SNDT WOMEN’S UNIVERSITY

LAW SCHOOL

VESTED INTERESET AND CONTINGENT INTEREST

UPASANA ROY
4th year B.B.A., LL.B
SUBJECT: transfer of property
Roll No: 12
Submitted on: 30th November 2021

Professor
Kamni Ahuja
 ACKNOWLEDGEMENT
Primarily I would thank god for being able to complete this project
with success. I give my sincere thanks to SNDT WOMEN’S
UNIVERSITY, LAW SCHOOL, then I would like to thank my teacher,
whose valuable guidance has been the ones that helped me patch
this project make it full proof success her instructions has served as
the major contribution towards the completion of the project.
The project helped me gain knowledge on the topic. I would like to
thank my parents and friends who have helped me their valuable
suggestions and information on the topic on various phases of the
completion of the project.
Last but not the least I would like to thank my classmates who have
helped me a lot.

Upasana Roy
 INDEX
Sr Topic Pg. no.
no.
1. INTRODUCTION 1

2. CONCEPT OF VESTED INTEREST 2

3. CHARACTERISTICS OF VESTED INTEREST 4

4. CASE LAWS 5

5. CONDTIONS AND APPLICATIONS OF VESTED INTEREST 6

6. CONCEPT OF CONTINGENT INTEREST 7

7. CHARACTERISTICS OF CONTINGENT INTEREST 8

8. CASE LAWS 10

9. DIFFERENCE BETWEEN VESTED AND CONTINGENT 13

INTEREST
10. CONCLUSION 14

11. COMMON QUERIES 15

12. REFERENCE 16
 Vested interest and contingent interest
Introduction
Property transfer and exchange is very common in the day to day life of an
individual. There are various provisions under the Indian Law related to
property matters. But firstly, what do we mean by the term property? Property
may be defined as any physical or virtual entity owned by an individual or a
group of individuals who hold the ownership and rights on the property.
Property can be transferred or sold from one person to another by various means
according to the statutes in India. The Transfer of Property Act, 1882 (ToPA)
deals with the transfer of properties between one people to another.
According to The Transfer of Property Act, 1882, the parties for the contract of
transfer of property are Transferor and Transferee. The transferor is someone
who transfers his property to another while the transferee is a person who is
transferred. Provisions of the Indian Contract Act, 1872 are applicable in the
transfer of property.

For the transfer of a property two major interests are taken into consideration,
namely, Vested Interest and Contingent Interest. They are explained under The
Transfer of Property Act, 1882 along with the necessary conditions related to
transfer of property.

Vested Interest is mentioned in Section 19 and Contingent Interest is mentioned

in Section 21 of the Transfer of Property Act, 1888.

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Concept of Vested Interest
Section 19 of the Transfer of Property Act, 1882 states about Vested Interest.
It is an interest which is created in favour of a person where time is not
specified or a condition of the happening of a specified certain event. The
person having the vested interest does not get the possession of that property but
has the expectancy to receive it upon happening of a specified certain event.

For example, a promises to transfer his property to B on him attaining the age of
22. B will have vested interest in A’s property till the time he does not get the
possession of it.

Death of the person who is having this interest will not have any effect over that
interest as after the deceased, the interest will vest in his legal heirs.

For example, in the above example, if B dies at the age of 21, then the interest
vested in B will pass on to the legal heirs of B and they will be entitled to the
property in the prescribed time period.

There are the important aspects of a vested interest as stated above, all these are
discussed in detail below:

Interest should be vested: This is the basic meaning of the provision that lays
down that interest should be created in favour of a person where time is not
specified or a condition of the happening of a specified certain event. A person
should profess to transfer a particular property in order for this interest to be
created.

1. Right to enjoy property is postponed: When interest is vested in a

person, he does not immediately get the possession of that property
and hence cannot enjoy that property. But any person who is not a
major and has a guardian is only entitled to the vested interest after he
attains majority.
For example, X agrees to transfer the property ‘O’ to Y and directs his guardian
Z to give him the property when he attains the age of 22. Y gets vested interest
once he attains the age of 18.

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 1. Time of vesting: The interest is vested right after the transfer is
initiated. Nothing can stop the interest from vesting in the person in
favour of whom the transfer is to be made.
2. Contrary Intention: The transferor can specify a particular time as to
when the interest will be vested in the person who will receive the
property.
3. Death of the transferee: If the transferee dies before getting the
property in his possession, the interest vested in him will now vest in
his legal heirs and they will get the possession of that property once
the condition is fulfilled.

