AN ANALYSIS OF THE RULE AGAINST PERPETUITY IN THE INDIAN SCENARIO

Introduction

Perpetuity implies timelessness and therefore is usually regarded as an ambiguous, long period of time in case of property transfer. It implies the creation of an interest in the present, but that will produce results after perpetuity.[1]The Rule Against Perpetuities protects the property of upcoming generations from the grip of the past. One might envisage a number of protections for a law limiting how long a person can retain property after their death. While the word ‘perpetuity’ is not defined explicitly in terms of years, it is interpreted in Section 14[2] of the Transfer of Property Act, 1882 to mean the life span of at least one living person in conjunction with the minority of an unborn person who’d ultimately acquire the total interest in the estate.[3]

Implications Of The Rule

Living Persons

Section 14 sets no restriction upon the numbers of life interest holders which may be formed. It states merely that these individuals must be alive at the time of the transfer. Thus, a transfer done by X to Y for the duration of his lifetime, then to Z for the duration of his entire life, would indeed be lawful if Y and Z were all still alive at that point of the transfer. Nevertheless, if Z were not alive at the moment of the transfer, the transaction would be null and unenforceable since Section 13[4] of the TPA mandates that such an unborn individual receive the full remaining interest in the house, not only the life interest. Additionally, Section 14 demands that the unborn child be born prior to the expiry of the last preceding estate, or else the transfer to him/her will lapse.[5]

Period of Perpetuity

Minority:

According to the Indian Succession Act, 1925, as well as the TPA, the minority of the individual with interest in the estate is at issue. The minority is defined as the outside boundary of perpetuity in Indian law regulated by the Indian Majority Act, IX of 1875.[6] According to this Act, the minority ceases at the age of eighteen,[7] and the minority is taken into account in Section 14. A transfer deed is made well before the person with whom the estate is to vest is born, and therefore, whether this person’s minority will terminate at 18 or 21 years cannot be foreseen in advance. This may occur in real life, and in determining the transaction’s validity, factual occurrences cannot be considered.[8]In Soundara Rajan v Natarajan,[9] the testator left the property to his daughter for life, with interest to pass to her offspring at their attainment of the age of 21. A guardian was already assigned for them, thereby extending the children’s minority to 21 years. Nevertheless, the transfer ceased since it violated the rule against perpetuity by extending the duration past 18 years.

Gestation Period:

Whenever an unborn person does not arrive at or before the expiration of the previous interest, a problem exists; she is just in the womb. In these instances, the gestation time must be considered when calculating the duration of perpetuity.[10] The gestation time is usually 9 months, wherein the unborn child resides in his mother’s womb.[11]Henceforth, if the ultimate beneficiary is yet in the mother’s womb when the previous life interest holder expires, the estate vests instantly whilst the baby is already in the mother’s womb.[12]

Regards Had to be To the Deed’s Language and not Actual Events

In Ram Newaz v Nankoo,[13] an individual R transferred his property to another person, P, except for 2 bighas. He had stipulated that they would stay with him and his heirs for the rest of their lives, their successors for the rest of their lives, and so forth. The land would pass towards the vendee, and his successors only had there been no lineal successors. He established a life estate for himself, his children, and perhaps even their unborn offspring via this transaction. It’s a breach of Section 13 of the TPA, which mandates that solely an absolute interest in an unborn child be formed. Additionally, this transaction operated inside the allowable time and so may have been lawful, but because the transfer could be delayed for 100 years till the vendor’s lien expired, this was declared invalid.

Exceptions To The Rule

Benefit of Public

According to Section 18 of the TPA,[14] whenever a property is transferred for the benefit of the public, it is excluded from commerce, and it is generally necessary that it be preserved immaculate and its use limited to the purpose for perpetuity.[15]The question of whether a particular object is intended to benefit the general population to exempt it from the rule against perpetuity must be addressed in light of this segment’s requirements. The argument is made that the phrase “beneficial to mankind” must be construed ejusdem generis as referring to objects of a similar type to all those described.[16]

Personal agreements –    

Personal agreements are unaffected by the rule against perpetuity.[17] It is unconcerned with such arrangements or even with authoritative rights and obligations in general. An agreement obligation a person, his heirs, or authorized agents to provide money in the event of a future occurrence beyond the time period specified would be entirely significant. As a result, the rule against perpetuity is justified in that it only applies to property rights and has no bearing on the formation of arrangements that do not create property rights.[18]

Right of Pre-emption

In the case of Maharaj Bahadur Singh v Balchand,[19]it was determined that a pre-emption drafted prior to the TPA’s implementation violated the rule against perpetuity. Nevertheless, this ruling was reversed in Ram Baran Prasad v Ram Mohit Hazra.[20] The judge concluded in this instance that a pre-emption provision did not violate the rule against perpetuity.

