Transfer of Property Act (TPA)
Transfer to a Class under Section 15: When Some Members Are Affected by Sections 13 and 14
A settlor rarely names each grandchild. He gives to 'the children of B', or to 'such of B's children as attain twenty-one', and leaves the class to be ascertained later. That raises a problem when the interest of some members of the class would be bad under section 13 or section 14. Before 1929 the English rule was followed and the whole class gift fell, so that one remote share destroyed the provision for everybody. Section 15 as it now stands reverses that: the interest fails as regards those persons only, and the members whose interests are good take their shares.
Figure 1: A class in which some interests are good and others offend sections 13 and 14, and what section 15 does about it
1. The Section
Section 15, TPA 'If, on a transfer of property, an interest therein is created for the benefit of a class of persons with regard to some of whom such interest fails by reason of any of the rules contained in sections 13 and 14, such interest fails in regard to those persons only and not in regard to the whole class.' The present form dates from the Transfer of Property (Amendment) Act, 1929. Before it, the section made the whole gift fail, following the English rule that a class gift bad as to any member is bad as to all. |
2. What Is a Class Gift
A gift is to a class where the property is given to a body of persons answering a general description, whose number is uncertain at the date of the transfer, and whose individual shares depend on how many members the class ultimately contains. 'To the children of B' is a class gift; 'to X, Y and Z, the children of B' is a gift to named individuals who happen to be related, and the class rules do not apply.
The limitation | Class gift? |
|---|---|
'To the children of B' | Yes — a general description, and the shares depend on the number of children |
'To such of B's children as attain the age of twenty-one' | Yes — the class is ascertained by reference to a qualification |
'To X, Y and Z, being the children of B' | No — named individuals; each takes his own share whatever happens to the others |
'To the children of B, in equal shares, each taking ₹50,000' | Not a true class gift as to the amount, since the shares do not fluctuate with the number of takers |
'To the grandchildren of B living at the death of the survivor of B's children' | Yes — a class ascertained at a future date |
3. How Section 15 Works
- Test each member separately. Ask, of each person who would answer the description, whether his interest offends section 13 — because it does not extend to the whole remaining interest — or section 14, because it may vest too remotely.
- Strike out only the bad shares. The interest fails 'in regard to those persons only'. Those whose interests are good take.
- The shares of the others are ascertained accordingly. The members who take divide the property between them; the void shares fall back to the transferor or his representatives, unless the terms of the transfer provide otherwise.
- Section 16 is not automatically triggered. It speaks of failure 'in regard to such person or the whole of such class'. Where section 15 has saved part of the class gift, the whole class has not failed, and an ulterior interest is not swept away.
4. A Worked Example
The settlement, and how it is tested A settles property on B, a living person, for life, and after B's death on such of B's children as attain the age of twenty-five, absolutely. Each child's interest is tested separately. A child who is alive at the date of the transfer, and who attains twenty-five, takes: his interest vests within a life in being plus his own minority, or later but still measured by a life in being — the position depends on the ages and the facts. A child born after the date of the transfer, who can reach twenty-five only more than eighteen years after B's death, has an interest that may vest beyond the perpetuity period. His share is void under section 14. Under the old rule the whole gift to the class would have failed, and none of B's children would have taken anything. Under section 15 as it stands, only the shares of the offending children fail; the rest of the class takes. |
5. The Provisions to Read With It
Provision | Relationship |
|---|---|
Section 13 | A class member's interest fails if it does not extend to the whole remaining interest of the transferor |
Section 14 | A class member's interest fails if its vesting may be postponed beyond the perpetuity period |
Section 16 | Destroys an interest intended to take effect after or upon the failure of a prior interest — but only where the prior interest has failed as regards a person or the whole of a class |
Section 20 | The members of the class who are unborn at the date of the transfer acquire vested interests on their birth |
Section 115, Indian Succession Act, 1925 | The testamentary counterpart: where a bequest is made to a class and is void as to some members, it is void as to those members only |
6. Why the Amendment Was Made
- The old rule punished the innocent. The remoteness of one share had nothing to do with the members whose interests were perfectly good, yet it destroyed their provision too.
- It defeated the settlor's evident intention. A settlor providing for 'the children of B' means each of them to take; he does not mean the whole arrangement to depend on the accident of when the last child is born.
- It produced arbitrary results. Whether the gift stood or fell could turn on events after the date of the transfer that nobody could have controlled.
- And the mischief the perpetuity rule addresses is met by striking the offending shares alone. Nothing is tied up too long once the remote shares are removed.
Retention aid Test the members, not the class. Each share stands or falls on its own, and since 1929 the good shares no longer go down with the bad. Then remember the words that save the ulterior gift too: section 16 needs the failure of a person or the whole of such class. |
7. Landmark Cases
📖 Leake v. Robinson, (1817) 2 Mer 363 Held: A class gift which was void as to some members was formerly held void as to the whole class, the gift being treated as a single gift to a body of persons to be ascertained at a future time. Ratio: The English rule that a class gift bad as to any member was bad as to all, which the Indian amendment of 1929 reversed. |
8. Related Topics and Provisions
- Failure of Prior Interest, Section 16 — the provision section 15 must be read against
- Rule Against Perpetuity, Section 14 — the rule that most often affects individual class members
- Transfer for the Benefit of an Unborn Person, Section 13 — the other source of failure
- Section 20, TPA — vesting on birth, which applies to unborn members of a class
- Section 115, Indian Succession Act, 1925 — the testamentary counterpart
- Transfer to an Unborn Person, Sections 13, 14 and 20 — the scheme in which section 15 sits