Absolute And Partial Restraint On Alienation

Chanakya National Law University, Patna

Name- Shikhar Neelkanth

Roll no. 1233
Course- B.B.A. LL.B. (H)
Topic- Absolute and partial restraint on alienation
Submitted to- Dr. S. Rama Rao

Absolute And Partial Restraint On Alienation

Contents
ACKNOWLEDGEMENT................................................................................................. 3
Research Methodology............................................................................................... 4
Introduction................................................................................................................ 5
General Principles of Transfer of Property: Subject to a limitation or Condition........10
Absolute restraint..................................................................................................... 12
Partial restraint...................................................................................................... 14
Exceptions to the general rule..............................................................................16
Conclusion................................................................................................................ 23

Absolute And Partial Restraint On Alienation

ACKNOWLEDGEMENT

Any project completed or done in isolation is unthinkable. This project, although prepared by
me, is a culmination of efforts of a lot of people.
Firstly, I would like to thank my Professor for Property Law Dr. S. Rama Rao for his valuable
suggestions without which this wouldnt have been possible.
Moving further, I would also like to express my gratitude to my seniors, the library staff and my
friends who were always there for me when I needed any sort of help regarding this project.
Lastly, I would like to thank the almighty for making this happen.

Shikhar Neelkanth

Absolute And Partial Restraint On Alienation

Research Methodology

Method of research
The researcher has adopted a purely doctrinal method of research. The researcher has made
extensive use of the library at the Chanakya National Law University and also the internet
sources.

Aims and Objectives

The aim of this project is to present an overview of absolute and partial restraint on alienation
and further elucidate it with the relevant case laws.

Sources of Data

The following sources of data has been used in this project1. Books
2. Internet

Absolute And Partial Restraint On Alienation

Introduction
Ownership of the property carries with it certain basic rights, such as a right to have the title to
the property, a right to possess and enjoy it to the exclusion of everyone else, and a right to
alienate it without being dictated to, save in accordance with a provision of law. An absolute
right to dispose of the property indicates that the owner can sell it for consideration or can donate
it for religious or charitable purposes he may gift it to anyone, mortgage it or put it up for lease.
Save with the help of law, no other person can interfere with this power or right of the owner or
dictate to him, what should be the manner of alienation, should he alienate or not, or even what
kind of use it should be put to. In short, this right of alienation, that is one of the basic rights of
the owner, cannot be unreasonably encroached upon by anyone through a private agreement.
This general rule is applicable despite there being an express contract to the contrary, and
prevents the transferor from controlling the power of alienation of the transferee once the interest
in the property is transferred.
The extent to which a person transferring real or personal property may limit its subsequent
disposition by the transferee has for centuries been a problem troubling the courts. Restrictions
upon the grantees right to transfer the property, at any time, to whomsoever he may choose, and
in whatever manner he may select, are called restraints on alienation.
Recent developments in the field of real property security law have rekindled an interest -in one
of the most ancient and important battlegrounds of the law-the extent to which the law should
protect free alienability of real property and strike down attempts to restrict or penalize an
owners ability to transfer his property. The context in which the present-day struggle arises is a
far cry from the feudalistic society existing in England when the restraints on alienation doctrine
was developed, yet the materials which follow evidence quite clearly that the judicial role in
articulating and enforcing the doctrine is beginning anew.

Absolute And Partial Restraint On Alienation

Importance of the subject
Understanding what the role the right to exclude plays in defining property is important for
several reasons. First, having a better grasp of the critical features of property may promote a
clearer understanding of the often-arcane legal doctrine that surrounds this institution. Second,
understanding the domain of property is an important preliminary step in developing a
justification or critique of property from the perspective of distributive justice. Third,
formulating a more precise conception of property may be necessary in order to offer a complete
account of constitutional provisions that protect property. In any event, for those who are
learning the concept of the law of property, the question is one of intrinsic interest, whether or
not it has any payoff in resolving more immediate concerns.
Ownership of property carries with it certain rights, such as the right to have the title to the
property, a right to possess and enjoy it to the exclusion of everyone else, and a right to alienate
it to the exclusion of others without being dictated to. Sections 10 to 18 of the Transfer of
Property Act, 1882 contain the first set of rules that have to be observed while alienating a
property. Since it is a principle of economics that wealth should be in free circulation to get the
greatest benefit from it, these Sections provide that ordinarily there should be no restraints on
alienation.
This project seeks to analyse the rules regarding transfer of property which talk about conditions
restraining alienation of property once it is transferred. The researcher will first look into the
general provision that all such conditions should be void and then will talk about partial
restraints and other conditions which are valid. Finally, conditions restraining enjoyment of
property which can be enforced will be discussed. The researcher will analyse the law in light of
decided Supreme Court and major High Court cases.

