INTRODUCTION

Perpetuity means indefinite period. A perpetuity, as defined by Lewis in his well-known book,
‘‘Lewis on Perpetuities’’, is ‘a future limitation, whether executory or by way of remainder, and
of either real or personal property which is not to vest until after the expiration of , or will not
necessarily vest within, the period fixed and prescribed by law for the creation of future estates
and interests.’ Rule against perpetuity is the rule which is against a transfer making the property
inalienable for an indefinite period or forever.

The Rule Against Perpetuity is generally understood to serve the purpose of balancing the rights
of property owners to impose conditions on the use and exchange of their property with the
importance of having property with the importance of having property under the control of living
persons, so that it maybe put to its best contemporary use. There cannot be any direct transfer to
unborn person. An unborn person means a person who is not in existence even in mother’s
womb. Accordingly, section 5 of the Act provides that transfer of property takes place between
two living persons only. The Transfer of Property Act, by and large deals with transfer as
between living persons, but there are certain sections in the Act which lay down certain rules
with regard to transfer for the benefit of unborn person.

RULE UNDER SECTION 13:

Section 13 deals with the transfer for benefit of unborn person. It reads as:

“Where, on a transfer of property, an interest therein is created for the benefit of a person not in
existence at the date of the transfer, subject to a prior interest created by the same transfer, the
interest created by the same transfer, the interest created for the benefit of such person shall not
take effect, unless it extends to the whole of the remaining interest of the transferor in the
property.”

This section refers to interest created for the benefit of person not existing at the date of transfer.
Such in interests can be created subject to certain rules contained in this section. The following
rules may be noted:
 (i) NO DIRECT TRANSFER:

A transfer cannot be made directly to an unborn person. Such transfer can only be
made by the machinery of trusts. It is a fundamental principle of the English Common
Law, that any disposition of land calculated of produce an abeyance of ownership is
void. Accordingly, if a transfer were made directly to an unborn person, there would
be an abeyance of ownership from the date of transfer till coming into existence of
the unborn person.

(i) PRIOR INTEREST:

In a case trust is not created, the estate must vest in some person between the date of
the transfer and the coming into existence of unborn person. The interest in favour of
unborn person must always be preceded by a prior interest in favour of a living
person.
(ii) ABOSLUTE INTEREST:
The entire property must be transferred to the unborn person. It is not permissible to
confer a life-interest on an unborn person. Transfer of property for life of unborn
person is void and cannot take effect. If there is any other limitation which derogates
or cuts short the completeness of the grant in favour of the unborn, the transfer is
void.

CASE LAWS:

1. Girijesh Dutt V. Delta Din1

A made a gift of her properties to B for her life and then to her sons absolute. B had no child
the date of the execution of the gift. The deed further provided that in case B had only
daughters but only for their life. In case B had no child then after the death of B, the property
was to go absolutely to X.

The deed on paper provided a life estate in favor of B’s unborn daughters: which is contrary
to the rule of sec 13. However, B died without any child and X claimed the property under
the gift deed. The court held that where a transfer in favor of a person or his benefit is void
1
(1934) 9 Luck. 329
 under section13, any transfer contained in the same deed and intended to take effect or upon
failure of such prior transfer is also void. In determining whether the transfer is in violation
of sec. 13, regard has to be made with respect to the contents of the deed and not what
happened actually. Here as the transfer stipulated in the contract that was void, the transfer in
favor of X also became void. Hence, claim was defeated.

2. Sridhar V. Revanna2

The donor transferred property by the way of gift in favor of his grandson. The property
thereafter was to be vested in the male children of the grandson. The court held that the gift
deed could be said to have created life interest in favor of the grandson and absolute interest
in favor of his unborn sons. Alienation of the property by the done after birth of his sons was
improper. The sons were allowed to recover the sale consideration received by their father
from the purchasers.

RULE UNDER SECTION 14:

“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.”

This rule is founded on the general principle of policy guiding judges, that the liberty of
alienation shall not be exercised to its own destruction and that all contrivances shall be void
which tend to create a perpetuity or place property forever beyond the reach of the exercise
of power of alienation.3 Section 13 and 14 of the Transfer of Property Act, 1882 go hand in
hand. Section 13 regulates procedure of creating interest in favor of unborn person, whereas
section 14 provides a time limit until which the unborn transferee will get the interest so
created.

The essential elements of the rule against perpetuity as given in this section are as follows:

(i) There is a transfer of property.

