Chapter:

Conditional transfer

I. Introduction:
Property may be transferred either absolutely or conditionally. Where property is
transferred absolutely, it is unconditional transfer and transferee gets the interest
without any subjection or limitation. On the other hand when property is transferred
conditionally, the transfer is subject to certain conditions or limitations attached to it, it
is called as conditional transfer.

II. Kinds of Conditions:

Conditions may be of three kinds:
1) Condition precedent
2) Condition subsequent, and
3) Collateral conditions.
1) Condition precedent:
A condition precedent is that condition which precedes (comes before) the
transfer of property. It is a condition prior to the transfer. 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 is a condition precedent. The transfer is, therefore, dependent
on the fulfillment of a condition precedent.
The characteristics of a condition precedent may be summarized as follows:
(i) A condition precedent is one which must happen before the estate can vest.
(ii) Where the condition is precedent, the estate does not vest in the transferee until
the condition is performed.
(iii)A condition precedent is fulfilled if it is substantially complied with.
(iv)Where the condition precedent becomes impossible of performance, or is
immoral or opposed to public policy, or fraudulent, the transfer will be void.
Example: Where A makes a gift of his house to B if B marries C, the condition is a
condition precedent. Gift in favour of B shall take effect only if B marries C; if he does
not do so, the house cannot be transferred in his favour.

2) Condition subsequent:
A condition subsequent is that condition which is required to be fulfilled after the
property is transferred. Therefore, where a condition subsequent has been imposed in a
transfer, the interest of the transferee which has already been vested in him is affected
by fulfillment or non-fulfillment of that condition.
Example: A transfers a farm to B provided that, if B shall not go to England within three
years after the date of transfer his interest in the farm shall cease. B does not go to
England within the period prescribed. His interest in the farm ceases.
3) Collateral condition:
A condition is collateral if it is required to be fulfilled simultaneously with the
transfer. A collateral condition is required to be performed side by side the operation of
the transfer.
Example: A leases his property to B so long as B resides in the house of A, the condition
is collateral. The transfer i.e. the lease remains in operation only till B fulfils the
condition, viz. he continues to live with A

III. Provisions as to Conditional Transfer:

1. Section 25: Conditional transfer -
An interest created on a transfer of property and dependent upon a condition
fails, if the fulfillment of the condition -
i) is impossible, or
ii) is forbidden by law, or
iii) is of such a nature that, if permitted, it would defeat the provisions of any law, or
iv) is fraudulent, or
v) involves or implies injury to the person or property of another, or
vi) the Court regards it as immoral or opposed to public policy.
Illustrations:
(a) A lets a farm to B on condition that he shall walk a hundred miles in an hour. The
lease is void.
(b) A gives Rs. 500 to B on condition that he shall marry A’s daughter C. At the date of
the transfer C was dead. The transfer is void.
(c) A transfers Rs. 500 to B on condition that she shall murder C. The transfer is void.
(d) A transfers Rs. 500 to his niece C if she will desert her husband. The transfer is void.

2. Section 26: Fulfillment of condition precedent:

Where the terms of a transfer of property –
a) impose a condition which is to be fulfilled before a person can take an interest in the
property,
b) then the condition shall be deemed to have been fulfilled if it has been substantially
(mostly) complied with.
Illustrations:
(a) A transfers Rs. 5,000 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.
(b) A transfers Rs. 5,000 to B on condition that he shall marry with the consent of C, D
and E. B marries without the consent of C, D and E, but obtains their consent after
the marriage. B has not fulfilled the condition.
3. Section 27: Conditional transfer to one person, coupled with transfer to another, on
failure of prior disposition:
Where on a transfer of property -
a) an interest therein is created in favour of one person, and
b) by the same transaction an ulterior disposition of the same interest is made in
favour of another,
c) if the prior disposition under the transfer shall fail, the ulterior disposition shall
take effect upon the failure of the prior disposition,
d) 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 particular manner.
Illustrations -
(a) 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 neglect to do so, to C. B dies in A’s life-time.
The disposition in favour of C takes effect.
(b) A transfers property to his wife; but, in case she should die in his life-time, transfers
to B that which he had transferred to her. A and his wife perish together, under
circumstances which make it impossible to prove that she died before him. The
disposition in favour of B does not take effect.

