TRANSFER SUBJECT TO A CONDITION OR

LIMITATION
(Term paper towards partial fulfilment of the project assessment in the subject of Property
Law)

Submitted By: Submitted To:

Siddharth Varshney Ms. Rosmy Joan
B.A. LLB.(Hons.) Faculty of Property-
Semester – IV Law
Roll No. 1249

NATIONAL LAW UNIVERSITY, JODHPUR

WINTER SESSION
(JANUARY-MAY, 2016)
 TABLE OF CONTENTS
Abstract ...................................................................................................................................... 4

SIGNIFICANCE OF THE STUDY........................................................................................... 5

Object and Scope of the Study ............................................................................................... 5

Research Methodology .......................................................................................................... 5

Chapter -1................................................................................................................................... 7

Introduction ............................................................................................................................ 7

Chapter- 2................................................................................................................................... 9

Transferred Subject to a condition or limitation .................................................................... 9

Chapter- 3................................................................................................................................. 11

Restraint On Transfer ........................................................................................................... 11

Chapter- 4................................................................................................................................. 14

Agreements in Restraint on Alienation ................................................................................ 14

Categorisation of restraints .............................................................................................. 14

Absolute restraint .......................................................................................................... 15

Partial restraint ................................................................................................................. 17

Chapter- 5................................................................................................................................. 18

Applications of the Section .................................................................................................. 18

Application Of The Section To Gifts ............................................................................... 18

Application Of The Section To Partitions ....................................................................... 19

Chapter- 6................................................................................................................................. 22

Exceptions to the general rule .............................................................................................. 22

Lease ................................................................................................................................ 22

Married Women ............................................................................................................... 23

Repugnant conditions....................................................................................................... 24

Chapter- 7................................................................................................................................. 26

Conclusion ........................................................................................................................... 26

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 ACKNOWLEDGEMENT

On the completion of this project I find that there are many persons to whom I would like to
express my gratitude, since without their help and co-operation the success of this educative
endeavour would not have been possible.

I welcome this opportunity to express my sincere gratitude to my teacher and guide, Mr. S.K.
Kaushik, Faculty of Legal Theory, who has been a constant source of encouragement and
guidance throughout the course of this work.

I am grateful to the IT Staff for providing all necessary facilities for carrying out this work.
Thanks are also due to all members of the Library staff for their help and assistance at all
times.

I am also grateful to all my friends and colleagues for being helpful in their differences and
for their constant support.

I express my deepest gratitude to my parents Mrs. Snehlata Varshney and Mr. Radha Mohan
Varshney, who have been the real driving force for this work.

Siddharth Varshney

3|Page
 ABSTRACT

The ownership and right to transfer are inseparable from one another. An absolute restraint,
thus, on that power is not a favourable to the nature of the property, and an exception to the
very core of the grant. The essential right of the ownership of property is that, it provides for
free power of alienation. Alienation of such property cannot be made upon the condition or
limitation that the alienee shall not alienate the property to anyone.

Such a condition or limitation is void as per section 10 of the Transfer of Property Act,
because, when a transferee obtains the property by transfer, he has a power to alienate it to
any person by the law. If such a condition or limitation were valid in law, then he would be
denied with all the powers that the law provides him; this would be unreasonable, and
therefore, such a condition or limitation is declared to be void. The research paper covered
the in-depth analysis of the section 10 of the Act in 3 chapters as follows; first; deals with the
transfer subject to condition or limitation, second; deals with the agreements in restraints on
transfers and last chapter; deals with the application of section to gifts.

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 SIGNIFICANCE OF THE STUDY

OBJECT AND SCOPE OF THE STUDY

Understanding what the role the right to exclude plays in defining property is important for
several reasons. First, having a better grasp of the critical features of property may promote a
clearer understanding of the often-arcane legal doctrine that surrounds this institution.
Second, understanding the domain of property is an important preliminary step in developing
a justification or critique of property from the perspective of distributive justice. Third,
formulating a more precise conception of property may be necessary in order to offer a
complete account of constitutional provisions that protect “property.” In any event, for those
who are learning the concept of the law of property, the question is one of intrinsic interest,
whether or not it has any payoff in resolving more immediate concerns.

Ownership of property carries with it certain rights, such as the right to have the title to the
property, a right to possess and enjoy it to the exclusion of everyone else, and a right to
alienate it to the exclusion of others without being dictated to. Sections 10 to 18 of the
Transfer of Property Act, 1882 contain the first set of rules that have to be observed while
alienating a property. Since it is a principle of economics that wealth should be in free
circulation to get the greatest benefit from it, these Sections provide that ordinarily there
should be no restraints on alienation.

This project seeks to analyse the rules regarding transfer of property which talk about
conditions restraining alienation of property once it is transferred. Firstly I have tried to look
into the general provision that all such conditions should be void and then will talk about
partial restraints and other conditions which are valid. Finally, conditions restraining
enjoyment of property which can be enforced will be discussed. I have analysed the law in
light of decided Supreme Court and major High Court cases.

RESEARCH METHODOLOGY

The methodology of research used in this project is not just one single type of method but a
combination of methods. Descriptive method was used to carry out the research on this topic.
It included fact finding enquiries. As researchers, we have largely based our studies on the
secondary sources and the materials available from such sources. The study largely focused

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on the analysis of the decisions of the court thereby trying to bring forth the better
interpretation of the provisions of the Act. Thus, the project has also been completed with the
large support of the subject of Interpretation of Statutes. But simultaneously analytical
method of research was also used to use the facts or information available to make an
analytical evaluation of the material.

