Report No. 70

28.11. Validity of contingent interest without supporting interest.-

There seems to be some discussion in the text books of the question whether the artificial rule of English Real Property Law that every contingent gift must be supported by a prior estate and that it must vest at least so instant the determination of the particular estate which supports it, applies in India. Mulla1 has expressed the view that the rule ought not to be imported into India.

He has stated that there is no reason why a contingent gift by a Hindu to a living person inter vivos without a prior gift supporting it should not be upheld. Though Mulla has used the expression "Hindu", it would appear that this view was being advanced as an interpretation of the provisions of the Transfer of Property Act also.

1. Mulla, (1973), p. 145.

28.12. Practical query.-

Of course, the practical query that could, at first, be put forth is-what is to happen until the interest becomes vested by the happening of the contingency? This was perhaps an aspect which weighted with Ramesam J. in a Madras case1 in holding that a bequest, by a testator leaving the estate to the grandson or grandsons who might be born within 10 years after the testator's death would be void under Hindu law, as there would be an interval of 10 years after the testator's death during which the estate is not vested in any person.

So far as Hindu law, apart from statutory provisions, is concerned, it is Mulla's view, relying on the judgement of the Privy Council in Gadadhar's case,2 that after the decision of the Privy Council, the Madras view cannot be accepted as correct.

1. Official Assignee of Madras v. Ved Vali, AIR 1926 Mad 966 (Ramesam, J.).

2. Gadadhar v. Official Trustee of Bengal, AIR 1940 PC 45.

28.13. Section 23.-

Let us now consider the text of section 23. On the one hand, the mandate in the last 22 words of the section to the effect that the interest fails unless such event happens before or at the same time as "the intermediate or precedent interest ceases to exist", has to be applied. On the other hand, it is not clear whether the expression "intermediate or precedent" covers the transferor's interest also. As a matter of construing the intention of the transferor, however, a contrary view would appear to be arbitrary, since one can assert that "every settler or testator intends the contingent remainder to take effect"-as was observed by Jessel M.R.1

There is, therefore, something to be said for taking the same view as Mulla has expressed.

1. Qualiffe v. Brancker, 3 Ch D 393 (399).

28.14. Property without owner.-

If the difficulty of the property remaining without owner could be surmounted, there is much to be said for Mulla's view. It would appear that the difficulty could be surmounted by holding that until the contingency happens, the property remains in the ownership of the transferor-we are taking a case where the very first gift is contingent one. On this view, the text of the section is also satisfied, because the "precedent" interest of the transferor has not yet come to an end.

28.15. No change needed.-

On the whole, we think that the language of the section could, and should, be construed as not ruling out a contingent interest dependent on an uncertain event not proceeded (by a "supporting" gift) and the technical rule of English law does not necessarily apply. Of course, the relevant contingency like the contingency attached to any other interest must fall within the perpetuity period and must comply with such other provisions as may be applicable. But no amendment is needed.

Section 22

28.16. Gist.-

Contingent interests in favour of members of a class are covered by section 22. Under section 22, where, on a transfer of property, an interest therein is created in favour of such members only of a class as shall attain a particular age, such interest does not vest in any member of the class who has not attained that age.

This sections corresponds to section 121 of the Succession Act,1 which reads-

"121. Where a bequest is made only to such members of a class as shall have attained a particular age, a person who has not attained that age cannot have a vested interest in the legacy.

Illustration

A fund is bequeathed to such of the children of A as shall attain the age of 18, with a direction that, while any child of A shall be under the age of 18, the income of the share to which it may be presumed he will be eventually entitled, shall be applied for his maintenance and education. No child of A under the age of 18 has a vested interest in the bequest."

1. Section 121, Indian Succession Act, 1925.

28.17. Rationale.-

Section 22 deals with gifts to a contingent class, and, therefore, it follows that, unless the condition of the transfer is fulfilled, the wishes of the transferor cannot be carried out. As observed by Rest, C.J.1 unless the requisite age is attained, no child completely answers the description of those who are to be transferees. So, in England, a gift to children who shall have attained 21, or to such children as shall have attained that age is contingent, and no child before attaining that age can have a vested interest.2

1. Duffield v. Duffield, 3 Bli (US) 216 (333).

2. Bull v. Pritchard, 1 Russ 213;

Leake v. Robinson, 2 Mer 363;

Thomas v. Wilberforce, 31 Beav 299; Wiliams v. Hawthorne, LR 6 Ch 782.

28.17A. The rule in section 22 seems, in substance, to be an exception to the Exception1 to section 21. Under the Exception to section 21, at least where there is a direction to apply the income for the benefit of a particular person until he attains a particular age on which the interest is to belong to him, the interest is not contingent, while, under section 22, in such a situation the interest is contingent. In a similar manner, section 121 of the Indian Succession Act, 1925 overrides the Indian Succession Act, section 120.

1. Para. 28.4, supra.

28.19. No Change.-

The section seems to need no change. 28.20. Section 23.-This takes us to section 23, which reads-

"23. 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 of that event, the interest fails unless such event happens before, or at the same time as, the intermediate or precedent interest ceases to exist".