Kinds of Interest in the Transfer of Property.
There are two kinds of interest in the Transfer of Property Act. first vested and second contingent. Vested interest is to be distinguished from contingent interest. When any interest is vested the transfer is complete, but where 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.
A) Vested interest
Definition of vested interest
The definition of vested interest is defined u/s.19 of Transfer of Property Act which provides -
"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.
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
S.20 When unborn person acquires vested interest on transfer for his benefit
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.
S.21 Contingent interest
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.
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.