Vested Interest | Section 19 of Transfer of Property Act


When it comes to Transfer of Property Act, 1882, one of the most important key terminologies is Interest. There are two important interest in Section 19 and Section 21. Section 19 talks about Vested Interest and Section 21 talks about Contingent Interest. In this article, we will talk about Section 19 i.e. Vested Interest. Click here to read, Section 21 i.e. Contingent Interest.

What is Vested Interest

In simple language, vested interest means a legal right of present or future enjoyment.

Before, going to the details of it, let’s see an illustration or example of vested interest to understand the topic more clearly.

A father had some property. He scared to transfer the property to his son because son had multiple addiction e.g. drinking, smoking etc. So, what the father did was, he gave life interest to his son and absolute interest to his grandson.

Here, grandson did not get the possession yet. He only got interest which is known as vested interest. His possession is forwarded for certain number of years. But definitely he has some interest over the property which is known as vested interest.

Here grandson will get the possession and all other absolute rights over the property after the death of his father (Son). But before his father’s death, he will only have vested interest. It is not a contingent aspect because the son will obviously die. This event death is an obvious matter. But on the contrary, in contingent interest, there may be or may not be an event. An example of contingent interest is, A will only get the property if he marries B. Here the event is not certain. But, in the above case, the event i.e death is certain. That’s why it vested interest.

Happening of Vested Interest

It may happen in two ways.

  1. Without timeline
  2. With timeline

Without Timeline

Let’s understand this with an example.

Mr. A is gifting his certain property to Mr. B without giving the possession yet. Here, Mr. B got vested interest till the time he is getting the possession. It is without timeline.

With Timeline

When it comes to with timeline, it can happen in two ways

  1. In terms of specifying that is to take effect immediately or
  2. On the happening of an event which must happen

Let’s understand these two points with an illustration,

Mr. A transfers the property in favour of Mr. B for life and then to Mr. B’s unborn child C. If , Mr A mentions that C will get the property at the age of 10 then immediately after the birth of C, he will get vested interest. This interest will remain from the age of 0 to 10. Once C, attains the age of C then he will get property immediately.

If, that transfers was made by saying that B will enjoy for life and once C attains 18 years, he will get the property. Here before 18 years, C will have vested interest in this span of time. Here attaining 18 years is an must event.

Essentials of Vested Interest

These following points are the essential elements of vested interest

  1. There must be transfer of property.
  2. Timeline may be mentioned or may not be mentioned. Sometimes, transfer can happen immediately or on happening of certain event.
  3. This interest creates in favour of a person.
  4. A vested interest is not defeated by the death of the transferee before he obtains possession. In case of death, his legal heirs will get the property.
  5. It postpones the enjoyment of transfer of property.
  6. It creates a prior interest before the final transfer or absolute transfer of the property.
  7. There should be direction for accumulation of income.

Characteristics of Vested Interest

1.It’s present fixed interest

2.It’s transferable and inheritable

3.It can be attached and sold in execution

4. Mere fact that the transferee did not obtain the possession of the property before his death doesn’t defeat a vested interest.

5. An unborn person acquires his vested interest only after his birth

6.Contidion of  ‘on attaining a particular age’ is not contingent and it is vested interest

More Illustrations

Here are two more illustrations to understand vested Interest clearly.

Illustration 1

A transfers his estate to B and then to C after the death of B.

  • Here C has vested interest over the property
  • If B dies then the property will go to C
  • If C dies prior to B, then the property will go to C’s legal heirs

Illustration 2

A transfers his property to his wife and then to his son at the age of 18 along with the accumulated income

  • A’s unborn son has vested interest over the property
  • The son will get the complete possession after attaining 18 years
  • The son will get the accumulated income too.

Case Law

Maharaj Bahadur V Singh Bell Chand

In this case, there was an agreement between Maharaj Bahadur and Jains that if Jains construct temple in the land, Maharaj Bahadur will give the land free of cost. The Jains did not consider making the temple at that particular time. In the meantime, Maharaja sold the property to third party. After selling the property, the Jains came to build the temple but saw that third party was having possession over the land and was enjoying the property. So, the Jains went to the Privy Council asking for the land.

The privy council held that, there was no vested interest created and that’s why the suit was failed.

Section 20

Section 20 is pretty much related to Section 13 and Section 19. Click here to Read the whole article of Section 13.

Section 20 discusses about vested interest of unborn person. Here the unborn person will get the vested interest only after his/her birth. Unborn person might get the possession immediate after the birth or may be after attaining a certain age. This certain age can be mentioned in the clause it can be any age but the maximum is 18 years.

These were all about Section 19 – Vested Interest in Transfer of Property Act, 1882.

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