CHAPTERISATION PLAN

The project has been divided into seven chapters where each highlight different subjects and
concerns relating to the topic of the study, i.e., Transfer subject to a Condition or Limitation.
Following is the brief outline and description of the question dealt with in each of the
respective chapters.

The first chapter is the introductory chapter titled “Introduction”. This chapter briefly
describes the right of the owner of the property and different sections related to the when
conditions or limitations are allowed and not in respect of transfer of property.The chapter
mainly highlights the various sections under The Transfer of Property of Act, 1882.

The second chapter titled “Transfer subjected to condition or Limitation” deals with, in detail,
the provisions relating describing conditions and limitations for transfer like section 10 of TP
Act.

Chapter 3 titled “Restrain on Transfer” discusses about section lays down that where property
is transferred subject to a condition or limitation absolutely restraining the transferee from
parting with or disposing of his interest in the property, the condition or limitation is void.

Chapters 4 in essence discuss the agreements in restrain of alienation, what will be the
position of such contract in eyes of law, whether it would be valid or not. Moreover, restrain
is categorizes into the two categories partial and absolute; which are briefly discussed in the
chapter.

The fifth part of this project deals with application of the section to different deeds like gift,
partition. The sixth chapter discusses the exception to this rule and the reasoning behind
them. The final chapter titled “Conclusion” briefly discusses the whole project and finally
sums up the current position as regards transfer subject to conditions and limitations after
critical analysis of various case laws and opinions on the matter.

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 CHAPTER -1

INTRODUCTION

Ownership of the property carries with it certain basic rights, such as a right to have the title
to the property, a right to possess and enjoy it to the exclusion of everyone else, and a right to
alienate it without being dictated to, save in accordance with a provision of law. An absolute
right to dispose of the property indicates that the owner can sell it for consideration or can
donate it for religious or charitable purposes he may gift it to anyone, mortgage it or put it up
for lease. Save with the help of law, no other person can interfere with this power or right of
the owner or dictate to him, what should be the manner of alienation, should he alienate or
not, or even what kind of use it should be put to. In short, this right of alienation, that is one
of the basic rights of the owner, cannot be unreasonably encroached upon by anyone through
a private agreement. This general rule is applicable despite there being an express contract to
the contrary, and prevents the transferor from controlling the power of alienation of the
transferee once the interest in the property is transferred.

The principle underlying this section is that a right of transfer is incidental to, and inseparable
from, the beneficial ownership of property. An absolute restraint, therefore, on that power is
repugnant to the nature of the estate, and an exception to the very essence of the grant. It is
the essence of the ownership of property that it confers free power of alienation. Alienation of
such property cannot be made upon the condition or limitation that the alienee shall not
alienate the property to anyone. Such a condition or limitation is void, because, when a
transferee obtains the property by transfer, he has a power to alienate it to any person by the
law. If such a condition or limitation were valid in law, then it would oust him of all the
powers which the law gives him; this would be against reason, and therefore, such a
condition or limitation is declared to be void. The rule laid down in this section, merely, that
where property is transferred, subject to a condition or limitation, absolutely restraining the
transferee from parting with or disposing of his interest in the property, the condition or
limitation is void, is founded on grounds of public policy to make the property alienable,
thus, allowing its free circulation and disposition. 1 Rule against property as embodied in

1
Jagdeo Sharma v. Nandan Mahto, AIR 1982 Pat 32

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Section 14 of the Transfer of Property Act cannot have any application to the creation of an
easement grant and more over the Transfer of Property Act is not concerned with easement.2

The section is applicable only to cases where the restraint on alienation is absolute. The
reason is, that a right of transfer is an incident of ownership of property, and an absolute
restraint is repugnant to ownership. The section provides that a condition or limitation,
absolutely restraining the transferee from parting with or disposing of his interest in the
property is void. The section is silent as to the validity, or otherwise, of qualified restraint on
alienation. It may be taken, therefore, that a condition or limitation imposing a partial
restraint on alienation is not void.3

The partition of pre-existing rights does not annul the right of the coparcener or convert it
into an obstructed right. It merely adjusts or resolves joint rights into several rights. So the
restriction of alienation by the allottee in a deed which is either a partition deed or a family
arrangement deed in respect of joint family properties is not hit by and does not come within
the purview of Section 10 of the Act.4

Where an act or transaction does not amount to a transfer, but the act or transaction imposes a
condition or limitation, absolutely restraining the party, or any person claiming under him,
from parting with or disposing of his interest in the property, the condition or limitation is
void on the principle underlying this section.5

2
Mohini Debi v. Ramdas Banerjee, (1991) 1 CHN 53 (Cal) (DB
3
Ratanlal v. Ramanujdas, AIR 1944 Nag 187
4
Hariram v. Ram Asrey, AIR 2006 All 331
5
Prithmi Chand v. Sundar Das, AIR 1946 Pesh 12

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 CHAPTER- 2

TRANSFERRED SUBJECT TO A CONDITION OR LIMITATION

The section applies only to cases where property is transferred.6 It has no application to cases,
where the act or the deed does not transfer property. To constitute a ‘transfer’, there must be a
conveyance by one living person to one or more other living persons within the meaning of
Section 5.

The word ‘condition’ in this section means a condition superadded on a transfer of property,
whereby an interest which is created by the transfer in the property, is to cease to exist, in
case a specified uncertain event shall happen, or in case a specified uncertain event shall not
happen. In other words, the expression ‘condition’ means condition subsequent, which
divests an estate which has already vested. It is to be distinguished from the word
‘limitation’.

