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.
A vested interest is not defeated by the death of the transferee before he obtains possession.
Explanation.— An intention that an interest shall not be vested is not to be inferred merely from a provision whereby the enjoyment thereof is postponed, or whereby a prior interest in the same property is given or reserved to some other person, or whereby income arising from the property is directed to be accumulated until the time of enjoyment arrives, or from a provision that if a particular event shall happen the interest shall pass to another person.
Legal Commentary & Landmark Judgments: Section 19
Immediate conferment of proprietary entitlement defines a vested interest, creating a present right of ownership even when physical possession or enjoyment is postponed to a future date.
The statutory explanation confirms that vesting is not postponed merely because a prior interest is reserved for another, or because enjoyment is postponed, or because a direction for accumulation is inserted, or because a conditional limitation might subsequently divest the estate.
The distinction between a vested interest and a contingent interest is critical in property litigation: a vested interest is transmissible to heirs upon death and can be attached and sold in execution of a money decree under Section 60 of the Code of Civil Procedure, whereas a contingent interest cannot be attached.