Case law

In the case of Lachman v. Baldeo, a person transferred a deed of gift in favour

of another person but directed him that he will not get the possession of that
property until the transferor himself dies. The transferee will have a vested
interest even though his right of enjoyment is postponed.

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Characteristics of Vested Interest
1) Vested interest creates a present right that is in effect immediately, although
the enjoyment is postponed to the time prescribed in the transfer. It does not
entirely depend on the condition as the condition involves a certain event.

2) Death of transferee will not render the transfer invalid as the interest will pass
on to his legal heirs.

3) Vested interest is a Transferable and heritable right.

Section 20 of the Transfer of Property Act, 1882 states about vested interest to
an unborn child. The interest in the property will be vested in him once he is
born. The unborn child may not get the right of enjoyment of the property
immediately after having vested interest.

1. Vested interest does not depend on an uncertain event. It depends on a certain

event which must happen. It creates a present or immediate right though the
right to enjoyment is postponed.

2. Vested interest is not defeated by death. On the death of the transferee, the
interest is passed to the heir of such transferee.

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Case Law

1. Sunder Bibi v. Rajendra; the court held that A would hold the property till
his death and subsequently after his death the property would pass to B. The
interest acquired by B in the said property is a vested interest. B would
acquire vested interest because the death of A is a condition which is a
certain event and is bound to take place.
2. In the cases of Pearey Lal Vs Rameshwar Das,  AIR 1918 Mad
294 and Sri Ram Vs Abdul Rahim Khan, AIR 1946 1 M.L.J.275 it was
held that vested interest is not even defeated by the death of the devisee
before he obtains possession and his representatives will be entitled to its
benefit.

3. In the case of K. Subramaniam Chetti Vs T. Subramaniam Chelt, AIR

1971 (Madras) 202. , the executor died before the junior wife. It was held
that the executor has vested interest in the property and thus their heirs were
entitled to the property.

 Vested Interest is a transferable as well as a heritable right.

The transferee in the contract of transfer of property through vested interest has
both transferable and heritable rights. It means that the person has the rights of
the property while claiming the property from the transferor and also has the
rights of the property upon his death. The property will be in possession of the
legal heirs of the transferee after his death.

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Conditions Applicable for Vested Interest
There can be various conditions for vested interest when the parties are minor,
insolvent, unborn, etc. The rights and possession of property in such conditions
are mentioned in accordance with the Transfer of Property Act, 1888, The
Indian Partnership Act, 1932 and the Indian Contract Act, 1872.

 Minor
If a person is a minor in the contract of transfer of property, he cannot have any
right on the vested interest till he attains the age of majority and is guided by the
legal guardian who holds the possession of the property till the minor attains the
majority age.

 Insolvent
If a person is held insolvent, he cannot possess the vested interest and has no
rights on the property until he restores his financial crisis.

CASES – 

1. Subbaraya Chettiar Vs Papathi Ammal,A.I.R. 1918 Mad. 294,

2. Vijiaranga Naidu Vs N drayanappa, A.I.R. 1946 Mad. 371.

1. Unborn Child

According to Section 13 of the Transfer of Property Act, 1888, an unborn child

is not considered as a living person and he cannot hold the vested interest
individually. For the transfer of property, the unborn child will enjoy his rights
after the birth and the interest is transferred immediately to the legal heirs of the
unborn child.

CASE – 

1. Raja Bajrang Bahadur Singh Vs Thakurdin Bhakhtrey Kuer, AIR 1953

SC 7

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Concept of Contingent Interest
Section 21 of the Transfer of Property Act, 1882 states about Contingent
Interest. It is an interest which is created in favour of a person on a condition of
the happening of a specified uncertain event. The person having the contingent
interest does not get the possession of that property but has the expectancy to
receive it upon happening of that event but will not receive the property if the
event does not happen as the condition is not fulfilled. Contingent interest is
entirely dependent on the condition imposed on the transfer.

For example, A agrees to transfer the property ‘X’ to B on the condition that he
shall secure 90 % in his exams. This condition is uncertain and the happening of
the event or not happening is in doubt and therefore B here acquires a
contingent interest in the property ‘X’. He shall get the property only if he gets
90 % and when the condition is fulfilled.

