Section 20 - Vested Interest of Unborn Person

Section 20 of the Transfer of Property Act, 1882 explains when a person who was not born at the time of a transfer obtains a vested interest in property transferred for that person's benefit. Ordinarily, the interest vests upon birth, even where actual possession or enjoyment is deferred, unless the transfer expresses a contrary intention.

Complete text of Section 20

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.

Meaning of vested interest upon birth

An unborn person in this context is a beneficiary not living when the property is transferred. A vested interest is an interest that has become fixed in the beneficiary, even though possession, receipt of income or enjoyment may occur later. Under Section 20, birth is ordinarily the point when the unborn beneficiary acquires the vested interest, subject to the transfer's terms and compliance with the other legal requirements governing transfers for unborn persons.

The expression unless a contrary intention appears means that the document must be examined as a whole. The statutory default is vesting on birth; a different intention cannot simply be assumed because enjoyment is postponed.

How Section 20 operates

1. A transfer of property: An interest must be created by a transfer for the benefit of someone not living at the time.
2. Birth of beneficiary: The beneficiary ordinarily acquires the vested interest upon being born, not before birth.
3. Deferred enjoyment: The beneficiary need not immediately receive possession or enjoy the property for vesting to occur.
4. Terms of transfer: The instrument may disclose a contrary intention; the transfer must also satisfy other applicable legal restrictions.

Practical illustration

A transfers property to B for life and thereafter for the benefit of B's future child, giving that child the entire remaining interest. If the child is subsequently born, the child ordinarily acquires a vested interest at birth, though enjoyment may await B's death. This is an illustrative example only; validity depends on the exact instrument and compliance with Sections 13 and 14.

Vesting must be distinguished from immediate possession. The right can vest now while the right to enjoy the property begins later. Under Section 19, a vested interest is not defeated merely by the beneficiary's death before obtaining possession, subject to the actual terms and legal character of the interest.

Related provisions of the Transfer of Property Act

Section 13 - Transfer for benefit of unborn person requires that, after a prior interest, the interest created for an unborn beneficiary extend to the whole remaining interest of the transferor. Section 14 - Rule against perpetuity limits remote future interests. Section 15 concerns a class of beneficiaries some of whom fail under Sections 13 or 14. Section 16 addresses a subsequent interest dependent on a prior invalid interest. Section 19 provides the general rule concerning vested interests.

Vested and contingent interests

A vested interest is generally fixed in the beneficiary, although its enjoyment can be postponed. A contingent interest, addressed in Section 21, ordinarily depends upon the happening or non-happening of a specified uncertain event. Merely delaying enjoyment does not necessarily make an interest contingent; the precise wording and statutory provisions govern the distinction.

Official statutory sources

For the authoritative text, consult the Government of India's India Code and the Legislative Department. Check applicable amendments, local law and judicial interpretation before relying on a particular deed or settlement.