Condition Restraining Alienation

Transfer of Property Act, 1882

 

TANMOY MUKHERJEE INSTITUTE OF JURIDICAL SCIENCE

Dr. Tanmoy Mukherjee

[Advocate]

 

CONDITION RESTRAINING ALIENATION (SECTION- 10):

TANMOY MUKHERJEE

[ADVOCATE]

 

Transfer of Property from one person to another includes the right to own, right to enjoy and the right to dispose\ alienate without any restraint or restriction\ condition. If the transferor imposes any condition/clog on the transferee not to transfer further, such clog/ condition is called “Rule against Inalienability” and is void under Section 10 of the T.P Act and the transferee can simply ignore/deny such condition. In other words, further/ subsequent transfer by the transferee is valid and the condition imposed on transferee by the transferor is void. Section 10 runs as follows-

‘Where property is transferred subject to a condition or limitation 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, except in the case of lease where the condition is for the benefit of the lessor or those claiming under him: Provided that property may be transferred to or for the benefit of a woman (not being a Hindu, Mohammedan or Buddhist), so that she shall not have power during her marriage to transfer or charge the same or her beneficial interest therein.’

Illustrations:

(I)  A sells his property to B with a condition that if B sells the said property in future, he must sell to A or to any member of A’s family, on the rate of which he purchased. This is a restraining condition. It is not valid.

(ii) Two brothers partitioned their ancestral property. The partition deed has a clause that if any one of the brothers wants to sell his share, he must sell his property to the other brothers. This condition is invalid.

(iii) A makes a gift of the property to B, with a condition that B must enjoy the property during his life time. If he wants to sell the property, he must sell to A only at the half of the market value. The condition is invalid.

Ingredients:

To attract Section 10, the following ingredients are to be satisfied:

(i)  Any transfer of property the subject matter is transfer of property or there must exist transfer of property.

(ii) The transfer is made/affected by imposing a condition or limitation; and

(iii) The condition/limitation imposes absolute restraint on alienation by the transferee.

Effect:

The transfer from transferor to transferee is valid, but the condition imposed on transferee is void.

Underlying Principle:

The principle underlying in this section is that a right of transfer is incidental to, and inseparable from, the beneficial ownership of the property. An absolute restraint on that power is repugnant to the nature of the estate and exception to the very essence of the grant.

The principle contained in Section 10 is a self-evident proposition. One cannot transfer a property to its total destruction. The right of owner does not include the liberty to destroy the ownership. The owner can destroy the property if he so likes but he cannot destroy the ownership. Whosoever is the owner of the estate, he has freedom to deal with the property in the same way as was done by the ex-owners. The owner has full liberty to transfer a property but has no right to make it non- transferable forever. It is not reasonable exercise of the liberty to make the property non alienable with the help of condition or limitation in this regards.

Kinds of Restraint-

The condition restraining alienation is mainly of two kinds, they are-

(i) Absolute restraint, and

(ii) Partial restraint.

 

(i) Absolute restraint:

As stated above if the transferor while transferring the property imposes on transferee not to transfer further such clog is called absolute restraint.

 

Illustration:

Mr. A sells his property to Mr. B with a condition that Mr. B. should not dispose it to anybody. It is absolute condition which restrict the transferee absolutely to transfer. So it is void.

 

Exception:

The rule that absolute restraint is void, is subject to certain exception as stated below-

(i) Lease

(ii) Married women

 

Lease:

In case of a lease, the lessor can impose a condition that the lessee shall not sublet the property of sells his lease hold interest such condition is valid.

Married women:

The second exception is made in respect of married who is not a Hindu Buddhist or Muslim; a property may be transferred to or for the benefit of a married woman, so that she shall not have power during her marriage to transfer or charge same or beneficial interest herein.

(ii) Partial Restraint:

Where a property is transferred from one person to another, if the transferor imposes a condition\clog restriction on transferee, whereby the transferee is partially abandoned/ restricted from alienating the property such restriction is called partial restraint. For instance, in a settlement of the joint family property, if the members are required to sell their share only to other family members and not allowed to sell property to the outsiders, such restraint is called partial restraint and is valid.

E.g.

A transfers his property to B with a condition that if B transfers the property, A shall have a right of pre- emption, is valid.