The word ‘limitation’ refers to words limiting or defining the nature of the estate created. In
In re Machu, 7 Chitty, J., defined ‘limitation’ as “the definition or circumscription in any
conveyance of the interest which the grantee is intended to take”. Thus, in the case of a
transfer to ‘a person and his heirs and assigns,’ the ‘heirs and assigns’ are not transferees. The
heirs of the transferee take the estate by inheritance from the transferee instead of from
transferor under the transfer, as they do, when the estate is transferred by the transferor to a
person for his life and then to his heirs, and in which case, the heirs take under the transfer
and not by inheritance. In the former case, the transferee may dispose of the estate and his
heirs may get nothing; but, in the latter case, the original transferee can dispose of only his
life-interest, and the remainder passes to his heirs after his death.

Whether a transfer conveys an absolute estate or only a life-interest is a matter of

construction of the instrument of transfer. If the conveyance is to ‘a named transferee and his
heirs,’ the words ‘and his heirs’ are words of limitation, and the limitation being void, the
named transferee takes an absolute estate; but, if the conveyance is to the named transferee
for life and after his death to his heirs, the heirs are the direct objects of an independent and

6
Somithim v. Duggirala Lakshmi (1965) 2 AndhWR 72
7
21 Ch D 838 (842, 843).

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distinct transfer. Thus, in a will, the words ‘putra poutradi krame’ (from generation to
generation) have been held to be words of limitation denoting an estate of inheritance.8

In Madhav Rao v. Balabhai,9 the settlor made a provision for his daughter, during her life, for
her sole and separate use, and after her death in trust for the male heirs of the said daughter.
The settlor died and then the daughter died leaving six sons all of whom were living at the
date of the settlement. The heirs of the settlor contended that the limitation, in favour of the
daughter’s sons after her death was contrary to law and void. It was held that the true
interpretation of the settlement was that the daughter’s sons were the persons in whose favour
an independent gift was made, and they did not take by inheritance from her.

It seems settled, that where by a valid transfer an absolute estate is created in favour of person
but a condition of limitation is imposed which is repugnant to the absolute estate so created
the condition or limitation is void, but the transfer is valid and creates an absolute estate in
favour of the transferee.10 If the context shows an intention to prohibit an alienation, which is
repugnant to the transfer, it is void 11 So, where on a transfer, a condition is imposed
providing that neither the grantee nor his heirs should transfer the property, or any part
thereof, by way of gift, except a gift for religious purposes, which also should not exceed a
given extent, the condition is more consistent with an attempt to restrict the powers of an
absolute owner, and as such restriction is repugnant to the absolute estate and is void.12

A transferor cannot indirectly create interest in the estate of a character unauthorised by law.
Limitations which purport to create an estate, not recognised by law, e.g., an estate tail,
vitiate the transfer,13 to that extent, so that the transferee takes an estate for life and his heir-
at-law succeeds to the estate on his death as an absolute owner. In such cases, it has to be
assumed that the transferor intended to give only a life-interest to the transferee first named.

8
Ram Lal v. The Secretary of State, ILR 7 Cal 304
9
AIR 1928 PC 33
10
Saraju Bala Devi v. Jyotirmoyee Devi, AIR 1931 PC 179
11
Lalit Mohan Singh v. Chukkun Lal, ILR 23 Cal 834
12
Supra, Note 1
13
Juttendromohun v. Ganedromohun, LRIA (Sup) Vol. 47

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 CHAPTER- 3

RESTRAINT ON TRANSFER

The section lays down that where property is transferred subject to a condition or limitation
absolutely restraining the transferee from parting with or disposing of his interest in the
property, the condition or limitation is void. It is a question of substance, not of form,
whether the condition or limitation takes away absolutely the whole power of alienation
substantially. In Rosher v. Rosher,14 the testator devised an absolute estate to his son and
provided that if he sold the property during the lifetime of his wife; she should have an option
of purchasing it at a price which has one-fifth of the market value. This was held to be, in
effect, an absolute restraint and void.15

However much people may desire to keep their property in the hands of particular persons
they cannot succeed in doing so by violating the provisions of this Act. Once the property is
given absolutely to a particular person as transferee, a provision that that transferee shall not
alienate it, is void under this section. This prohibition does not, however, apply where the
property is not given to the transferee absolutely but only for enjoyment or convenience.
There the question does not arise, because the property is not absolutely transferred.16

The question, whether, in a particular case, a condition or limitation is void, depends for
decision upon, whether it imposes an absolute or only a partial restraint within the meaning of
this section. In order to determine, whether the restraint was absolute or partial, the Court has
to gather the intention of the transferor from the contents of the instrument of transfer. If his
intention is to protect the property and detain it and prevent it from passing otherwise than he
intends, or, for all practical purposes, he reserves to himself the power of absolutely
restraining the transferee, or any person claiming under him, from parting with or disposing
of his interest in the property, the condition or limitation, is void.17In other words, where the
restriction, in the instrument of transfer, on the power of alienation, absolutely derogates from

14
26 Ch D 801 (811).
15
Trichinopoly Varthaga Sangam. Ltd. v. Shanmughasundaram, ILR 1939 Mad 954.
16
Mudara v. Muthu, AIR 1935 Mad 33
17
Gomti Singh v. Anari Kuar, AIR 1929 All 492

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the full proprietary right conferred upon the transferee, the restriction is void.18 But a just and
reasonable partial restraint is valid.

