Author: Amisha Jain
RULE AGAINST PERPETUITY
Perpetuity basically refers to something which is perpetual or unending in nature. The Rule against Perpetuity is a basic rule of the Transfer of Property Act, by which a person can enjoy the rights in respect of his property during their lifetime. However, the Rule Against perpetuity imposes certain restrictions on the use and transfer of property.
SECTION 14 OF TPA, 1882:
Section 14 of Transfer of Property Act, 1882 deals with “Rule Against Perpetuity”. According to which,
“No transfer of property can operate to create an interest which is to take effect after the lifetime 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”.
This Section can be explained as A property can not be vested beyond the lifetime of a person or after the expiration of the minority period of an unborn child. This rule has imposed certain restrictions on the period of transfer of property beyond which the transfer becomes void.
ESSENTIAL ELEMENTS OF SECTION 14, TPA (1882):
- There must be transfer of property.
- The transfer should create an interest in favor of ultimate beneficiary i.e, a unborn child.
- The transfer in the favor of unborn child must be preceded by life or life interest of living person.
- The ultimate beneficiary must be in existence ( either in the womb of mother or born) at the expiration of the interest of living person.
- Transfer of property may be postpone only up to the life of living person and the minority of the ultimate beneficiary; but not beyond that.
Under this Section, Minority can be defined as the period between birth till the attainment of 18 years of age or can exceeds 21 years of age.
- X transfers property to Y for a lifetime and then transfer to Y’s unborn son when he attains the age of 27 years. the said transfer becomes void because it exceeds the time period of perpetuity i.e, minority.
CASE: Soundara Rajan Vs. C.M. Natarajan, in this case, the Privy Council held that, if at the time of transfer it is not known that whether the court will appoint a guardian for minor or not, then Sec. 14 of TPA comes inforce according to which the normal period of the minority is 18 years, thus the transfer can be postponed up to the lifetime of the ultimate beneficiary.
PERIOD OF GESTATION:
The maximum time limit for the postponement of transfer of interest is the lifetime of natural interest holders and the minority of the ultimate beneficiary. a child is the mother’s womb is also capable of becoming a transferee. the period of gestation is the period during which a child remains in the womb of mother i,e, the period of 9 months or 280 days after conceiving the baby. The period of gestation is not counted in the addition of a minority.
- If A (the natural interest holder) dies then the ultimate beneficiary i.e, B must be in existence at the time of transfer either in the womb of the mother or born. If A is in mother’s womb, say 7 months then the maximum period up to which transfer of property postponed would be the life of natural holder plus 7 months plus a minority of ultimate beneficiary.
CASE: Abdul Fata Mahomed Vs. Rasamaya in this case the Privy council held that a gift to an unborn person is forbidden by Mohammedan law except in the case of Waqf.
EXCEPTIONS OF SECTION 14 TPA (1882):
- When a property is transferred for public benefit i.e, for the advancement of knowledge, health, religion, or any other benefits to mankind then the said transfer is not void as per the Rule against perpetuity.
- This rule is not applied in case when property purchased or held by a corporation.
- Once the transfer if interest takes place it cannot be bad for remoteness.
- Those Agreements which do not create any interest in the property are not affected by this rule.
Case: Rambaran Vs. Ram Mohit in this case the Supreme court held that the rule of Perpetuity does not apply on personal agreements i.e, agreements that do not create any interest in the property.
- This rule does not apply to mortgages because there is no creation of future interest.
- This rule does not apply to contracts of the Perpetual lease.
Thus, the Rule against perpetuity provides that the liberty of transfer of possession of the property shall not be exercised in its own destruction. It provides a certain limit for the alienation that can be the life of the interest holder and the minority of the ultimate beneficiary. This rule helps the society in the active circulation of property.
A.I.R 1925 P.C 244
A.I.R 1967 S.C 744