1.

) INTRODUCTION

Perpetuity means continuous and unending transactions. It is tying up property for an

indefinite period. Transfers involving generation after generation are known as creating
perpetuities.1Perpetual transfers means the conveyance once made continues to regulate fate
of that property always in perpetuity. The course once set continues. Owners of that property
(subsequent) do not have liberty to re-direct the course of succession of that property. The
terms creating such interests are Peedhi dar Peeedhi, Generation after Generation, naslan bad
naslan. These are bad and cannot be so created.2

Section 14 of Transfer of Property Act, 1882 lays down the rule against perpetuity. 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.3Section 13 and 14 of the TOPA go hand in hand. Section 13 regulates procedure
of creating interest in favour of unborn person, whereas section 14 provides a time limit until
which the unborn transferee will get the interest so created. Where an interest is created in
favour of an unborn person on a transfer of property, such interest in favour of the unborn
person shall take effect only if it extends to the whole of the remaining interest of the
transferor in the property, thereby making it impossible to confer an estate for life on an
unborn person. Further, Section 14 of TOPA provides that where an interest is created for the
benefit of an unborn person (in accordance with the provisions of section 13), such interest
shall not take effect if the interest is to vest in such unborn person after the life time of one or
more persons living on the date of the transfer (i.e. the person in whose favour the prior
interest is created as required under section 13) and the minority of such unborn person. In
other words, the interest created for the benefit of an unborn person shall take effect only if
the interest is to vest in such unborn person before he attains the age of eighteen years.4

1.) Genesis of the rule:

1
Singh Avatar, “The Transfer of Property Act”, Universal law Publishing CO. PVT. LTD., Allahabad ,(2006),
62
2
Tripathi G.P, “The Transfer of Property Act”, Central law Publications, 11th ed, Allahabad, 128.
3
,Mulla, “The Transfer of Property Act”, Lexis Nexis, Nagpur, 9 th ed., 172.
4
Prem Rajani, Aradhana Bhansali and Ruchit Parikh, “A Brief Write-Up On Transfer Of Property For The
Benefit Of Unborn Person And Rule Against Perpetuity” available at,
http://www.mondaq.com/india/x/366482/wills+intestacy+estate+planning/A+Brief+WriteUp+On+Transfer+Of
+PropertyFor+The+Benefit+Of, retrieved on 15-09-2015 at 3:38 P.M.
The rule against Perpetuity has its roots in early English common law, in a 1682 opinion
crafted by Lord Nottingham- The Duke of Norfolk’s case. In this case, Henry (the 22nd Earl
of Arundel), tried to create a shifting executory limitation in a way that one of his titles would
pass to his eldest son (who was mentally deficient) and thereafter to his second son, and
another title would pass to his second son and thereafter, to his fourth son. The estate plan
also included provisions for shifting the titles many generations later, if certain conditions
were to occur. It was held by the House of Lords that such a shifting condition could not exist
indefinitely and that the tying up of property too long beyond the lives of people living at the
time was wrong. 5

2.) Object of Rule against perpetuity:

The object of the rule against perpetuity is to ensure free and active circulation of property
both for the purposes of trade and commerce as well as for the betterment of the property
itself. Frequent disposition of the property is in the interest of the society and also necessary
for its more beneficial enjoyment. A transfer which renders property inalienable for an
indefinite period is detrimental to the interest of its owners who are unable to dispose it of
even in urgent needs or for any higher value. It is also a loss to the society because when
property is tied up from one generation to another in family, the society as such would be
deprived of any benefit out of it.6

Rule against perpetuity is, therefore based on broad principles of public policy. Stating the
object of rule against perpetuity, JEKYLL M.R in Stanely v. Leigh7 has observed

“A great mischief would arise to public from estates remaining forever or for a long time
inalienable or in transferable from one hand to another, being a damp to industry and a
prejudice to trade, to which may be added the inconvenient and distress that would be
brought on families whose estates are so fettered.”

In the absence of any rule prohibiting creation of perpetuities, there might come a time when
almost all the properties of a country would have become static properties. This would cause
great hardship in easy enforcement of law, detrimental to trade, commerce and intercourse
and may also result in the destruction of the property itself.