4. Section 28: Ulterior transfer conditional - on happening or not happening of specified

event:
On a transfer of property an interest therein may be created to accrue to any
person with the condition superadded –
a) that in case a specified uncertain event shall happen, such interest shall pass to
another person, or
b) 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 sections 10, 12,
21, 22, 23, 24, 25 and 27.
Analysis:
This section deals with ulterior transfers which are conditional on the happening
or non-happening of a specified event. The section says that in case of a transfer of
property an interest may be created in favour of a person with condition that -
(i) a specified uncertain event shall happen, or
(ii) a specified uncertain event shall not happen.
 Example: If A transfers Rs. 1,00,000 to B with a condition that he will join the army
within 3 years from the date of transfer and if he fails to do so within the specified
period, the money shall go to C. Now, if B does not join the army within three years
from the date of transfer or he fails to do so at all, the money will go to C.
The difference between a condition subsequent and ulterior transfer is that in
the case of ulterior transfer - the happening of a contingency, the interest created does
not ceases but it passes on to another person.

5. Section 29: Fulfillment of condition subsequent:

An ulterior disposition of the kind contemplated by the last preceding section
cannot take effect unless the condition is strictly fulfilled.
Illustration -
A transfers Rs. 500 to B, to be paid to him on his attaining his majority or
marrying, with a proviso that, if B dies a minor or marries without C’s consent, the Rs.
500 shall go to D. B marries when only 17 years of age, without C’s consent. The transfer
to D takes effect.

6. Section 30: Prior disposition not affected by invalidity of ulterior disposition:

If the ulterior disposition is not valid, the prior disposition is not affected by it.
Illustration:
A transfers a farm to B for her life, and, if she do not desert her husband, to C. B
is entitled to the farm during her life as if no condition had been inserted.

7. Section 31: Condition that transfer shall cease to have effect in case specified
uncertain event happens or does not happen -
Subject to the provisions of section 12, on a transfer of property an interest
therein may be created with the condition superadded that it shall cease to exist -
a) in case a specified uncertain event shall happen, or
b) in case a specified uncertain event shall not happen.
Illustrations -
(a) A transfers a farm to B for his life, with a proviso that, in case B cuts down a certain
wood, the transfer shall cease to have any effect. B cuts down the wood. He loses his
life-interest in the farm.
(b) A transfers a farm to B, provided that, if B shall not go to England within three years
after the date of the transfer, his interest in the farm shall cease. B does not go to
England within the term prescribed. His interest in the farm ceases.

8. Section 32: Such condition must not be invalid:

 In order that a condition that an interest shall cease to exist may be valid, it is
necessary that the event to which it relates be one which could legally constitute the
condition of the creation of an interest.

9. Section 33: Transfer conditional on performance of act, no time being specified for
performance:
Where, on a transfer of property,
i) an interest therein is created subject to a condition that,
ii) the person taking it shall perform a certain act,
iii) but no time is specified for the performance of the act,
iv) then the condition is broken when he renders the performance of the act
a. impossible permanently or
b. for an indefinite period.

10. Section 34: Transfer conditional on performance of act, time being specified -
Where an act is to be performed by a person either –
a) as a condition to be fulfilled before an interest created is enjoyed by him on a
transfer of property, or
b) as a condition on the non-fulfillment of which the interest is to pass from him to
another person, and
c) a time is specified for the performance of the act, if such performance within the
specified time is prevented by the fraud of a person who would be directly benefited
by non-fulfillment of the condition, such further time shall as against him be allowed
for performing the act as shall be requisite to make up for the delay caused by such
fraud.
d) But if no time is specified for the performance of the act, then, if its performance is
by the fraud of a person interested in the non- fulfillment of the condition rendered
impossible or indefinitely postponed, the condition shall as against him be deemed
to have been fulfilled.

IV. Conclusion: