Conditions Restraining Alienation

Introduction

Section 10 of the Transfer of Property Act, 1882 deals with conditions that restrict a transferee (person receiving property) from transferring it further.

The law aims to ensure free transferability (free movement) of property and prevents unreasonable restrictions.

Meaning / Definition

A condition restraining alienation means a condition that limits or restricts the transferee from transferring (selling or disposing) the property.

Rule:

• An absolute restraint (complete restriction) on transfer is void (not valid).
• A partial restraint (limited restriction) is valid.

Even if the condition is void, the transfer itself remains valid.

Modes or Types

Absolute Restraint

• Completely restricts the transferee from transferring property.
• Such a condition is void.

Example:

• Transfer with condition that transferee cannot sell without permission.

Partial Restraint

• Restricts transfer only in a limited manner.
• Such a condition is valid.

Examples:

• Transfer restricted only within family.
• Restriction against selling to a specific person.

Determination of Restraint

• Whether restraint is absolute or partial depends on:
  • Intention of the transferor
  • Terms of the document

Scope of Section 10

• Applies only to transfers by act of parties (voluntary transfers).
• Does not apply to:
  • Transfers by operation of law
  • Court sales (execution of decree)
  • Partition or family settlement

Exceptions

Lease

• In a lease, a condition restricting sub-letting or assignment is valid.
• This applies even in long-term leases.

Married Women (Limited Application)

• A restraint on alienation may be valid in case of transfer to a married Christian woman during coverture (period of marriage).
• Not applicable to Hindus, Muslims, or Buddhists.

Important Case Law

• Mohammed Raza v. Abbas Bandi (Privy Council)

  • Condition restricting sale outside family was held valid (partial restraint).

• T.V. Sangam Ltd. v. Shanmuga Sundaram (Madras High Court)

  • Condition restricting sale within family at fixed low price was held void (absolute restraint).

• Attwater v. Attwater (1853)

  • Restriction limiting transfer within a class (brothers) held void.

• Sarju Bala v. Jyotirmoyee (Privy Council)

  • Restriction on gift except for limited religious purpose held void.

Distinction / Comparison

Practical Example

• A transfers property to B with condition that B cannot sell it at all. This condition is void.
• A transfers property to B with condition that B cannot sell to outsiders. This is valid.
• A leases property with condition that tenant cannot sublet. This is valid.
• A transfers property with condition to sell only at very low price. This may be treated as absolute restraint and be void.

Summary

• Section 10 deals with restrictions on transfer of property.
• Absolute restraint on transfer is void.
• Partial restraint is valid.
• Transfer remains valid even if condition is void.
• Section applies only to voluntary transfers.
• Lease restrictions are valid exceptions.
• Determination depends on intention and terms of document.