3.) Rule against Perpetuity in its primary sense:

5
The Duke of Norfolk’s case, 3 Ch. Cas. 1, 22 Eng. Rep. 931 (1682)
6
Sinha, R.K, “The Transfer of Property Act” ,Central law Agency Allahabd, 14 th ed, 100
7
(1732) All E.R 917 at p. 918 : cited in Shah’s Principles of The Law of Transfer, ED. III, P44.
A perpetuity, in the primary sense of the word, is a disposition which makes property in
alienable for an indefinite period. In this sense it is concerned with certain interests created in
proesenti which are sought to be made inalienable for an indefinite period.8 Examples of
such interest in proesenti which have been held to be void under the name of perpetuity or as
tending to a perpetuity are gift to trustees for non-charitable indefinite objects or for non-
charitable unincorporated institutions or societies which may last for an indefinite time.9 In
the case of Leahy v. Attorney-General10 it was discussed that the gift is in truth to the present
member of the society described by their society name so that they have the beneficial use of
the property and can, if they please, alienate and put the proceeds in their own pocket, then
there is a present gift to individuals which is good, but if the gift is intended for the goods not
only of the present but of the future members so that the present members are in the position
of trustees and have no right to appropriate the property or its proceeds for their personal
benefit, then the gift is invalid.

4.) Modern Rule against perpetuity:

In its modern sense, it is concerned with interest arising in futuro and not with interest arising
in proesenti.

“Subject to the exceptions to be presently mentioned, no contingent or executory interest

in the property can be validly created, unless it must necessarily vest within the maximum
period of one or more lives in being and 21 years afterwards.”

It is this modern English rule which is with certain modifications, adopted by our
section.11Property may be transferred to any number of persons who are living at the date of
transfer. In this way, vesting of interest in favour of ultimate beneficiary may be postponed
for any number of years. Thus property may be transferred to A for life then to B for life then
to C for life and so on for several years and all these persons who hold the property
successively for their lives would tie up the property for many years before it goes absolutely
to the ultimate beneficiary. However, as required under section 13, such ultimate beneficiary
must be borne 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

8
Supranote 1, Pg.: 64
9
Supranote 2, Pg. 131
10
(1959) AC 457
11
Supranote 3, Pg.: 175
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 minority of the ultimate
beneficiary. Where property is made to vest within the period prescribed in this section, the
transfer is valid. Any delay beyond this period would make the transfer void. Accordingly
where a property is transferred to A for life and then to unborn person when he attains the age
of 19 years, the transfer to U.B is void under section 14.12

5.) Rule against Perpetuity in Transfer of Property Act: (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.”

6.1) Essential Ingredients:

1.) There should be transfer of property.

2.) The Transfer is for the ultimate benefit of an unborn person who is given an absolute
interest.
3.) The vested interest in favour of ultimate beneficiary is preceded by life or limited
interests of living persons.
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.13

6.2) Maximum remoteness of vesting: Under section 14, the maximum permissible
remoteness of vesting is the life of the last preceding interest plus the minority of the ultimate
beneficiary. For example, the owner of the property may transfer it to a living person, A, for
life and after his death to B (a living person) for life or on 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 supervision of
the court.) In Soundarajrajan v. Natarajan14, the Privy Council held that since at the date of
transfer it is not known whether or not a guardian would be appointed by Court for the minor

12
Supranote 6, pg: 101
13
Ibid, pg: 100
14
A.IR. 1925 P.C ,244.
in future, for purposes of section 14 the normal period of minority would be 18 years. So, the
vesting may be postponed up to the life of the last person and the minority of 18 years of the
ultimate beneficiary.15

6.3) Ultimate beneficiary in mother’s womb: Where the ultimate beneficiary is in the
mother’s womb i.e. it is a child en ventre sa mere, the latest period up to which vesting may
be postponed, (after the preceding interest) is the minority plus the period during which the
child remains in mother’s womb. It may be noted that minority is counted from the date of
worldly birth whereas for purposes of being a transferee, a child in mother’s womb is a
competent person. Where the ultimate beneficiary is in mother’s womb when the last person
dies, the property vests immediately in him while he is still in mother’s womb. Accordingly,
the minority up to which the vesting is permitted to be postponed under this section would
include the period during which the ultimate beneficiary remains in womb before he is born
alive. 16