2
AIR 2014 Kar. 79.
3
Mulla, “The Transfer of Property Act”, Lexis Nexis, Nagpur, 9 th ed., 172.
(ii) The transfer is for the ultimate benefit of an unborn person who is given absolute
interest.
(iii) The vesting of interest in favor of ultimate beneficiary is preceded by life or limited
interests of living person(s).
(iv) The ultimate beneficiary must come into existence before the death of the last
preceding living person.
(v) Vesting of interest in favor of ultimate beneficiary may be postponed only up to the
life or lives of living persons plus minority of ultimate beneficiary; but not beyond
that.

Illustrations:

1) If an estate is given to a living person, A for life, then to a living person, B for life and
then to Unborn son of B. Here the son of B must be in existence on or before the date of
expiry of the life estate in favour of B.

2) The vesting of absolute interest in favour of an Unborn person maybe postponed until he
attains full age. for example, an estate may be transferred to A, living person, and after his
death To His unborn son when he attains the age of 18. Such a transfer would not be violative
of the rule against perpetuity.

Property may be transferred to any number of persons who are living at the date of transfer. In
this way, vesting of interest in favor of ultimate beneficiary may be postponed for any number
of years. However, as required under Section 13, such ultimate beneficiary must be born
before the termination of the last preceding interest. Accordingly, there should not be any
interval between the termination of preceding interest and its consequent vesting in the
ultimate beneficiary; vesting of interest cannot be postponed even for a moment. By way of
relaxing this strict rule of Section 13 it is provided in Section 14 that vesting of interest may
be postponed but not beyond the life of preceding interest and the minority of the ultimate
beneficiary. If in a transfer of property, vesting of interest is postponed beyond this period as
prescribed in this section, the transfer would be void as being a transfer for an indefinite for
an indefinite period or a transfer in perpetuity.

Perpetuity may arise in two ways-

 (a) By taking away the power of alienation from the transferor

(b) By creating a remote interest in the future property.

A condition restraining the transferee's power of alienation is void as per S.1O of the Act.
And a disposition to create a future remote interest is prohibited under S.14 of the Act.

The Rule applies to all sorts of contingent future interest in property, real or personal,
whether by trust, power, estate, option to purchase, easement or otherwise. In the typical
scenario of a will, which may gift certain property to be held in trust until the happening of a
certain event, it must be certain that the property will absolutely vest in the entitled person or
persons before twenty-one years has passed since the death of a person who is identifiable by
the terms of the will, and who was alive at the time of the testator's death.

MAXIMUM REMOTENESS OF VESTING

under Section 14, the maximum permissible remoteness of vesting is the life of the last
preceding interest plus minority of the ultimate beneficiary. Accordingly, property may be
transferred to A for life and then to B for life and then to the unborn of B when he attains the
age of majority. A and B hold property successively for-their lives; therefore, the property is
tied up for their lives one after the other. After the death of B (the last preceding interest)
although it should vest in the ultimate beneficiary, immediately but, under this section the
property may be allowed to vest in the unborn when he attains the age of majority. Minority
in India terminates at the age of eighteen years or, when the minor is under supervision of
Court, at the age as twenty-one years. But in, Saundara Rajan V. Natamjan4, the privy
council held that since at the date of the transfer it is not known whether or not a guardian
would be appointed by Court for the minor in future, for purpose of Section 14 the normal
period of minority would be eighteen years. So, the vesting may be postponed up to the life of
the last person (B) holding property for his life and the minority (18 years) of the ultimate
beneficiary.

GESTATION PERIOD

The period during which a child remains in womb after being conceived is called gestation. If
the ultimate beneficiary comes into existence (say in the mother’s womb) prior to cessation of
4
AIR 1925 PC 244
 prior estate, gestation period would not be added in permissible perpetuity limit. However, if
a transferee is a person who comes in womb after this child in womb survives, lives and dies
and ultimate transferee now comes in womb, English law may permit 21 years even thereafter
too but not so by Indian Law. Gestation is a grace to a person not in existence.

MINORITY

‘Minority’ means till the ultimate beneficiary become 18 years of age. This benefit would be
only for the one who is born on or before the end of prior estates. The person coming in
womb after expiry of prior estate or last prior estate is not eligible to get property directly or
indirectly. Minority in India terminates at the age of 18 years as given in Indian Majority Act.

