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All General India internship Law Transfer of Property Act

Conditions restraining Alienation under the Transfer of

Property Act, 1882
February 14, 2020  37904  0

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This article has been written by Ishaan Banerjee from Vivekananda Institute of Professional
Studies, affiliated to Guru Gobind Singh Indraprastha University. This article explores the
basics of the Transfer of Property Act 1882, along with the concept of alienation. We will
also examine the conditions and exceptions relating to the restriction of alienation under
this Act.

Table of Contents

1. Introduction
2. What is the transfer of property according to law?
2.1. What can be transferred?
2.2. Who is competent to transfer?
3. What is alienation?
4. Can alienation of property be restrained?
4.1. Types of restraints
4.1.1. Absolute Restraints
4.1.2. Partial Restraints
4.2. Exceptions to the restraints
4.2.1. Lease
4.2.2. Married Woman
4.3. Repugnant conditions
4.3.1. An exception to Section 11
4.4. Positive and negative conditions
4.5. Difference between Section 10 and Section 11
4.6. Condition of insolvency
5. Conclusion
6. References

Introduction
The Transfer of Property Act, 1882 is an Act laying down the rules and regulations
regarding the transfer of property among persons in India. It explains how a transfer of
property is completed and the conditions under which transfer may be carried out. An
understanding of the basic terms of this Act along with exploring alienation and its history
would be important in understanding the conditions and exceptions involved in the restraint
of alienation.

What is the transfer of property according to law?

Section 5 of the Transfer of Property Act, 1882 has several conditions for an act to be
defined as a ‘transfer of property’-

A ‘living person’ must convey property. Conveying essentially means giving a title of
ownership on the property to the transferee. A living person has been defined in the
same section to include company, association or a body of individuals whether it has
been incorporated or not.

The conveyance of the property can be carried out in both the present and the future.

This conveyance may happen towards one or more other living persons, including
himself.

What can be transferred?

It is not explicitly stated in the Act regarding what is ‘property’ or what can be transferred.
Rather, the Act states that property of any kind may be transferred subject to exceptions
given under Section 6. The property that can be transferred includes both movable and
immovable property, as well as intangible property like tenancy, copyrights etc.

Who is competent to transfer?

Section 7 of the Transfer of Property Act categorizes persons competent to transfer as-

Every person is competent to contract under the Indian Contract Act, 1872 and
entitled to the transferable property.

A person who is authorised to dispose of transferable property that he does not have
the ownership to.

This property can be transferred wholly or partly, absolutely or conditionally, with regard to
the extent of the law and circumstances. The property, as stated above may be conveyed
to any living person including a company, association or a body of individuals whether
incorporated or not. Under Section 13, even an unborn child can be the transferee of the
property.

What is alienation?
Alienation means transferring of property. This transfer of property can be through gifts,
sales and mortgages. Under Hindu Law, no person of the Joint Hindu family, not even the
Karta, has the full power to alienate the joint family property or his own interest in the joint
family property without the consent of all coparceners. In the case of separate property, a
Hindu can alienate that property whether it comes under Dayabhaga or Mitakshara school.
This power is absolute.

Earlier, under the classical law, the father or the Karta had the power to alienate the whole
joint family property without the consent of the other coparceners, and that is why there
have been certain conditions added for the situation where a Karta or father can do so.

Can alienation of property be restrained?

Section 10 to 18 of the Transfer of Property Act, 1882 state the rules for alienation of
property-

Section 10 lays down that where the transferee is absolutely restrained from transferring
his interest in his property to another person because of a condition which came along
 when the property was transferred to the transferee, then this condition will be made
void. The transfer, from the transferor to the transferee would remain valid.

For example, A transfers some property to B as a gift but with the condition that while A
is alive, B must not transfer the property to any other person. This condition will be held
void as it absolutely restrains B from transferring his interest in the property to another
person.

This is commonly known as the ‘rule against alienability’. The Transfer of Property Act is
based on the principle that there can be a free transfer of property and has been
specifically made with regard to free transfer. If conditions restraining transfer are imposed,
then the free transfer would be restricted and there would be no use for the Transfer of
Property Act.

However, only conditions mandating ‘absolute restriction’ are void. There are conditions
which call for partial restraint to be observed with regard to the transfer of property. If we
are to determine whether a condition is absolute or partial, then one must look at the
substance of the condition, and not merely the words. Therefore, restraints can be
classified into two categories.

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Types of restraints

Absolute Restraints
An absolute restraint is such a restraint which completely takes away the right of the
transferee to alienate or dispose of the property. The transferee can now no longer
transfer his interest in the property to another person and he has no freedom to do what
he wants with the property in his capacity as the owner of the property.

Section 10 stipulates that any condition imposed on the transferee which would amount
to an absolute restraint on the right of the transferee to dispose of his interest in the
property shall be void. The property must be transferred to the transferee subject to the
condition.

In Rosher v. Rosher (1884) 26 Ch D 801, A made a gift of a house to B, and gave a

condition that if B decides to sell the house during the lifetime of A’s wife, she should
have the option of purchasing it for Rs 10000, while the market value of the house was
set at Rs 10,00,000. This condition was held to be an absolute restraint and was
declared void.

