“Vested Interest” under TPA, 1882

Vested Interest (VI)—

From the point of view of getting interest in the property, the interest may be of two kinds—

1. Vested interest (VI) or
2. Contingent interest (CI).

• Section 19 of the Transfer of Property Act, 1882 (TPA) deals with the vested interest (VI). (UKJ-2006/ MPAPP-10)
• In case of VI, the transferee gets the interest in the property immediately while in case of CI, the transferee gets the interest in the property on happening of an uncertain future event as specified in the transfer-deed.

When does Interest Transfers in VI:

• Section 19 provides that the transferee gets vested interest where—

1. No time has been specified as to when it shall take effect.
2. It is specified that transfer shall take effect immediately.
3. It shall take effect upon the happening of an event which must happen.

• Whether an interest is vested or not, is determined from the intention of the transferor.
• Section 19 clearly provides that a VI is not defeated by the death of the transferee before he obtains possession.

Nature of VI—

1. VI is a present fixed right to property. It vests in the transferee immediately.
2. The tile of the transferee is complete as soon as the transfer is completed.
3. VI is transferable & inheritable /heritable (UKJ-2011)
4. VI can be attached & sold in execution of a decree.

Explanation to section 19

It provides that in the following situations although it appears that the transferee has no vested interest but nevertheless the interest is vested—

1. Postponement of enjoyment
2. Prior interest created in same transfer.
3. Direction for accumulation of income.
4. Conditional limitation.

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