THE RULE AGAINST PERPETUITIES AND THE NEED FOR REFORM INTRODUCTION

The rules of law affecting perpetuities are based upon considerations of public policy. Although the principle of private ownership requires that an owner of property is to have power to dispose as he thinks fit, either during life or on death, of his whole interest in the property he owns, public policy requires that the power should not be abused. Accordingly from early times, the law has discouraged dispositions of property, which either impose restrictions on future alienations of that property, or fetter to an unreasonable extent its future devolution or enjoyment.1 The rule against perpetuity has been dealt with in the Section 142 of the Transfer of Property Act, 1882 (henceforth referred to as ―the Act‖). Sections 10 to 17 of the Transfer of Property Act have been enacted to encourage free alienation and circulation of property.3 The object of the rule against perpetuity as embodied in the Section 14 is to restrain the creation of future conditional interest in the property. It concerns rights of property only and does not concern the making of contracts which do not create the rights of property. It does not therefore apply to personal contracts which in effect do not create interest in any property.4 An ordinary contract for purchase entered into after the Transfer of Property does not by itself create any interest in land but the obligation can be enforced against a subsequent gratuitous transferee from the vendor of a transferee of value but with notice. The rule against perpetuity has no application to contracts which create no interest in land.5 The provision of Section 14 shall not apply to any case

This Article has been written by Punarva Gera, Semester V of Hidayatullah National Law University, Raipur, C.G.(INDIA). 1 Refer Halsbury‘s Laws of England, 4th Edition(Reissue), vol. 35, p. 605. 2 Section 14 of the Act states: ―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 created is to belong.‖ 3 Vencatachellum v. Kabalamurthy AIR 1955 Mad 350(358); K. Muniswamy v. K. Venkataswamy AIR 2001 Kant 246 (248). 4 South Eastern Railway Co. v. Associated Portland Cement Manufactures Ltd., (1910) I Ch. 12. 5 Jagar nath v. Chhedi Dhobi AIR 1973 All 307(309).

as history readers know. invoking for support. Cas. Robert J.wherein there is no transfer of property as is very clear from the language of the section itself. supra note 1.7 GENESIS OF THE RULE AND ITS GROWTH The Rule against Perpetuity has its roots in early English common law. Henry Frederick Howard. was faced with trying to figure out how to provide for his youngest son.77 Yale L. D." he replied. "I will tell you where I will stop: I will stop where-ever any visible Inconvenience doth appear. 9 Lynn. ―PERPETUITIES: THE NEW EMPIRE‖. 8 The Duke of Norfolk’s Case. a host of policies.10 The problem stemmed from the fact that Mr. 6 7 Kannamal v. 10 Haskins. that an attempt had been made earlier to restrict the creation of certain executory interests in Child v. a member of one of the most prominent families in England and Earl of Arundel and Surrey. The Rule then grew in a manner typical of the common law. Rep. see also Haskins. by judges finding inconvenience here and no inconvenience there. Note. Howard‘s eldest son. Baylie. the Modern Rule Against Perpetuities. "Where will you stop?" asked Lord Nottingham of himself in the Duke of Norfolk's Case.8 Most empires. Kesava Grounder v. undefined territory. 3 Ch. however. have a way of putting up a strong front for a considerable time after decay has set in. 159. 6 From times immemorial. M. is so absolute that it is easy to comprehend the potential force of that right. The Rule began three centuries ago by laying claim to a vague. the owner of the property has a vested right in him to deal with it in accordance with his discretion. Rajan AIR 1976 Mad 102(109). at 20 (noting that The Duke of Norfolk’s Case is famous for first announcing the elements of the Rule Against Perpetuity). in a 1682 opinion crafted by Lord Nottingham—The Duke of Norfolk’s Case. 22 Eng. 9 In this case. which is coexistent with a right of ownership. taboos. Rajeswar AIR 2004 NOC 8.. which is to take effect after the lifetime of one or more persons living at the date of the transfer. often imprecisely.. at 19. The right of disposition or alienation. But equally salient and time honoured is the well-known rule against perpetuity which is based on public policy which necessarily had to make certain dents on the exercise of such absolute power in case it is sought to be abused. . 931 (1682). 1.. supra note 1.C. and doctrines. This observation conveniently fits the empire called the Rule against Perpetuities.J. The rule against perpetuity would come into operation where the transfer of property creates an interest.

