Imperial Journal of Interdisciplinary Research (IJIR)
Vol-3, Issue-6, 2017
ISSN: 2454-1362, http://www.onlinejournal.in
Conveying the Direction for Accumulation and
Issues Involved In Partial Accumulation
1
A.S.Janani & 2Prof: Girija Anil
Final year B,A.,B,L.,(hons) student at saveetha school of law
Assistant professor of Saveetha School of law
Abstract: Conveying the directions for object of this section is to make a separate rule
accumulation and period for accumulation in the further restricting the period for the accumulation
law of property. The owner of the property. The of income.
owner of the property can accumulation his own
property to a beneficial for enjoyment of property A direction for accumulation may be express as
for certain period prescribed amount will be well as implied. The question is one of construction
received amount will be received by the owner. The and if the disposition cannot be carried out without
invalid rule for repugnancy can be made. With a an accumulation, the section appliesi
statutory period with section invalid rule can be
made by the owner of the property. VOID UNDER THE RULE AGAINST
PERPETUITIES:
INTRODUCTION:
Independently of this section, a direction
Section seventeen of the act speaks about for accumulation may be void under the perpetuity
the accumulation of income of property or direction rule if the accumulation is directed for a period in
for accumulation. A direction for the accumulation excess of that allowed by the pertuity rule. Thus, if
of income of property amounts to limiting A transfers property to B for life and then to the
beneficial enjoyment of property. Such direction is son of B who shall first attain the age of 25, with a
void as per s.11 of the act but s.17 is an exception direction to accumulate the income till the son
2.11 is applicable where there are absolute transfers attains that age the direction would be void under
whereas s.17 applies to all kinds of transfer e.g., A the pertuinty rule. However, if A transfers property
settler by deed directs. This section is akin to to B for life, and then to the first son of B who shall
section 117 of Indian succession act, 1925. attain the age of 18 with a direction to accumulate
the income during the lifetime o B and until the son
Accumulation = profits or income arising out of the attains that age, there is no infringement of the
property, it can be whole or in part perpetuity rule, and the direction would be valid for
one of the statutory periods allowed by this section.
PERIOD FOR ACCUMULATION ARE:
VOID FOR REPUGNANCY:
(i)Life of the transferor or
Indecently of this section, a direction for
(ii)Period of 18 years, whichever is longer. Any accumulation may be void repugnancy. A direction
condition beyond this period is invalid and not for accumulation is a restriction is a restriction on
operative. The direction for the whole or part of enjoyment such as is referred to in s 11. However,
the income can be made. while s 11 is limited to transfers which create an
absolute interest in the transferee, s 17 refers
ACCUMULATION OF INCOME: indifferently to any transfer. Where a transfer is of
an absolute interest, the exceptions to this section
A direction which separates the income are also exception for the benefit of the donee,
from the ownership of property so as to form a merely postpones enjoyment, and is void for
separate fund, or so as to postpone the beneficial repugnancy. This is illustrated by Indian iicases.
enjoyment of property, is a direction for The first illustration to s 56 of the Indian trusts act
accumulation. The rule against perpetuities has for 1882, show that a direction for the accumulation of
its object, the circumscription of the period during the income of a minor is determinable when he
which the property might be tied up in such a way attains majorityiii.
as to prevent its being transferred absolutely.
Earlier an accumulation of income could be
directed for so long as the property could be tied up
without infringing the rule against perpetuities. The
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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-3, Issue-6, 2017
ISSN: 2454-1362, http://www.onlinejournal.in
SAVINGS OUT OF INCOME: children should be held on trust for his children,
but died without issue, it was held that the testator
The section does not apply to savings out having died without issue, there was no effective
of income made voluntarily by the person entitles disposal by his will within the meaning of s 49 of
to the income, or by the court on behalf of an the administration of estate act 1925, of the
infantiv. Nor does it affect the discretionary power residuary estate, and that the direction for
of trustees to make accumulation out of a minors accumulation was not a direction to which the
income under s 41 of the Indian trusts act 1882. property not effectively disposed off by the will
was subject. The direction for accumulation here
POWERS TO ACCUMULATE: came to an end by reason of the failure of its object
and purpose, and the widow becomes entitled to the
In England the law prohibits any person surplus income as on intestacyviii.