In the former case, the condition or limitation amounts to an absolute restraint. Thus, a
condition restraining alienation during a lifetime is invalid.19 In Renaud v. Taurangeau20 the
Privy Council held that a restriction for a period of twenty years is contrary to general
principles of jurisprudence. Where the restriction with respect to time is not unreasonable, the
case is not hit by this section. Whether the restriction is or is not reasonable would depend
upon the facts and circumstances of each case. It is not possible to lay down any hard and fast
rule.

An ekrarnama, which was registered, was entered into consequent on the execution of a sale
deed between the vendor and the vendee, that the latter would re-convey the property to the
former on the return of the consideration-money within five years. This ekrarnama was held
not invalid under Sections 10 and 11 of the Act.21 The condition not to alienate except to
particular persons may be bad, unless, under the circumstances of a particular case, the
limitation does not amount to absolute restraint. In category (3) above where a deed of
transfer provides that the vendee should not transfer the property to any one excepting the
vendor or his heirs the clause is contrary to Section 10 of the Act and is void.22

When an absolute right is transferred in favour of the assignee under sale deed and sale deed
contains a condition limiting that right, restricting the rights of assignee to sell the property
except to assignor, the said clause would definitely come within mischief of Section 10 and it
would be void.23 Where State Government prohibits transfer of regularised land by a person
who has committed encroachment on land of Government or Municipal Boards, after
regularisation for a period of ten years, is valid.24

18
Pratap Das v. Nand Singh AIR 1924 Lah 729 (l
19
Rosher v. Rosher, 26 Ch D 801.
20
LR 2 PC 4
21
Loknath Khound v. Gunaram Kalita, AIR 1986 Gau 52
22
Jagar Nath v. Chhedi Dhobi, AIR 1973 All 307 (309) : 1973 All LJ 202.
23
Bhavani Amma Kanakadevi v. CSIDK Maha Idavaka, AIR 2008 Ker 38 (41);
24
Shiv Paresar v. Municipal Board. Mount Abu. (1997) 1 WLC 443 (Raj).

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Condition not to sell out of the family has been held good in Doe d Gill v. Pearson,25 and In
re Macleay.26 In Mohammad Raza v. Abbas Bandi,27 the Judicial Committee observed that
such restriction is not absolute but partial; it forbids only alienation to strangers, leaving the
transferee free to make any transfer to any person within the ambit of the family. In this case,
in compromise of conflicting claims, a family arrangement was come to; it was agreed that
the lady should take what she claimed upon certain conditions, one of which was that she
should not alienate the property outside the family. Judging the matter upon abstract grounds,
their Lordships, thought that where a person has been allowed to take property upon the
agreement that it shall not be alienated outside the family, those who seek to make title,
through a direct breach of this agreement, could hardly support their claim by an appeal to
high sounding principle. Their Lordships held that a partial restriction upon the power of
disposition would not, in the case of a transfer inter vivos, be regarded as repugnant; and that,
in view of the terms of this section, it would be impossible to assert that such an agreement is
contrary to justice, equity and good conscience.

25
6 East 173
26
LR 20 Eq 186
27
AIR 1932 PC 158

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 CHAPTER- 4

AGREEMENTS IN RESTRAINT ON ALIENATION

The section applies only to a case where property is transferred subject to a condition or
limitation. It contemplates a case of a completed transfer and a condition restricting the
alienation of the estate transferred. It has no application, for instance, to an agreement
affecting the transferee personally. So, where A sells his house to B, and B executes an
agreement that in case he transfers the house, he would sell it back to A for the same price
and to nobody else, unless A declines to purchase it for that price, such an agreement is not
void under this section, as being an absolute restraint on alienation. It is merely a personal
contract between A and B, and as such A can enforce it both against B and the transferee of
B, if he takes the transfer with notice of the contract.28

Although, where property is transferred subject to a condition or limitation absolutely

restraining the transferee from parting with or disposing of his Interest in the property, the
condition or limitation is void, yet, where there is a special personal contract between the
parties, which is binding on them and can be enforced against a transferee with notice, it may
operate as a personal covenant binding the covenant or personally and creating an obligation
enforceable against a transferee from him with notice under Section 40. The Privy Council
has held in Jafri Begum v. Syed Ali Raza,29 in relation to an award that an invalid condition,
agreed to among the parties, may bind them.

It may be stated that, although a condition or limitation, subject to which a property is

transferred, is void, yet, if a subsequent agreement, independent of the transaction of the
transfer of the property itself, is made, it is binding upon the parties.

CATEGORISATION OF RESTRAINTS

Since alienation of property is the sole prerogative of the owner of the property, he is
empowered to sell it at any point of time, for any consideration, to any person, and for any
purpose. There are certain integral components of the very term “alienation” and include
selection purely at the discretion of the transferor or the transferee and the time or

28
Debi Dayal v. Ghasita, AIR 1929 All 667
29
ILR 23 All 383

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consideration for the transfer. A restraint on alienation thus would include a condition that
dictates to him when to sell it, to sell it at how much consideration, or how to utilise the
consideration; to whom to sell or for what purpose he should sell. These restraints can appear
in the following ways:30

 Restraints on transfer for a particular time:

 Restraints directing control over consideration/money;
 Restraints with respect to persons/transferee; and
 Restraints with respect to sale for particular purposes or use of property

ABSOLUTE RESTRAINT

Absolute restraint refers to a condition that attempts to take away either totally or
substantially the power of alienation. 31 Section 10 says that where property is transferred
subject to a condition or limitation which absolutely restraints the transferee from parting
with or disposing of his interest in the property is a void condition. Restraint on alienation is
said to be absolute when it totally takes away the right of disposal. In the words of Lord
Justice Fry,32 “from the earliest times, the courts have always learnt against any devise to
render an estate inalienable.”33

Section 10 relieves a transferee of immovable property from an absolute restraint placed on

his right to deal with the property in his capacity as an owner thereof. As per section 10, a
condition restraining alienation would be void. Section applies to a case where property is
transferred subject to a condition or limitation absolutely restraining the transferee from
parting with his interest in the property. For making such a condition invalid the restraint
must be an absolute restraint.