In the case of Leake v. Robinson, the court held that whenever a condition
involves a bequest that is to be given ‘at’ a particular age or ‘upon attaining’ a
particular age or ‘after’ attaining this particular age, then it can be derived that
the transfer involves a contingent interest.

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Characteristics of Contingent Interest

1. This interest is entirely dependent upon the condition. It only happens

when the condition is fulfilled.
2. Death of the transferee before getting the possession of the property
will result in the failure of continent interest and the property will
remain with the transferor.
3. Contingent interest is a Transferable right, but whether it is heritable or
not, it depends upon the nature of such any transfer and the condition.

There are some important aspects surrounding contingent interest which are
explained in detail below:

1. Interest: In a transfer if a condition is such that the transfer will take

effect only upon the fulfilment of that condition and till that time, the
interest is contingent.
2. Contingent Interest exists in wills: Any bequest to a wife, son or
daughter can be a contingent interest if the condition provides so.
3. Exception: When a person who has an expectancy in the rights of
ownership of a particular property, and he for the time being till the
happening of the event, gets any sort of income that arises from that
property. This interest in the property does not come under the aspect
of contingent interest.
Section 120 of the Indian Successions Act, 1925 lays down the exceptions for
contingent interest.

Section 22 states about the transfer to a group or class of members with a

contingent interest. For example, there is a transfer to a group of 5 people, and
the condition is that the property will be vested in persons who attain the age of
40 years on this particular date. The persons who have attained this age will get
an interest in the property and people who have not, will not get an interest in
that property.

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9
 Section 23 states about a transfer that happens after happening of an event that
was mentioned in the transfer involving contingent interest. This provision
simply lays down one of the two branches of Section 21 that laws down about
contingent interest. The two branches are happening of an event and non-
happening of an event. This Section states about what happens after the
happening of the specified uncertain event.

Section 24 states about a transfer to a group or class of members who will get
the property on a condition that they shall be living at the specified date. This is
also a contingent interest as the event mentioned here is an uncertain event. The
transfer will only take place for those people who satisfy the condition of
surviving at a particular date. The legal heirs of the deceased cannot claim an
interest in that property as a transfer involving a contingent interest solely
depends upon the fulfilment of the condition.

Difference between Vested & Contingent Interest

Sign Ground of
Vested Interest Contingent interest
number Difference

Vested interest is
Contingent interest is provided
provided in Section
1. Section in Section 21 of the Transfer of
19 of the Transfer of
Property Act, 1882.
Property Act, 1882.

2. Definition It is an interest which It is an interest which is created in

is created in favour of favour of a person on a condition of the
a person where time is happening of a specified uncertain
not specified or a event. The person having the contingent
condition of the interest does not get the possession of
happening of a that property but has the expectancy to
specified certain event. receive it upon happening of that event
The person having the but will not receive the property if the
vested interest does not event does not happen as the condition
get the possession of is not fulfilled.
that property but has
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 the expectancy to
receive it upon
happening of a
specified certain event.

The condition involves

The condition involves a specified
a specified certain
uncertain event. There is a chance of
3. Condition event. A certain event
the happening or non-happening of that
means an event that
particular event.
will eventually happen.

Vested Interest
does not entirely
depend on the
condition as the
condition involves a Contingent interest is entirely
certain event. It creates dependent on the condition imposed
Fulfilment of
4. a present right that is on the transfer. Interest is only
conditions
in effect immediately, transferred to the transferee on the
although the fulfilment of the condition imposed.
enjoyment is
postponed to the time
prescribed in the
transfer.

This right is created as

Right of There is mere chance to be having the
5. soon as the interest is
Ownership ownership rights.
vested.

6. Death of Death of the person Death of the transferee before getting

transferee who is having this the possession of the property will
interest will not have result in the failure of continent
any effect over that interest and the property will remain
interest as after the with the transferor.
deceased, the interest
will vest in his legal

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 heirs.

Contingent interest is a Transferable

Vested interest is
Transferable and right, but whether it is heritable or
7. a Transferable and
heritable? not, it depends upon the nature of
heritable right.
such any transfer and the condition.

There is present,
There is no present right of
The present right immediate right even
8. enjoyment, there is a mere expectancy
of enjoyment. when its enjoyment is
of having such a right.
postponed.

X professes to transfer X professes to transfer the property ‘O’

the property ‘O’ to Y to Y on the condition that he shall
when he attains the age construct a well in his property. If he
9. Examples
of 20. There is a vested constructs, Y shall get contingent
interest with Y for the interest in the property until the
property ‘O’. condition is not fulfilled.