6.4) Section 14 uses the term shall be in existence. These words means born. A child in
womb is considered to be a person in existence for some purposes but he is not so eligible for
getting property under section 14. On birth the child ordinarily gets vested interest. It matters
not as to when the actual possession falls on him. It may be postponed till he becomes a
major. A child coming in womb after expiry of prior or last of the prior estates if there are
many, is not a person in existence.17

Example: Transfer to A for life, then to his son who is not born at the date of transfer. A dies
on 18-3-2010. Son comes in mother’s womb on 17-03-2010. Is he qualified to take property?
If one is prepared to interpret the words “shall be in existence” to include a person in womb,
A’s son would be qualified. If it is interpreted to mean those born, A’s son is not qualified.
The correct approach is to interpret the words to include those that are born. If so, the
perpetuity would be extended during the ultimate transferee does not become major. On birth
he/she gets a vested interest.The rule against perpetuities, however does not require that the
vesting shall take place at the birth of the ultimate beneficiary. What it does require is that the
vesting cannot be delayed in any case beyond his minority.

6.5) 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

15
Supranote 12 , pg: 101
16
Ibid, pg 101
17
Supranote 9, pg: 139.
mother’s womb) prior to cessation of 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. It is given only once in India after the end of last prior
estate ( not 2nd gestation) but 21 years in English law may be two grace periods. One in the
beginning, the other in the end.18

6.6) Minority: ‘Minority’ means till the ultimate beneficiary celebrates 18th birthday. This
benefit would be only for the one who is born on or before the end of prior estate or last of
prior estates. A person coming in womb after expiry of prior estate or last prior estate is not
eligible to get property directly or indirectly. He would not get in any case. Minority in India
terminates at the age of 18 years as given in Indian Majority Act. In a Privy Council case 19,
the bequest was to the testator’s daughters for their lives with remainder to their children at
the age of 21 years. The bequest to the children was to be void under Section 114 and 115 of
Indian Succession Act. An attempt however, was made to support the bequest on the ground
that if guardians were appointed by the Court under the Guardians and Wards Act, they
would under the act attain majority at the age of 21, but the contention failed because at the
testator’s death it was not certain that any of the children would have guardian appointed.20

Therefore the total period of perpetuity i.e, the period for which the vesting of property can
be postponed is given below:-

(1) Where the unborn person has come into existence either at or before the expiry of the
last prior interest plus his minority interest.
(2) Where the unborn person is in womb at the expiry of the last prior interest, the period
of gestation plus minority.21

For example, A transfers certain propertied to B for life and then to C for life and then to an
unborn person when he attains the age of majority. B and C are living at the date of transfer
and unborn, the ultimate beneficiary is not in existence even in mother’s womb. The last prior
life interest is with C. When C dies, the contemplated unborn must be in existence either as a
born child or unborn in mother’s womb. The maximum period up to which vesting of

18
Ibid, pg:139
19
Soundara Rajan v. Rasamaya (1925) 48 Mad. 906.
20
Abdul Fata Mohammed v. Rasamaya (1884) 23 Cal. 619.
21
Supranote 8, pg: 64
property in unborn can be postponed would be, in case of born child, life of C plus till the
child attains the age of majority, and in case of a child in mother’s womb, life of C plus
period of gestation plus period of majority.22

6.) Contingent Interest:

The Vesting of interest on favour of the ultimate beneficiary, may be postponed till his
minority, i.e., till he becomes a major. Therefore, between the periods the last person having
prior life interest dies and the unborn, who is ultimate beneficiary attains the age of majority,
the ultimate beneficiary has only contingent interest which becomes vested in him when he
attains the age of majority.23 Where the ultimate beneficiary is already born at the death of
the last preceding interest but does not survive to attain majority, e.g., dies at the age of 15
years, the interest does not vest in him but reverts back to the transferor or his legal heir if he
is dead at that time.24

