Section 13: Transfer for the benefit of an Unborn Person.

According to sec 13
1. The interest of the unborn person must be preceded by a prior interest.
2. The unborn person must be in existence when
the prior interest comes to an end.
3. The interest created in favour of the unborn person
must be the whole of the interest remaining of the
transferor.
Tagore v. Tagore (1872)

 Privy Council observed that foetus/infant in a womb is a person in existence for the purpose of
making a gift to an unborn child.
what Happens:
1. If UB is never born? (back to transferor )
2. When UB is born after the death of B? (Back to transferor)
3. If UB dies before the death of B? ( Goes to Legal heir of UB)
4. UB born as a dead child ( Legal fiction ac to mulla goes back to
transferor)
Section 113 (Indian Succession Act, 1925) - Bequest to person not in existence at testator’s death
subject to prior bequest.
Where a bequest is made to a person not in existence at the time of the testator’s death, subject to
a prior bequest contained in the Will, the later bequest shall be void, unless it comprises the
whole of the remaining interest of the testator in the thing bequeathed.
Rule of Double Possibility - Whitby v. Mitchell (1889)
A (father) creates life interest over property in favour of B (son) and after him a life
interest in favour of C (unborn child of B) and ultimately an absolute interest in favour
of D (unborn child of C) after D’s birth and before he/she attains majority.

Double Possibility i.e. a possibility based on second possibility. It would have been a case
where A restricted alienation of property for up to two generations (B and C) after him.
There is occurrence of a possible condition on the occurrence of another possibility (as a
necessary contingent) which is not allowed, that is why this rule is called the rule of Double
Possibility.
Section 14: Rule against Perpetuity
I. INTRODUCTION
Perpetuity means indefinite period. Rule against perpetuity is the rule which is against a
transfer making the property inalienable for an indefinite period or forever. Where a
property is transferred in such a way that it becomes non-transferable in future for an
indefinite period, the property is tied up forever. This disposition would be a transfer in
perpetuity. In any disposition, perpetuity may arise in two ways: (a) by taking away from
the transferee his power of alienation and, (b) by creating future remote interest.
However, a better name of the rule may be the rule against remoteness of vesting.

II. 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.

III. OBJECT OF RULE AGAINST PERPETUITY

The object of the rule against perpetuity is to ensure free and ensure free and active
circulation of property both for purposes of trade and commerce as well as for the
betterment of the property itself. Frequent disposition of 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 interests 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
society because when property is tied up from one generation to another in one family, the
society as such would be deprived of any benefit out of it. Free and frequent disposal
ensures wholesome circulation of properties in society. Rule against perpetuity is, therefore,
based also on broad principles of public policy.
IV. ESSENTIAL ELEMENTS OF SECTION 14
The essential elements of the rule against perpetuity as given in this section may be stated
as under:
i) There is a transfer of property.
ii) The transfer is for the ultimate benefit of an unborn person who is given absolute
interest.
iii) the vesting of interest in favour of ultimate beneficiary is preceded by life or limited
interests of living persons(s).
iv) The ultimate beneficiary must come into existence before the death of the last
preceding living person.
v) 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.

Imp points for section 14.

 The word Perpetuity means ‘indefinite period’ or here it can be said
‘generation to generation’.
 This section was created to put a limit on the maximum time period beyond
which property cannot be transferred.
  This limit is put so that a person cannot transfer in such a manner that it
would defeat the right in the hands of his successors to whom he transfers.
 This was done to prevent transfer of property in such way that it became
inalienable (non transferrable) for indefinite period.
In summary
No transfer of a property shall create such an interest, which will take effect after the
lifetime of one or more living persons and/or 1 unborn person.
o Section 13 states that life interest can be created in favour of living persons and
the moment unborn is born he will get the vested interest
o Section 14 provides that transferor can postpone that vesting of interest in
such unborn person till minority.

Section 114 (Indian Succession Act, 1925) - Rule against perpetuity:

Exceptions to Rule of Perpetuity

Charities - Section 18: Transfer in Perpetuity for Benefit of Public - The
restrictions shall not apply in the case of a transfer of property done for
the benefit of the public; for the advancement of religion, knowledge,
commerce, health, safety, or any other object beneficial to mankind

Case law on sec 14 Stanley v. Leigh (1732)

a

IX. EXCEPTIONS TO THE RULE AGAINST PERPETUITIES

i) Vested interests are not affected by the rule, for when an interest has
once existed, it cannot be bad for remoteness.

ii) Gifts to charities do not fall within the rule; thus, in case of a transfer
for the benefit of the public in advancement of religion, knowledge, health,
commerce, etc., the rule does not apply (Section 18).

iii) Property settled upon individuals for memorable public services may
be exempted from the operation of this rule.

iv) the rule against perpetuity applies when interest in property is created
and has no application to personal contracts. A contract for sale of property
does not of itself create any interest in such property (Section 54).
Section 15. Transfer to class some of whom come under sections 13 and 14.
Refer Bare Act
If, on a transfer of property, an interest therein is created for the benefit of a
class of persons with regard to some of whom such interest fails by reason of
any of the rules contained in sections 13 and 14; such interest fails in regard to
those persons only and not in regard to the whole class
Section 115 (Indian Succession Act, 1925) - Bequest to a class some of whom may come under rules
in sections 113 and 114.

