Vested and Contingent Interest

VESTED AND CONTINGENT INTEREST –ANALYSIS AS TO
THE TITLE IN THE PROPERTY
INTRODUCTION
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.
I.TITLE IN THE PROPERTY
The term Title is derived from the term Titlus of Roman law and Titre of
French law. According to Salmond, title is the fifth element of legal right. Every legal
right has a title, that is to say, certain facts or events by reason of which the right has
become vested in the owner. However, Holland does not include title as an element of
a legal right. Austin does not approve of the use of title for right. His contention is that
title is not the right itself but merely an element of right. While title indicates the idea
of an investitive fact, right is a power; faculty or capacity conferred on a person and is
founded in the title. The party entitle is invested with right by the investive fact.
Legal rights are created by title. A person has a right to a thing because he has a
title to that thing. According to Justice Holmes, Every right is a consequence attached
by the law to one or more facts which the law defines and wherever the law gives
anyone special right, not shared by the body of the people, it does so on the ground
that certain special facts not true of the rest of the world are true to him. It is these
special facts that create a title. Title means any fact which creates a right or duty. If a
law confers a right upon one man which it does not confer upon another, the reason is
that certain facts are true of him who are not true of the other and these facts are the
title of the right. A person may acquire right on account of his birth or he may acquire
the same by personal efforts later on but in both cases title is essential. Title is the root
from which the rights proceed.
Holland does not approve of the use of the term title as it does not indicate the
facts which transfer or extinguish rights. A fact giving rise to a right has long been
described as a title, but no such well-worn equivalent can be found for a fact through,
which a right is transferred or for one by which a right is extinguished. Bentham also
objects to the use of the term title and suggests the term dispositive facts. He divides
the dispositive facts into three parts: investitive facts, divestitive facts and translative
facts. He re-divides the investitive facts into collative facts and impositive facts.
The main rights in the title bundle are usually:
 Exclusive possession
 Exclusive use and enclosure
 Acquisition
 Conveyance, including by bequest
 Access easement
 Hypothecation
 Partition
Title to personal property may accrue in three different ways.

 1. By original acquisition.
 2. By transfer, by act of law.
 3. By transfer, by, act of the parties.
1.Rajesh Kanta Roy vs Shrimati Sunita Debi

Fact -
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 ?
Judgement –
It was observed that the entire scheme of the trust deed was:
1) Specified lots were earmarked for each of the two sons

2) The present income out of those lots were to be applied for the discharge of the
debts after payment of specified sums there form by the way of monthly
payment of the two sons and presumably such application was notionally pro
rata
3) Any surpluses which remain from out of the income of each of the lots were to
go to the very person whom the corpus of the lot itself was belong on the
termination of the trust
4) In the event of any of the two sons dying before the termination of the trust ,his
interest in the monthly payment out of the income was to devolve on his heirs.
This arrangement clearly show that what is postponed was not were vesting of
the property in the lot themselves but that the enjoyment of the income of the
income thereof was burden with certain monthly payments of which taken
together constituted application of the income for the benefit of the two sons .
Therefore the interest taken by the Rajes and Ramendra under the trust deed
was vested not contingent. It nothing but short of spes succession ,and the interest
of the life estate holder in the property during his life time was vested interest.
2. Ramaswami Naidu vs M.S. Velappan And Ors. [(1979) 2 MLJ 88]

In the instant case the first plaintiff was already in charge of the properties as trustee
to perform the obligations created under it and continued them after the lifetime of
Meenakshi Ammal. There are also positive words whereby it was made clear that the
properties should bevested in Velappan and his heirs for them to enjoy the same
absolutely. The words used are: These two dispositive Clauses create an interest in
praesenti. The question is whether the postponement of such proprietary rights
already vested in Velappan and his heirs, to the lifetime of Meenakshi Ammal, would
make any difference. The Explanation to Section 19 of the Transfer of Property Act,
providing that a vested interest is not defeated by the death of the transferee before he
obtains possession, makes the legislative intent clear that such a vested interest,
merely for the reason that it becomes vested after the lifetime of the settlor, would not
make it a settlement not being in praesenti. We are therefore unable to agree with the
contention that the interest that Velappan, the first plaintiff, obtained under the
instrument is not a vested one and that it could be defeated because it is postponed till
after the lifetime of Meenakshi Ammal.
Submitted by:
Aryan Dev
103
BBA LLB Corp Law Batch 2

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VESTED AND CONTINGENT INTEREST –ANALYSIS AS TO

THE TITLE IN THE PROPERTY

I.TITLE IN THE PROPERTY

The main rights in the title bundle are usually:

Title to personal property may accrue in three different ways.

1.Rajesh Kanta Roy vs Shrimati Sunita Debi

1) Specified lots were earmarked for each of the two sons

2. Ramaswami Naidu vs M.S. Velappan And Ors. [(1979) 2 MLJ 88]

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