Lease

A lease is essentially a transfer of the estate’s possessory right and use, and it might be for some specified time or in perpetuity. In either instance, the rule against perpetuity is applicable only when a property is exchanged and vesting is postponed beyond the period of perpetuity. In this regard, it is irrelevant in leasing situations.[21]

An Analysis Of Sections 13 And 14 In Conjunction With Section 20

Sections 13 and 14 obstruct a person’s disposition capacity by restricting men’s inherent desire to reproduce and retain the house in their own family indefinitely.[22] Section 13, which addresses remoteness, specifies that land may be transferred to an unborn child through an intermediate trust — in other words, by forming a preceding interest, as long as the unborn child receives the ultimate interest. Nonetheless, according to this section, it is conceivable to retain the estate in suspense among the last holder of a previous interest as well as the acquisition of the effect in benefit of the unborn child, so any duration of time may elapse among these 2 circumstances. Section 14 is introduced at this stage to stop the property from just being maintained in the household by establishing a term of perpetuity for the life holders and the final beneficiary’s minority. Additionally, Section 20 of the Act says that the ultimate beneficiary’s interest is vested, and his absolute interest in the property transfers in him upon his birth, except if the transfer agreement expressly states otherwise. As a result, the transferor may plan for the period whenever vesting occurs.[23] Returning to Section 14, the transferor may designate a timeframe that does not exceed the perpetuity duration – i.e., any point from birth till the completion of the age of eighteen. In terms of usage, the kid may benefit the property at birth via parents or guardians, but vesting would follow the provisions of the preceding parts.

Conclusion

The rule against perpetuities applies when a property is transferred to an unborn individual by ensuring that vesting happens prior to the child attaining majority, ensuring nobody is enabled to permanently shield the land from alienation. Nevertheless, the act considers the number of different factors that arise in the actual world and subsequently provides relaxation in instances wherein the transfer is made for the benefit of the public, including for trusts or charitable organizations. Taken together, the rule against perpetuity and related sections of TPA are unexpected and speculative in their implementation, especially from the viewpoint of the transferor.

Author(s) Name: Chaitanya Thakur (West Bengal National University of Juridical Sciences, Kolkata)

References:

[1]Poonam Pradhan Saxena, Property Law (3rd ed. 2017).                                                                       

[2] Transfer of Property Act, 1882, §14, No.4, Acts of Parliament,1882 (India).

[3] supra note 1.

[4] Transfer of Property Act, 1882, §13, No.4, Acts of Parliament,1882 (India).

[5]Mulla, The Transfer of Property Act (13th ed. 2018).

[6]Darashaw Vakil, Commentaries on the Transfer of Property Act(5th ed. 2017).                        

[7] Indian Majority Act, 1875, §3, No.9, Acts of Parliament,1875 (India).

[8]Saxena, supra note 1.

[9] Soundara Rajan v Natarajan, AIR 1925 Pat 244.

[10]Moore v. Wingfield, [1903] 2 Ch. 411.

[11]Avtar Singh & Harpreet Kaur, Textbook on Transfer of Property Act (6th ed., 2019).

[12] Urwashi Ahuja, Rule Against Perpetuity, Law Times Journal (July 4, 2019), http://lawtimesjournal.in/rule-against-perpetuity/.

[13] Ram Newaz v. Nankoo, AIR 1926 All 283.

[14] Transfer of Property Act, 1882, §18, No.4, Acts of Parliament,1882 (India).

[15]Mulla, supra note 3.                        

[16]Id.

[17] Ram Baran v. Ram Mohit, AIR 1967 SC 744.

[18] Walsh v. Secretary of State for India, (1863) 10 HLS 367.

[19]Maharaj Bahadur Singh v.Balchand, AIR 1922 PC 165.

[20] supra note 17.

[21]Saxena, supra note 1.

[22]Vakil, supra note 4.

[23]Samsuddin v. Abdul Hussein, (1906) 31 Bom 165.