Transfer of Property Act (TPA)
Rule Against Perpetuity vs Restriction on Alienation: Two Rules, One Policy, Different Targets
Both rules serve the same end — property should remain in circulation — and both strike down what a transferor has written into his deed. That is where the resemblance stops. The rule against perpetuity in section 14 attacks an interest that is to vest too far in the future, and when it bites the interest itself is void. Sections 10 to 12 attack a fetter fastened on an interest already given, and when they bite only the fetter falls, leaving the transferee with the property and without the restriction. Confusing the two produces the wrong answer about what survives.
Figure 1: Where each rule stands on the road from the transfer to the property's free circulation
1. What Each Rule Attacks
The two provisions Section 14 — no transfer can operate to create an interest which is to take effect after the lifetime of one or more persons living at the date of the transfer, and the minority of a person in existence at the expiration of that period to whom the interest is to belong. Sections 10 to 12 — a condition absolutely restraining alienation, a direction as to the manner of enjoyment of an absolute interest, and a condition making an interest cease on insolvency or attempted alienation, are each void. |
2. The Comparison
Point | Rule against perpetuity — s. 14 | Restrictions on alienation — ss. 10 to 12 |
|---|---|---|
What is attacked | Remoteness of vesting — the creation of a future interest that may vest too late | A fetter attached to an interest that has already been given |
When it operates | Before the interest vests; it tests the limitation as drafted | After the interest has vested in the transferee |
The vice | Futurity — property would be tied up for an indefinite time | Inalienability — property would be locked in the hands of the present holder |
What is struck down | The interest itself is void | Only the condition is void; the interest stands |
Who suffers | The intended taker gets nothing | Nobody — the transferee keeps the property, free of the restriction |
Knock-on effect | Section 16: an interest intended to take effect after or on the failure of the void interest fails with it; section 15 saves the unaffected members of a class | None. The transfer is unaffected, and the condition is simply ignored |
Is a partial version allowed? | No — an interest either vests within the period or it does not | Under section 10, yes: a partial restraint is valid. Under sections 11 and 12, no |
Exceptions | Transfers for the benefit of the public — section 18; personal covenants creating no interest in property; the right of redemption in a mortgage | A lease where the condition is for the lessor's benefit; the married-woman proviso; a direction protecting the transferor's other land |
3. Why the Consequences Differ
The difference in outcome follows from the difference in what the offending words are doing.
- Under section 14 the offending words ARE the gift. The limitation that postpones vesting is the disposition itself; strike it out and there is nothing left to give effect to, so the interest is void.
- Under sections 10 to 12 the offending words are an ADDITION to the gift. The disposition stands on its own; the restraint is a rider on it. Remove the rider and a complete transfer remains.
- Hence the different treatment of partial versions. A partial restraint on alienation leaves a real power of disposal, so there is nothing to strike down. A limitation cannot be partially remote: vesting either happens within the period or it does not.
4. Worked Contrasts
The limitation or condition | Which rule, and with what result |
|---|---|
'To B for life, then to B's eldest son on attaining 25' | Section 14 — vesting is too remote; the son's interest is void, and section 16 carries the failure to anything dependent on it |
'To B absolutely, but B shall never sell' | Section 10 — an absolute restraint; the condition is void, and B takes the land and may sell it |
'To B absolutely, but B shall use it only as a school' | Section 11 — the direction is void; B keeps the property and uses it as he pleases |
'To B absolutely, but B's interest shall cease if he becomes insolvent' | Section 12 — the condition is void; B's interest continues and passes to his assignee |
'To B for life, then to B's eldest son absolutely on attaining 18, but the son shall never sell' | Both: the limitation satisfies section 14 and the interest vests; the restraint on sale is void under section 10 |
'To B for life, then to B's eldest son for life, then to C' | Section 13, not section 14 — the unborn son's life interest does not extend to the whole remaining interest; and section 16 takes C's interest with it |
5. Where the Two Meet
- They can operate on the same deed. A single settlement may contain a remainder that is too remote and, separately, a covenant against alienation; each is judged by its own rule and the results may differ.
- They share the policy of free circulation, which is also what animates section 6 and, in a different way, section 17 on accumulations.
- Both leave the earlier valid interests standing. A life estate properly given does not fail because a later remainder is remote, and it does not fail because a restraint fastened on it is void.
- Neither is engaged where the property was never transferable at all. That is section 6, and the transfer fails at the threshold.
Retention aid Perpetuity asks WHEN; restraint asks WHETHER. And the answer to 'what survives?' follows automatically: remote vesting kills the gift, a bad fetter kills only itself. |
6. Landmark Cases
📖 Rambaran Prasad v. Ram Mohit Hazra, AIR 1967 SC 744 Held: The rule against perpetuity is directed at the creation of interests in property to arise at a remote future time. A personal covenant, such as a covenant of pre-emption, creates no interest in the land and is outside the rule. Ratio: Perpetuity strikes at future interests in property; restraints on alienation strike at fetters on interests already given. |
7. Related Topics and Provisions
- Rule Against Perpetuity, Section 14 — the period and remote vesting
- Condition Restraining Alienation, Section 10 — absolute and partial restraints
- Section 10 vs Section 11 — the neighbouring comparison within the restraint sections
- Sections 15 and 16, TPA — class gifts and dependent interests, which follow a failure under section 14
- Section 18, TPA — transfers for the benefit of the public
- What May Be Transferred, Section 6 — restraints imposed by law, where the transfer itself fails