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Conclusion
The Transfer of Property Act, 1882 deals with two kinds of interest that are
vested interest and contingent interest. The concepts of vested interest and
contingent interest are something that is very important to understand as there
are many sections relating to these concepts. The main point to understand
about both the concept is that the transfer of property involving Contingent
interest takes effect only after the condition is fulfilled, if the condition is not
fulfilled then the transfer will not take effect.

The conditions are required to be fulfilled and they have to necessarily comply
with the rules of the preamble that talk about justice, equity and good
conscience, the three major principles of the natural law on which this whole act
is based upon. In a transfer of property involving vested interest, the transfer is
not invalidated if the condition mentioned is not fulfilled. The reader will get to
know about the basic meaning and interpretations of the sections involving the
two concepts with the help of various examples. I have tried to explain the two
concepts by discussing all the aspects of both for a better understanding of the
provisions. Towards the end, I have also discussed certain judicial
pronouncement in a brief manner as to make sure that the reader understands
the concept in a more direct and easier way and so that he can get into more and
more specific details of the two concepts.

Hence section 19 to 24 of the Transfer of Property Act 1882 explain the

provisions related to vested interest and contingent interest. Such interests are
acquired in immovable property in favour of the transferee on the transfer of
such property to him. Such transfer of interest might take place immediately or
on the occurrence of a specified event.

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Common queries -

 What is the difference between vested interest and contingent interest?

When on the transfer of a property the interest is created in favour of the

transferee immediately or there is present right of possession with the
transferee, it is called as vested interest. Such a vested interest exists even if the
right to enjoyment in the property is delayed to a future date.

For example, A transfers his house to B for life and after his death to C. C will
acquire a vested interest in the house on the death of B which is a certain event.

Whereas when on the transfer of property the interest created in favour of the
transferee depends on a contingent event which may or may not take place, such
contingent interest becomes vested in the person on fulfilment of the specific
condition.

For example, A agrees to transfer his house to B, provided B constructs a well

in a village. Whether B constructs a well in the village is an uncertain condition
which may or may not take place. If B constructs the well, B acquires interest in
A’s house

 Is contingent interest a transferable and heritable?

Contingent interest is a transferable right. Such an interest can be transferred in

favour of another person. However, whether a contingent is or is not heritable
by the legal heirs of the transferee depends on the nature of contingency on
which the accrual of interest lies.

 When does an unborn child acquire an interest in a property?

When a transfer is executed in favour of an unborn child, he acquires interest in

the property transferred to him upon his birth. A vested interest is created in
favour of the child on his birth. The child may however not be in the immediate
enjoyment of the interest created in the property.

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Reference
1. https://lawtimesjournal.in/contingent-and-vested-interest/

2. https://blog.ipleaders.in/property-law-vested-contingent-interest

3. Section 19 of the Transfer of Property Act,

1882, https://indiankanoon.org/doc/1817590/
4. Pearey Lal Vs Rameshwar Das, AIR 1918 Mad
294, https://indiankanoon.org/doc/146718/
5. K. Subramaniam Chetti Vs T. Subramaniam Chelti , AIR 1971 (Madras) 202 (Vested
interest and contingent interest) https://www.casemine.com/search/in/K%28DOT
%29%20A%28DOT%29%20SUBRAMANIAM
6. Sunder Bibi Vs Rajendra , 47 All. 496, https://indiankanoon.org/doc/515934/
7. Subbaraya Chettiar Vs Papathi Ammal  ,A.I.R. 1918
Mad. https://www.legitquest.com/case/subbaraya-chettiar-dead-another-v-papathi-
ammal-alias-lakshmi-ammal-others/DE0D
8. Vijiaranga Naidu Vs N drayanappa,A.I.R. 1946 Mad.
371 https://indiankanoon.org/doc/1713962/
9. Raja Bajrang Bahadur Singh Vs Thakurdin Bhakhtrey Kuer, AIR 1953 SC
7 https://indiankanoon.org/doc/1230342/
10. Section 21 of the Transfer of Property Act,
1882, https://indiankanoon.org/doc/420207/#:~:text=21.,contingent%20interest%20in
%20the%20property
11. Section 22, https://indiankanoon.org/doc/1872590/
12. Section 23 https://indiankanoon.org/doc/1262251/
13. Section 24 https://indiankanoon.org/doc/1927677/

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