Two persons purchased securities in their own names with the money belonging to a third
person. And on his instructions they deposited the securities in the name of that person and
also the interest accruing on them in that person’s account. The securities carried the
stipulation that they were not to be transferred. In order to wipe out his liability to another
person, that third person tendered the securities to his creditor by way of satisfaction to hold

30
Dr. PoonamPradhanSaxena, Property Law, 2nd Ed. (Lexis Nexis:Nagpur, 2011)
31
Bhavani Amma Kanakadevi v CSI Dekshina Kerela Maha Idavaka, AIR 2008 Ker 38
32
In re, Parry and Dags (1886) 31 Ch D 130
33
Zoroastrian Co-operative Housing Society v District Registrar Co-opertaive Societies (Urban), AIR 2005 SC
2306

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them as a beneficiary. It was held that from the very beginning a beneficial interest was
created in favour of the person with whose monies the securities were purchased and,
therefore, his beneficial interest was transferable because otherwise the whole transaction
would have been hit by section 10.34

Condition imposing absolute restraint on the right of disposal is a void condition and has no
effect. For example, a person makes a gift of a property to another person (transferee) with a
condition that he will not sell it. This condition imposes an absolute restraint. If the transferee
sells that property, the sale will be valid because conditions imposing absolute restraint are
void. A made a gift of a house to Bwith a condition that if B sold the house during the
lifetime of A’s wife, she should have an option to purchase it, for Rs. 10,000. The value of
the house was Rs. 10,000. This was held to be having the effect of absolute restraint and was
void. 35 The provision of law against absolute restriction on alienation is founded on the
principle of public policy, namely that there should be free transferability of property. A
transfer of property for construction of a college contained a condition that if the college was
not constructed; the property would not be alienated. Rather it would be re-conveyed to the
person transferring it. The condition was held to be void and, therefore, not capable of being
enforced.36

Where the settler intending to create a life estate in favour of his son-in-law ‘M’, handed over
the title-deeds of the said property to M indicating that he had divested himself of all rights in
the property but imposed absolute perpetual restraint on alienation, it was held that the
restraint was void since the transfer was an absolute transfer in favour of M. Under the
provisions of section 10, the sale deed made by the heirs of M in favour of appellants was a
valid sale because the heirs were entitled to ignore the restraint on alienation and deal with
the property as absolute owners.37

The condition restraining lessee from alienating leasehold property is not illegal or void. 38

34
Canbank Financial Services Ltd. V Custodian, (2004) 8 SCC 355
35
Rosher v Rosher, (1884) 26 Ch D 801
36
DhavaniAmmaKankadevi v C.S.I. Dekshina Kerala MahaIdavaka, AIR 2002 Ker 38
37
Kannamal v Rajeshwari, AIR 2004 NOC 8 (Mad)
38
RaghuramRao v Eric P. Mathias, AIR 2002 SC 797

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PARTIAL RESTRAINT

Section 10 has only provided for absolute restraints. It is silent about the partial restraints.
Where the restraint does not take away the power of alienation absolutely but only restricts it
to certain extent, it is a partial restraint. Partial restraint is valid and enforceable. In words of
Sir George Jesel, “the test is whether the condition takes away the whole power of alienation
substantially; it is question of substance and not of mere form…. You may restrict alienation
in many ways, you may restrict it by prohibiting it to a particular class of individuals or you
may restrict alienation by restricting it to a particular time.”

A total restraint on right of alienation is void but a partial restraint would be valid and
binding. This rule is based on sound public policy of free circulation.39

A restriction for a particular time or to a particular or specified person 40 has been held to be
absolute restriction. A compromise by way of settlement of family disputes has been held to
be valid in Mata Prasad v Nageshwar Sahai 41 , although it involved an agreement an
agreement in restraint of alienation. In this case, dispute was as to succession between a
widow and a nephew. Compromise was done on terms that the widow was to retain
possession for life while the title of the nephew was admitted with a condition that he will not
alienate the property during the widow’s life time. The Privy Council held that the
compromise was valid and prudent in the circumstances of the case.

While an absolute restraint is void, a partial restraint may not be. For instance, a partial
restraint that restricts transfers only to a class of persons is not invalid. However, if the
transfer is restricted to being allowed only to specific individuals, then it is an absolute
restraint and hence, void. How is it determined if a restriction is absolute or partial? In order
to determine whether a restriction is absolute or partial, one must look at the substance of the
restraint and not its mere form. Ordinarily, if alienation is restricted to only family members,
the restriction is valid. However, where in addition to that restriction, a price is also fixed
which is far below market value and no condition is imposed on the family members to
purchase, then the restraint is an absolute one and hence, void, although in form, it is a partial
restraint. Even if such a substantially absolute restriction is limited by a time period that is, it
applies for a specific time period only, it remains void.

