Contingent Interest and Spes Successionis: Analysing The Difference Under The Transfer Of Property Act, 1882

This guest post was written by Nishant Tiwari, a student of National University of Study and Research in Law (NUSRL), Ranchi

Understanding Spes Successionis and Contingent Contract-

Spes Successionis is mentioned in section 6 of the Transfer of Property Act, 1882. It states that, property of any kind may be transferred except as otherwise provided by this Act or by any other law for the time being in force[i]–

1. The possibility of an heir apparent succeeding to an estate.
2. The chance of a relation obtaining a legacy on the death of a kinsman
3. Any other mere possibility of a like nature cannot be transferred.

The possibilities referred to in this clause are bare possibilities and not possibilities coupled with an interest such as contingent remainders and future interest. With reference to contingent interest, it is something quite different from the mere possibility of the similar nature of an heir seemingly succeeding in inheritance, or the possibility of a relationship gaining a legacy and also something quite different from the mere right to sue. It is a well-proven form of property. It certainly has been transferred in this country for generations in respect of which it is quite possible to raise money and to dispose of it in any way the beneficiary chooses.

Whereas, in a transfer of property, if an interest is created in favour of a person to take effect only in the case of happening of specific uncertain event, or if a specific uncertain event will not happen, then, that person acquires a contingent interest in the property[ii]. There are exceptions to the same which are as follows:

Exception – Under transfer of property, a person becomes entitled to an interest 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 many be necessary to be applied for his benefit, such interest is not contingent[iii]. This means that when the transfer of property is supposed to happen only on the happening of specified uncertain event, then the person to whom the transfer is to be made is said to have the contingent interest in that property, meaning which the interest arises only on the happening of the specified uncertain event which means the event on the happening of which the property is to be transferred, is specified and is uncertain. Therefore, when for instance a person A is said to transfer his property to B only on his demise, then the happening of A’s death is uncertain but is specified so the interest of B therein becomes the Contingent Interest. The exception to this is that when the person becomes entitled to the interest of attaining that property at a particular age, but even before that age the transferor is giving him the benefits arising out of his land, the interest may not be considered as a contingent interest.

For instance, in the above mentioned example we saw that A was to transfer his property to B only on his death, but if A does transfer his property before his death, then the interest of B in the property is not contingent anymore. If the transfer is subject to a condition precedent, there is no transfer at all until the condition is fulfilled. Till then the interest is contingent on the condition being fulfilled. When the condition is fulfilled, the transfer takes effect and the interest becomes vested[iv]. The specified uncertain event may be one which depends upon the will of the intended transferee, e.g. execution of a deed, or payment of a sum of a money. The performance of such condition is subject to section 26 of the Act[v].

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Comparing Spes Successionis and Contingent Interest –

A contingent interest is distinguishable from a mere spes successionis[vi]. Spes Successionis cannot be transferred, whereas, contingent interest can be transferred. A contingent interest is something quite different from mere possibility of a like nature of an heir apparent succeeding to the estate, or the chance of a relation obtaining a legacy. It is also something different from mere right to sue, as it is a well ascertained form of property. It certainly has been transferred in this country for generations in respect of which it is quite possible to raise money and to dispose of it in any way the beneficiary choose. Contingent ownership is based upon the present existence of an incomplete title and not upon the mere possibility of future acquisition. The distinction between contingent interest and spes successionis may be understood by the following illustrations:

1. Shyam is a Hindu, owing separate property who died leaving a widow Rita and a brother Ram. Here, in this case, Ram has simply a chance of becoming the owner of A’s estate.
2. Shyam is a Hindu, owing separate property and makes settlement of his property to his wife Rita for life and then to his son, if he should have one, and in default of a son of Ram. Here, in this case, Ram’s interest is contingent and is transferable. Also, his contingent interest is something more than a simple chance of becoming the owner of it. He has an interest contingent on Shyam not having any son.

Conclusion –

In this article, Spes Successionis and Contingent interest is compared and shown how they are different from each other. The main point to remember is that the transfer of property under the Contingent interest happens only when the condition is fulfilled, and had it been the case that the condition is not fulfilled, then the transfer is not valid. The conditions must be fulfilled and must necessarily comply with the preamble rules that speak of justice, fairness and good conscience, the three main principles of natural law on which all this act is based.

[i] Section 6, The Transfer of Property Act,1882.

[ii] Section 21, The Transfer of Property Act, 1882.

[iii] Ibid.

[iv] Cheena Reddy v. Pajau Kesamma, A.I.R. Hyd, 1954, 185.

[v] Section 26, The Transfer of Property Act, 1882.

[vi] Pestonjee Bhicajee v. PH Anderson, (1938) 2 Mad LJ 906.