Restraint on Alienation under TPA, 1882

Author: Prasoon Sekhar, ICFAI University

Restraint on Alienation under Transfer of Property Act, 1882

Introduction

The right to ownership of property includes some applied rights like the right to have title over the property, right to the enjoyment of the property, and the right to the alienation of it keeping in mind the provisions of law. Austin has defined ownership as the right to indefinite uses, unlimited duration, and unrestricted disposition of the property. Fredrick Pollock has defined ownership as a complete allowance of power of usage and disposal.

The Transfer of the Property Act, 1882 provides the laws regarding the transfer of property in India. It also provides the conditions under which transfer needs to be carried out and when the transfer of property is completed.

What is Alienation?

Alienation is defined as a voluntary and complete transfer of title of property from one person to the other. The right to alienation is considered an essential part of ownership. A person having ownership of the property has a right to sell it for an amount of consideration or give it for free as a gift or for charitable purposes. Even the property can be put on lease or mortgages.

In the earlier days, the Karta had the absolute right to alienate the property without due permission of coparceners under Hindu Law. But with the judicial and legislative developments, now even the Karta does have the right to alienate the property or even his part without the approval of all the coparceners. If it is separate property, absolute power has been given in Mitakshara and Dayabhaga schools to alienate his property.

The rules regarding the alienation of property are provided under Sections 10 to 18 of the Transfer of Property Act, 1882. These sections put various restrictions on alienation.   

Conditions Restraining Alienation

Section 10 of the Act provides: “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 a 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 women (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.”

 This is generally refereed as ‘rule against alienability’. The Act is based on principle of free transfer of property and free transfer will be prohibited if conditions restraining further transfer are imposed. This can be better understood with the help of an illustration. Suppose, A while selling a property to B and imposes a condition that he cannot sell the property further, the conditions restraining alienation is void.

Types of Restraint

Absolute Restraint: It is a type of restraint in which the right of alienation of transferee is completely taken away. He has no right to transfer the property even being the owner of the property. As provided under this section, these types of restraints are considered void. To fall under this particular category, the property must have been transferred by the transferee subject to the condition of absolute restraint.

In the case of Renand v. Tourangeaon[1], a condition restraining alienation for a time of twenty years was considered as an absolute restraint and hence void.

In the case of Rosher v. Rosher[2], a person ‘X’ gifted a house to another person ‘Y’ having a value of Fifteen Thousand pounds. A condition was made that if ‘Y’ sells the house during the lifetime of ‘X’s’ wife, she could have an option to purchase the same for Three Thousand pounds. The condition was considered as complete restraint and hence void.    

In the case of Md. Raza & Ors. v. Abbas Bandi Bibi[3], a condition in which a transfer of property was restricted to a particular person for a certain period of time was considered as void.

Partial Restraint: It is a condition in which the right of the transferee to alienate a property is not completely taken away, but it is taken away to a partial extent. There is no as such provision related to partial restraints. It is valid in the eyes of law.

In the case of Zoroastrian Co-operative Housing Society Ltd v. District Registrar Co-operative Societies[4], bye-laws for the society had conditions that only Parsis could be the member of the society and also, no member could alienate his property to non-Parsis. The Apex Court did consider the same as absolute restraint and it was considered valid.

In the case of Mata Parsad vs Nageshar Sahai[5], a dispute related to succession arose between widow and nephew. A compromise was made in which the title of the property was given to the nephew and possession of the property was given to the widow. There was a condition that the nephew could not alienate the property before the death of the widow. The condition was held as valid.

Exceptions of Restraint

Section10 provides two conditions against the ‘rule against alienability’. Firstly, In the condition of the lease when the condition is for the profit of lessor or the ones claiming under him. Secondly, transfer for the benefit of a woman who is not a Hindu, Muhammadan, or Buddhist so that she does not have the power to transfer of changing her interest during her marriage.

Lease: A lease is a condition in which the ownership or title of the property lies with the lessor and only the right of enjoyment is transferred to the lessee. In the case of Raja Jagat Ranvir v Bagri Den[6], it was held that a condition that the lessee will not sublease his property or will not assign his interest was considered as valid. In the case of Rama Rao v Thimappa[7], a condition in which the lessee had to return the property when the lessor needed to sell the property was considered as valid.

Married Women: The essentials to fall under this exception are that women should be married and she must not be a Hindu, Muhammadan or Buddhist. The exception is established from ‘doctrine of coverture’, where the women were given the right to enjoy the property without the power to alienate it.  

Repugnant Conditions

Section 11 of the Act details the conditions which are inconsistent with the nature of the interest transferred. These are referred to as repugnant conditions. This section is a corollary to Section 10. Section 11 prohibits the transfer in which the transferee is restricted to use the property only in any particular manner and if the absolute interest of the transferor is passed on. Such kind of conditions is void and the transferee is entitled to receive the property as if no such condition existed.

In the case of Smt. Manjusha Devi v. Suinit Chandra Mukherejee[8], it was held that if any limitation or the condition is imposed on the deed of conveyance, it will be considered objectionable as under Section 11 of the Act.

The exception to this section is any condition imposed restraining the enjoyment of land by the transferor for benefit of his/ her adjoining land.

Insolvency Condition

Section 12 of the Act provides that if any person turns to be insolvent, the interest which he had in any property would remain to him. Any condition, which restrains the interest in the property when a person turns insolvent, is void. This section does not apply to the conditions of the lease.

Conclusion

The object behind the Transfer of Property Act, 1882 was of the free transfer of the property. Section 10 of the Act lays down the conditions that when a property is transferred imposing a condition of absolute restraint of alienation on the transferee, the same is void.

The right to ownership of property includes all the rights like enjoyment and alienation of the property though it is subject to certain exceptions like lease or a transfer made to a married woman.

Constitution of India, 1950 provides us with Article 300A i.e, right to property and every citizen should not be deprived of any such right except in accordance with the law. Even, Article 19 (1)(e), provides a fundamental right to settle and reside in any part of the territory of India subject to certain restrictions. The right to proper enjoyment and disposal of the property has been considered by the legislature and thus, absolute restraint on alienation has been considered as void.        

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[1] (1867) LR 2 PC 4

[2] (1884) 26 Ch D 801

[3] (1932) 59 IA 236

[4] (2005) 5 SCC 632

[5] (1927) 47 All 484

[6]  AIR 1973 All 1

[7] AIR 1925 Mad 732

[8] AIR 1972 Cal 310