39
K. Muniaswamy v K. Venkataswamy, AIR 2001 Kant 246
40
Mohd. Raza v Abbas BandiBibi, (1932) 59 IA 236
41
Mata Prasad v Nageshwar Sahai , (1927) 47 All 484

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 CHAPTER- 5

APPLICATIONS OF THE SECTION

APPLICATION OF THE SECTION TO GIFTS

Under Section 126 of the Act, the donor and donee may agree that, on the happening of any
specified event which does not depend upon the will of the donor, a gift shall be suspended or
revoked. But the condition contemplated by that section should not be repugnant to the
provisions of this section and Section 12 of the Act. Therefore, where the gift is made subject
to a condition or limitation, absolutely restraining the donee, or any person claiming under
him, from transferring his interest in the property, the condition or limitation is void. The
reason is, that the provisions of this section and of Section 12 are very general and refer to all
transfers, whether by sale, exchange or gift, or otherwise. The condition imposed upon the
donee must be consistent with the general principles in regard to conditions in transfers
contained in this chapter. So, where a gift transfers full proprietary rights in the property
gifted, and it recites that the donee or his successor shall have no right to transfer the
property, and that if he does transfer it, the transfer would be invalid and the donor or his
successor would have a right to revoke the gift, the condition is void as it is repugnant to the
estate created by the gift.42

Section 126 of the Act further provides, that a gift may also be revoked in any of the cases, in
which, if it were a contract, it might be rescinded, but not so as to affect the rights of a
transferee from the donee for consideration without notice. It is clear, that the condition of
revocation operates only as a personal covenant; it does not restrict the interest of the donee
and is not repugnant to the gift under this section. Therefore, on a gift with a condition, that
the donor shall be at liberty to revoke the gift, if the donee transfers the property without his
consent, the condition is not hit by the provisions of this section. In Ma Yin Hu v. Ma Chit
May,43 the donee executed a registered deed the same day on which the donor executed the
deed of gift by which he agreed not to transfer the property without the consent and
permission of the donor and that, if he did so, he would return the property to the donor; it
was held, that the two documents must be treated as forming part of one transaction, that the
42
Brij Devi v. Shiva Nanda Prasad, AIR 1939 All 221
43
AIR 1929 Rang 226

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case fell within the provisions of Section 126, as, at the time of making the gift, it was agreed
by the donee that the gift would be revoked on his transferring the property without the
donor’s consent, that is, on the happening of any specified event, which did not depend on the
will of. the donor, and that the agreement did not contravene the provisions of this section,
inasmuch as there was a promise to the donor personally, and it was only the donor who
could revoke the gift in his lifetime.

APPLICATION OF THE SECTION TO PARTITIONS

Cases of restraint on partition are dealt with in comment under Section 11. It is to be
observed, however, that this section can be applied only if the partition operates as a transfer
or effect a transfer.

A clause, prohibiting alienation except with the consent of all the members of the tarwad,
provides a definite indication that the document is only an arrangement for maintenance and
not a deed of partition. Such a clause cannot be brushed aside as a clause in restraint of
alienation; for, in a maintenance arrangement, a provision can be made for the different
branches and it can also be provided that they shall not have the right to the properties
allotted to them but to take only the income thereof and that they shall not alienate the
properties without the consent of all the members of the tarwad.44

A lease of immovable property is determined by forfeiture, in case the lessee breaks an

express condition which provides that on breach thereof the lessor may re-enter. 45 The
amendment, made in clause (g) of Section 111 by Act 20 of 1929, makes it clear that a breach
of a condition against transfer will not entail forfeiture unless the condition reserves a right of
re-entry. In view of the said amendment, a condition in a lease that, in case of transfer, the
lease shall be void may be said to be insufficient to determine the lease, and the breach of the
condition may be said only to give the lessor a right to an injunction and damages,46and not a
right to determine the lease.47

The above view is obviously founded on the ground that Section 111 of the Act is exhaustive
of the modes in which a lease can be determined, and that a lease cannot be determined in
any other way.

44
Raman v. Krishnan, AIR 1958 Ker 265
45
Section 111. Clause (g) of the Act.
46
Tamaya v. Timapa, ILR 7 Bom 262
47
Khetra Nath v. Baharali, AIR 1929 Cal 228

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It is, however, to be observed, that the exclusion of leases from the main provision of this
section and Section 12 is based on a very definite principle. The definition of lease, in Section
105 of the Act, begins with the words “a lease of immovable property is a transfer of a right
to enjoy such property”. It is thus nota transfer of the property itself which remains the
property of the lessor. Clearly, the Legislature has recognised, as a fundamental principle,
that the owner of immovable property should be able to transfer, by way of lease, a right to
enjoy such property, without necessarily rendering himself liable to accept, as a tenant, some
person who may, on various grounds, be obnoxious to him. The Legislature has recognised
this principle as of such importance as to override the general principle embodied in this
section, that the owner of an interest in property should not be absolutely restrained from
disposing of his interest.

This section expressly allows in the case of a lease, a condition or limitation, absolutely
restraining the lessee from disposing of his interest in the property. But it does not lay down
what would happen if the condition is broken. It seems to be clear that if the lessor desires
that, on breach of the condition, the lease itself should come to an end, he must insert a
covenant in the lease, providing that, on breach, he shall have the right to determine the lease,
and to re-enter. If such a term is not embodied in the instrument of lease, the lease is not
determined but the question remains whether the transfer in contravention of the terms of the
lease is void or voidable or valid. It seems, that if the transferee from the lessee who has
covenanted not to transfer his interest is recognised by the lessor, the transfer is not hit by the
covenant against alienation in the lease.48

In Sachindra Mohan v. District Magistrate, 49 a dar-taluk patta executed in Tripura State

contained a condition against alienation without permission in favour of an outsider but
reserved no right of re-entry to the lessor. The lessee sold his interest without permission to
an outsider. It was held, that even if the deed be deemed to be operative, the mere fact that, in
the terms, it had been laid down that any alienation without permission shall be void, did not
make the transfer absolutely void. It was observed, that the transfer, in favour of the alienee,
for valuable consideration could not be said to be void, as the right to question the alienation
will be deemed to have been waived under Section 112 of the Act.

