Conditional Transfer

[DOCUMENT SUBTITLE]

AVINASH
[COMPANY NAME] | [COMPANY ADDRESS]
 TRANSFER OF PROPERTY

INTRODUCTION
An interest created on a transfer of property and depending on the conditions is
impossible, or is forbidden by law, or is of such a nature that, if permitted, it would
defeat the provisions of any law, or is fraudulent, or involves or implies injury to the
person or property of another, or the courts regards it as immoral or opposed to public
policy.

Illustrations

 A lets a farm to B on the condition that he shall walk a hundred miles in an

hour. The lease is void.
 A gives ₹500 to B on the condition that he shall marry A’s daughter C. At the
date of transfer C was dead. The transfer is void.
 A transfers ₹500 to Bon the condition that he shall murder C. The transfer is
void.
 A transfers ₹500 to his niece C, if she shall desert her husband. The transfer is
void.

Sections 25 to 34 deal with conditions and conditional transfers. Section 25 and 26

deals with condition precedent. Sections 29,30,31,32 to 34 deal with condition
subsequent. Section 27 deals with the doctrine of acceleration and Section 28 with
doctrine of conditional limitations.

Section 25 Conditional Transfer

The legal effect of transfer varies according to the nature of conditions attached.

Conditions are of three kinds

Examples: -

Pre-condition: - Exp. 197A gifts his house to B with a condition that he marries C.

After-condition: - A gifts his house to B, he will not visit within 5 years to USA.

Side by Side conditions: - A gifts his house to B with the condition that B has to leave his
house.

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Object of Section 25
To eliminate the following conditions- If following are the conditions then the transfer
would be void.

 Impossible conditions
 Unlawful/ forbidden by law
 Opposed to public policy
 Fraudulent conditions

Condition Precedent
Conditions are of three kinds, viz, conditions precedent, collateral conditions and
conditions subsequent. In the case of a contract, there may be a condition attached on
whose performance the contract as a whole comes into operation. For instance, A
contracts to give his house to B if B marries C. This is the case of a contract with a
condition precedent and its effect is that until B marries C. the obligation to give the
house does not arise against A. Secondly, a condition may be required to be performed
side by side, with the performance of the contract. Where A agrees to let his fields to
B, so long as B lives in the same house as A, the case is a one of contract with the
collateral condition and the contract of lease remains in operation so long as B
continues to live in the same house as A. Thirdly there may be a condition that on the
happening or non-happening of a specified event which may or may not happen the
contract will be discharged. For instance, A contracts to lend his library to B till he
survives. This is the case of a condition subsequent, and on B’s death, the library will
revert back to A.

Section 25 deals with the transfer which takes effect if the condition precedent is
satisfied. If the condition precedent is invalid in the law, this section enacts that the
transfer itself fails. In Illustrations (a) and (b) the transfer fails because of the
impossibility of the performance of the act required. In Illustration (c) the act is one
forbidden by law and in Illustration (d) the act is one opposed to public policy.

The test whether a condition is valid or void, it is to judges by its character without
taking the intentions of the parties in consideration. Intention of the parties is
irrelevant. If an interest, created on a transfer of properties is based on the condition,

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which is impossible or forbidden by law1 or of such a nature that if permitted, it would

defeat the provision of any law, or is fraudulent or involves or implies injury to the
person or property of another or the court regards it as immoral or opposed to public
policy, it shall fall within this section. A provision is good as a contract is also valid
as a condition2. In cases contemplated by Section 25 both the condition and the
transfer dependent on it are void.3.

A transfer of property on the condition that the transferee will commit crime or civil
wrong as a assault, libel and a fraud, etc, is hit by this section. So, also a transfer of
property which is based on a condition against public policy.

Section 25 of this act may be compared with section 126 and 127 of the Succession
Act, 125, and Section 23 and 36 of the Indian Contract Act.

If the fulfilment of the condition is impossible: - When a deed makes a transfer,

subject to a condition precedent and the performance of the condition is rendered
impossible by the act of the transferor himself, the interest would fail if the
circumstances show that the transferor intended that the transfer should take effect
only if the condition is fulfilled.

Opposed to Public Policy: - Condition against public good or public policy is illegal.
Public policy is not a breach of law to be intended but is governed by judicial
precedents.

Interest created on transfer of property forbidden by law: - The transfer

conditional on continuance of immoral relations between transferor and transferee is
void. Prohibition can be implied.

Difference between Condition Precedent and Condition

Subsequent
1) A condition precedent is one which must happen before the estate can
commence. A condition subsequent is only happening of which an existing
estate will be defeated.

