Dr.

RAM MANOHAR LOHIA NATIONAL

LAW UNIVERSITY

Law Of Property-I

FINAL DRAFT
RULE AGAINST PERPETUITY

Submitted to Submitted by

Dr. Manish singh Aman Rai

Asso. Professor BA LLB (HONS.)

RMLNLU , LUCKNOW ROLL. NO: 160101024

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ACKNOWLEDGEMENT
It is a pleasant duty of mine to duly acknowledge my debt of gratitude to my teacher Dr.
Manish Singh giving me such an opportunity to work on this topic. All through the
exploration period, I have been guided by my educator at whatever point I confronted any
obstacles or was in a state of daze not having the capacity to resolve the intricacies of the
subject.

I want to thank my University, Dr. Ram Manohar Lohiya National Law University,
Lucknow, for giving me the opportunity to be a part of a novel exploration turned educational
program which without a doubt helps the comprehension of the subject.

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Meaning of perpetuity
Perpetuity means infinity. It means creation of an interest which is to take effect after
perpetuity.it is understood under sec 14 as equivalent to the lifetime of one or more living
person plus the minority (till 18 in Indian ,21 in English law) of an unborn .who will take
absolute interest in property.1

Jurisprudential aspect2

Sir D. Mulla "Liberty of alienation shall not be exercised or used for its own destruction. This
is because if the owner having inherent power to transfer the property uses the right to the
extreme and he thereby destructs the further right of alienation of future transferee.

Scope & Applicability-

Sec.14 - Rule against perpetuity
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.
The rule against perpetuity in short - ' vesting cannot be postponed beyond the life of living
person and minority of Unborn person'. This provision permits perpetuity up to certain
period, beyond that period law does not allow perpetuity.
Section 14 of transfer of property act can only apply when there is a transfer of an interest in
property. The creation of a charge is not a transfer of an interest in property. This section
applies both to immovable and movable property.3 Thus, a gift of property or of a fund to the
living son, and after him to his unborn sons, when they attain the age of 18 years would be hit
by rule against perpetuity and would be void. The rule against perpetuities is applicable only
to future interest in land which may possibly vest beyond the legal limit of perpetuity.

Object: As discussed earlier, it is important to ensure free and active circulation of property
both for trade and commerce as well as for the betterment of the property that ultimately is

1
Property law by poonam pradhan (2nd edition).pg 116
2
Mulla on property law
3
I.L.R.20 Bom.511

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good for the society. Thus, the object of this section is to see that the property is not tied- up
and to prevent creation of perpetuity.4

Analysis of Sec. 14-

The vesting of property absolutely cannot be postponed beyond the life-time of any one or
more persons living at the date of the transfer, i.e., there must be no interval between the
termination of the precedent interest of a living person and the vesting of the interest in the
unborn person. Thus, if an estate is given to A for life, then to b for life and then oto unborn
son of B. Here, the son of B must be in existence “on or before” the date of expiry of life
estate in favour of B ( i.e. before B’s death).
The unborn person takes a vested interest at birth, immediately on the termination of prior
interest, however the vesting of interest in favour of him may be postponed until he attains
full age , i.e, the age of majority ( 18 years). Sec.14 allows the delaying of the vesting during
the minority period of a person who is not born at the date of the transfer.

Perpetuity period- it is the maximum period during which the property may be rendered
inalienable. The extent of perpetuity period is the life of any person who is alive at the
moment when the deed which creates the interest begins to operate, plus period of 18 years
from the time when such designated person dies.
For example, the owner of property transfers it to a living person, a for life, and after his
death to B, a living person for life and on B’s death to his unborn son when he attains the age
of 18. Suppose a remains alive for 13 years and B for 15 years, and the unborn son comes
into existence just before B’s death. As the unborn son would not get the property until he
attains the age of 18, it follows that the property would remain tied up for 15+18 years, or 33
years.
A question arise” what would be the position if the unborn person has already become a
major at or before the death of last living person (e.g. B in above example)? In that case, the
vesting in the unborn person is to vest in the unborn person cannot be delayed beyond the
actual minority of that person. However, under the English law, the visiting will not be void
(discussed later).