48
Khetra Nath v. Baharali, AIR 1929 Cal 228
49
AIR 1956 Tripura 9

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In the former case, the lessee being incompetent to transfer his interest, any transfer by him in
contravention of the terms of the lease, is void. The transferee from the lessee, in such a case
gets no right.50 But, in the second case, a transfer made without consent or permission is
merely voidable at the option of the lessee, although it is true, that the restriction on
assignment prevents the lessee from transferring his interest, in whole or in part, without the
consent of the lessor.

If alienation of the property was restrained and it was leased out then alienation of leasehold
without proper permission of collector would be treated as void. Without declaring alienation
void or determining lease it was not permissible that the collector proceeded to resume
leasehold.51

A stipulation in an instrument, providing that if the interest of the lessee is sold at auction for
arrears of rent due to the lessor, then all agreements entered into between the lessor and the
lessee shall be extinct and stand annulled,—the transaction being a lease and the condition
being obviously for the benefit to the lessor-does not contravene the provisions of this
section.52 In such cases, the covenant runs with the land, so as to be operative not merely
between the grantors and grantees but also between their representatives in-interest and the
holders of derivative titles from them. The only restriction imposed is that the holder of a
derivative title from the lessee would be in peril in the event of a sale of the lessee rights for
arrears of rent.83 When the impugned clause did not place a complete ban on transfer but
only laid down that the interest of all lease holders may be transferred but with the written
permission of the Dy. Commisionerr., there is no contravention of Section 10.53

Where an owner of property leases it under a condition that the lessee shall not transfer his
rights to any one, except, to him for a certain price, the lease does not convey the proprietary
title and what is created is merely a tenancy, and this section does not prohibit such a
transaction.54

50
Jackie v. Venkataramana, 28 IC 904
51
Dinesh Chhapolia v. State of Orissa, AIR 2008 (NOC) 844 (Ori
52
Madhusudan v. Midnapore Zamindari Co., AIR 1919 Cal 942
53
Bola Ram Chaudary v. State of Bihar, AIR 1990 Pat 20
54
Har Dayal Singh v. Nauratan Singh, AIR 1934 All 358

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 CHAPTER- 6

EXCEPTIONS TO THE GENERAL RULE

Section 10 provides two exceptions to the rule against in alienability. First, Section 10 does
not prohibit conditions or limitations in the case of a lease, which are beneficial to the lessor
or those claiming under him. Second, property may be transferred for the benefit of a woman
who is not a Hindu, a Muslim, or a Buddhist, such that she shall not have the power to
transfer the property or change her interest therein during her marriage. This exception is
based on the doctrine of covertures that operated in England in the nineteenth century. There,
women could be given property for their enjoyment without the right to alienate the property
during her marriage. The rule protected women from being forced to alienate their property in
favour of their husbands. However, despite the abolition of the doctrine of covertures in
England, this exception continues to remain on the statute books in India.

LEASE

Conditional transfer is valid in the case of lease where the condition is for the benefit of the
lessor or those claiming under him. Lease is a transfer of a limited interest where the lessor
(transferor) reserves the ownership and transfers only the right of enjoyment to the lessee
(transferee). A lessor can impose a condition that the lessee will not assign his interest or sub-
lease the property to any other person. Such a condition will be valid. This exception is
applicable to permanent leases too. The Supreme Court has held that this section does not
carve out any exception with regard to perpetual or permanent lease. Thus, any condition
restraining the lessee from alienating leasehold property is not invalid.55

A condition in the ease that the lessee shall not sublet or assign his interest to anyone during
the tenure of the lease is valid.56 Similarly, a stipulation in the contract of lease that the lessee
would not sublet the premises and if he does, he would have to pay a fourth of the
consideration as nazaar to the lessor,57 is valid and enforceable. A condition in the lease deed

55
RaghuramRao v Eric P. Mathias, AIR (2002) SC 797
56
Raja JagatRanvir v Bagriden, AIR 1973 All 1
57
Sardakripa v Bepin Chandra, AIR 1923 Cal 679

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that the lessee would compulsorily have to surrender the lease in the event the lessor needs to
sell the property again is valid.58

MARRIED WOMEN

The proviso enacts that property may be transferred to or for the benefit of a woman (not
being a Hindu, Muhammadan or Buddhist), so that she shall not have power during her
marriage to transfer or charge the same or her beneficial interest therein. It recognises another
exception to the restraint on the power of alienation, which may be introduced in marriage
settlements, whereby property may be settled for the separate use of a married woman
without power to transfer the corpus of the estate.

Section 8 of the Married Women’s Property Act III of 1874, provides that a person entering
into a contract with a married woman, with reference to her separate property, may sue and
recover against her to the extent of that property. Full meaning can be given to this section,
without imputing to the Legislature an intention to ignore conditions in restraint of
alienation.59

Statutory effect has been given to the above view by the amended proviso to the aforesaid
Section 8, substituted by Section 2 of the Transfer of Property (Amendment) Act 21 of 1929,
which expressly provides, that a decree passed against a married woman under Section 8
cannot be executed by attachment or sale of property which she is restrained from alienating
during her marriage.

