Section 173 Succession Act: Annuity created by will payable for life only unless contrary intention appears by will

Section 173 of Indian Succession Act: Annuity created by will is payable for life only unless contrary intention appears

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

Where an annuity is created by will, the legatee is entitled to receive it for his life only, unless a contrary intention appears by the will, notwithstanding that the annuity is directed to be paid out of the property generally, or that a sum of money is bequeathed to be invested in the purchase of it.

Illustrations:

(i) A bequeaths to B 500 rupees a year. B is entitled during his life to receive the annual sum of 500 rupees.

(ii) A bequeaths to B the sum of 500 rupees monthly. B is entitled during his life to receive the sum of 500 rupees every month.

(iii) A bequeaths an annuity of 500 rupees to B for life, and on B's death to C. B is entitled to an annuity of 500 rupees during his life. C, if he survives B, is entitled to an annuity of 500 rupees from B's death until his own death.

174. Period of vesting where will directs that annuity be provided out of proceeds of property, or out of property generally, or where money bequeathed to be invested in purchase of annuity.-

Where the will directs that an annuity shall be provided for any person out of the proceeds of property, or out of property generally, or where money is bequeathed to be invested in the purchase of any annuity for any person, on the testator's death, the legacy vests in interest in the legatee, and he is entitled at his option to have an annuity purchased for him or to receive the money appropriated for that purpose by the will.

Illustrations:

(i) A by his will directs that his executors shall, out of his property, purchase an annuity of 1,000 rupees for B. B is entitled at his option to have an annuity of 1,000 rupees for his life purchased for him or to receive such a sum as will be sufficient for the purchase of such an annuity.

(ii) A bequeaths a fund to B for his life, and directs that after B's death, it shall be laid out in the purchase of an annuity for C. B and C survive the testator. C dies in B'S lifetime. On B's death the,fund belongs to the representative of C.

Legal Commentary & Landmark Judgments: Section 173

Section 173 establishes the statutory presumption that an Annuity created by will is payable for the life of the annuitant only, unless a contrary intention appears.

Presumption of Life Duration: An annuity created by will is payable for the life of the annuitant only, terminating immediately upon the death of the annuitant.
Perpetual Annuity Exception: An annuity is perpetual only if the will expressly directs that it shall be perpetual or directs that a fund be purchased to produce the annuity for the annuitant and his heirs.
Charge on Estate: The annuity constitutes a charge on the income and, where necessary, the corpus of the testator's estate during the annuitant's lifetime.

Key Landmark Precedents:

F.S. Gandhi v. Commissioner of Wealth Tax (1990) 3 SCC 624: The Supreme Court delivered an authoritative ruling on Section 173, holding that a testamentary annuity is prima facie a personal life interest that extinguishes upon the death of the beneficiary.
Commissioner of Wealth Tax v. Estate of Late Vikramsinhji (2014) 14 SCC 278: Affirmed that unless a will contains words of perpetual inheritance, testamentary annuities terminate with the annuitant's life under Section 173.

Courtroom Practice & Strategic Litigation Guidance:

If representing the heirs of a deceased annuitant seeking to continue receiving annuity payments, counsel must demonstrate that the will directed a permanent capital fund to be purchased for the annuitant's estate; absent such terms, Section 173 terminates payments upon death.

Section 173: Annuity created by will payable for life only unless contrary intention appears by will

Section 173 of Indian Succession Act: Annuity created by will is payable for life only unless contrary intention appears

Legal Commentary & Landmark Judgments: Section 173