A human being with possession believes that its ownership should remain with his successors for a long period of time, people by deeds and wills transfer the ownership to the person who will be the next in the line of successors after the death of the former.
This situation can lead to crisis in land availability, thereby, depriving the society. To stop this enclosed circulation of property within a particular family, The Rule against perpetuity was introduced in the Transfer of Property Act,1882.
PROVISION GIVEN IN THE ACT
Section 14 of Transfer of Property Act, 1882 states that in a transfer of property, vesting of interest cannot be postponed beyond the life of last preceding interest in the living person [or persons] and the minority of ultimate beneficiary.
SECTION 14 OF TPA STATES THAT-
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.
MAXIMUM REMOTENESS OF VESTING
According to Section 14, the maximum permissible remoteness of vesting is the life of the last preceding interest added with the minority of ultimate beneficiary.
Property can be transferred to any members of persons living at the date of transfer.
The vesting of interest in the favour of ultimate beneficiary maybe postponed for more numbers of years.
WHEN THE ULTIMATE BENEFICIARY IS IN THE MOTHER’S WOMB
When the child is in the mother’s womb, the latest period till when the vesting maybe postponed is Minority plus the period during which the child remains in the mother’s womb. Child in the womb is a competent person, where the ultimate beneficiary is in the mother’s womb when the last person dies, the property gets vested immediately in him while being still in the womb.
The time when a child is in the womb after getting born is gestation.
MAXIMUM ALLOWED REMOTENESS OF VESTING
Life of preceding interest+ Period of gestation of ultimate beneficiary+ minority of the ultimate beneficiary
The normal period considered for gestation is 9 months or 280 days, added to the period of remoteness of vested interest.
SECTION 13 OF TRANSFER OF PROPERTY ACT, 1882
Section 13 and Section 14 of TPA go inseparably, hence, S.13 and S.14 are to be perused together to comprehend the arrangements administering of the rules.
The Act doesn’t allow the transfer of property straight forwardly for an unborn person. The fundamental standard in s.13 is that a person discarding property to another will not shackle the free demeanour of that property in possession of more than one age. According to s.13 of TPA, the ultimate beneficiary must come into existence before the last preceding interest and its consequent vesting interest in the ultimate beneficiary.
Section 14 gives relaxation in postponing the vesting of interest but not beyond the certain time period.
FAILURE OF PRIOR INTEREST
Section 16 of TPA provides that if the prior interest under s.14 fails the subsequent interest also fails.
Girjesh Dutta v. Data Din, 1934
‘A’ made a gift to his nephew’s daughter ‘B’ for life and subsequently to the descendants of ‘B’ absolutely. However, ‘B’ died childless. Here the gift was held to be void and the property was transferred to the legal heirs of the donee.
DOES THE RULE APPLIES UNDER THE HINDU AND MUSLIM LAW
The TPA was made applicable to Hindus through the 1929 amendment. S.14 of the act is applicable to Hindus. Even before the amendment, the rule against perpetuity was applicable to Hindus through local laws, eg. Hindu Disposition of Property Act, 1916 and Madras Act, 1914.
Though it is mentioned in chapter II of the TPA that no provision will apply to Muslims, but gift to remote and unborn person was held as void, exception is only made in matter of wakfs.
CASE LAWS ON RULE AGAINST PERPETUITY
The Rule against perpetuity was established in the famous case of The Duke of Norfolk. However, the time period for vesting the interest in a property was laid down in Thelluson v. Woodfard
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 movable property to a son with gift of shares in the property to son’s son’s son when they should attain age of 21.
- Subramania v. T. Varadharayas, 2003
In this case ‘A’ transferred his property to ‘B’ for life and after the death of ‘B’ to his eldest son, and then to second son, the court held that the interest so created for the benefit of the eldest son does not take effect, because the interest created in favour of eldest son was limited only to his lifetime.
HOW IS IT DIFFERENT FROM ENGLISH LAW
Under English law, vesting of interest maybe postponed up to life or lives of last person plus period of 21 years irrespective of the age of minority of ultimate beneficiary.
In, India under s.14 of TPA vesting can be postponed up to life or lives of the last person plus minority of ultimate beneficiary.
EXCEPTIONS TO RULE AGAINST PERPETUITY
The rule against perpetuity will not be valid in the following conditions-
- TRANSFER FOR THE BENEFIT OF THE PUBLIC- Section 18 of TPA
Section 18 of TPA states that where a property is transferred for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety or any other objective which is beneficial to the public at large, a perpetual transfer is not void.
The purpose of the exemption is to enable the formation of trusts.
The purpose of the exemption is to enable the formation of trusts.
In the case of trusts, the property is settled for an indefinite period so that income derived from it can be used forever for the purpose the trust was created.
If s.14 will be made applicable in such cases, it would defeat the purpose of such trusts.
- PERSONAL AGREEMENT
When a personal agreement was made which does not create any type of interest in property, then rule against perpetuity cannot be applied. The rule applies only on the transfer of property, when there is no transfer of property or interest, the rule cannot make it void.
- RENEWAL OF LEASE AGREEMENT
This rule also does not affect the agreements of renewal of leave.
- CONTRACT OF PRE-EMPTION
This rule does not apply to the contract where there is an option of purchasing a land by family members.
The section does not apply where there is a covenant of redemption of the mortgage.
- CHARGE CREATED OVER PROPERTY
It does not amount to transfer of interest.
CASE LAWS REGARDING EXCEPTIONS OF RULES AGAINST PERPETUITY
Nafar Chandra v. Kailash, 1921
The Shebiats of a temple agreed to appoint the family of pujaris from generation to generation and more provisions for expenses and remunerations of the office.
The court held that this agreement is valid and not affected by the rule against perpetuity.
Padmanbha v. Sitarama, 1928
It was established that the rule against perpetuity shall be exercised or applied only in cases where new, future interest in the property is to be exercised after the mentioned time period.
Kempraj v. M/S Burton Sons & Co., 1970
The court held that the rule of perpetuity does not apply to contracts for perpetual renewal of leases
Jhagru Rai v. Basdeo Rai & Anr., 1924
The court held that a contract of pre-emption does not create any interest in land, it would be difficult to contend that such a contract comes within the rule against perpetuity.
Such a rule cannot apply unless an interest in land purports to have been created.
Ram Baran v. Ram Mohit, 1967
The Supreme court held that the Rule against perpetuity does not apply on charge created over property as this does not amount to transfer of interest.
Section 14 of TPA or Transfer of Property Act i.e., Rules Against Perpetuity is one of most important topics of Transfer of Property. This section helps circulation of property in society. Otherwise, there won’t be any conformity in the society. Otherwise the situation can lead to crisis in land availability, thereby, depriving the society. To stop this enclosed circulation of property within a particular family.
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ARTICLE WRITTEN BY VYSHNAVI KRISHNAN.