112:32 ER 1030.Thomas. Sir Orlando Bridgman.C. The 21 years are allowed because the law considers that time reasonable. & Fin. In its modern sense it is concerned with interest created in futuro and not with interest created in presenti. was insane. is a disposition which makes the property inalienable for an indefinite period. 8th Edition. which ―became the basis for the celebrated legal battle between‖ the two sons. not later than 21 years after the determination of some life in being at the time of the creation of such estate or interest and not only must the person to take be ascertained but the amount of his interest must be ascertained within the prescribed period. however. The two chose to accomplish this through the use of a trust instrument. This legal word or term of an art. through his attorney. became infamous as the first to provide a foundation for the common law Rule against Perpetuity. The issue in The Duke of Norfolk’s Case was deceivingly simple: Which of the two brothers was entitled to the property in question? The case. Thompson. Howard. Vol. which consisted basically of real property. 372: 6 ER 956. LexisNexis Butterworths). 13 (1883)1 Cl.16 In this sense it is concerned with certain interests created in proesenti which are sought to be made inalienable for an indefinite period. I. Thompson v. in such manner as would render it inalienable longer than for a life or lives in being at the same time and some short or reasonable time thereafter. Mr. his eldest son was entitled to succeed to his wealth. is limiting an estate either of inheritance or for years. According to the rule every estate or interest must vest. Palmer13 and Thelluson v.Bharuka. (1906) 2 Ch 199.167.12 The origin and the growth of the rule of law against perpetuities based as it is upon public policy. attempted to devise a way in which he could provide for his youngest son at the expense of his eldest son. p. is described in Cadell v. See id. 11 12 See id. 16 Jarman on Wills..284. Woodford14. in the primary sense of the word.15 ―Perpetuity‖. (10th edition. however. 15 Re Thompson. if at all. G. . “MULLA THE TRANSFER OF PROPERTY ACT 1882”. p. 14 (1805) 11 Ves.11 Under English law.

Soli J. The traditional common law Rule against Perpetuities limiting the time period within which contingent interests must vest is currently in effect either by statute or by judicial adoption in only a few states. Wadhwa Nagpur).S. Talb. 242.17 Basically. W. I. ―PERPETUITIES IN A NUTSHELL‖. L. L. Barton. the law does not recognize dispositions which would practically make the property inalienable forever. VAKIL‘S COMMENTARIES ON THE TRANSFER OF PROPERTY ACT‖ (2nd Edition. 18 Sorabjee. Rev. by adopting a wait-and-see rule. Some of those states have a general constitutional prohibition against perpetuities. 1867 (1968). 51 Harv. H. Rev. 21 Leach. or by excepting trusts where the trustee has the power of sale. Hari Singh. Delhi Law House). It started with limiting alienations to a life or lives in being. 22 Bharuka. 20 Dukeminier Jesse.“MULLA THE TRANSFER OF PROPERTY ACT 1882”. thus permitting perpetual trusts. however. have either abolished the rule. it was felt that. the court extended it still further to 21 years.. 638 (1938). 228: 25 ER 751.21 Rule against perpetuity in its primary sense: Examples of such rules interest in proesenti which have been held void under the name of perpetuity or as tending to perpetuity are classified as follows22: 17 Dr. (10th edition. and the limitations of estates in remainder to the unborn children.168. property may.After property in future estates begun to be recognized. ―DR. Gour. and later stretched to include the period of gestation. Temp.2008.(11th Edition. p. G. for example.18 This is the rule against perpetuities. by a single transfer be tied up in perpetuity. Vol.20 The large majority of states. unless some rules restraining the creation of such estates were devised. .p. GOUR‘S COMMENTARY ON THE TRANSFER OF PROPERTY ACT‖. as well as the creation of future estates by way of shifting use and executory devise began to be permitted. Further. in Stephens v. or by imposing an absolute limit on the number of years by which time an interest must vest.237. 2004. 74 Cal. ―DARASHAW J. LexisNexis Butterworths). 19 (1736)Cas. p. or modified it. ―A MODERN GUIDE TO PERPETUITIES‖. saying that this would not create ―perpetuity‖.C. Stephens19. or by giving the courts a cy pres power to reform the offending language.