1
Section 26 to 30, Contract Act
2
(1846) 26 to 30, Contract Act.
3
(1926) 95 L.J. Ch. 136

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2) Where the condition is precedent, the estate is not in the grantee until the
condition is performed; but where the condition is subsequent, the estate
immediately vests in the grantee and remains in him till the condition is
broken.4
3) In the case of condition precedent being or becoming impossible to be
performed or being immoral or opposed to public policy, the estate will not
arise, and the transfer will be void. But in the case of an impossible or an
immoral consideration subsequent the estate will be or become absolute and
the condition will be ignored. Thus, if a gift was made with a condition
superadded that the done should marry a certain person on or before she
attained the age of 21, and the person named died before she attained that age,
it was held that the fulfilment of the condition subsequent having become
impossible, the estate becomes absolute.
4) There is a clear distinction between immoral consideration for a gift, and the
immoral condition which is subsequently attached to the gift. If the
consideration itself is immoral, the transfer falls to the ground. On the other
hand, if a subsequent condition is tried to be attached to a perfectly valid gift,
then the condition, if immoral, is void but the gift remains unaffected.
5) Precedes the condition precedent, and follows the condition subsequent, so far
as the interest sought to be given is concerned.
6) No condition, precedent; no vesting; no retention of estate if ‘no’ to the
condition subsequent.
7) No vesting if ‘no’ to the condition precedent divesting if ‘no’ to the condition
subsequent.
8) No acquisition of interest if ‘no’ to the condition precedent; no retention of
estate of ‘no’ to the condition subsequent.
9) Immoral conditions if preceding, ‘no’ to the transfer. It is void. If condition
subsequent, is immoral the interest survives the condition is ignored.
10) Validity must to condition precedent, it is of no sense in condition subsequent.
11) Cy pres applies to condition precedent; it is not applicable in condition
subsequent.

4
Wynne v. Wynne, 2 M. & G.8.

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12) A condition subsequent must be strictly fulfilled, for the condition precedent
substantial compliance is sufficient.
13) Exception: - if the fulfilment of the condition is made impossible of the fraud
of any person directly benefitted by the non-fulfilment of the condition, the
condition is deemed to have been fulfilled.

Fulfilment of condition precedent

Where the terms of a transfer of property impose a condition to be fulfilled before a
person can take an interest in the property the condition shall be deemed to have been
fulfilled if it has been substantially complied with.

Illustrations

a) A transfers Rs. 5000 to B on condition that he shall marry with the consent
of C, D and E. E dies. B marries with the consent of C and D. B Is deemed
to have fulfilled the condition.

This section deals with the fulfilment of a condition precedent. The general principle
is that where a transfer is made on a condition precedent, the transfer fails unless the
condition is first fulfilled. This section provides that such a condition shall be deemed
to be fulfilled if it is substantially complied with. Thus, for the applicability of this
section a literal performance of the condition is not required 5. It is an application of
the well-recognised principle that the law leans in the favour of vesting of the estates.
It is also in accordance with what is known as the cy pres doctrine applicable to wills
and charitable trusts.6

Condition precedent--- what are?

Conditions precedent are the conditions which are essential to be performed before
the interest arises. A makes a gift of his property in favour of B, his wife, and also
provides in the instrument that his son, C, will be entitled to the property after
performing the obsequies of the mother, B. There is no provision in the instrument
regarding the enjoyment of the property in case the son dies before the performance
of the obsequies. The high court came to a conclusion that the condition in this case
is not a condition precedent and the son gets a vested interest in the property.7

5
Santona v. Advocate-General of Bengal, AIR 1921 C. 389.
6
See H v. Taylor, 2 W. & TLC. 146.
7
Narayana v. Subbraya, AIR 1929 Mad. 32 at p. 33.

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Conditions precedent-- Substantial compliance of.

A condition precedent is fulfilled if it is substantially complied with; but a condition

subsequent must be strictly fulfilled.
Condition subsequent which divest the interest once vested shall be construed strictly,
for they are obvious, and hence it is that unless they are strictly fulfilled, the
disposition shall remain intact through the disposition that is ulterior shall not take
effect. But in the case of a condition precedent, as the estate cannot commence until
the condition is performed, the condition is beneficial and ought to be construed
favourably8. the law is always in the favour of vesting of estates 9 and a condition
precedent should be construed in favour of the devisee. Thus, transfer to A if he goes
to England and works there is condition subsequent. If A goes to England and works
even for a day, A gets the property. The intention was that A will work in England,
may be for longer. A single day’s work would be deemed substantial compliance.
In Beni Chand v. Ekram Ahmad, wherein by an agreement between A, a widow, on
the one side and B, C and D on the other, it was agreed that A should not transfer her
property without the consent of B, C, D and A transferred her property with the
consent of B, the other two being dead at that time, it was held that there was no
substantial compliance.