7.) Regards of Possible events not of actual events:

In deciding questions of remoteness, regard must be had to be possible and not to actual
events.25Where at the time of transfer of property there is possibility or probability that in
future it would be a transfer in perpetuity, the disposition shall be void even if at the time of
actual vesting of interest there is no violation of rule against perpetuity.26

For example: In Ram Newaz case27, ; R had a share in a village which he sold to the
defendant reserving two bighas of land to himself under the following condition: “Two
bighas of land which I have excluded from sale shall remain in my possession for life, and
after my death in the possession of my lineal descendants……I and my lineal descendants
have no right to transfer the land excluded…… if none of my lineal descendants be alive then
land shall be the own property of the vendee.” This was a transfer to take effect on the date of
vendor’s last lineal descendent R had only one son who was alive at the date of transfer, but
who died childless. On actual facts, the transfer operated within the period allowed, but as it
was possible that the transfer might have been postponed for 100 or 200 years until the
vendor’s line was extinct, the reservation of the two bighas was not valid.

22
Ibid, pg: 64
23
Supranote 21, Pg:66
24
Supranote 12, pg: 103
25
Ram Newaz v. Nankoo (1926) 92 IC 401.
26
Supranote 24, pg: 103
27
(1926) 92 IC 401.
8.) Analogous to Section 114 of Indian Succession Act:

Section 14 of T.P Act corresponds to Section 114 of the Indian Succession Act, 1925, Rule
against perpetuity applies to will and transfer inter vivos in same way. Perpetual transfer is
void whether it is in will or any transfer otherwise. In Section 14 the transfer cannot operate
to create an interest perpetually. No transfer can create perpetuity. In Section 114 of
Succession Act, the bequest is not valid if it creates perpetuity and as such delays the vesting
perpetually.28

“No bequest is valid whereby the vesting of the thing bequeathed may be delayed beyond the
life-time of one or more persons living at the testator's death 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 thing bequeathed is to belong."

In Veerattalingam v. Ramesh29, 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 favour
of her son’s sons, 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 the will) absolutely. The apex court
held that the bequest was not hit by the rule against perpetuity as successive life interests
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.

9.) Exceptions to the Rule against Perpetuity:

a.) Transfers for the benefit of public: Where a property is transferred for the benefit of
public in the advancement of religion, knowledge, commerce, health, safety or any
other object beneficial to mankind, the transfer is not void under the rule against
perpetuity.30This exemption is necessary because transfers of property for the benefit
of public generally are made through the medium of religious or charitable trusts. In
the trusts, the property settled is tied up for an indefinite of perpetuity period so that
its income may be utilized for ever for the object for which trust is created.

28
Saxena, Poonam, “Property Law”, “Lexis Nexis Butterworths Wadhwa”, Nagpur, 2 nd Ed., 123.
29
(1991) 1 SCC 489.
30
Section 18 , Transfer of Property Act, 1882.
 Application of the rule against perpetuity on trusts would render every trust void and
it would be impossible to create any trust for the benefit of public.31
b.) Personal Agreements: Personal agreements which do not create any interest in
property are exempted from the rule against perpetuities. Rule against perpetuity is
only applicable to transfer of property. If there is no transfer of property i.e no transfer
of interest, the rule cannot be applied. Contracts are personal agreements even though
contracts relate to rights and obligation in some property. In Ram Baran v. Ram Mohit
32
the Supreme Court held that a mere contract for sale of an immovable property does
not create any interest in immovable property and, therefore the rule cannot apply to
such contracts e.g. it cannot apply to a covenant of pre-emption.. Similarly where the
Shebatis of a temple, under an agreement, appointed a pujaris out of a particular
family to perform religious services in the temple, the agreement was valid because
the Court held that being a personal Agreement, it was not hit by rule against
perpetuity.33

10.) Applicability of this Rule:

11.1) Hindu law:

Since the amendment of section 2 this section applied directly to Hindus. It was applied by
the Hindu Disposition of Property Act 1916, and similar provisions were contained in Madras
Act I of 1914 and an Act 8 of 1921. The amendment made to those Acts by Act of 21 of 1929
make transfers by Hindus to unborn persons subject to the limitations contained in Chapter II
of this Act and bequests by Hindus to unborn persons subject to the rules contained in ss 113,
114, 115 and 116 of the Indian Succession Act 1925. But irrespective of the statute, a
perpetuity is repugnant to Hindu law except in the case of religious and charitable
endowments.

