Rule Against Perpetuity in Transfer of Property Act 1882

Introduction

The Rule against Perpetuity is enshrined in Section 14 of the Transfer of Property Act, 1882. The word “perpetuity” means indefinite duration. This rule prevents property from being tied up or rendered inalienable for an indefinite period. In simple terms, it restricts any transfer of property that delays ownership or enjoyment beyond a certain limit of time or generations.

Concept and Objective

The principle aims to ensure the free and active circulation of property. If such a rule did not exist, property could remain stagnant for generations — harming trade, commerce, and overall economic growth. The law ensures that property always remains in the hands of a living, competent owner who can use, manage, and transfer it as needed.

The Rule against Perpetuity, therefore, is a rule against remoteness of vesting — it restricts how far in the future an interest in property can be created.

Related Provisions

Essentials of Section 14

For the Rule against Perpetuity to apply, the following conditions must be met:

• There must be a transfer of property.
• The transfer must create an interest for an unborn person (the ultimate beneficiary).
• The unborn person must take the property as an absolute owner.
• The interest must vest (come into effect) before or at the death of the last living person with a prior interest.
• No interval should exist between the termination of the prior interest and the vesting of the ultimate interest.

In other words, the transfer must not postpone ownership beyond the life of one or more living persons plus the period of minority of the unborn beneficiary.

Transfer to Unborn Child – Sections 13 & 14

Normally, property can only be transferred between two living persons (inter vivos). However, Section 13 allows an exception — a transfer can be made for the benefit of an unborn child, provided:

• It is preceded by a life interest or limited interest in favor of a living person.
• The unborn child must come into existence before the death of that living person.
• The unborn child must take the property as absolute owner.
• If the unborn child dies before attaining maturity, the property reverts to the transferor or their legal heirs.

Concept of Gestation

A child en ventre sa mère (in the mother’s womb) is considered a competent beneficiary. The law recognizes the period of gestation as a valid postponement of vesting. Thus, if the prior life tenant dies while the ultimate beneficiary is still in the womb, the property vests in the unborn child once born alive — though the interest remains contingent until then.

Void Transfers and Case Law

If a transfer creates an interest that may vest remotely, beyond the period allowed under Section 14, it becomes void.

In Ram Nivaran v. Nanku, the court held a transfer void where the vesting could be postponed for an excessively long period (e.g., 100–200 years). The rationale was that such a condition would violate the rule by tying up property indefinitely.

Exceptions

Section 18 of the Act provides statutory exceptions to Section 14. Transfers made for the benefit of the public — such as for the advancement of religion, knowledge, commerce, or charity — are not subject to the Rule against Perpetuity.

Comparison with English Law

The Indian provision is largely influenced by English law, which allows postponement up to a life or lives in being plus 21 years. Similarly, Indian law permits postponement until the life of the last prior interest plus the minority of the unborn child, but not beyond.

Conclusion

The Rule against Perpetuity under Section 14 of the Transfer of Property Act, 1882 ensures that property does not remain tied up indefinitely and continues to serve social and economic functions. It balances the freedom of an owner to dispose of their property with society’s interest in maintaining the free circulation of property. Transfers violating this rule are void, ensuring that ownership always rests with someone capable of maintaining and utilizing the property effectively.