for example an estate of inheritance. 192. However. Interest held on perpetual non-charitable trust. the attempted entail of a chattel made prior to 1926.”*26 So long as the transferees are living persons. example trusts to keep in repair a tom not part of the fabric of a church. Modern Rule against perpetuity: The modern rue against perpetuities is thus enunciated by Jarman:25 “Subject to the exceptions to be presently mentioned. unless it must necessarily vest within the maximum period of one or more lives in being and 21 years afterwards. 26 * The exceptions shall be dealt in detail later. (1944)49 Cal WN 145.. An Indian Case on the point is found in MAE Halfhyde v. an unbarrable entail.I. not known to the common law. CA Saldanha24. Supra note 11. 23 24 (1913) ILR 40 Cal.304. 21 IC 183. if the ultimate beneficiary is someone not in existence at the date of the transfer. As regards the first class. If he is born before the termination of the last prior estate. Estates and interests limited in proesenti with an unauthorized mode of devolution. 25 Jarman on Wills. Hushes23. 2. The principle on which the second class is put has been applied in India in Administrator General v. he takes a vested interest at birth and possession immediately on the last prior interest. 3. any number of successive estates can be created.1. no contingent or executory interest in property can be validly created. p. 8th Edition. section 13 requires that the whole residue of the estate shall be transferred to him. where no person or persons. .The life estate so created in favour of the wife does not offend the rule of perpetuity as incorporated in Section 14.vol. Gifts to trustees for non charitable indefinite objects or for non charitable unincorporated institutions or societies which may last for an indefinite time. can take any benefit. The cases from the third class require consideration. it will suffice to say that even under the Hindu Law no estate can be created which is unknown to Hindu Law. an estate in which successive heirs take life estates only.

27 According to this doctrine. 594 (footnote in the original text omitted). He considered that it was desirable per se that wealth should be controlled by the living and not the dead. of course.28 SCOPE AND APPLICABILITY OF THE RULE The Section is a branch of law of property and not of the law of contract. ―Lives in Being Revived‖ (1981) 97 LQR 593.The rules against perpetuities and excessive accumulations. The thinking behind this was. The great advocate of the ―dead hand‖ rationale for the rule against perpetuities was Lewis M Simes: see his Public Policy and the Dead Hand (1955). . The opening words of section 14 of the Act prohibit the creation of an interest which is to take effect after the lifetime of one or more persons living at the date of such transfer. being fettered by his wishes. 28 Ruth Deech. that the function of the rule was to maintain a balance between the living and the dead. the Rule is necessary in order to strike a balance between on the one hand the freedom of the present generation and. on the other. If a settler or testator had total liberty to dispose of his property among future beneficiaries. changes in the nature of the property and in the personal circumstances of the beneficiaries. unforeseeable by the best intentioned and most perspicacious of donors.63. however. pp 58 . expressed above. The result of the rule against perpetuity is that the minority of the ultimate beneficiary is the latest period at which an estate can be made to vest. If a contract 27 Refer The law commission (Item 7 of the sixth programme of law reform: the law of trusts). He went further than the view. the recipients.This view has not escaped criticism. Justification of the rule: The most convincing modern explanation of the functions of the Rule against perpetuities is the so-called Dead Hand Rationale. that the dead could not respond to changes in circumstances as they arose. The liberty to make fresh rearrangements of assets is necessary not only in order to be rid of irksome conditions attached by earlier donors to the enjoyment of income but also in order to be able to maneuver in the light of new tax laws. would never enjoy that same freedom in their turn.The rule against perpetuities however does not require that the vesting shall take place at the birth of the ultimate beneficiary. that of future generations to deal as they wish with the property in which they have interests. What it does require is that the vesting cannot be delayed in any case beyond his minority.