Section 15 states, "If, on a transfer of property, an interest therein is created for the benefit
of a class of person with regard to some of whom, such interest falls by reasons of any of
the rules contained in Section 13 and 14, such interest fails in regard to those persons only
and not in regard to the whole class."

Property may be transferred for the benefit of single unborn person or for the benefit of a
class of such persons. In both the situations, the transfer must be made according to the
provisions of Section 13 and 14. Where the transfer is for the benefit of a single unborn and
fails under any of the above sections then the transferee, who is ultimate beneficiary, gets
no property. But, under Section 15 it is provided that where a property is transferred for the
benefit of a class of unborn persons and the transfer fails with regard to only some of them
under Sections 13 or 14 then the whole transfer is not void. It fails in regard to only those
transferees who are unable to take either because or remoteness under Section 13 or
because of rule against perpetuity under Section 14. the transfer in regard to other
transferees is valid and takes effect.
Illustrations

A transfers his properties to b for life and then to X, Y and Z who are all unborn at the date
of transfer) with a condition that X and Y shall get the property when they attain the age of
majority but X shall get when he attains the age of 25 years. The transfer in regarded to Z
fails under Section 14 but in regard to X and Y the transfer is valid and shall take effect.

Section 16. Transfer to take effect on failure of

prior interest.
Where, by reason of any of the rules contained in sections 13 and 14, an interest created
for the benefit of a person or of a class of persons fails in regard to such person or the
whole of such class, any interest created in the same transaction and intended to take
effect after or upon failure of such prior interest also fails.

Section 16 of Transfer of Property Act states, "where, by reason of any of the

rules contained in Sections 13 and 14, an interest created for the benefit of a
person or of a class of persons fails in regard to such person or the whole of such
class, any interest created in the same transaction and intended to take effect after
or upon failure of such prior interest also fails".
Section 16 provides that in a transfer of property if prior (earlier) interest fails
under section 13 or 14, the subsequent interest also fails. This is a commonsense
rule and is based on English Law that limitations following upon limitations
which are void for perpetuity are themselves void whether within perpetuity or
not. In any transfer of property if there are two successive creations of interests
one after the other, the later creation of interest would be subject to validity of the
prior. This is so because the latter creation of interest is dependent on the earlier
one. Accordingly, a valid transfer which is subsequent to and dependent upon
void transfer is itself rendered void. For example, A transfers property to B for life
then to C for life and then to D absolutely. B is a person living at the date of the
transfer but C and D are unborn persons. The transfer of life interest to C (unborn)
is void under Section 13 therefore it fails. Since this prior interest fails, the
subsequent transfer to D (next unborn) would also fail although D's interest in
absolute and is valid under Section 13.

This section is applicable only where the prior interest fails with under Sections
13 or 14 but not otherwise. If the prior interest fails under Section 25 (i.e. where
the prior transfer is a conditional transfer and the condition precedent is void
under Section 25) the subsequent interest would fail but not under Section 16.

Girish Dutt v. Datadin (1934)

A made a gift to her nephew's daughter B for her life and then to B’s male descendants
absolutely, if she had any.

But if she had no male descendant then to B’s daughter without the power of
alienation. In case, B had no descendants, male or female, then to her nephew,
Datadin. B died without any child.

It was held that as the gift to B ’s unborn daughters was a limited interest only,
therefore, transfer to nephew which was dependent upon prior interest also
failed.

Section 17: Directions for Accumulation.

( Also known as DOCTRINE OF ACCUMULATION)

When the transfer is done with the condition that whatever income arising from the
property shall be accumulated and given to someone. It can be for either 18
years or lifetime of transferor. Any Direction for accumulation for higher than
these periods will be void.

A direction for the accumulation of income of any property means restraining

the free enjoyment of its incidents benefits such as rents, produce or profits.
Conditions which restrains the enjoyment of property which is transferred
absolutely has been declared as void condition under section 11 of transfer of
property Act. Section 17 is an exception to this rule section 17 applies to all
kinds of transfer where as section 11 is applicable only where the property has
been transferred ‘absolutely’. Under section 17 direction for the accumulation of
income is allowed but not beyond a certain period. The maximum permissible
period up to which income of the property may be accumulated is:-
(1) life of the transferor
(2) a period of 18 years, which ever is longer period

Any direction (condition) which makes accumulation beyond this period of

maximum permissible is void and inoperative.

Eg. A transfers his house to B in 1960 with a direction for accumulation of its
rents up to 1990. A dies in 1970. Here, the transferor lives only for 10 years
which is less than 18 years. Therefore, the direction for accumulation is valid up
1978 i.e. up to 18 years from the date of transfer because it is the longer period.
Refer Bare Act

Section 18: Transfer in Perpetuity for Benefit of Public.

The restrictions in 14,16 and 17 shall not apply in the case of a transfer of property done
for the benefit of the public; for the advancement of religion, knowledge, commerce,
health, safety, or any other object beneficial to mankind.

DOCTRINE OF CY PRES:

Cy pres means ‘carried out as near as possible to the testator's or donor's

intentions when these cannot be precisely followed.’
If property is transferred to any of the agendas mentioned in section 18, but
the objects of the transfer are uncertain, or are incapable to be carried out
then court will apply doctrine of cy pres and carry out the object as near as
possible to the original object.