4
https://www.lawctopus.com/academike/transfer-property-unborn/

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EXTENT OF PERPETUITY PERIOD5

Position in India – Life or any number of lives in being + period of gestation + minority
period of the unborn beneficiary.

English Law – Life or lives in being +period of gestation +minority period.

Maximum remoteness of vesting-

Maximum period during which the property may be rendered inalienable. According to
section 14, the maximum permissible remoteness of vesting is the life of the last preceding
interest plus minority of the ultimate beneficiary. For example, the owner of a property may
transfer it to a living person, A, for life and after his death to B (a living person) for life and
on or before the death of B to his unborn son when he attains the age of 18 years (or 21 years
when the minor is under the supervision of the court).

Contingent interest till attaining majority- The vesting of interest in favour of the
ultimate beneficiary may be postponed till his minority, i.e., till he becomes a major.
Therefore, between the period the last person having prior life interest dies and the unborn,
who is the ultimate beneficiary, attains the age of majority, the ultimate beneficiary has only
a contingent interest which becomes vested in him when he attains majority. Where the
ultimate beneficiary is already born at the death of the last person but does not survive to
attain majority, the interest does not vest in him but reverts back to the transferor his legal
heir if he is dead at that time.

Exceptions-

➢ Transfer for benefit of public S.18- where property has been transferred for the
benefit of the public for advancement of religion, knowledge, commerce, health,
safety etc., the restriction envisaged under section 14 will not apply there.

➢ Personal agreement- Rule against perpetuity does not apply to personal

agreements.6 it is not concerned with contracts as such, or with contractual right and

5
https://www.lawctopus.com/academike/transfer-property-unborn/
6
Ram baran v. ram mohit AIR1967 SC 744

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 obligations as such. Thus, a contract to pay money to a person, his heir or legal
representatives upon a future contingency, which may happen beyond the period
prescribed would be perfectly valid it is therefore well established that the rule of
perpetuities concerns rights of property only and does not affect the making of
contract which does not create right to property.7

➢ Other cases e.g. lease, mortgage etc- A lease is not a mere contract. It is a transfer
of right to possess and enjoy the property, and can be created for a specific number of
years or even in perpetuity. However, rule against perpetuity is applicable only in
those cases where there is a transfer of property, and the vesting of it is postponed
beyond the period of perpetuity. It, therefore, does not apply in case of lease and
mortgage.

➢ Agreement of sale- section 54 of the Transfer of Property Act enacts that an

agreement for the sale of land does not of itself create an interest in land. A mere
contract for sale or immovable property does not create any interest in such property,
and therefore, the rule against perpetuity does not apply to such contracts.8

Comparison of English law & law of perpetuity9- under English law, vesting of
interest may be postponed for any number lives plus a period of 21 irrespective of the age of
minority of ultimate beneficiary section 163 of the Law of Property Act, 1925 provides that a
transfer shall not be valid even if the vesting has postponed beyond 21 years but it shall take
effect as if the age of 21 had been substituted for the age specified in the instrument. In
Indian Law, section 14 provides that vesting can be postponed up to the life of the last person
plus the minority of the ultimate beneficiary. Minority terminates at the age of 18 years( 21
years where a guardian has been appointed by the court). The section says that after the
lifetime of one or more person living at the date of such transfer and the minority of some
person.