is nothing more than a contingent contract for sale which becomes enforceable when the party to the contract intends to dispose of certain property. as in the present case. To the same effect is the decision in Matlub Hasan v. Kurunjilikattil Appu alias Raman v. The creation of a charge is not a transfer of interest in the property.29Like mentioned earlier. Ordinarily a contract for sale does not create any interest in favour of the prospective purchaser. AIR 1965 Ker 27. Mary. Such a contract thus does not come within the purview of Section 14 of the Act. section 14 comes into play only when Section 14 can come into play only if there has been a transfer of interest in the property. AIR 1960 Assam 178.does not create any interest in favour of an individual or any party. It does not create any estate in favour of the party to whom the property is to be offered for sale in future. Sundara Pondiyasami Tevar31.30 In Raja Rajeswara Dorai v. Brikodar Nath. That the rule applies to his right to property or any future limitation of such right and where. the covenant does not seek to create or limit any such right.C. Mst. Their lordships held that since there was no transfer of interest in any immovable property Section 14 of the act would not be applicable. the rule has no application”. 704 32 ILR (1948) 1 Cal 492 33 AIR 1958 MP 246 . it was the accepted doctrine in India that the agreement created an interest in the land itself in the favour of 29 30 Mahmud Ali Majumdar v. In Bhupati Bhusha Trivedi v. Any contract thereof which embodies a right of pre-emption. such a contract does not come within the purview of Section 14. it was held that the creation of an annuity in perpetuity with a charge on property would not offend Section 14 of the Transfer of Property Act. Kalawati33. 31 49 I. Birendra Moahn Singh Chauthari32 it was held: ―The test to determine whether the rule against perpetuity as embodied in the Section 14 applies or not is whether the covenant creates or seeks to transfer an interest in land. There the suit was to enforce a covenant to pay an annuity in perpetuity as the charge on property.In the case of an agreement for sale entered into prior to the passing of the Act.

36 In Ram Newaz v. To covenants which run with the land because they are so annexed to the land as to create something in the nature of an interest in the land. Ram Mohit. 533. such an interest would be void for perpetuity. AIR 1960 Bom 105. and following this doctrine the view was that a covenant for pre-emption. was not enforceable in law. Nankoo37 it was held by the Court that the transfer of two bighas of land to a person was void under Section 14. . An agreement to sell immovable property does not itself create any interest in or charge on such property. 38 Mackenzie v. Ltd. Himalaya Assurance Co. A contract for sale does not create any interest in the land but is annexed to the ownership of the land. Therefore a bare agreement to sell immovable property in future on demand by a party to the agreement would not infringe the rule against perpetuities.S. 37 AIR 1986 All 283. L. Dada Alli.39 ii. To a revocable license to enter and build up windows in default of the owner of the building doing so. 40 Smith v.S. 2. The obligation can be enforced against a gratuitous transferee from the vendor aor a transferee from value with notice. (1990)I Ch 12. To personal contracts38.the purchaser.34 But there has been a change in this proposition and the current proposition is:35 1. AIR 1967 SC 744. v. Co. Ram Baran v. although there is some connection with a reference to the land. 36 R.40 for it does not give the adjoining owner any interest in land. AIR 1926 Cal 745. If it did.41 34 35 Allibhai Mahomed v. AIR 1931 Bom 578. Colbourne (1914) 2 Ch. Associated Portland Cement Manufacturers.Ghadge v. Ghadge. EXCEPTIONS TO THE RULE This rule has no application: i. 39 South Eastern Rly. iii. contained in a deed of partition which was unlimited in point of time.

To equity of redemption which is a present interest in a property in exercise of which the property is sought to be redeemed. (1889) 43 Ch.44 vii. Under the Indian law it is the life or lives in being at the time of the grant plus the period of minority of the beneficiary taking under the grant 41 42 Muller v. Alt Publication). ―G. To a restrictive covenant or contract not being a limitation of property.. Vepa P. 48 Section 18 of the Easements Act states : An easement may be acquired in virtue of a local custom. 44 Padmanappa v.457. safety or any other object beneficial to mankind. Fane (1913)I Ch.42 v. 45 Mackenzie v.‖ 43 Haris Paik v. AIR 1928 Mad 28. (4th Edition.47 x.V. To an agreement to sell or to recover a land. 49 See. SUBBARAO‘S LAW OF TRANSFER OF PROPERTY‖. To transfer for benefit for public. D.45 viii. p.43 vi. Childers. health. (1901)1 Ch 54. . commerce. Under the English law. 265 46 In Re Fane. Sarathi. Sitarama Ayyar. Such easements are called customary easements. 2004. Fane v. Jahuruddi Gazi (1897)2 CWN 575. 47 Supra Note 30. plus a term of 21years. the perpetuity period is a life or any number of lives when the instrument under which the interest arises takes effect.C. To an easement acquired by the virtue of a local custom known as customary easement.48 ENGLISH LAW AND INDIAN LAW COMPARED The following points of distinction may be noted between the Indian and the English rules of perpetuity49: a) The perpetuity period is different. 54. knowledge.iv. 16 and 17 shall not apply in the case of a transfer of property for the benefit of the public in the advancement of religion.46 ix. To general powers. Section 18 of the Act states: ―Transfer in perpetuity for benefit of public: The restrictions in sections 14. To a covenant giving a mortgage a right of pre-emption. Trafford.

