Transfer of Property Act (TPA)
Rule Against Perpetuity under Section 14: Object of the Rule, the Perpetuity Period, and Remote Vesting
A settlor who could postpone the vesting of an interest indefinitely could keep property out of commerce for ever, tying up land through generations of people not yet born. Section 14 sets the outer limit. An interest must vest, if it is to vest at all, within the lifetime of one or more persons living at the date of the transfer, plus the minority of a person who is in existence when that period ends and to whom the interest is to belong. Anything later is void for remoteness. The rule is about vesting, not enjoyment, and that distinction decides most of the problems set on it.
Figure 1: The two components of the period, and the moment after which an interest is too remote to vest
1. The Section
Section 14, TPA 'No transfer of property can operate to create an interest which is to take effect after the life-time of one or more persons living at the date of such transfer, and the minority of some person who shall be in existence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong.' |
2. The Object of the Rule
- To keep property in commerce. Land whose ownership is fixed for generations cannot be sold, mortgaged, developed or put to its best use.
- To limit the dead hand. A transferor may reasonably provide for those he knows and for their immediate successors; he may not govern the property indefinitely through people he will never meet.
- To prevent uncertainty of title. An interest that may or may not vest in some distant generation makes title unmarketable in the meantime.
- To complete the policy of sections 10 to 13. Those sections stop a transferor fettering an interest he has given; section 14 stops him postponing the gift itself beyond a defined horizon.
3. The Perpetuity Period
Component | Content |
|---|---|
A life or lives in being | The lifetime of one or more persons living at the date of the transfer. Any number may be taken, and the period runs until the death of the last survivor. The persons need not have any interest under the transfer, though in practice they are the prior interest holders |
Plus the minority | The minority of a person who is in existence at the expiration of that period, and to whom, if he attains full age, the interest is to belong. Minority is eighteen years under the Indian Majority Act, 1875 |
Plus, where applicable, gestation | Where the person who is to take is in the womb at the relevant time, the period of gestation is allowed in addition, since a child en ventre sa mère is treated as in existence |
The difference from English law The English rule allows a life or lives in being plus a fixed period of twenty-one years in gross, whether or not there is any minor in existence. The Indian rule allows the minority of a person who must actually be in existence when the prior interest ends, and that minority ends at eighteen. The Indian period is therefore both shorter and dependent on a real person — it cannot be claimed in the abstract. |
4. Vesting, Not Enjoyment
The rule strikes at remote vesting. Once an interest has vested within the period, it does not matter that possession or enjoyment is deferred for much longer. This is why section 14 must always be read with section 20, under which an unborn person acquires a vested interest on birth though he may not be entitled to enjoyment immediately, and with section 19, which defines a vested interest.
The limitation | Valid or void, and why |
|---|---|
To B for life, then to B's eldest son absolutely on attaining 18 | Valid — vesting occurs at the end of a life in being plus the son's minority |
To B for life, then to B's eldest son absolutely on attaining 25 | Void — vesting is postponed beyond the minority of the person who is to take |
To B for life, then to C for life, then to C's eldest son absolutely on attaining 18, B and C both living at the date of the transfer | Valid — two lives in being, then the minority |
To B for life, then to B's eldest son for life, then to that son's eldest son absolutely | The son's life interest is void under section 13, and the gift to his son fails with it under section 16 |
To A for life, and on A's death to such of A's grandchildren as shall be living twenty-five years after A's death | Void — the period is measured by a term in gross exceeding the permitted minority |
To B for life, then to B's eldest son absolutely, enjoyment to be postponed until he is 30 | Valid as to vesting; the interest vests, and only enjoyment is deferred — though a direction accumulating the income meanwhile is subject to section 17 |
5. What the Rule Does Not Touch
- Transfers for the benefit of the public. By section 18, sections 14, 16 and 17 do not apply to a transfer for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety or any other object beneficial to mankind.
- Personal contracts creating no interest in property. A covenant that binds the parties personally, and creates no interest in land, does not offend the rule — the reasoning applied to a covenant of pre-emption in Rambaran Prasad v. Ram Mohit Hazra, AIR 1967 SC 744.
- The mortgagor's right of redemption. The right to redeem is an incident of the mortgage and is not an interest created to arise at a remote future time.
- Vested interests. An interest already vested is outside the rule; the rule is directed at the postponement of vesting.
- Charges, and covenants for perpetual renewal of leases, which have been treated as not creating a future interest in property of the kind the section contemplates.
6. What Happens When the Rule Is Broken
- The offending interest is void, and the property devolves as though the limitation had not been made — ordinarily reverting to the transferor or his representatives after the valid prior interests have run.
- Section 16 carries the failure forward. An interest created in the same transaction and intended to take effect after, or upon the failure of, the void interest also fails.
- Section 15 saves the rest of a class gift. Where the interest is created for a class, it fails only as regards those members whose interests offend sections 13 or 14, and stands for the others.
- Prior valid interests are unaffected. A life estate properly given to a living person does not fail because the remainder over is too remote.
Retention aid Lives in being, then one minority, and vesting must be done. Two follow-ups decide most problems: eighteen and not twenty-one, because the Indian period rides on a real minor; and vesting, not enjoyment, because an interest that has vested may wait as long as it likes to be enjoyed. |
7. Landmark Cases
📖 Sopher v. Administrator-General of Bengal, AIR 1944 PC 67 Held: Where the vesting of an interest is postponed beyond the period allowed, the interest is void for remoteness, and the question is not whether it in fact vested in time but whether on the terms of the instrument it might not have done so. Ratio: Remoteness is tested on the possibilities at the date of the transfer, not on what actually happened. |
📖 Rambaran Prasad v. Ram Mohit Hazra, AIR 1967 SC 744 Held: A covenant of pre-emption between co-sharers does not offend the rule against perpetuity, because it creates no interest in land. The rule applies to the creation of future interests in property, not to personal covenants which bind only the parties and give rise to a right to sue for breach. Ratio: The rule against perpetuity has no application to a contract which creates no interest in property. |
8. Related Topics and Provisions
- Transfer to an Unborn Person, Sections 13, 14 and 20 — the scheme in which section 14 operates
- Transfer for the Benefit of an Unborn Person, Section 13 — the structural requirement that precedes the timing one
- Sections 15, 16, 17 and 18, TPA — class gifts, dependent interests, accumulations, and public benefit
- Sections 19, 20 and 21, TPA — vested and contingent interests, and vesting on birth
- Section 114, Indian Succession Act, 1925 — the rule against perpetuity in testamentary form
- Rambaran Prasad v. Ram Mohit Hazra, AIR 1967 SC 744 — personal covenants and the rule