Rule against Perpetuity

Rule against Perpetuity- Nothing can be for Indefinite Period

Introduction

Perpetuity means for an indefinite period. When a human being has an unmovable property, he thinks that its ownership should remain with his successors for a long period, the period which is not determined. No one wants to lose the ownership of a piece of land as it is the land which can give many benefits to its owner, and so 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. If everyone gets the freedom of acquiring land and transfers its ownership among his family, this will lead to crisis in land availability and society will be deprived of using land for free circulation of property for the purpose of trade, commerce and many other things of commercial purposes. There must be free and frequent disposal of property among the society. To stop the enclosed circulation of property within a particular family, the rule against perpetuity was introduced in the Transfer of Property Act, 1882 (mentioned as TPA further).

Provision given in the Act

Section 14 of the TPA 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 the ultimate beneficiary. There are some essential elements given under the section to determine rule against perpetuity:

1. There should be a transfer of property

2. The transfer should be for the ultimate benefit of an unborn person who is given absolute interest.

3. The vesting of interest in favour of ultimate beneficiary is preceded by life or limited interests of living person (s)

4. The ultimate beneficiary must come into existence before the death of the last preceding living person.

5. Vesting of interest in favour 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.

Property can be transferred to any number of persons living at the date of transfer. By this, the vesting of interest in favour of ultimate beneficiary may be postponed for much number of years. For example- property must be transferred to A for life then to B for life and then to C for life and so on for several years and all these persons holding property successively for their lives would occupy the property for several years prior to its absolute transfer to the ultimate beneficiary. But as given under Section 13 of TPA, the ultimate beneficiary must be come into existence before the last preceding interest gets terminated. There should be no interval between the termination of preceding interest and its consequent vesting interest in the ultimate beneficiary. There should be no postponement even for a moment in vesting of interest. Section 14 gives relaxation in postponing the vesting of interest but not beyond the life of preceding interest and the minority of ultimate beneficiary. In simple words, section 14 states that vesting of interest can be postponed but not beyond the ‘certain time period’. If the vesting of interest gets postponed beyond the time given in the section, then the transfer will be considered as void because then it will be for an indefinite period.

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. For example A got the property transferred in his name for life and after him to B for life and then to unborn (U.B.) when he will comes to the age of majority. The property remained with A and B for their respective lives and when B died, though the vested interest should immediately to the ultimate beneficiary but, because of this section, he will get the vested interest when he will attain majority. When a person attains the age of eighteen he is said to have come to the majority according to Indian laws or when a minor is under the supervision of the court of law, he attains majority at the age of twenty one. But in the case of Saundara Rajan v. Natrajan, the Privy Council observed that since at the date of the transfer it is unknown that whether the court has appointed any guardian for the minor or not in future, according to Section 14, the normal period of minority would be eighteen years. Hence, the vested interest may be postponed up to the life of the last person (B) who holds property for life and the minority (eighteen years) of the ultimate beneficiary.

When the Ultimate Beneficiary is in Mother’s Womb

When the ultimate beneficiary is in the mother’s womb, it is a child en ventre sa mere, the latest period till when the vesting may be postponed (after the preceding interest) is minority plus the period during which the child remains in the mother’s womb. The minority should be counted from the date of worldly birth on the other hand in the case of being a transferee, a child who is in mother’s womb is a competent person. Where the ultimate beneficiary is in mother’s womb when the last person dies, the property gets vested immediately in him while he is still in the womb. Hence, the exact time from which the age of minority starts is the date when ultimate beneficiary is born. The time when a child is in the womb after getting born is called gestation. In our country, the maximum possible remoteness of vesting is considered as-

Maximum allowed remoteness of vesting= life of the preceding interest+ Period of gestation of ultimate beneficiary + Minority of the ultimate beneficiary.

It is to be noted that the maximum limit which has been fixed for postponement of vesting the interest is the life or lives that were in existence at the date of transfer in addition to the age of minority of ultimate beneficiary plus the period of gestation, nut gestation should actually exists which means the ultimate beneficiary must be in mother’s womb when the last person dies. If the ultimate beneficiary has already taken birth, then the gestation period will not be counted with minority. If gestation period has to be added, then nine months or 280 days which is the normal period considered for gestation will be allowed to be added with the period of remoteness of vested interest.

Exceptions to this Rule

The rule will not be valid in the following two conditions:

1. Transfer for the benefit of public- When the property has been transferred for the betterment of public at large, for religious purposes, knowledge, commercial purposes, health, safety or any purpose which benefits mankind, the transfer will not be declared as void under the rule against perpetuity. It is necessary to have this exemption because when the property is transferred for the benefit of public it is usually made by the religious or charitable 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 rule against perpetuity is applied on the trusts it will consider all the trusts as void and they cannot be used for the benefit of people.

2. 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. The best example for personal agreement is a contract. In the case of Ram Baran v. Ram Mohit, the Supreme Court observed that a mere contract for selling an immovable property does not create any interest over the immovable property and so the rule against perpetuity cannot be applied. The rule is not applicable on mortgages as mortgages don’t have any future interest.

Does this rule applies under the Hindu and Muslim Law

The TPA was made applicable to Hindus through the 1929 amendment. Section 14 of the act is applicable to Hindus. Even before the amendment, the rule against perpetuity was applicable to Hindus through local laws, e.g. Hindu Disposition of Property Act, 1916 and Madras Act 1914.

Though it is mentioned in Chapter II of the TPA that no provisions will applicable to Muslims but gift to remote and unborn person was held as void, exception is only made in the matter of wakfs.

Conclusion

The rule against perpetuity imposes a limit on the period of transfer of property and vesting interest. If such rule doesn’t exist, the society will be deprived of many benefits which can be proved good for the public in the long run. The property can be destructed soon if there is no free circulation of it among the society. Hence, this rule is a complete necessity for the easy enforcement of law and free and active circulation of land for the benefit of the society and for the coming generations.

Author: Samiksha Mehta,
Invertis University/ Student ( LL.B 3rd year