Report No. 70
Conditions of Defeasance
As distinguished from conditions which terminate an estate by transferring it from A to B, we have, in section 31, the situation of a condition which merely provides that the interest shall cease to have effect in case a specified uncertain event happens or does not happen. This, as we have already pointed out, is known in England as a condition subsequent. But, to distinguish it from those conditions which transfer the interest to another person, we can describe such conditions as conditions of defeasance, to bring out the narrower sense. They are dealt with in section 31. This is how the section reads:-
"31. Subject to the provisions of section twelve, on a transfer of property, an interest therein may be created with the condition superadded that it shall cease to exist in case a specified uncertain event shall happen, or in case a specified uncertain event shall not happen.
(a) A transfers a farm to B for his life with a proviso that, in case B cuts down a certain wood, the transfer shall cease to have any effect. B cuts down the wood. He loses his life interest in the farm.
(b) A transfers a farm to B provided that, if B shall not go to England within three years after the date of the transfer, his interest in the farm shall cease. B does not go to England within the term prescribed. His interest in the farm ceases."
30.2. English law-Theory of re-entry.-
In England, the theory is that in all cases of this type, there vests in the grantors, his heirs and assigns a right of reentry, the exercise of which determines the estate of the grantee.1 Of course, an interest may terminate by the very nature of its tenure-for example, a life interest.
This is not a case of termination by "condition"; the very words which create the estate denote its quantum, extent and duration, because the utmost time for which the interest can continue is indicated. This is not concerned with a condition which specifies some event which, if it takes place during the time for which an estate continues, will defeat the estate. We are concerned with terms which while creating an interest, define its duration.
The word "condition" in this context seems to have a heritage of about 400 years. In a case reported in 15962, it was observed-
"And here is a condition, because there is not a new estate limited over, but the estate to which it is annexed is destroyed".
It is needless to say that a condition precedent creates a future interest, while a condition subsequent is concerned with a present interest subject to determination.
1. Cheshire Modern Law of Real Property, (1972), p. 315.
2. Sergeant Rudhalls case, 1596 Savile 76, cited in Hollis Hospital (in re:), (1899) 8 Chancery 540 (549).
It is not always easy to decide whether a particular term in the transfer imposes a condition subsequent, or whether it defines the duration of the estate. This seems to have created an interesting debate in England. For example, Williams1 states: A devise to a school in fee simple "until it ceases to publish its accounts" creates a determinable fee (duration of the interest), whereas a devise to the school in fee simpl.-on condition that the accounts are published annually" creates a fee simple defeasible by a condition subsequent.2
In the first case, the determination is automatic, while in the second case, according to the theory of the English law, a right of re-entry is given. The distinction is subtle; and, according to some writers, it is a mere matter of words. It may assume importance in practice only if the condition subsequent is void. A condition subsequent in the strict sense, when void, is disregarded, and the transfer takes effect as if the condition had not been imposed.
On the other hand, a determinable interest fails altogether if the possibility of revertor is invalidated. To take a hypothetical though not very realistic situation to illustrate this distinction, a property is given to a girl "until she ceases to carry on prostitution" (an obviously unmoral stipulation). If the condition is not regarded as a condition subsequent in the strict sense but as a limitation of the tenure defining its duration, then, it would seem that the transfer itself is void, at least according to the English law.3
1. Williams Real Property, (1966), p. 77.
2. Da Costa (in re:), (1912) 1 Chancery 337.
3. Cheshire Modern Law of Real Property, (1972), p. 318, [sub-para. (4)1. The hypothetical illustration is not taken from Cheshire.
The condition here mentioned is a condition subsequent, and must, it appears, be construed subject to the provisions of sections 14 and 23. It must not be invalid as laid down in section 32.
A gift to a person on condition that if he marries under the age of twenty-five without the consent of a person named, the estate shall cease to belong to him is valid under the section; and the donee will forfeit the estate if he breaks the condition1. A proviso that, if the donee becomes a nun she shall forfeit the estate, is similarly enforced2. Similarly, a clause in a gift deed executed by one V who was sentenced to transportation for life in favour of S on the eve of V's departure for Port Blair (the place for transportation), providing that in the event of V's return, all the properties gifted to S should revert to V, was held to be legal and enforceable.3
1. Section 134, ill. (b), Indian Succession Act, 1925.
2. Section 134, Indian Succession Act, 1925, ills. (d) and (e).
3. Venkatrama v. Aiyaswami, 43 MIJ 340.
30.5. Conditions repugnant.-
The difference between a repugnant clause which is invalid and a clause of defeasance to which the Court will give effect, has also been pointed out often. We cannot do better than quote the words of Chitty. J. In Govindaraja's case1, where the court had to construe a pre-nuptial settlement by a husband in favour of his wife in the following terms:
"I have accordingly given you the undermentioned properties valued at Rs. 1,000 and you shall yourself from this day hold and enjoy the same with all rights. Should any issue be born to us, that issue shall get the properties after our death. If there is no issue, after your death, your brothers should take the properties".
The wife pre-deceased the husband, leaving no issue. The Judge, in giving effect to the claim of the brothers, observed:
"The distinction between a repugnant provision and a defeasance provision is sometimes subtle, but the general principle of law seems to be that where the intention of the donor is to maintain the absolute estate conferred on the donee but he simply adds some restrictions in derogation of the incidents of such absolute ownership, such restrictive clauses would be repugnant to the absolute grant and therefore void; but where the grant of an absolute estate is expressly or impliedly made subject to defeasance on the happening of a contingency and where the effect of such defeasance would not be a violation of any rule of law, the original estate is curtailed and the gift over must be taken to be valid and operative".
1. Govindaraja v. Mangalam Pillai, AIR 1933 Mad 80: 63 ML) 911 (913).