In Kannamal v. Rajeshwari, AIR 2004 NOC 8 (Mad), a life estate was to be created in
favour of ‘M’, but the transferor gave an absolute restriction along with the property
transfer to M, whilst divesting himself of all his interests in the property. This restraint
was held to be void as there was an absolute transfer.

In Mohd Raza v. Abbas BandiBibi,(1932) 59 IA 236, a condition imposing restriction for a

particular time or transfer to a specific person has been held to be void.

Partial Restraints

A partial restraint is a condition which partially takes away the right of the transferee to
dispose of his interest in the property. Here, the right is not taken away substantially.
Section 10 does not explicitly talk about partial restraints. A condition imposing partial
restriction is valid.

In Mata Prasad v. Nageshwar Sahai (1927) 47 All 484, there was a dispute regarding
succession between nephew and widow. A compromise was formed that the widow had
possession of the property while the title for the same was given to the nephew with the
condition that he was restricted from alienating the property during the widow’s lifetime.
It was held that the compromise and the condition were valid and prudent in the present
case.

Exceptions to the restraints

Lease

A lease is a transfer of property wherein the lessee only has the right of enjoyment of the
property, while the ownership right is still with the lessor. Conditions imposing restrictions
are valid in the case of a lease, where the condition is for the benefit of the lessor or those
claiming under him. In Raja JagatRanvir v. Bagriden, AIR 1973 All 1, a condition in the
lease that the lessee shall not sublet or assign was held to be valid.

Married Woman

When the property is to be transferred to a married woman, who is not a Hindu,

Mohammedan or Buddhist, then the condition restricting alienation can be valid.

Repugnant conditions
Section 11 of the Transfer of Property Act contains conditions which are inconsistent with
the nature of the interest transferred are repugnant conditions. These conditions come
with the transfer when the transfer confers to the transferee, absolute interests in the
property. Any condition with a transfer of absolute interests in the property will be void.

When a property is transferred absolutely, it must be transferred along with all its legal
incidents. In Manjusha Devi v. Sunil Chandra, AIR 1972 Cal 310, the parties entered into
a sale for a piece of land. In the sale deed, it was mentioned that the buyer could only
use the land for setting up a factory for jute textile manufacturing. It was held that this
condition was invalid as the absolute interests in the land had been transferred to the
buyer and he could use it as he pleased.

An exception to Section 11
If the transferor has another piece of immovable property, he may, for the benefit of that
property, impose conditions of restrictions on the transferee’s right of enjoyment. For
example, A has two properties: X and Y. A sells them to B with the condition that a portion
of X, adjoined to Y, shall be kept open for the benefit of Y. This condition will be valid.

Positive and negative conditions

Positive conditions: These are those conditions imposed on the transfer where the
transferor imposes a condition on the transferee to do some act. For example, A
transfers land to B, on the condition that he shall maintain and keep filling up the well
on that plot of land. This condition is positive.

Negative conditions: These are those conditions imposed on the transfer when the
transferor imposes a condition on the transferee to not do some act. For example, A
transfers land to B, on the condition that he shall leave open a four feet wide space on
the land, and would not build anything on it.

Difference between Section 10 and Section 11

Section 10 specifies that in a transfer with condition that absolutely restrains the
alienation of the property by the transferee, the condition will be deemed to be void.

Section 11 specifies that in a transfer where absolute rights in the property have also
been alienated to the transferee, and where a condition is imposed that the transferee
cannot, in spite of having the absolute right in the property, do an act for his enjoyment
of the property, such condition will be deemed to be void.

Thus, the differences in these sections are that in Section 10 the condition is deemed
void due to absolute restrainment and in Section 11, the condition is deemed void due to
the transfer being of absolute nature.

Condition of insolvency
Section 12 provides that when the transferee becomes insolvent, and if he has some
interest in the property that was transferred to him by the transferor, the transferee still
would not lose his interest in the property. Hence, any condition stating that transferee
shall lose the interest in the transferred property on insolvency and this interest shall be
reverted back to the transferor shall be void.
 However, this section does not apply to a condition on a lease for the benefit of the
lessor or those claiming benefit under him. However, in Smith v. Gronow (1891) 2 QB
394, if lessee assigns the lease and then is rendered insolvent, then this condition will
not apply.

Conclusion
The Transfer of Property Act, 1882 has been made for the regulation of the free transfer of
property in India. This transfer can be in the present or the future and must be between
living persons. This article also explores what can be transferred under this Act, and who
are the ones competent to transfer. The concept of alienation was also explored. Earlier,
under the classical law, the father or the Karta had the right to alienate the joint family
property without the consent of the coparceners, but now conditions have been introduced
to regulate this.

Section 10, 11 and 12 contain certain conditions under which restraining of alienation of
the property by the transferee is void. It also has exceptions where these conditions may
be valid. Primarily, under Section 10, conditions of restraint can be classified into two
categories: absolute and partial. Whether a condition is absolute or partial is determined by
the substance of that condition, not merely the words. This article explored other
conditions such as positive and negative and insolvency, along with their exceptions.

References
[1] https://www.lawctopus.com/academike/restraints-on-transfer/#_edn40

[2] https://www.legalbites.in/restraints-transfer-section-10/

[3] https://www.lawctopus.com/academike/alienation-of-property/

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TAGS Can alienation of property be restrained? Exceptions to the restraint Types of restraints What is alienation?

What is the transfer of property according to law?

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