Introduction

Section 21 of the Transfer of Property Act, 1882 (TPA) deals with the concept of Contingent Interest. It is an interest which is created in favor of a person on a condition of the happening of a specified uncertain event.

Section 21 of TPA

• This section states that where, on a transfer of property, an interest therein is created in favour of a person to take effect only on the happening of a specified uncertain event, or if a specified uncertain event shall not happen, such person thereby acquires a contingent interest in the property. Such interest becomes a vested interest, in the former case, on the happening of the event, in the latter, when the happening of the event becomes impossible.
• Exception—Where, under a transfer of property, a person becomes entitled to an interest therein upon attaining a particular age, and the transferor also gives to him absolutely the income to arise from such interest before he reaches that age, or directs the income or so much thereof as may be necessary to be applied for his benefit, such interest is not contingent.

Illustrations

• A sum of money is transferred to B in case he shall attain the age of 18 or when he shall attain the age of 18. B’s interest in the sum of money so transferred is contingent until the condition is fulfilled by his attaining that age.
• If C dies issueless, then the property will go to X, here X’s interest is contingent.

Characteristics of Section 21

• It is created in favour of a person to take effect only on the happening or not happening of a specified uncertain event, which may or may not happen.
• It is solely dependent upon the fulfilment of condition after which it becomes vested interest.
• It is transferable.
• It is only a chance of becoming an owner.
• There is no present right of enjoyment.
• 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.

Conditions for Contingent Interest

Sections 22, 23 and 24 of the TPA contain the conditions for Contingent Interest.

• Section 22 states that where, on a transfer of property, an interest therein is created in favour of such members only of a class as shall attain a particular age, such interest does not vest in any member of the class who has not attained that age.
• Section 23 states that where, on a transfer of property, an interest therein is to accrue to a specified person if a specified uncertain event shall happen, and no time is mentioned for the occurrence of that event, the interest fails unless such event happens before, or at the same time as, the intermediate or precedent interest ceases to exist.
• Section 24 states that where, on a transfer of property, an interest therein is to accrue to such of certain persons as shall be surviving at some period, but the exact period is not specified, the interest shall go to such of them as shall be alive when the intermediate or precedent interest ceases to exist, unless a contrary intention appears from the terms of the transfer.