Under the Hindu law, an idol represents a deity or a spiritual being, which is supposed to
exist for ever. Since it is not a natural person, it cannot act like human beings. Therefore, it
cannot, by itself, transfer any property. Such acts have to be done by a trustee, or a manager,
or she bait, on its behalf.

An endowment may be made subject to a condition that the property shall be inalienable,
either by a voluntary or involuntary transfer.

The prohibition against a condition or limitation absolutely restraining the transferee from
transferring the interest transferred to him, as laid down in this section, does not affect the
idol to whom the transfer is made, because an idol by itself is incapable of making any

58
Rama Rao v Thimappa, AIR 1925 Mad 732
59
Goudoin v. Vencatesa, ILR 30 Mad 378

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transfer or disposing of its interest in the property. The disposal, if it has to be made, can only
be made by someone else acting on its behalf. The conditions, under which someone else can
make the disposition, must be governed by some other law and not by this section.

A doner is competent to lay down a condition or limitation that the trustee, or manager, or
Sheba it, acting for the idol, in whose favour the endowment is made, will not be competent
to dispose of the property. If such a condition is imposed, the property cannot be transferred
either by a voluntary or an involuntary sale.60

Ordinarily, property donated for a religious purpose is inalienable, but it is competent to a

trustee, or manager, or Sheba it to incur debts and borrow money for the proper expenses of
keeping up the religious worship, repairing the temple or other property of the idol, defending
hostile litigation, or attacks, and the like objects. The power, however, to incur such debts
must be measured by existing necessity for incurring them.61

REPUGNANT CONDITIONS

Section 11of the Transfer of Property Act deals with repugnant conditions. Repugnant
conditions are those that are inconsistent with the nature of the interest transferred. Section 11
prohibits the imposition of any condition directing the transferee to apply or enjoy in a
particular manner, any interest that is transferred absolutely in a particular manner. Such
conditions or directions are void and the transferee is entitled to receive property as if such a
condition did not exist in the first place. The transfer itself is, however, not invalidated. These
conditions are inconsistent with the nature of the interest transferred. Therefore, they are
called repugnant conditions.

Illustration: A and B enter into a sale deed for a piece of land. The terms of the sale deed
provides that the piece of land should be used for the purposes of starting a factory for the
manufacture of jute textiles only. This condition is invalid. B can enjoy the land in any
manner that he chooses and the sale deed itself continues to be valid.

Thus, no life interest can be created in favour of a vendee in a contract of sale. 62 A gift
restraining enjoyment is void.63 Payment of certain amount to the vendor out of the profits of

60
Mukundji Mahraj v. Persottam Lalji, AIR 1957 All 77
61
Prosunno Kumari v. Golab Chand, LR 2 IA 145
62
Manjusha Devi v Sunil Chandra, AIR 1972 Cal 310
63
N. Manekal v BaiSavita, CA No 959 of 1963 decided on Oct 1(SC)

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property by way of rent after sale is illegal.64 A direction in restraining of partition in a gift or
will is void even thought the restriction is limited in time to the sons attaining majority.65

The exception to this rule according to the second paragraph of Section 11 is that if the
transferor owns another piece of immovable property, he may, for the benefit of that
property, impose a restriction on the enjoyment of that by him. In such a case, the restriction
on the enjoyment of the interest would be valid and saved by Section 11 of the Transfer of
Property Act.

64
State of Rajasthan v Jeo Raj, AIR 1990 Raj 90
65
Umrao Singh v Baldeo Singh, AIR 1933 Lah 201

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 CHAPTER- 7

CONCLUSION

The equitable principle of law, enacted in this section, governs the restraint upon the power
of alienation, independent of the provisions of this Act. Any covenant against alienation is
repugnant to the nature of the estate created by permanent conveyance of property, by sale,
gift or otherwise. In the case of permanent dedication of properties to deities, the sole object
of dedication is performance of services and worship of the deities. As a necessary corollary
to this paramount object is the power of the trustee, or manager, or she bait, in charge of the
dedicated property, to alienate, wholly or in part, such property for the purpose of keeping up
the religious service and for the preservation of the property. Such trustee, or manager or she
bait has undoubted power to incur debts and alienate the dedicated property in a case of need,
or for the benefit of the estate. If such a trustee, manager, or a Sheba it is to have no such
power, the very object of dedication would be frustrated and the worship of the deities may
suffer. Therefore, a gift to a deity with condition not to alienate, even when pressing necessity
or benefit to the estate may demand it, will render ineffectual the entire dedication, since the
preservation of the property, meant to sub serve the interest of the deity, will prevail over the
legitimate interests of the deity,—a fact hardly consistent with the intention of the donor and
the interest sought to be created by the instrument. In the absence of a power of alienation,
the deities, in many cases, will languish and may eventually vanish, though the gifted
property may thereby remain intact. Having in view, the primary object of the dedication, it
would be unreasonable to assume that, by generally restricting the power of alienation, the
donor intended to abrogate the well established principle that a trustee, or manager, or Sheba
it can alienate the dedicated property for legal necessity or the benefit of the estate. For these
reasons, conditions or limitations against alienation are considered void. This section, does
nothing beyond laying down the well-recognised principle, upon which it is based, and this
principle applies also to cases which do not directly come within the purview of this Act. It
must be held, therefore, that restriction on the power of the trustee, or manager, or Sheba it, to
alienate the dedicated property is void and inoperative.

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