Substantial compliance- Test

The test to be applied for determining whether there had been a substantial compliance
with the condition is; first whether, in case where it is possible for the transferee to
fully perform the condition, He has endeavoured his best to do so, and secondly,
whether the intention of the transferor is imposing the condition ( as ascertained from
the terms of the transfer and the surrounding circumstances) can be said to have been,
in substance, satisfied by what has actually been done by way of compliance with the
condition.
Illustration (a) is based on the case of Dawson v. Oliver decided by Chancery division
in 1876. in this case, the marriage could be solemnized with the consent of parents
only. the consent of surviving parents was held to be sufficient compliance of the
condition.

8
See H v. Taylor, 2 W. & TLC. 146.
9
Taylor v. Graham, 8 App Cas 1287

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Conditions precedent--- When compliance not substantial.

Illustration (b) shows that if the condition is clear it cannot be avoided. Therefore,
when the marriage with the consent of guardian is the condition and the sole guardian
dies, it does not mean that marriage without consent would be upheld. It would be
necessary to have another guardian appointed and then to marry with his consent
would be the substantial compliance.
Likewise, a sale is made to A if he signs promissory note of the price on or before
January 1,2008. A signs the pro note on January 10, 2008. A has not performed the
condition though he signed within a reasonable time. it is not covered by substantial
compliance with the rule.
In another case, A gave a legacy to X who was in Australia, if he returned to England
before the death of Y. X embarked within time specified on board a British ship to
return to England, but the ship and all the passengers perished in the sea. It was
held that the condition was not fulfilled, and the X’s administration could not claim
the legacy.

Doctrine of Acceleration (Section 27)

Conditional transfer to one person coupled with transfer to another on failure of
prior disposition.
Where, on a Transfer of Property, and interest therein is created in favour of one
person, and by the same transaction and ulterior disposition of the same interest is
made in favour of another, if the prior disposition under the transfer shall fail, the
ulterior dispositions shall take effect upon the failure of the prior disposition, although
the failure may not have occurred in the manner contemplated by the transferor.
But, where the intention of the parties to the transaction is that the ulterior
disposition shall take effect only in the event of the prior disposition failing in a
particular manner, the ulterior disposition shall not take effect unless the prior
disposition fails in that manner.
Illustrations
 A transfers Rs. 500 to B on the condition that he shall execute a certain
lease within three months after A’s death, and, if he should neglect to
do so, to C. B dies in A’s lifetime. The disposition in the favour of C
takes effect.

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The section gives legislative effect to a general rule that where an interest created on
a Transfer of Property is intended to take effect upon the failure of a prior interest
created by the same transaction, such interest will take effect upon the failure of the
prior interest in any manner, unless it is clearly intended that the subsequent interest
is not to take effect unless the prior interest failed in a particular manner and the failure
happened in some other manner. But if the prior and the ultimate disposition do not
refer to the same interest the section will not be applicable 10. in English law the rule
is called the rule of acceleration inasmuch as, on the failure of the prior interest the
subsequent interest is accelerated, i.e., it takes effect before it would normally have
come into existence. It has been observed in Halsbury’s laws of England11:
“The effect of failure of a prior life interest……. is to accelerate the subsequent
interest which are limited to take effect on the regular determination of that prior
interest; the court construed the gist of such interest as intended to take effect on the
failure or determination of the prior interest in any manner.”

This section does not apply unless the prior and ulterior disposition refer to the same
interest12. If the prior disposition is void ab initio the subsequent disposition will fail
on principle contained in section 16.

The object of the rule is to give effect to the intention of the transferor. The court will,
therefore, always look to the intention of the transferor as disclosed in the document
of the transfer. where no particular mode of failure is specified, the court presumes
the intention of the transferor to be to benefit subsequent transferee in whatever
manner the prior interest may fail. This is the effect of the first part of the section. But
where the transferor specifies the mode of failure of the prior interest as the only
condition on which he intends, the subsequent is to take effect, there is no question of
any presumption, and the subsequent interest will fail, in accordance with the intention
of the transferor, if the failure of the prior interest has not taken place in the manner
specified. this is the effect of second paragraph of the section.

