Vested Interest and Contingent Interest
By Y. Srinivasa Rao,
M.A (English)., B.Ed., LL.M., Research Scholar in Torts., Principal Senior Civil Judge, Tirupati.
TABLE OF CONTENTS:
- Section 19 of the Transfer of Property Act
- Vested Right
- Vested Remainder
- Vested interest and Contingent Interest
- When does a contingent interest become a vested interest?
’The meaning in Black’s Law Dictionary of the word “vested” relied upon by Hon’ble Apex Court viz.: “fixed; accrued; settled; absolute; complete. Having the character or given the rights of absolute ownership; not contingent; not subject to be defeated by a condition precedent.” Rights are “vested” when right to enjoyment, present or prospective, has become property of some particular person or persons as present interest; mere expectancy of future benefits or contingent interest in property founded on anticipated continuance of existing laws, does not constitute vested rights. In Webster’s Comprehensive Dictionary, (International Edn.) “vested” is defined as: “Law held by a tenure subject to no contingency; complete; established by law as a permanent right; vested interests.”
Contingent legacy is known as one bequeathed on a contingency. Contingent contract is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen as seen from Section 31, Contract Act, 1872. Contingent reminder is an executory remainder limited so as to depend on an event or condition which may never happen or be performed or which may not happen or be performed till after the determination of the preceding estate. Let us see what are contingent uses. These properly take effect as remainders and in imitation of contingent remainders. Where an estate is limited previously to a future use, and the future use is limited by way of remainder, it is subject to the rules of the Common Law, which are, that a vested estate of freehold must precede, in order to support, the remainder, and that a remainder must vest either during the existence of such proceeding estate or instanti that it determines. And herein these contingent or springing uses (for they have been called by both epithets, and without any great inconsistency, although it creates difficulty in regard to their distinctive classification) differ from executory devises, which latter do not require any particular estate to support them.
Curiously enough, contingent plans are such that the establishment of emergency response, back up operation, and post-disaster recovery processes maintained by an information processing facility or for an information system. Establish the strategy for recovering from unplanned disruption of information processing operations. The strategy includes the identification and priority of what must be done, who performs the required action, and what tools must be used. A document, developed in conjunction with application owners and maintained at the primary and backup computer installation, which describes procedures and identifies the personnel necessary to respond to abnormal situations such as disasters.
Contingency plans:- Under purview of Sechedule 5 of Information Technology (Certifying Authorities) Rules, 2000 , Contingency plans help managers ensure that computer application owners continue to process (with or without computers) mission-critical applications in the event that computer support is interrupted.
Section 19 of the Transfer of Property Act:-
Where, on a transfer of property, an interest therein is created in favour of a person without specifying the time when it is to take effect or in terms specifying that it is to take effect forthwith or on the happening of an event which must happen, such interest is vested, unless a contrary intention appears from the terms of the transfer, as seen from Section 19 of the Transfer of Property Act, 1882.
An absolute or indefeasible right and Immediate fixed right in present or future enjoyment in respect of property. The word “vest” is normally used where an immediate fixed right in present or future enjoyment in respect of a property is created. With the long usage the said word “vest” has also acquired a meaning as “an absolute or indefeasible right”, Howrah Municipal Corpn. Vs. Ganges Rope Co. Ltd.,(2004) 1 SCC 663 .
An expectant estate, which is limited or transmitted to a person who is capable of receiving the possession, should the particular estate happen to determine; The person who is entitled to a vested remainder having a present vested right of future enjoyment, i.e. an estate in præsenti, to take effect in possession and permanency of the profits in futuro, can transfer, alien and charge it much in the same manner as an estate in possession.
Vested interest and Contingent Interest
Vested interest means, “when there is immediate right of present enjoyment or a present right for future enjoyment. An interest is said to be contingent if the right of enjoyment is made depend upon some event or condition which may or may not happen. To understand these words ‘Vested interest and Contingent interest’ more in detail, it is apt to refer to the case of Murugan and Others (infra).
In Murugan v. Kesava Gounder, 2019 SCC OnLine SC 270, the Hon’ble Supreme Court observed as follows: ‘It is important to find from the sale deed what was conveyed. This we say, as appellant has a case that the father of the minor was given a life estate and after his death alone the minor was to get a right. In this regard we may notice the distinction between a vested right and a contingent right. Vested right is the subject-matter of Section 19 of the Transfer of Property Act whereas a contingent interest is dealt with Section 21 of the Transfer of Property Act. Since the life estate followed by an absolute right is created by a will, the relevant provision is Section 119 of the Indian Succession Act, 1925. Section 119 reads as
“119. Date of vesting of legacy when payment or possession postponed.—Where by the terms of a bequest the legatee is not entitled to immediate possession of the thing bequeathed, a right to receive it at the proper time shall, unless a contrary intention appears by the Will, become vested in the legatee on the testator’s death, and shall pass to the legatee’s representatives if he dies before that time and without having received the legacy, and in such cases the legacy is from the testator’s death said to be vested in interest.
Explanation.—An intention that a legacy to any person shall not become vested in interest in him is not to be inferred merely from a provision whereby the payment or possession of the thing bequeathed is postponed, or whereby a prior interest therein is bequeathed to some other person, or whereby the income arising from the fund bequeathed is directed to be accumulated until the time of payment arrives, or from a provision that, if a particular event shall happen, the legacy shall go over to another person.”It is relevant that we notice Illustration (iii) which reads as follows:
“(iii) A fund is bequeathed to A for life, and after his death to B. On the testator’s death the legacy to B
becomes vested in interest in B.”
Therefore, the absolute right bequeathed in favour of Palanivel became vested in him upon the death of Petha Gounder.’
When does a contingent interest become a vested interest?
On the happening of event or condition a contingent interest becomes a vested interest.” as laid down in Amaravathy v. Isakimuthi. The same principle is laid in P.K. Mohan Ram v. B.N. Ananthachary, holding that on the happening of the event, a contingent interest becomes a vested interest. An interest can be said to be a vested interest where there is immediate right of present enjoyment or a present right for future enjoyment. An interest can be said to be contingent if the right of enjoyment is made dependent upon some event which may or may not happen.
An interest is said to be a vested interest when there is immediate right of present enjoyment or a present right for future enjoyment. An interest is said to be contingent if the right of enjoyment is made dependent upon some event or condition which may or may not happen. On the happening of the event or condition a contingent interest becomes a vested interest, Usha Subbarao v. B.N. Vishveswaraiah. Contingent reminder is some what an executory remainder limited so as to depend on an event or condition which may never happen or be performed or which may not happen or be performed till after the determination of the preceding estate.