11.2) Mahomedan law:

31
Supranote 24, pg: 104
32
A.I.R 1967 S.C. 744
33
Supranote 29, pg:104
With reference to Mahomedan law, the Privy Council held in Abul Fata Mahomed v.
Rasamaya34 that a gift to remote and unborn generations is forbidden by Mahomedan law
except in the case of a wakf, and that a wakf is invalid if the gift is illusory. But the law has
since been altered by the Mussalman Wakf Validating Act 6 of 1913, under which a wakf is
valid even if the gift to charity is unsubstantial and illusory, provided there is an ultimate gift
to charity.

11.3) Agreement of Sale and Rule against Perpetuity:

In London & S.W. Railway v. Gomm35, the plaintiff Railway Co. no longer required a piece of
land for the purpose of the railway and by a deed of 1865 conveyed the land to G absolutely.
G covenanted that he and his heirs would at any time, thereafter, whenever the land was
required by the railway and after six months’ notice reconvey the land to railways for 100
pounds. In 1879, the defendant Gomm purchased the land from G’s heir with notice of
covenant. In 1880 the Plaintiff Railway gave notice to Gomm to reconvey the land and on his
refusal sued for specific performance of the covenant. Kay, J., held, that the covenant did not
create an estate or interest in land and was therefore, not affected by the rule against
perpetuity and decreed the suit. This was reversed in appeal and Jessel, M.R., said that there
was no real distinction between a “contract of purchase” and an “option of purchase” and an
option for purchase created an equitable interest which if unlimited in duration, was void for
remoteness as against an assignee of land.

An agreement for purchase of lands create in English law an equitable interest in land and,
therefore so far as specific performance is concerned, it is subject to the rule against
perpetuity. Before the Transfer of Property Act a contract of sale of land was treated as
creating an equitable interest in land, for Indian cases followed the English law. Accordingly,
in a case decided in 1875 a covenant for pre-emption unlimited in point of time and occurring
in a deed of partition was held to offend the rule against perpetuity. But there has been a
change in the legal position since the passing of Transfer of Property Act.

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. Since this enactment, there has been considerable
conflict of decisions as to the application of rule against perpetuity to such agreements. Some
cases treat that an agreement as personal agreement, and therefore, they are not affected by

34
(1894) 22 Cal 619, 22 IA 76;
35
(1882) 20 Ch. D. 562.
rule against perpetuity; while others continue to apply the English rule or treat the agreement
as personal but void under Section 23 of the Indian Contract Act as “being of such a nature
that if permitted it would defeat the provisions of law” as enacted in this section.

The Privy Council considered this point in Basdeo Rai’s case36 . The proprietor of a hill
agreed in 1872 with a society of Jains in compromise of a litigation, that if the society
required a site on the hill for erection of a temple, he and his heirs would grant the same free
of cost. In a suit for the enforcement of the covenant it was observed:

“If the case was to be regarded in another light- namely agreement to grant in future whatever
land might be selected as a site for a temple, as the only interest created would be one to take
effect by entry at a later date and as the date is uncertain the provision is obviously bad as
offending the rule against perpetuities, for the interest would not then vest in praesenti; but
would vest at the expiration of an indefinite time which might extend beyond the expiration
of the proper period.”

Ordinarily a contract for sale does not create any interest in favour of the prospective
purchaser. Any contract thereof which embodies a right of pre-emption, is nothing more than
a contingent contract for sale which becomes enforceable when the party to the contract
intends to dispose of certain property.