CONTINGENT INTEREST UNDER SECTION 14

Vesting of interest in favour of the ultimate beneficiary may be postponed up to his minority.
In other words, the property does not best in him until he attains the age of majority. Between
the period when last person dies and the majority of the ultimate beneficiary, the ultimate
beneficiary has a contingent interest which becomes vested upon his attaining majority.
Where the ultimate beneficiary is already born at the death of the last person but does not
survive to attains majority e.g., dies at the age of 15 years, the interest does not vest in him
and therefore it reverts back to the transferor or his legal heir if the transferor is dead by that
time.

ANALOGOUS TO SECTION 114 OF THE INDIAN SUCCESSION ACT

Section 14 of Transfer Property Act corresponds to section 114 of the Indian Succession Act,
1925, Rule against perpetuity applies to will and transfer otherwise inter vivos in same way.
Perpetual transfer is void whether it is in will or any transfer otherwise. The transfer cannot
operate to create an interest perpetuity. No transfer can create perpetuity. In Section 114 of
Succession Act, the bequest is not valid if it create perpetuity and as such delays the vesting
perpetually.5

“No bequest is valid whereby the vesting of the thing bequeathed may be delayed beyond the
lifetime of one or more persons living at the testator’s death and the minority of the some

5
Saxena, Poonam, “Property Law”, “Lexis Nexis Butterworths Wadhwa”, Nagpur. 2 nd Ed., 123.
 person who shall be in existence at the expiration of that period, and to whom, if he attains
full age, the thing bequeathed is to belong.”

In Veerattalingam V. Ramesh6, A executed a will giving the possession of her property to

her sons without any power of alienation, and after that, a life interest was created in favor of
her son’s son, who were also alive at the time of executing the bequest. The testament further
provided that after the death of such grandson, the property was to vest in the great-grandson
(who were unborn on the date of execution of will) absolutely. The apex court held that the
bequest was not hit by the rule against perpetuity as successive life interest could be created
in favour of any number of living persons, and both sons and grandsons in whose favour the
life interest was created were living on the date the bequest was created.

CASE LAW

1) Anand Rao Vinayak V. Administrator General of Bombay, 1896.

In this case Bombay High Court declared that the gift void as offering against perpetuity
when a gift was made of moveable property to a son with gift of shares in the property to
sons’s sons son when they should attend the age of 21.
2) Abdul fata Mahomed V. Rasamaya, 1894
The Privy Council held that a gift to an Unborn generations is forbidden by Mohammedan
law except in the case of Wakf.
3) Rambaran V. Ram Mohit7
Supreme Court held that the rule against perpetuity doses not apply to personal
agreements, for example…agreements which do not create an interest in the property.

EXCEPTION TO THE ‘RULE AGAINST PERPETUITY’

Following are the exception to the rule against perpetuity:

1) Vested interest is not affected by the rule because once the interest are vested it cannot be bad
for remoteness.

2) The rule is not applicable to land purchased or held by Corporation.

6
(1991) 1 SCC 489.
7
AIR 1967 SC 744.
3) Gift to charities, the rule does not apply to transfer for the benefit of public for religious,
pious, or charitable purposes.

4) Properties settled upon individuals for memorable Public Service.

5) The rule against perpetuity does not apply to Personal agreement. For example - agreement
which do not create any interest in the property.

6) A covenant of redemption in mortgage does not effect by the rules the rule. 7) The does not
apply to contacts for Perpetual renewal of lease.

8) The rule also does not apply where only charges is created which does not amount to a
transfer of an interest.

9) Contract of preemption also not affected by rule against perpetuity.

CONCLUSION

The rule against perpetuities limits the duration of certain restrictions on the use and transfer of
property. The Rule is to the effect that no legal interest in property is valid unless it is certain, at
the time when the disposition (e.g., a trust) takes effect, that the interest must vest within a life or
lives in being plus twenty-one years. In other words, property may not be tied up in trust, subject
to restricted use, or otherwise held subject to any contingency, for longer than twenty-one years
after the death of a person who is alive at the time of the disposition and identifiable by the terms
of the instrument of disposition. The Rule applies to all sorts of property interests - e.g., options
to purchase, conditional easements, remainder estates, etc. - but today arises most commonly in
connection with trusts. In short, the rule against perpetuity provides that vesting cannot be
postponed beyond the lifetime of anyone or more persons living at thedate of transfer. The basis
of the rule against perpetuity is that Liberty of alienation shall not be exercised to its own
destruction. The rule of perpetuity is not absolute but it has certain exceptions.