Natarajan51 would be useful. c) The period of gestation. . Under the Indian statutes the term is the period of the minority of the person to whom if he attains full age the interest created is so to belong. There is no corresponding provision under the Indian law. The harsh consequences of violating the rule.yet it has inevitably become ‗encrusted with barnacles‘. While the Rule expresses a perfectly reasonable policy – a fair balance between the desire of members of the present generation. by Section 163 has validated certain remote gifts by allowing the substitution of the age of 21 years when the gift is to fail for remoteness on the ground that the ascertainment of the beneficiary or the class of the beneficiary is made to depend on the attainment by the beneficiary or members of the class of an age exceeding 21 years. There is widespread agreement that some form of reform is required. a look at the case of Soundarjan v. PUBLIC POLICY AND THE DEAD HANDS. The causes of dissatisfaction with the rule are mainly two: The requirement of absolute certainty that the interest will vest within the perpetuity period. and its consequent invalidity if any possible combination of events. however. 1955. And Secondly. could it to vest outside the perpetuity period. 58 AIR 1925 PC 244. and a similar desires of succeeding generations to do what they wish with the property which they enjoy50. 1925. where it actually exists may be added to the perpetuity period as above defined. This case illustrates the anomaly resulting from the fact that a slight excess over the legally 50 51 Simos. the interest fails to vest completely instead of being cut down to size. the rule against perpetuity has come under fire in many parts of the world. THE NEED FOR REFORM AND RECOMMENDED SUGGESTIONS During the last forty years or so. In English law it admits of addition at both ends of the perpetuity period. p. improbable or fantastic. But Indian law it may be added only at its commencement. To illustrate the point. d) The Law of Property Act.b) Under the English rule the additional period of 21 years allowed after lives in being is a term in gross without reference to the infancy of the person. whereby.

If such a provision is enacted. The above two propositions shall not be constructed as invalidating or modifying the 52 P. by virtue of the operation of Section 102. an estate was given to the testator's daughters for their lives with the remainder for the children on attaining the age of 21 years. it could not be certain that in the case of every child a guardian would necessarily be appointed so as to postpone the minority of the child to 21 years. August 1977 at 170. Hence. but the position would be the same in respect of transfer during a person's lifetime. That case was no doubt a case relating to succession of death. unless guardians are appointed or a Court of Wards takes charge.14. as at the testator's death. .permissible age may defeat the transfer.B. because it is contingent upon any person attaining or failing to attain the age in excess of majority. even though it may terminate at an earlier time. Law Commission of India. an interest which must not terminate later than the death of one or more persons is a life interest. closely corresponding to its Section 114 and also by Section 14 Transfer of Property Act. It may be added that for the purposes of this proposition. 70thReport. In this case. In Applying Section 14. there was a possibility that the bequest would be held beyond the lifetime of the daughters and the minority of some of the children of the daughters.Gajendrakar.52 If an interest in property is void under S. Indian Succession Act. It was held that. the contingency shall be reduced to the age of majority as regards all persons subject to the same age contingency. to an interest in property-limited to take effect at or after the termination of one or more life interests of persons in being when the period mentioned in Section 14 commences to run or on or after the termination of lives of persons inbeing when such period commences to run the validity of the interest shall be determined on the basis of the facts existing at the termination of such one or more life estates or lives. The age of majority in India is 18 years. 1882 the transfer was illegal and void. The Law Commission of India in its Seventieth Report has advocated that the reforms in India should be mainly spearheading in two directions: (i) Regard be had to actual events (ii) Mischief arising from conditions as to age should be remedied. the Court will determine the validity of the gift by examining the actual facts as they appear at the end of the life interest.

There is a need for reform to be built on the modern rule itself.53 It seems apt to conclude that the rule against perpetuities were formulated in certain socio-economic conditions. 53 Id. including appointments made by an instrument under a power created before that date. .term of any limitation which would have been under S. which are valid today as well as and as relevant as they were at the beginning of the laissez faire economy. The above three propositions shall apply to transfer taking effect on or after the date on which those propositions become operative and to appointments made after that date in exercise of a power of appointment.14 apart from these provisions. but equipped to overcome its deficiencies. yet the era of the welfare economy had dawned and the rule against perpetuities needs to be for reform to be re-examined and mould afresh to suit newer and changed conditions.

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