It does not create any estate in favour of party to whom the property is to be offered for sale
in future. Such a contract thus does not come within the purview of section 14 of the Act.
This section comes into play only when if there has been a transfer of interest in property.
The creation of charge is not a transfer of interest in property.

In Raja Rajeswara Dorai v. Sundara Pondiyasami Tevar37, it was held that the creation of an
annuity in perpetuity with a charge on property would not offend section 14 of Transfer of
Property Act. There the suit was to enforce a covenant to pay an annuity in perpetuity as the
other charge on property. Their Lordships held that since there was no transfer of interest in
any immovable property, Section 14 of the act would not be applicable.

11.4) Pre-emption and Rule against perpetuity:

36
I.L.R. 46 ALL. 333.
37
49 I.C. 704.
In Ram Baran Prasad v. Ram Mohit Hazra38, the Court considered whether covenant of pre-
emption contained in an arbitration award violates the rule against perpetuity and whether the
same is binding on assignees or successor-in-interest of the original contracting parties. The
factual matrix of that case was that two brothers, Tulshidas Chatterjee and Kishorilal
Chatterjee owned certain properties in the suburbs of Calcutta. In 1938, Kishorilal sued for
partition of the properties. The matter was referred to arbitration. The arbitrators gave award,
which was made rule of the court. Under the award, two of the four blocks into which the
properties were divided by the arbitrators were allotted to Tulshidas and the remaining two
blocks to Kishorilal. In the award there was a clause to the following effect:

"We further find and report with the consent of and approval of the parties that any party in
case of disposing or transferring any portion of his share, shall offer preference to the other
party that is each party shall have the right of pre-emption between each other."

After the arbitration award became rule of the court, Tulshidas sold some of the portion of his
properties to Nagendra Nath Ghosh. This was done after Kishorilal refused to pre-empt the
same. Later on, Kishorilal sold his two blocks to Rati Raman Mukherjee and others. The
Mukherjees sold the property to the plaintiff-respondents. Nagendra Nath also sold the
property to defendant No.1. Thereupon, the plaintiffs filed suit for pre-empting the
transaction between Nagendra Nath Ghosh and defendant No.1. The trial Court held that the
covenant of pre-emption was not hit by the rule against perpetuities and was enforceable
against the assignees of the original parties to the contract. Accordingly, a decree was granted
to the plaintiffs. The defendants took the matter in appeal to the Calcutta High Court which
was dismissed. Before this Court, it was argued that the covenant for pre- emption was
merely a personal covenant between the contracting parties and was not binding against
successors-in-interest or the assignees of the original parties to the contract. The Court then
considered whether covenant of pre-emption offends the rule against perpetuities and is,
therefore, void and not enforceable. After noticing the definition of "perpetuity" given by
Lewis, the Court held that the rule against perpetuity concerns rights of property only and
does not affect the making of contracts which do not create interest in property. The Court
then referred to Sections 14 and 54 of the Transfer of Property Act and observed as under:

38
A.I.R 1967 S.C. 744
"The rule against perpetuity which applies to equitable estates in English law cannot be
applied to a covenant of pre-emption because Section 40 of the statute does not make the
covenant enforceable against the assignee on the footing that it creates an interest in the land.
“The Court further held that the covenant of pre-emption was not violative of the rule against
perpetuity and could not be declared as void.

The same view was reiterated in Shivji v. Raghunath39, the Court found that the restriction
contained against alienation of the property was not absolute and held that the same was not
violative of the rule against perpetuity, the Court held, when a contract has been executed in
which no interest in praesenti has been created, the rule of perpetuity has no application. As a
result, the agreement is in the nature of a pre-emptive right created in favour of the co-owner.
Therefore, it is enforceable as and when an attempt is made by the co- owner to alienate the
land to third parties."

11.5) Mortgage: and Rule against perpetuity

In Padmanabhan Ayyar v. Sita Ram Ayyar,40 it was held that the rule against perpetuities
applies only to the cases where there was a new interest in immovable property contemplated
to be created after the expiry of the time prescribed by the rule and that in the case of a
mortgage, there was no such future interest in property contemplated to be created because it
was of the very essence of the mortgage that the equity of redemption was a present interest
in the property in exercise of which alone the property was sought to be redeemed. House of
Lords is also of the view that the rule against perpetuities had no application to mortgages.

