Section 17 of TPA : Section 17: Direction For Accumulation

Explanation using Example

Imagine that Mrs. Sharma, a wealthy individual, wants to create a trust for her grandson, Aarav. She transfers a piece of real estate to a trust with the direction that all income generated from the property (for example, rent from tenants) should be reinvested into the trust (accumulated) until Aarav turns 25 years old. Mrs. Sharma is currently 60 years old.

In this example, Section 17 of the Transfer of Property Act, 1882, would apply. If Mrs. Sharma's direction for accumulation extends beyond 18 years from the date of the transfer or beyond her lifetime, whichever is longer, it would be void to the extent of the excess period.

Since Mrs. Sharma is 60, let's assume she lives for another 25 years. The direction for accumulation would be valid for 25 years (her lifetime) but not beyond. If Aarav is currently 10 years old, the direction to accumulate until he turns 25 (which is 15 years from now) is valid, because it does not exceed either 18 years or Mrs. Sharma's lifetime.

However, if the direction was to accumulate until Aarav turns 40, this would be invalid under the act, as it exceeds both the 18-year period and Mrs. Sharma's lifetime (assuming she does not live beyond 90 years old).

Exceptions to this rule would include if the accumulation was directed for paying off debts, providing for children, or maintaining the property, in which case the accumulation could continue as directed.