from settling or disposing of property in such a
manner that the income thereof would be EXCEPTIONS:
accumulated beyond the periods there indicated v. It
followed that it hit cases where, though there was The first two exceptions closely those in s
no direction to accumulate beyond the permitted 164 of the law of property act 1925. The third
periods, there was power to trustees to do so, and exception is not in the English act, but follows the
where the trustees were in fact accumulating the case of vine v raleighix.
income beyond the permitted periods or were
contemplating doing so. It is submitted that this EXCEPTION (I)- PAYMENT OF DEBTS:
would not be the case in India where s 17 only
prohibits directions providing for an accumulation A provision for the payment of debts, not
of income beyond the permitted periods. being of the transferor, but payable on a
contingency which might happen outside the
PERIOD: perpetuity period would be void as infringing the
rule against perpetuities. So also, a transfer
The periods are expressed to be in the contingent on the payment of specified debts for
alternative so that an accumulation cannot be the debts might have not is paid within the
directed during a combination of two periods. The perpetuity period.x . However, directions for the
appropriate period is a question of construction, payment of debts or provisions for accumulation of
and is the one that best accords with the intention income for that purpose, for however long a period,
expressed in the instrumentsvi. are not only exempt from the statutory restriction
on accumulation, but do not infringe the rule
EXCESSIVE ACCUMULATION: against pertuities. Such a provision does not tie up
property absolutely so as to prevent its being
If accumulation is directed to be for a transferred absolutely because the creditor may at
longer time than that allowed by the section, it is any time insist on payment, or the person indebted
invalid for the excess over the appropriate period, can at any time discharge the debtxi
and that income for the excess period as well as the
interest on the accumulated fund, belongs to A trust or direction to pay a debt is, therefore, if
persons, who would have been entitled, if there had possible construed as a charge for the payment of
been no direction to accumulatevii. debts, and the transferee is considered as taking a
vested interest subject to the charge. Thus, on an
FAILURE OF PURPOSE: assignment of a lease for 99 years, a trust to
accumulate half the rent for the whole term, for the
Where on a true construction of the
payment of the debts of the transferor, would be
instrument directing accumulation and investment,
valid as creating a charge on the lessee’s interest. A
the purpose or object to which that accumulation
direction for the payment of debts has been held to
and investment is directed entirely fails, the
be valid even when it is annexed to and forms part
provision cannot be enforced and the direction for
of a series of limitations, all or some of which
accumulation cannot be read as an independent
infringe the rule against perpetuities.
provision. Thus, where a testator after bequeathing
an annuity to his mother directed his trustees out of The debts may be existing debts, or contingent
the income of his residuary estate to pay an annuity liabilities to arise in future. If the debts are paid not
to his wife and to accumulate the surplus income out of income, but out of capital, the exception
during the life of his wife or for 21 years from his ceases to apply and the trust for accumulation of
death (whichever was the shorter) and directed that income to recoup capital is valid for one of the
at the end of the period of accumulation, the statutory periodsxii. If the provision is not made in
residuary estate including the accumulation for his
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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-3, Issue-6, 2017
ISSN: 2454-1362, http://www.onlinejournal.in
good faith the exception will not applyxiii. So a The direction is valid, unless the conditions are so
provision to accumulate income against a liability unreasonable as to be against public policy, or
that is not likely to become a debt, or to retain and unless it is given for an illegal object or its effect is
set apart income to create a reserve fund against inconsistent with Hindu law. Thus, in
future liabilities in business is subject to the krishnaramani v ananda krishnaxix there was a trust
statutory periods. In order, however, that such a of surplus income to be accumulated, and every
provision falls within the exception, the provision time the accumulations amounted to three lakhs,
must not be a provision which might or might not they were to be divided among the sons and
be used for the payment of such debts at the descendants per stripes. Justice macpherson said
discretion of some third person; it ought to be a that the when the trust for accumulation is not
provision which must be applied for that purposexiv. accompanied with any disposition of the corpus of
the property. A direction to accumulate surplus
The English exception is wider for it includes the income for the benefit of a son to be adopted, or for
debts of the grantor, settlor, testator, or any person the payment of debts or the benefit of the minor
and it has been held that the other person may be a donee, or for the marriage expenses of the testators
stangerxv. son,xx has been held to be valid.
