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Section 14 of Transfer of Property Act (Rule Against Perpetuity) | Notes of Section 14 TPA


MEANING OF PERPETUITY
Perpetuity means continuous or unending transaction. It is tying up property for an indefinite period. Transfers involving generation after generation (pidhi dar pidhi) are known as creating perpetuities.

Section 14 is a Rule against these unending transaction. This rule can be divided into two points :

ANALYSIS OF THE RULE
(1) The Transfer of Property cannot operate to create an interest which is to take effect after the lifetime of one or more living person at the date of transfer.

llustration : A transfer a property to B for life, then to B's son's for life, then to B's son's son for life, then to B's son's son's son for life. Here neither B nor his Sons and Grandsons are living. So this transfer will be void as it is creating unending transaction and making the property inalienable.
If by any mechanism, the property is made inalienable it would be detrimental to the property.

(2) The vesting of absolute interest in favour of Unborn person may be postponed till minority. Earlier in Section 13 we discussed that life interest can be created in favour of living persons.
The moment UB is Bom he will took a Vested Interest in the property. But this Section says that rule of vesting of property at birth can be changed by the transferor. 
The transfer can decide when the Unborn will acquire vested interest in the property. But he can only postponed the vesting of absolute interest till minority. He cannot stipulate a time of vesting which goes beyond the period of perpetuity.

Period of Perpetuity i.e. -Life of the last preceding(prior) interest plus minority of the ultimate beneficiary.

Illustration - (i) A transfers property for life to B, and then to B's first child when he attains the age of 18 years absolutely. B is living on the date of the transfer but has no child. In this case, when B's first child would be born, the property would not vest in him till he attains the age of 18 years. If he dies without attaining the age of 18 years, it would revert back to the transferor or his heirs as the case may be.
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(ii) A transfers property for life to B, and then to B's first child when he attains the age of 25 years. The transfer is void, as the vesting of the property is postponed beyond the minority of B.

(iii) A transfers property for life to B, and then to B's first child when he attains the age of 10 years. The transfer is perfectly valid and the property would vest in his favour, on his attaining the age of 10 years.

Illustration (iv) : A transfers his property in 1970 to B for life, then to C for life, then to D for life then to E for life and then to B's such son UB who should first attain the age of 18 years. B, C, D and E were all living on the date of the transfer. B dies in 1990, C in 1985, D in 1992 and E in 2002. B's son UB is born in 1980.
UB (absolute interest) born 1980 On the death of B, in 1990, the possession of the property would be taken by D as C died during B's lifetime. E will get the property in 1992, on the death of D. UB attains the age of 18 years in 1998, so while the possession is still with E, the property will vest (ownership) in UB in 1998, while he will get the possession when the last life estate holder dies in 2002.

TRANSFER WHEN PERSON IS IN WOMB
However, a case arises when an unborn person does not come into existence at or before the expiry of the last prior interest but he is merely in womb. In such a case, the period of gestation has to be included as a period of grace with the perpetuity period. It is normally a period of 9 months or 280 days.

llustration : A transfers certain properties 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 the transfer and unborn, the ultimate beneficiary, is not in existence even in the mother's womb. The last prior life interest is with C. When C dies, the contemplated unborn who is in Womb must come into existence in 280 days otherwise the property will revert back to A After coming into existence in 280 days he will get Possession of Property immediately (As C is died) but will acquire vested interest in property at attaining 18 years of age. If he died before attaining the age of 18 then property will revert back to A or his legal heirs.


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