the railway company would not grant him a contract. He advanced money
to B so that he could put forward an application for the contract on behalf of A and after the
contract was granted, A shall serve as the real contractor. In this situation, the agreement is void
as the condition imposed while transferring the money was fraudulent with an aim to commit fraud
upon the Railway Company.

(vi) Conditions that are regarded as immoral or opposed to public policy by the court.
Case- In Wilkinson v. Wilkinson [6], it was held that the agreement was against the public policy
and void where the person advanced money to enable a woman to divorce her husband and marry
him later, he sued her afterward for return of money as she failed to do so.
It should be kept in mind that, if these conditions are conditions precedent, they will make the
transfer void for the conditions being void themselves. However, if the condition is a condition
subsequent, the transfer may continue to be valid even if the condition is void. In Ram Sarup v.
Bela[7], it was noted that a gift to which immoral condition is attached is a good gift but the
condition is void. While in Ghumna v. Ramchandra [8], the court opined that the transfer in
consideration of future immoral relations is void.
Condition Collateral
Any condition that is required to be fulfilled simultaneously after the transfer
of any property is called condition collateral. It needs to be strictly followed
otherwise the transfer will break down. For example, A transfers property ‘X’
to B on the condition that he shall maintain A’s wife C for a period of 10 years.
If B complies with it and maintains C, the transfer will be valid and the property
will be in the possession of B.

Also it has been recently clarified by the Hon’ble Supreme Court in a case in
2018, in case of a conditional gift where there was no recital of acceptance
and no proof or any sign of acceptance. If the possession of that gift is with
the donor for his lifetime and it is not completed during his lifetime. The deed
of gift might be cancelled at the option of the donor as it has not violated any
principles required in a valid transfer of property and the donor is within his
rights to cancel any gift deed of such kind.

In Venkatarama V. Aiyasami Ayar[14], A prisoner was sentenced for life and before serving his
sentence he transferred his property to B with a condition that the interest created in the transferee
shall cease to exist if the transferor return from the prison. It was held that the condition imposed
was valid therefore when he returned from prison, the transfer in favour of the transferee ceases
to exist.

Other Types of Conditions

Section 27 of the Transfer of Property Act, 1882 provides for any transfer
to any other person if the first transfer fails. For example, A transfers a car to
B on condition that he shall transfer his bike to C, if he does not the car shall
go to D. So if B does not transfer his bike to C, the car shall go to D on failure
of ‘prior disposition’ as said in the section.

It should be noticed that the condition on the first transfer was valid otherwise,
the subsequent interest or transfer also fails. Only when the valid condition is
not fulfilled or ‘shall fail’ then only the subsequent transfer takes effect.

The Doctrine of Acceleration comes into the picture here, it is based on the
principle that one property should be passed on to some other person if the
first condition fails as if the property was never vested in him. In the case
of Ajudhia v. Rakhman Kaur (3), where the property when not registered in
the name of the mother because of a local act and she could not have received
the gift, the property was accelerated to the children as a gift.
There is an exception to this section which is when it is a situation of a transfer
in form of a gift, doctrine of acceleration does not apply unless the first transfer
fails in a particular specified manner only.

Section 28 of the Transfer of Property Act, 1882 provides for any

subsequent transfer that takes place on not happening of a specified event.

Conditional Limitation is something that is applied here and it affects any

ulterior disposition and if a vested property involves any condition that does
not happen, it takes place and property is transferred to the ulterior disposition
which is the ultimate beneficiary.

This section is subject to rules which are present in the sections

10,12,21,22,23,24,25 and 27 of the Transfer of Property Act,1882.

For example in Contingent interest which is mentioned in Section 21 of the

Transfer of Property Act, 1882 when the condition is put that A’s land which is
transferred to B will be transferred to C if B dies. Hence the interests created
in C is ulterior transfer. The requirement here also is that the conditions need
to be lawful and satisfy all other requirements in Section 25.

This event is a condition of defeasance i.e. the act of making something null
and void. The only exception is where a person is vested with an absolute
interest and thereafter to a person. The interest for the third person is on
termination of the person vested with absolute interest and not on defeasance.

Section 30 of the Transfer of Property Act, 1882 provides that any

transfer will not be affected by the invalidity of the ulterior disposition, which
means that is the subsequent transaction as it is rendered void because of
some default, then the first transaction will not be held invalid because of it.

For example if X transfers land to Y and then, after his marriage, life interest
to his male offspring. As the transfer to the male offspring is not valid as per
Section 13 of the Transfer of Property Act, 1882 which prohibits any life
interest created in favour of unborn. The substance of Section 30 provides that
the transfer to B will not be affected even when the ulterior disposition
(transfer to unborn son) is not valid.

