The Transfer of Property Act deals with two kinds of interest vested interest and contingent interest. Vested interest is to be distinguished from contingent interest. When an interest is vested, the transfer is complete but when 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.
Definition of Contingent Interest -
Section. 21 defines Contingent interest as follows -
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.
'X' bequeathed his property i.e. estate to 'Y' until he shall marry to 'Z'. 'Y's interest in the bequeath is contingent because it depends upon a condition precedent i.e. a marriage of 'Y' with 'Z'. An event has no proprietary interest in the estate and cannot alienate it.
But as soon as 'Y' marries with 'Z' his contingent interest becomes vested interest.
Transfer to members of a class who attain a particular age (Check it out... Transfer to class )
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.
Section.23 - Transfer contingent on happening of specified uncertain event -
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.
Section.24 - Transfer to such of certain persons as survive at some period not specified
Where, on a transfer of property, an interest therein is to accrue to such of certain persons as shall be surviving at some period, but the exact period is not specified, the interest shall go to such of them as shall be alive when the intermediate or precedent interest ceases to exist, unless a contrary intention appears from the terms of the transfer.
A transfers property to B for life, and after his death to C and D, equally to be divided between them, or to the survivor of them. C dies during the lifetime of B. D survives B. At B's death the property passes to D.
Characteristics of contingent interest
A) A contingent interest is solely depending upon the fulfillment of a condition.
B) If the transferee dies before obtaining possession the continent interest fails and property revert to transferor .
C) Contingent interest is Transferable, whether it is heritable or not depend upon the nature of such contingency.
CASE LAW -
1) Sundar Bibi vs Rajendra Narayan AIR1925 All.389.
In this case the Allahabad High Court held that in a vested interest the title passes absolutely from the transferor to the transferee at the date of the transfer, though the enjoyment may be postponed.
2) Rajesh Kanta Roy vs Shrimati Sunita Debi AIR1957, S.C.255 -
One Ramani Kanta Roy executed a registered trust deed in respect of his properties. The eldest son Rajesh was appointed the sole Trustee to hold the properties under the trust subject to certain power and obligation. After his death his two son Rajesh And Ramendra got interest in the property. There was a clause in the trust deed that both of them was to get interest in the properties allotted to each other happening of the two events -
1) Discharge of all the debts specified in the schedule and death of the settler himself.
2) The trust was to come to an end on the death of settler and the son were to get properties allotted to them there after.
Issue before the court was whether the interest created by the trust were vested or contingent ?
A Supreme Court held that the interest taken by the two brothers under the trust deed was vested and not contingent because it was certain event.
A contingent interest depend solely upon the fulfillment of the condition. In contingent interest there is no present right, there is a promise to give right upon the fulfillment of a condition. A contingent Interest is inalienable and not transferable.