R. Kempraj v. Barton Son & Co. (AIR 1970 SC 1872)

This case explains a simple point: a lease renewal option is a personal promise inside the lease. It does not create a future interest in land. Because of that, the rule against perpetuity in Section 14, Transfer of Property Act, 1882 does not strike it down. The tenant who followed the contract can ask the court to make the landlord renew the lease.

• Does a clause allowing the lessee to renew a 10-year lease after each 10-year period violate the rule against perpetuity?

Section 14, Transfer of Property Act, 1882 (rule against perpetuity) limits creation of remote future interests in property. A renewal option in a lease is a personal covenant. It does not, by itself, create any property interest in the future. Therefore, Section 14 does not apply to such a clause.

• Section 14 TPA applies when there is a transfer creating a future interest in property.
• A renewal option is a personal promise, not a transfer of a future interest. Hence, the perpetuity rule does not apply.
• The lease here was not a lease in perpetuity; the first term was only ten years.
• The Court noted that English law similarly does not apply the perpetuity rule to covenants for renewal.
• Specific performance of the renewal covenant was proper. The appeal failed.

A lease renewal option creates no future interest in property. It is a personal covenant enforceable in law and equity. Therefore, the rule against perpetuity under Section 14 TPA does not strike down such clauses.

• Confirms that renewal clauses are valid drafting tools for commercial leases.
• Protects tenant certainty where the option is properly exercised.
• Aligns Indian law with English precedents on renewal covenants.

1. Section 14 TPA targets future interests, not personal covenants.
2. Renewal options are contract rights, enforceable by specific performance.
3. A 10-year lease with renewal is not a lease in perpetuity.

Mnemonic: “ReNew = No Future” — Renewal is a personal promise, not a future interest.

1. Read the clause: renewal is a promise.
2. Recall Section 14: applies to future interests only.
3. Result: perpetuity rule does not apply.

Rule against perpetuity

A rule that stops creation of remote future interests that can tie up property for too long.

Renewal option

A contractual promise that the lessee may continue the lease on agreed terms after expiry.

Specific performance

A decree ordering a party to do exactly what was promised in the contract.