EXCEPTION (II)- PROVISION OF THIELLUSSON V. WOODFORD (1798), 4
PORTIONS: VES. 227:
The word portion ordinarily means a share Thellusson v Woodford (1799) 4 Ves 227 is
and points to the something out of something else an English trusts law case. It was a lawsuit
for the benefit of some children. It does not apply resulting from the will of Peter Thellusson,
to the making of additions of income to capital in an English merchant (1737–1797).
order to increase the capital for the person to whom
Facts
it is givenxvi. The exception only applies to
provisions which must be applied for the provision Peter Thellusson directed the income of his
of portions; and cannot save provisions which must property, consisting of real estate of the annual
be applied for the provision of portions; and cannot value of about £5000 and personal estate
save provisions which may or may not be so amounting to over £600,000, to beaccumulated
applied at the discretion of some third person. during the lives of his children, grandchildren and
great-grandchildren, living at the time of his death,
EXCEPTION (III)- PRESERVATION AND and the survivor of them. The property so
MAINTENANCE: accumulated, which, it is estimated, would have
amounted to over £14,000,000, was to be divided
The third exception is not in the English
among such descendants as might be alive on the
act, but it has no doubt, been suggested by the case
death of the survivor of those lives during which
of vine v raleighxvii, where a trust out of income to
the accumulation was to continue.
maintain houses in good repair was held to be
outside the thellusson act. A fund provided to meet To gave by will all his property to trustees upon
dilapidations repair at the end of a lease is within trust to accumulate the income during the lives of
the exception. A direction which simply keeps the his sons A, B, and C, and of all their descendants
property at its present value is not affected by the who might be living at his death, and after the
rule restricting accumulation of income. death of the last survivor of them, the whole to be
held on trust in equal thirds for the eldest male
(11) INDIAN SUCCESSION ACT: descendants of A, B, and C.
A similar amendment has been made in the Held, although the funds might accumulate at the
corresponding s 117 of Indian succession act lowest computation to nineteen millions sterling
1925xviii. and no person could enjoy it for perhaps 80 years,
yet the trusts were validxxi.
(12) HINDU LAW:
By an Act of 1799 (a), usually called the
As stated above, a direction for Thellusson Act because it was passed in
accumulation for the benefit of the donee was consequence of this case, accumulations may not
under Hindu law repugnant to an absolute gift. The be directed for longer than one of the following
section is not inconsistent with any rule of Hindu periods.
law, and is made applicable to Hindus by the
amendment of s 2. (i.) during the life of the grantor, or
(a) 39 & 40 Geo. III. c. 98.
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ISSN: 2454-1362, http://www.onlinejournal.in
(ii.) for 21 years after the death of the grantor or circumscription of the period during which the
testator, or property might be tied up in such a way as to
prevent its being transferred absolutely.
(iii.) during the minority of any person or persons
living at the death of the grantor or testator, or
(iv.) during the minority of any person or persons BOOKS REFFERED:
who would have been entitled to the income if it
had not been directed to accumulate. 1. The tranfer of property act 1882
2. Sec 17 the direction og accumualtion
This last period may include the minority of some
3. Commentary on The tranfer of property
person who is not living at the death of the grantor. act 1882 Dr. sir hari singh gour”s
JUDGEMENT: 4. B.B mithra & senguptamThe tranfer of
property act 1882.