Section 31 of the Transfer of Property Act, 1882 states that any transfer
where the condition of happening of an event or not happening of an event
takes place is applied, the transfer shall cease to have an effect. The condition
mentioned in this section is a condition subsequent and not a conditional
limitation which is in favour of any third party. This condition is given in a
negative sense, as the transferor prescribes when the transfer shall cease to
have effect.
For example, A can put a condition on B to plant a tree and then the transfer
will have an effect. If B plants, then he will get the property.

In the case of Ambika Charan v. Sasitara (4), it was held that even
condition collateral is a valid condition under the application of Section 31 and
in this case, one party was required to live at a particular residence and as
long as this condition is fulfilled, the transfer shall continue to have an effect.

Even where the condition where there is a prescribed penalty, it can be

extracted by way of compensation, for example for forfeiting an estate,
compensation can be demanded.

Section 32 of the Transfer of Property Act, 1882 states that the condition
mentioned in Section 31 should not be invalid or prohibited by law.
Although Section 30 is also kept in mind that any condition in ulterior
disposition which is invalid will not invalidate any transfer that happened prior
to it. As for condition precedent or subsequent, for the transfer to be valid the
conditions need not be invalid and all the requirements mentioned in Section
25 should be met.

Section 33 of the Transfer of Property Act, 1882 states about any transfer
where on a condition, time is not specified for the happening or non-happening
of an act. This transfer ceases to have effect only when the act is made to be
impossible permanently or for a great period of time.

TRANSFER CONDITIONAL ON PERFORMANCE OF ACT[15]

A. WHEN NO TIME SPECIFIED FOR PERFORMANCE
Section 33 of the Act states that if a person’s interest is created in a property but subject to his
fulfilling a condition for the performance of which no time is specified then the person is not
permitted to create conditions by his conduct which renders impossible the fulfillment of the
condition either permanently or indefinitely. He cannot evade the fulfillment of conditions, yet
plan to take benefit under the transfer, thereby breaking the condition.

In Shyama Charan v. Naba Chandra[16], a person bequeathed certain properties to his

daughter’s son in the event of his widow dying without adopting a son and such interest vested in
him was conditional on him living in the family house, but the son himself joins the wife in selling
the house. It was held that the son will be deprived of the interest given to him by bequest as he
breached the condition.
B. WHEN TIME SPECIFIED

Section 34 of the Act incorporates a rule that prevents a person from taking advantage of his own
fraud. It is applicable to both condition precedent as well as condition subsequent. It states that
when upon a transfer, time is specified for the happening or non-happening of an act, then the act
should be performed in that time specified time only otherwise the interest on the property shall
transfer to any other person. It is pertinent to note that if any delay is caused in the performance
of an act by the person who is interested in its non-fulfillment, then the delay shall be condoned
and the condition shall stand discharged.
In Tin Cowri Dassee v. Krishna[17], A transferred property to B with a condition that if A does not
live at a holy place for three months from the date of the transfer then he shall be divested of his
interest in the property. Relatives of B with an intent of non-fulfillment of this condition confined
A in a secluded place. It was held the condition deemed to be discharged as relatives of A caused
the non- performance of the condition with anticipation that property would devolve on them.

Section 34 of the Transfer of Property Act, 1882 states about any transfer
where on a condition, time is specified for the happening or non-happening of
an act and on the failure of such condition, the interest of the property is to
go to another person. If the condition is fulfilled within the prescribed time,
then the transfer will continue to have effect; if not, then the transfer shall
cease to have an effect. For example, M agrees to transfer land ‘X’ to N on the
condition that he shall go to England in a span of 2 months. If N goes to
England within the prescribed time period then the transfer shall go through
and N shall get the property, but if he fails to do so inside the 2 months
specified by M, the transfer shall cease to have effect.

But, it has to been seen that, what caused the delay of the condition to be
fulfilled. If the performance of the specified condition that may be either
subsequent or precedent is prevented by a person who is interested in its non-
fulfilment, the delay is condoned and the condition is discharged.

X transfers property to Y with a condition that if he does not go to U.S. within

2 years, the property will pass on to Z. Later on if Z, by playing a fraud,
prevents Y from performing the condition, the delay in such performance is
excused.

Conclusion
Conditional Transfers form a very crucial aspect in day to day transactions of
transfer of property. It is important to know about provisions relating to this
concept. All types of conditional transfers are given from Section 25 – 34 of
the Transfer of Property Act, 1882. It is important to note that the condition
on any transfer should not be prohibited by law and can be ideally performed.
This article conveys the basic principles and mechanisms behind these
provisions, and how they fare out with practical examples that will help the
reader relate it with the real time events.

Reference
1. (1876) 2 Ch D 753.
2. (1871) Eq 604.
3. (1883) 10 Cal 482.
4. (1915) 22 Cal LJ 61.