11.6) Covenant in leases:

In a Contract for lease, clause which provides for perpetual renewal of leases is not hit by this
section. In Kempraj v. M/s Barton & Co.,41 the Supreme Court of India held that a lease with
a covenant for renewal does not offend the rule against perpetuity. The reason is this, that the
clause for renewal of lease cannot be treated as a transfer. Where the conract for lease
contained a clause providing that the lessor shall have right to terminate the lease at any time,
the Court held that the contract is not hit by this section.

11.7.) Rule Applicable to both Movable and Immovable Property:

39
(1997) 10 SCC
40
106 .I.C. 158.
41
A.I.R. 1970 S.C. 1873.
Rule against Perpetuity is applicable to both movable and immovable property. 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 21 years would be hit by rule against perpetuity and would be void.42

12.) Perpetuity under English law:

Section 163 of Property Act, 1925 lays down the rule against perpetuity in English law. The
law is; “life or lives in being plus 21 years after cessation of prior estate.” The transfer made
operative after 21 years shall not be void or ineffective. The period said in deed shall be read
as substituted by 21 years. It shall become effective immediately 21 years after irrespective of
the period given in deed. 43

12.1) Difference between Indian and English law:

(a) The Perpetuity period is different. Under English law, the perpetuity period is a life or
any number of lives when the instrument under which the interest arises takes effect,
plus a term of 21 years. Under Indian law, it is the life or lives in being at the time of
grant plus the period of minority of the beneficiary taking under the grant.
(b) Under English rule the additional period of 21 years allowed after lives in being is a
term in gross without reference to the infancy of the person. Under the Indian Statues
the term is the period of minority of the person to whom if he attains full age the
interest created is so to belong.
(c) The period of gestation, where it actually exists may be added to the perpetuity period
as above defined. In English law it admits of addition at both ends of perpetuity
period. But in Indian law it may be added only at its commencement.
(d) The Law of property Act,1925 by Section 163 has validated certain remote gifts by
allowing the substitution of the age of 21years when the gift is to fail for remoteness
on the ground that the ascertainment of the beneficiary or the class of an exceeding 21
years. There is no corresponding provision under the Indian law.44

13.) Latest Case law

K. Naina Mohamed vs A.M. Vasudevan Chettiar45 Decided on 7 July, 2010

42
Anand Rao Vinayak v. Administrator- General of Bombay, (1896) ILR 20 Bom 450.
43
Supranote 9, pg: 141
44
Ibid, pg 142
45
Civil Appeal No. 8365 of 2002
The suit property belonged to one Smt. Ramakkal Ammal wife of Pattabiraman of Uraiyur of
Tiruchirapalli. She executed registered Will dated 22.9.1951 in respect of her properties and
created life interest in favour of her two sisters, namely, Savithiri Ammal and Rukmani
Ammal with a stipulation that after their death their male heirs will acquire absolute right in
`A' and `B' properties respectively subject to the rider that they shall not sell the property to
strangers. Clauses 4, 10 and 11 of the Will and details of `A' and `B' properties. Savithiri
Ammal died in February 1979. After about two years, one of her three sons, namely, A.M.
Krishnamurthy filed a suit for partition of his share in `A' property. He impleaded Rukmani
Ammal as one of the defendants. The suit was disposed of in terms of the compromise
arrived at between the parties, which envisaged that the plaintiff therein and his brothers will
divide `A' property among themselves and `B' property will be the absolute property of Smt.
Rukmani Ammal and her descendants.