This section enunciates the doctrine of acceleration. Thus, where there is a gift in
remainder, expectant on the termination of an estate for life, and the prior life estate

10
Gopaldas Matharam v. Hemandas Ram Rahiomal, AIR 1942 Sind 145.
11
Vol. 28, para 1188.
12
AIR 1976 SC. 78.

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becomes void, the gift does not fail but is accelerated13.Where in a series of successive
limitations a particular estate fails due to technical reasons the remainder, which is
immediately expectant on such estates accelerates. In Full v. Jacobs14, there was a gift
to the testator’s daughter of real and personal estate, “during her lifetime, and after
her death the property was to be equally divided between her children on the coming
of age” and the gift to the daughter was held void on the account of her attesting the
will. It was held that the gift to the children was accelerated and took effect earlier and
immediately. However, the prior disposition must be valid and not void ab initio.
where the prior gift is void ab initio and fails, the subsequent gift must also fail under
section 16 of this act.

The rule has been justified on the ground that it gives effect to the intention of the
grantor15. The failure of a prior gift does not accelerate a subsequent transfer not taking
effect on the determination of the prior interest; Thus, a subsequent gift cannot be
accelerated where the persons who are to take under it are only ascertainable at a future
date. It also cannot take effect unless two gifts are independent of each other.

In Okhoymoney Dassi v. Nilmoni16, the testator’s wife was pregnant, and the testator
left his property to the expected son and made a provision for the maintenance of the
daughter should the expected child prove to be a daughter. There was a “gift over” in
case the son died before attaining majority. On the birth of a daughter, the court held
that the “gift over” took effect, although the failure of the gift to the son was not in
the manner contemplated by the testator.

In Radha Prasad v. Rani Mani17, the testator made a gift to a son to be adopted by his
wife and, in case of his death without issue, to his daughters. The power of adoption
proved to be invalid, but although the prior bequest failed, the gift over to the
daughters took effect.

13
Ajudhia v. Rakhman, 10 Cal. 482 (P.C.).
14
3 Ch. D. 703
15
Ismail v. Umar, AIR. 1942 Bom. 155.
16
(1888) 15 Cal. 282.
17
(1906) 33 Cal. 947.

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In Durga Prasad v. Raghunandan Lal18, A made a bequest to a minor son, and on his
death before attaining majority, to the widow for life and then to the daughters. It was
held that the daughters were not deprived of their legacy by the death of the widow
before the minor son.

Exception. ---the second clause of the section refers to the exception clause where the
intention has been expressed that the “gift over” shall not take effect unless the prior
gift fails in the particular manner stated.

Conditional Limitation (sec 28)

Ulterior transfer conditional on happening or not happening of specified event.
On a Transfer of Property and interest therein may be created to accrue to any person
with the condition super added that in case a specified uncertain event shall happen
such interest shall pass to another person, or that in case a specified uncertain event
shall not happen such interest shall pass to another person. In each case the
dispositions are subject to the rules contained in section 10, 12, 21, 22, 23, 24, 25 and
27.

Ulterior transfer an ulterior disposition are two terms, former is used in marginal note
of this section and the latter in section 27, 29 and 30. Such transfers can only be
affected by a conditional limitation which is described in section 28. Conditional
limitation is one containing a condition which divests an estate that has vested and
simultaneously buy some stroke vests in it another person. as against this, condition
subsequent, discussed in section 31, divests an estate that is vested but vests it in the
grantor himself.

A transfer, which is absolute in the first instance, may be made subject to a condition
that it shall be cut down or divested on the happening of a contingency. Such a
condition is called a condition subsequent. A transfer may also be made subject to a
condition that, on the happening of a contingency the interest created shall not only
cease, but that it shall pass to another person. Such A case is known as conditional
limitation. Section 31 deals with conditions of the nature referred to in the first class

18
(1915) 9 CWN 439

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of cases.19 Where there is no defeasance of the prior interest, the gift over cannot
come into operation.

Sections 28 and 31. -- Section 28 deals with the case, in which, on the happening of
a specified uncertain event the property transferred is to pass to the second donee
whereas, section 31 refers to a mere end of the first donee's interest in the happening
of a specified uncertain event in which case the property will in ordinary case revert
to the donor.

On the happening of the uncertain event on which the interest created Is to pass to
another person, the prior interest is put to an end and the “gift over” takes effect.

A. A settled property on his second wife for her life, and then on her son if he
should have a son, but if he does not have a son, then, on the sons by his first wife.
20
The privy Council held that the son by first wife took vested interest liable to be
digested by the birth of a son to the second wife21.