The bequest was held valid. In 1856, there was a 5. Mulla The tranfer of property act 1882
protracted lawsuit as to who were the actual heirs.
i
It was decided by the House of Lords (9 June 1859) Tench v cheese [1855] 6 De GM and G 453, pp
in favour of Lord Rendlesham and Charles Sabine 462, 473.
ii
Augustus Thellusson. Owing, however, to the Cally nath v chunder nath (1882) ILR 8 cal 378;
heavy expenses, the amount inherited was not mokoonda lal v ganesh chandra (1876) ILR I cal
much larger than that originally bequeathed. 104; srinati bramamayi v joges chander (1871) 8
beng LR 400.
iii
See notes enjoyment postponed and
accumaulation of income under s 19
In amrito lall v surnomoye xxii, J jenkins said that for iv
Tench v chesse [1855] 6 de GM and G 453 p 463
the period of accumulation under Hindu law the (CA)
limit must be that which determines the period v
Re robb s will trusts [1953] ch 459, [1953] 1 ALL
during which the course or devolution of property ER 920
can be directed and controlled by the testator. In vi
Re errington, errington- turbutt v errington
(1897) 76 LT 716
Gosavi shivgar v rivett- carnacxxiii, where the devise vii
Griffiths v vere [1903] 9 ves 127; re walpole
was to a minor disciple for whom as portion of the
public trustee v canterbury [1933] ch 431. [1933]
income was to be accumulated until he was of the
all ER rep 988
age of 30, it was held that he was entitled to all the viii
Re thornber, crabter v thornber [1937] ch 29,
income after he attained majority. In the absence of
[1936] 2 all ER 1594
any direction to the contrary, the rule of Hindu law ix
[1891] 2 ch 13
is that accumulations of income go with the x
Re bewick ryle v ryle [1911] 1 ch 116
capitalxxiv. xi
Briggs v oxford (earl) [a1852] De GM and G
The rule against accumulation determines how long 363, p 370
xii
the income can be directed to accumulate at Re heathcote, heathcote v tench [1904] 1 ch 224.
xiii
compound interest, in such a way as to prevent its Mathews v keble [1868] 3 ch app 691.
xiv
being received and enjoyed by any one. Re bournes settlement tusts 1946 1 all ER 411,
117, LT 281, 62 TLR 269(CA)
xv
JUDGEMENT: Barrington (viscount) v liddell [1852] 2 deg M &
G 480 p 497
xvi
The bequest was held valid. In 1856, there was a Re elliot public trustee v pinder 1918 2 ch 150,
protracted lawsuit as to who were the actual heirs. [1918-9] all ER rep 1151 dissenting from
It was decided by court of law ninth june nineteen middleton v losh 1852 1 sm& griff 61.
xvii
ninty nine in favour of judges. similarly, however, 1891 2 ch 13.
xviii
to the high expenses , the amount inherited was not Re gardiner, gardiner v amith [1901] 1 ch 697,
much larger than that originally bequeathed. p 701.
xix
1872 4 beng LR 231
xx
SUGGESTION: Nafar chander v ratan (1910) 15 cal WN 66 7 IC
921
A direction which separates the income from the xxi
ownership of property so as to form a separate http://en.wikipedia.org/wiki/Thellusson_v_Woodfo
fund, or so as to postpone the beneficial enjoyment
rd
of property, is a direction for accumulation. The
rule against perpetuities has for its object, the
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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-3, Issue-6, 2017
ISSN: 2454-1362, http://www.onlinejournal.in
xxii
(1897) ILR 24 cal 589.
xxiii
(1889) ILR 13 bom 463; husenbhoy v ahmedbhoy (1902)
ILR 26 born 319.
xxiv
Bissonauth v barnasoondry (1867) 12 MIA 41, p 60; sonatun
bv juggustsoondree(1859) 8 MIA 66
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