7
Walsh v. Secretary of state (1863) 10 HLS 367
8
(1921) 25 CWN 201
9
https://www.lawctopus.com/academike/transfer-property-unborn/

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Case-laws-

Ram Prasad v. Ram Mohit,10 this case illustrated that rule against perpetuity applies only to
transfer of property and not to agreement/contract. Two brothers, who jointly owned certain
properties , made a covernant (agreement) that if any one of them wanted to dispose of his
property, the first right to buy the property shall be that of the other brother (thus a right of
pre-emption is created in favour of both). One brother sold his property to a third person on
his brother’s refusal to buy the same. Thereafter, the other brother. When such transferee
sought to sell his property, one brother claimed his right of pre-emption. The issue was
whether the covenant was not hit by rule against perpetuity, and was enforceable against the
transferees of the original parties to the contract.

The supreme Court observed and held as follows:-

The court referred to the provisions of the Specific Relief Act, 1963 to state that a contract is
enforceable by and against the assignees/transferees of the original parties prima facie, the
rights of the parties to a contract are assignable. Having regard to the contract and
circumstances in the present case, it is clear that pre-emption clause must be construed as
binding upon the assignees.

The rule against perpetuity does not apply to contracts, which do to create rights of property.
This proposition was supported by reading Sec. 14 along with Sec. 54, if the T.P. Act.
According to se. 54, a contract for sale of property does not of itself create any interesting
such property.

The supreme court, thus, held that rule against perpetuity cannot be applied to a covenant of
pre-emption even though there is not time-limit within which the option has too be exercised.

R. Kempraj v M/s burton Son & Co.11

This case illustrates that the rule against perpetuity does not apply to a lease. A lease for 10
years provided for an option to lessee to renew the same for further 10 years as desired on the
same terms. The lessee, before the expiry of 10 years, wanted to renew lease, but the lesser
did not complied. The lessee filed a suit for the performance of covenant in lease for renewal.
The issue was whether a clause for renewal of lease can be regarded as crating an interest in

10
(1967) 1 SCR293
11
(1970) 2 SCR 140

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property, and thus hit by the rule against perpetuity and, thus, void. The court observed that
rule against perpetuity is founded on the principle that the liberty of alienation shall not be
exercised to its own destruction a perpetuity (certain of remote interest in future) is a
limitation which place the property forever out of reach of the exercise of power of
alienation. Owing to Sec. 105 of T.P.Act, a lease is a transfer of right to enjoy property for a
certain time or in perpetuity, but even then an interest still remains in the lesser, the
reversioner.

In Ganesh Sonar v P. Narayan,12 the option given by the lessee to the lesser to resume the
leasehold land was merely a personal covenant and not a covenant which crated an interest in
land and so the rule against perpetuity will not apply. The same principle would govern the
present case.

The clause relating to ‘renewal’ of lease ( even on the footing that it contain covenant
running with the land), can by no means be regarded as crating an interest in property of the
nature that would fall within the ambit of Sec. 14 of Transfer of property Act, 1882. Thus, the
lease in the present case, is not hit by the rule against perpetuity.

12
AIR 1962 Pat 201

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Conclusion-
The unborn person is the one whose favour the interest is created. This vesting of interest in
favour of the ultimate beneficiary is preceded by life interest of one or more living persons.
life interest is always a limited interest. it is important to ensure free and active circulation of
property both for trade and commerce as well as for the betterment of the property that
ultimately is good for the society. Thus, the object of this section is to see that the property is
not tied- up and to prevent creation of perpetuity. It is necessary that the ultimate beneficiary
must come into existence before the death of the last preceding living person. The vesting of
interest in favour of ultimate beneficiary may be postponed only to the life or lives of living
persons and minority of ultimate beneficiary but not beyond that.

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BIBLIOGRAPHY

• https://legal-dictionary.thefreedictionary.com/rule+against+perpetuities
• http://www.srdlawnotes.com/2016/05/rule-against-perpetuity.html
• https://unacademy.com/lesson/transfer-of-property-rule-against-perpetuity-section-
14/E0OTBIOB
• https://www.lawctopus.com/academike/transfer-property-unborn/
• Book by poonam pradhan on property law (2nd edi.)
• Book by Mulla : the transfer of property act

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