B. The terms of a compromise provided that L should have an estate for life, and
that after her death R should be full owner if he survived L, and if he did not, the estate
would pass to R’s lineal male descendant according to the rule of primogeniture. The
court held that the condition affected the retention of the estate and not the acquisition,
and construed the compromise as conferring on R a vested interest liable to be divested
if he did not survive L22.

Repugnancy: - Conditional limitation in a condition of defeasance, which terminates

the interest of one person and invests it in another person. But if an estate is given to
a name donee in terms which confer an absolute estate, and then a further interest is
given merely after or on termination of that donee’s interest and not in defeasance of
it, the further interest will be void for repugnancy. Condition subsequent in defeasance
of vested interest must be strictly construed23. Thus, when a testator gave an absolute
estate to his wife with power of alienation, and then added a clause that “if, at the time
of the death of my widow, there be no adopted son or if no son or wife of the adopted
son be alive, then, my heir according to the Hindu shastras who shall be alive at the

19
Mst. Rameshwar Kuer v. Sheo lal Upadhyay, 1935 Pat. 401.
20
AIR 1960 Ker. 183
21
Umesh Chandra v. Zahur Fatima, (1981) 18 Cal. 64.
22
Jitendra nath v. Banku, (1926) 96 IC 565.
23
Enasu v. Antony, AIR 1969 Ker. 207.

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time shall get the properties which shall remain after disposal of my wife by way of
gift or sale of the same”, the gift over was invalid24. Similarly, in Anand Rao Vinayak
V Administrator General of Bombay25, the testator made an absolute gift to his son G
and then added “and when the sons of my son G shall attain the age of 21 years, the
same shall be divided and duly received by G and his sons in equal shares.” the gift
to the grandsons was word for repugnancy and the absolute estate of G was not
divested.

With the condition superadded. - Where an absolute estate is conferred with the
clause superadded that in case the transferee dies without children, the estate would
revert to his sister and sister’s children, then what is conferred is an absolute estate
with a defeasance clause and not an absolute estate with repugnant clause26.

Exceptions

Section 28 is subject to rules-

1. Restraint on alienation (Section 10)

2. Restraint on insolvency or attempt to transfer (Section 12)
3. Contingencies (Section 21-24)
4. Condition Precedent (Section 25)
5. Doctrine of Acceleration (Section 27)
Hindu and Mohammedan Law. – This section applies to Hindus and conditional
limitations or grants subject to defeasance with a “gift over” have always been
recognised in Hindu Law. In Mohammedan law, conditional limitations are not
recognised.

CONCLUSION
Conditional Transfers of the Transfer of the Property Act are explained under the
Section 25 to 34.

24
Suresh Chandra v. Lalit Mohan, (1916) 20 CWN. 463.
25
(1896) 20 Bom. 450.
26
AIR 1973 Ker. 96.

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Every Person competent to contract can transfer a property either absolutely or

conditionally. Such conditions may be either "Conditions Precedent or Condition
Subsequent".

In Condition Precedent, conditions must be fulfilled before a person can acquire an

interest in a property.

In Condition Subsequent, conditions must be performed after the transfer has taken
place.

E.g.: - "A" transfers a house to "B" on the condition that "B" shall marry "C". This is
a Condition Precedent. But "A" transfers the house to "B" with a condition that "B"
shall marry "C" within two years from the of the transfer. This is a Condition
Subsequent.

Subsequent Transfers: Section 27 of the Act, deals with second transfer on failure
of prior valid transfer. The rule is that if the prior interest fails, then the subsequent
interest in the property takes effect, even though the first transfer has failed in a
manner not as though of by the transferor.

E.g.: - "A" transfers Rs.500 to "B" on condition that he shall execute a certain lease
within three months after "A"'s death, and if he neglects to do so, the to "C". "B" dies
in "A"'s lifetime. The transfer in favour of "C" takes effect.

2. Conditional Limitation: Section 28 of the Act, speaks about "conditional

limitation". An interest in a property transferred may be created in favour of any
person with a condition that in case a specified uncertain event shall not happen, such
not happen, such interest shall pass to another person.

E.g.: - "A" transfers Rs.5000 to "B" with the condition that "B" must go to USA within
three years from the date of the transfer and in case he does not go within the said
period, the property will go to "C". Noe in case, "B" does not go to USA, then "C"
gets Rs.5000.

BIBLIOGRAPHY
Websites referred: -
www.scconline.com

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www.manupatra.com
www.heinonline.com
www.advocatekhoj.com
www.legallyindia.com
Books referred: -
Transfer of Property Act. Dr. G.P. Tripathi
Transfer of property Act, 1882
Transfer of Property, Mulla
Transfer of Property, Avtar Singh

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