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Rule against Perpetuity
Introduction
Rule against perpetuity has been dealt under section 14 of Transfer of Property Act, 1882.
Perpetuity simply means “indefinite Period”, so this rule is against a transfer which makes a
property inalienable for an indefinite period.
1. by taking away from transferee his power of alienation (such a condition has been made
void under S.10 of the Act)
2. by creating future remote interest (which has been prohibited under S.14 of the TP Act)
Rule against perpetuity is the rule against such creation of future remote interest or we can say is
arule against remoteness of vesting(interest). Remoteness here means “The state of being
unlikely to occur”.
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Rule against Perpetuity
So clearly S.14 provides that in a transfer of property, vesting of interest cannot be postponed
beyond the life of the last prior interest holder and the minority of the ultimate beneficiary.
If all the above ingredients are present then the vesting of the interest in favour of the
ultimate beneficiary may be postponed only up to the life or lives of living persons plus the
minority of the ultimate beneficiary but not beyond that.
Minority
Minority in India terminates at the age of 18 years or when the minor is under supervision of
Court at the age of 21 years. But in Saundara Rajan v. Natarajan,1 , 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 purposes of S.14 the normal period of
minority would be 18 years. So, the vesting can be postponed only up to the life of the prior
interest holder and the minority i.e. 18 years of the ultimate beneficiary.
Period of Gestation
The maximum limit fixed for postponing the vesting of interest is the life or lives of the prior
interest holder/s plus the minority of the ultimate beneficiary. But when a child is in his
mother’s womb at the time of the expiration of the interest of the prior interest holder and
since for the purposes of being a transferee a child in the mother’s womb is a competent
person, the latest period up to which the vesting may be postponed would be the life of the
prior interest holder/s plus the period of gestation ( I.e. the period during which a child
remains in womb after being conceived which is normally about 9 months or 280 days) plus
minority of the ultimate beneficiary. The period of gestation shall not be counted in addition
to minority if the ultimate beneficiary is already a born person.
Example. If A (prior interest holder) dies then the ultimate beneficiary i.e. X must already be
in existence at that time either in the mother’s womb or as a born child. If X is in mother’s
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A.I.R 1925 P.C. 244
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Rule against Perpetuity
womb, say of 6 months then the maximum period up to which vesting of period may be
postponed would be life of A plus six months ( period of gestation) plus 18 years ( minority
of X)
Exceptions
The provisions of Section 14 shall not apply in the following cases –
1. Transfer for public benefit - Where property is transferred for the benefit of the people in
general, then it is not void under this rule. For eg. the advancement of knowledge,
religion, health, commerce or anything beneficial to mankind.
2. Covenants of Redemption - This rule does not offend the covenants of redemption in
mortgage.
3. Personal Agreements - Agreements that do not create any interest in the property are not
affected by this rule. This rule applies only to transfers where there is a transfer of
interest.
4. Pre-emption - In this there is an option of purchasing a land and there’s no question of
any kind of interest in the property, so this rule does not apply.
5. Perpetual Lease - It is not applicable to the contracts of perpetual renewal of leases.
6. Mortgages - because there is no creation of future interest.
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Rule against Perpetuity
Conclusion
Therefore S.14 provides a rule against perpetuity i.e. a rule against remoteness of vesting, in
absence of which the society shall definitely suffer a loss because of the stagnation of the
properties. It would cause great hardship in the easy enforcement of law which shall be
detrimental to trade, commerce, intercourse and may also result into the destruction of the
property itself.
So this rule against perpetuity ensures free and active circulation of property both for the
betterment of the property as well as for the betterment of the society at large.