Rule Against Perpetuities Under TPA: Section 14 Explained
Date Published
Can a person decide, by a deed made today, who will own a piece of property a hundred years from now? The Transfer of Property Act, 1882 says no. A transferor can plan ahead, but only up to a limit. That limit is set by Section 14, known as the rule against perpetuity.
The rule is only one sentence long, yet it is a favourite of the Civil Judge Exam, PCS J Exam and APO Exam because it must be read slowly. This blog explains the words of Section 14 and then shows how Sections 13, 15, 16, 17 and 18 work around it.
What Section 14 actually says
The section reads: "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."
The sentence looks heavy, so take it in pieces.
• "Living at the date of such transfer": The persons whose lives count must be alive on the day of the transfer. They are the measuring lives.
• "After the life time of one or more persons": The interest cannot start after the end of those lives, plus one more period.
• "And the minority of some person": The extra period is the minority, that is, the years before a person reaches full age.
• "In existence at the expiration of that period": The person whose minority is counted must already be in existence when the lives end.
• "To whom, if he attains full age, the interest created is to belong": The interest must be meant for that minor if he reaches full age.
Put together, the rule says that an interest must take effect within the lives of persons alive at the time of transfer, plus the minority of a person who is then in existence. Anything that is to start later than that is not allowed to operate.
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Why does the rule exist?
The section does not state its own reason, so stick to its effect. It fixes an outer limit on how far into the future a transferor can control who gets an interest. Beyond that limit, the transfer cannot operate.
Section 13: transfer for the benefit of an unborn person
Section 14 is often read with Section 13. Under Section 13, where an interest is created for a person who is not in existence at the date of the transfer, subject to a prior interest created by the same transfer, the interest for the unborn person does not take effect, unless it extends to the whole of the remaining interest of the transferor in the property.
The Act gives an illustration. A transferor owns property and transfers it to B in trust for A and A's intended wife, successively for their lives. After the survivor of them dies, the property passes to the eldest son of the intended marriage for his life. After that son dies, it passes to A's second son.
The interest given to the eldest son does not take effect. The reason given in the illustration is that it does not extend to the whole of A's remaining interest in the property. The idea is that an unborn person cannot be given a part of the interest while the rest goes elsewhere.
Section 15: a class where some members fail
Suppose an interest is created for a class of persons, and for some of them it fails because of Section 13 or Section 14. Section 15 says the interest fails only for those persons and not for the whole class. So the members who are not caught by the rules still keep their interest.
This is a useful protection. A single defect does not wipe out the gift for everyone.
Section 16: when the first interest fails, the next one fails too
Section 16 deals with chains of interests. Where an interest created for the benefit of a person or a class fails by reason of Section 13 or Section 14, any interest created in the same transaction and meant to take effect after or on failure of that prior interest also fails.
In simple words, if the first link in the chain breaks, the links that depend on it fall with it. Remember this as the knock-on rule.
Section 17: directions to accumulate income
A transfer sometimes directs that the income from the property be saved up and added to the capital. Section 17(1) limits this. A direction to accumulate is void to the extent that the period exceeds the longer of two periods: the life of the transferor, or eighteen years from the date of the transfer. At the end of that period, the property and the income are to be disposed of as if the directed period had elapsed.
Section 17(2) lists exceptions. The section does not affect a direction to accumulate for paying the debts of the transferor or of any other person taking an interest under the transfer, for providing portions for children or remoter issue, or for preserving or maintaining the property transferred.
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Section 18: transfers for public benefit
The rules in Sections 14, 16 and 17 do not apply to a transfer of property for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety, or any other object beneficial to mankind. A trust for a school or a hospital is the kind of purpose the section has in mind.
Note that Section 18 names Sections 14, 16 and 17. Section 13 is not on the list. Examiners sometimes test whether you noticed this.
Summary table for quick revision
Section | Topic | What to remember |
13 | Transfer for benefit of unborn person | Fails unless it covers the whole of the transferor's remaining interest |
14 | Rule against perpetuity | Interest must take effect within lives in being plus a minority |
15 | Transfer to a class | Fails only for those caught by Sections 13 and 14 |
16 | Later interests | If the prior interest fails, the later interest in the same transaction fails |
17 | Direction for accumulation | Void beyond the longer of the transferor's life or eighteen years, with three exceptions |
18 | Transfer for public benefit | Sections 14, 16 and 17 do not apply |
How to attempt a question on Section 14
First copy the key phrases of the section: lives in being, minority, in existence at expiry. Next, find the date of the transfer, because the measuring lives must be alive on that date. Then check when the interest is to take effect. If it falls outside the limit, the interest cannot operate. Finally, look at Sections 15 and 16 to see how far the failure spreads, and at Section 18 to see whether the transfer is for public benefit.
Use the Act's own language. For a rule this exact, every word you quote correctly earns marks.
Frequently Asked Questions
Q1. What is the rule against perpetuity under the Transfer of Property Act?
Section 14 says no transfer of property can create an interest that takes effect after the lifetime of one or more persons living at the date of the transfer, and the minority of some person who is in existence at the end of that period and to whom the interest is to belong on reaching full age.
Q2. Which persons count as the measuring lives?
Persons who are living at the date of the transfer.
Q3. What is the additional period allowed beyond the lives?
The minority of a person who is in existence at the expiration of that period and to whom, if he attains full age, the interest is to belong.
Q4. How is Section 13 related to Section 14?
Section 13 deals with an interest for an unborn person after a prior interest, and says it does not take effect unless it covers the whole of the transferor's remaining interest. It is usually read along with Section 14.
Q5. What does Section 15 say?
If an interest is created for a class and fails for some members because of Sections 13 and 14, it fails only for those members and not for the whole class.
Q6. What does Section 16 say?
If an interest fails by reason of Sections 13 and 14, any later interest in the same transaction meant to take effect after or on failure of that interest also fails.
Q7. How long can income be accumulated under Section 17?
A direction to accumulate is void to the extent it exceeds the longer of the transferor's life or eighteen years from the date of transfer, subject to exceptions for debts, portions for children and preservation of the property.
Q8. Do these rules apply to a transfer for public benefit?
No. Section 18 says Sections 14, 16 and 17 do not apply to a transfer for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety or any other object beneficial to mankind.
Q9. Is Section 14 a long section?
No. It is a single sentence, but each phrase in it has a separate meaning, which is why it is asked so often.
A last word from Aashayein Judiciary
The rule against perpetuity is short to read and slow to master. Take the section phrase by phrase, link it with Sections 13 to 18, and revise it with the summary table.
Nitesh Sir and the Aashayein Judiciary team teach the Transfer of Property Act with line-by-line explanations and problem practice. Join our Online Judiciary Coaching to get Judiciary Notes, Judiciary Study Material, PYQ practice and Mock Test series for the Civil Judge Exam, PCS J Exam and APO Exam.