Principle underlying this section.
1. A right to transfer is incidental to and inseparable from the ownership of the property.
2. This is also based on the principle of Public Policy allowing free circulation and disposal of property.
Condition restraining alienation
◦Absolute restraint[Void ]
◦Partial restraint[Valid]
If the Transfer is subject to a condition absolutely restraining the transferee or any person under him.
from parting with or
disposing of his interest in the property , the condition of limitation is void.
Categorization of Restraints:
◦Restraints on transfer for a particular time
◦Restraints directing control over consideration
◦Restraints with respect to persons/transferee
◦Restraints with respect to sale for particular purposes or use of property
Eg. A transfers his property to B with a condition that B shall never sell it. The condition is void and B may sell or not as he pleases.
Rosher v Rosher (1884) 26 Ch D 801
◦Court held these restrictions amounted to an absolute restraint on Son and his heir’s power of alienation and were therefore void. They were entitled to ignore them.
Zoroastrian Co-operative Housing Society Ltd v District Registrar Co-operative Societies, MANU/SC/0290/2005
◦SC held that this clause in the bye laws that a person could sell it only to Parsis and not a non-Parsi was a partial restraint not an absolute restraint.
Panna Lal Hazra v Fulmoni Hazra,AIR 1987 Cal 368–
◦According to the court this condition in gift to provide maintenance to the donor himself or any of his dependents was not in any way repugnant to the interest created by the instrument.
◦Condition was valid and enforceable therefore son was bound to maintain stepmother.This condition was not hit by Sec 10 or 11.
EXCEPTIONS
1.Lease, where condition is for the benefit of lessor or claiming under him
2.Condition is on married women
Lease –this exception arises from the nature of the lease which is transfer of property for a time or in perpetuity but in which lessor necessarily retains an interest.
Condition in lease that lessee shall not sublet or assign is valid.
Married Women
◦Proviso recognizes as another exception the restraint on power of anticipation in case of married women who is not a Hindu , Mahomedan or Buddhist.
RESTRICTION REPUGNANT TO INTEREST CREATED
Section 11deals with the restriction on enjoyment of absolute interest
Condition restraining the enjoyment of the property which is transferred absolutely is void.
such a condition would be opposed to the interest created and the transfer will be deemed to have been made as if there were no such conditions.
This section is based on the principle that when a man makes an absolute transfer , he cannot at the same time impose upon his transferee any condition restraining his enjoyment or disposition of property.
when a property is transferred absolutely; it must be transferred with all its legal incidents.
Rukminibai v Lakshmibai.
House was transferred with condition donee should reside in house and if he abandons the house another person will be substituted.
Donee after staying for sometime sold the house.
Question was whether sale is valid or void?
EXCEPTION
Transfer may impose conditions restraining the enjoyment of land if such restraining the enjoyment of land are for the benefit of his adjoining land.
Positive and Negative Covenants
◦If transferee sells the property to third party for value, the positive covenant would not bind the bonafide transferee/purchaser but the negative covenants because they run with the land can be enforced even against subsequent purchaser not only the original transferor, but also by his assigns.
Distinction between Section 10 & 11
Section refers to a restriction on the enjoyment of property, while s.10 refers to restriction on transfer of property.
Both sections rest on same principle that a condition repugnant to the interest is void.
section 12 Condition making interest determinable on insolvency or attempted alienation
Section deals with condition making interest determinable on
First –Insolvency
Second – attempted alienation
Object of this section is to protect the creditors of transferee who would otherwise be prevented from having recourse to the property transferred for satisfaction
