Vested Interest


Author: Sejal Jain


Transfer of property act 1882 is Indian legislation which regulates the transfer of property in India, it specifically contains two major interest, vested interest, and contingent interest along with its conditions to unborn child, heirs, minor…etc.

VESTED INTEREST means an interest belonging to a specific person, as defined under section 19 of transfer of property act, 1882, It is a transfer of property in favour of a particular person without specific time or condition mentioned. Such interest is vested on happening of a certain event i.e an event that must happen. The transferee’s right to the enjoyment of the property is postponed based on the event which is bound to happen.


X, the father of Y agrees to transfer an ancestral property in favour of Y after his death. The interest in the ancestral property in favour of Y is dependent on the condition of the death of his father X, which is certain. Hence on the death of X, Y will have vested interest in the ancestral property.[1] 


  1. A, transfers the property to B and specifies the condition that after the death of B the property will be transferred to C , here C has a vested interest in the property whereby a prior interest in the same property is given or reserved to some other person.
  2. A, transfers the property to B on the condition of accumulation of income arising from the property will be enjoyed by A to repay the loan whereby income arising from the property is directed to be accumulated until the time of enjoyment arrives
  3. A, transfers the property to B on the condition that B will enjoy the property when he attains the age of 19, here B has a vested interest in the property whereas from a provision that if a particular event shall happen the interest shall pass to another person.


  1. Interest is vested to transferee :- it is transfer of property without any specific time or condition mentioned in it. In Narayana v. Subbayya[2] it has been held that where a person made a disposition of property in favour of his wife by means of a will and the will provided that the son should get the property after performing the obsequies of the mother, in whose favour the disposition was made and no provision was made in the will for the enjoyment of the property in case the son should die before performing the obsequies it was held that the condition of performing the obsequies was not a condition precedent and the son got a vested interest in the property.
  2. Right to enjoy property is postponed in future :- it is based on the happening of the certain event. In the case of Lachman v/s Baldeo[3], 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.
  3. Vested interest is a transferable as well as heritable right.
  4. It is not based on any fulfilment of condition and purely based on happening of certain events.


1. Death of the transferee :- if the transferee dies before the enjoyment of property, the interest is not defeated by the death and the right to enjoy the property is vested in the legal tiers of the transferee.    In Pearey Lal v/s Rameshwar Das[4] and Sri Ram v/s Abdul Rahim Khan[5], held that a 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.

In K. Subramaniam Chetti v/s T. Subramaniam Chelti,[6] the executor dies 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. 

2. Right of a minor :- A minor can not have any vested interest until he attains majority, the property   is in the   Possession of the guardian.

3. Right of an insolvent:-  An insolvent can have no vested interest in the property, In Subbaraya   Chettiar v. Papathi Ammal[7], and In Vijiaranga Naidu v. Ndrayanappa[8] it was held: After the passing of an order of adjudication and vesting of the insolvent’s property in the Official Receiver under S. 16, Act 3 of 1907, the insolvent is ipso facto divested of the same and can have no vested interest in the property until after it is restored to him after administration.

4. Right of an unborn child :-  As stated under section 13 of transfer of property act states an interest created for the unborn child i.e a person who does not have existence and is not counted to as a living person, transfer of property can be made with the following essentials :-

  • NO DIRECT TRANSFER:- Transfer of property can only be made through the mechanism of trust, an essential principle of property act, that every property must have an owner thus property will be without an owner until the child is born.
  • PRIOR INTEREST:-  If there’s no mechanism of trust, then the property is preceded by a prior interest created to a living person, after the child is born, the interest in the property shifts from the living person to the child born.
  • ABSOLUTE INTEREST:- The entire property must be transferred in the favour of the unborn person, after the two possibilities given by Whitby Mitchell, it was decided that a property needs to be absolute in interest and not a life estate. In Girjesh Dutt v/s. Data din[9], The court held that the gift for life to b was valid because B was living person at the date of transfer but a gift in favour of B’s daughter was void under sec 13 of transfer of property act because it was given only limited interest she had not given absolute interest .since this transfer was invalid the subsequent transfer depending on it also failed.


Under section 20 of transfer of property act, it states that interest in the property will be vested in him once he is born though he may not get the right to enjoyment immediately interest is transferable immediately unless a contrary intention appears from the terms of the transfer.


“A” transfers an estate to trustees for the benefit of B’s unborn son with a direction to accumulate the income of such estate for a period of twelve years from the date of the birth of B’s son and then to hand over the funds to him. b’s unborn son acquires a vested interest upon his birth, although he is not entitled to take and enjoy the income of the property for a period of twelve years. 

In Pulibandla Venkata Subbanna and ors. V/s. Devasani Chinna Panayya,[10] it was held that it is true that the vested remainder cannot be. created in perpetuity as engrafted in section 13 of the act. but, when both wife and husband are living and they intend to have the benefit of the property for their life and the vested remainder to their unborn children, there ….. l itself is void for the reason that the vested remainder cannot be created in perpetuity and therefore it offends section 13 of the T.P.A.

Another case related to this concept is of Raja Bajrang Bahadur Singh v/s Thakurdin Bhakhtrey Kuer[11], the court had observed that no interest can be created in favour of an unborn person but when the gift is made to a class or series of persons, some of whom are in existence and some are nonexistent, it does not fail completely, it is valid with respect to the persons who exist at the time of testator’s death and is invalid with respect to the rest.


Vested interest is an important aspect of transfer of property, it is important to understand that vested interest does not comply with any conditions, and the right of enjoyment is given in the future. The author has tried to used the interest to define the effect of vested interest on various other rights like the heirs, the minor, the unborn, and the insolvent. Towards the end author has also tried to explain the difference between the two types of interest to make the concept more clear along with the relevant case laws and example.

[1] Bare act transfer of property act, 1882

[2] A.I.R. 1929 Mad. 32

[3] (1919) 21 OC 312

[4] AIR 1918 Mad 294

[5] AIR 1946 1 M.L.J.275

[6] AIR 1971 (Madras) 202.

[7] A.I.R. 1918 Mad. 294.

[8] A.I.R. 1946 Mad. 371

[9] Girjesh dutt v/s data din

[10] AIR 1987 Andhra Pradesh

[11] AIR 1953 SC 7