Soon after disposal of the Suit, Rukmani Ammal and her son, A.B.M. Ramanathan Chettiar
executed registered sale deed dated 9.12.1982 in favour of the appellant in respect of the suit
property. Respondent Nos.1 and 2 challenged the same in another suit. They pleaded that in
view of the restriction embodied in clause 11 of the Will, Rukmani Ammal and her son could
not have sold the property to a stranger. They prayed that the sale deed be declared void and
defendants in the suit be directed to execute sale deed in their favour. Rukmani Ammal and
her son contested the suit by asserting that the Will executed by Ramakkal Ammal did not
obligate them to sell the property to the plaintiffs; that clause 11 of the Will was liable to be
treated as void because the same was against the rule against perpetuity and the law of
alienation. In a separate written statement filed by him, appellant - K. Naina Mohamed
pleaded that the Will did not provide for joint possession and enjoyment of the properties by
two sisters and that clause 11 of the Will cannot be relied upon by the plaintiffs for claiming
pre-emption. He also questioned the legality of the restriction contained in clause 11 of the
Will on alienation of the property to the strangers by asserting that the said clause violated the
rule against perpetuity

The trial Court negatived the appellant's challenge to the Will by observing that being a
purchaser from one of the legatees, he does not have the locus to question legality of the Will.
The trial Court held that clause 11 is valid and binding on the legatees and it does not violate
the rule against perpetuity. The trial Court further held that K. Naina Mohamed had
purchased the property with notice of the clause relating to pre-emption and as such he is
bound by the same.

Rukmani Ammal and her son did not challenge the judgment and decree of the trial Court but
the appellant did so by filing an appeal. The lower appellate Court agreed with the trial Court
that the appellant before it was not entitled to challenge the Will but opined that the
restriction contained in clause 11 of the Will was void and not binding on Rukmani Ammal
and her son.

Judgement: It was held that by executing Will dated 22.9.1951, Smt. Ramakkal Ammal
created life interest in favour of her two sisters with a stipulation that after their death, their
male heirs will acquire absolute right in `A' and `B' properties respectively subject to the
condition that if either of them want to sell the property then they shall have to sell it to other
sharers only as per the prevailing market value and not to strangers. The restriction contained
in clause 11 was not absolute inasmuch as alienation was permitted among male heirs of the
two sisters. The object of incorporating this restriction was to ensure that the property does
not go out of the families of the two sisters. The male heirs of Savithri Ammal and Rukmani
Ammal did not question the conditional conferment upon them of title of the properties.
Therefore, the appellant who purchased `B' property in violation of the aforesaid condition
cannot be heard to say that the restriction contained in clause 11 of the Will should be treated
as void because it violates the rule against perpetuity.

Conclusion:

The effect of these Rules is that a transfer/ gift can be made to an unborn person subject to
the following conditions:

(i) That the transfer/ gift shall be of the whole of the remaining interest of the
transferor/ testator in the thing transferred/ bequeathed and not of a limited
interest; and
(ii) That the vesting is not postponed beyond the life in being and the minority of the
unborn person.

In simple terms, while section 13 of TOPA lays down the mechanism for transfer of property
for the benefit of unborn person and "what property" is required to be ultimately transferred
in favour of an unborn person in order to validate such transfer, section 14 of TOPA provides
the "maximum period as to when" such property can be vested upon such unborn person.

Section 14 of TOPA supplements section 13 of TOPA and thus, it is pertinent to note that
when an interest in any property is intended to be transferred in favour of an unborn person,
sections 13 and 14 of TOPA are required to be read together and the provisions contained
thereunder are required to be duly complied with, in order to give effect to the intended
transfer in favour of such unborn person.
 LAW OF PROPERTY

Right against Perpetuity

Submitted to Submitted by
Dr Rajinder Kaur Nimrat Brar
B.A.LL.B(Hons)
Sem VII
Section A
300/14
 ACKNOWLEDGEMENT

I take the prerogative to express my heartfelt gratitude to my guide Dr. Sabina Salim, UILS
department, Panjab University, Chandigarh, for her diligent guidance all through the course
of my project. It is her fruitful teaching which has given me a comprehensive understanding
of the topic. She has truly been a source of inspiration to me.

I would also like to thank my friends, who have been very helpful in providing me useful
information, wherever needed for the completion of my project. I also extend my
thankfulness to my parents for their precious moral support.

I’m grateful for all their help and valuable advice which has made the successful completion
of my project possible.

Nimrat Brar
Roll no. 300/14