Absolute And Partial Restraint On Alienation

Right to exclude
Right to exclude others is one of the most essential sticks in the bundle of rights that are
commonly characterised as property.
Three schools of thought regarding right to exclude
Generally speaking, it is possible to identify three different intellectual traditions regarding the
role of the right to exclude. These may be called single-variable essentialism, multiplevariable essentialism, and nominalism.
Single-variable essentialism
Probably the oldest continuing tradition in attempts to define property is essentialism-the search
for the critical element or elements that make up the irreducible core of property in all its
manifestations. The patron saint of property essentialism is William Blackstone, the first fulltime law professor at an English-speaking university. In fact, Blackstone endorsed not one but
two essentialist definitions of property, corresponding to what is called the single-variable and
the multiple- variable versions.1
The first or single-variable version of essentialism posits that the right to exclude others is the
irreducible core attribute of property.
Thus, Blackstone:There is nothing which so generally strikes the imagination, and engages the
affections of mankind, as the right of property; or that sole and despotic dominion which one
man claims and exercises over the external things of the world, in total exclusion of the right of
any other individual in the universe.2
Single-variable essentialism also finds extensive if somewhat qualified support in the decisions
of the contemporary U.S. Supreme Court. The Court has said of the right to exclude that it is
universally held to be a fundamental element of the property right; 3 that it is one of the most
1 Merill, Thomas W., Property and the Right to Exclude, 77 Neb. L. Rev. 737 1998
2 William Blackstone, Commentaries on the Laws of England
3 Kaiser Aetna v. United States, 444 U.S. 164, 179-80 (1979)
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Absolute And Partial Restraint On Alienation

essential rights of property;and that it is one of the most treasured rights of property. 4
Although all these statements imply that the right to exclude is not the only right associated with
property, no other right has been singled out for such extravagant endorsement. Moreover,
governmental interference with the right to exclude is more likely to be considered a taking of
property without compensation than are interferences with other traditional elements of
property.5
Multiple variable essentialism
The second version of essentialism, also found in Blackstone, posits that the essence of property
lies not just in the right to exclude others, but in a larger set of attributes or incidents, of which
the right to exclude is just one. Thus, Blackstone II: The third absolute right, inherent in every
Englishman, is that of property: which consists in the free use, enjoyment, and disposal of all his
acquisitions, without any control or diminution, save only by the laws of the land.
This version of essentialism holds that property is defined by multiple attributes or incidents.
Blackstone describes these multiple attributes as the rights of free use, enjoyment, and
disposal. Curiously, the right to exclude others fails to make an appearance on this list.
Moreover, it would seem that the rights of free use and enjoyment are arguably redundant, or
at least largely overlapping. But these anomalies have been overlooked in subsequent accounts,
which have translated the Blackstonian trilogy as the rights of possession, use, and
disposition,18 or alternatively, the rights to exclude, to use or enjoy, and to transfer.6
Under the multiple-variable version of essentialism, the right to exclude is a necessary but not a
sufficient condition of property. Without the right to exclude, there is no property. But more than
the right to exclude is needed in order to create a package of rights sufficiently impressive to be
called property.7
4 Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982)
5 Dolan v. City of Tigard, 512 U.S. 374, 384 (1994)
6 RichardA. Epstein, Takings:Private Property and thePower ofEminent Domain58-59 (1985).
7 The Development of Restraints on Alienation Since Gray, 48 Harv. L. Rev. 373 1934-1935
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Absolute And Partial Restraint On Alienation

Nominalism
This school of thought views property as a purely conventional concept with no fixed meaningan empty vessel that can be filled by each legal system in accordance with its peculiar values and
beliefs. On this view, the right to exclude is neither a sufficient nor a necessary condition of
property. It may be a feature commonly associated with property, but its presence is not essential;
it is entirely optional. A legal system can label as property anything it wants to.8
These three schools of thought-single-variable Essentialism, Multiple-Variable Essentialism, and
Nominalism-do not exhaust the possibilities with respect to understanding of the nature of
property. One of the most sophisticated modern expositions of property by a philosopher is that
of Jeremy Waldron9. Borrowing a distinction developed by Ronald Dworkin, Waldron argues that
private property is best understood as a general concept, of which the various incidents or
elements embody different conceptions. He defines the general concept of private property as
the understanding that, in the case of each object, the individual person whose name is attached
to that object is to determine how the object shall be used and by whom. His decision is to be
upheld by the society as final. This general concept, Waldron argues, takes on different
conceptions in different contexts, depending on the type of resource involved, the traditions of
the legal system, whether ownership is unified or divided, and so forth.

8 Supra at 1
9 Jeremy Waldron, What is Private Property?, 5 OxFoPnJ. Legal Stud. 313(1985)
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Absolute And Partial Restraint On Alienation

General Principles of Transfer of Property: Subject to a

limitation or Condition
Sections 10, 11, and 12 of the Transfer of Property Act deal with the imposition of restrictions or
limitations in transfer of property. They contemplate situations where limitations may be
imposed on the transferee by the transferor in the instrument on the interest so transferred. 10 In
such a case, the question that arises is: are such restrictions valid? If so, under what
circumstances are they valid? Sections 10, 11, and 12 of the Transfer of Property Act hold the
answers to these questions.
Rule against alienability
Section 10 of the Transfer of Property Act: Condition Restraining Alienation- 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.
Conditional transfers
Every owner of a property, who is competent to transfer, may transfer his property either
unconditionally or with certain conditions. Conditions are limitations or restrictions on the rights
of the transferees. Transfers which are subject to restrictions are known as conditional transfers.
These conditions may be either conditions precedent or conditions subsequent. Conditions
precedent is put prior to the transfer and the actual transfer depends upon compliance of those

10 S.M. Lahiri, The Transfer of Property Act (Act IV of 1882), 11th ed., (India Law House, New Delhi,
2001)
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conditions. Subsequent conditions are those conditions which are to be fulfilled after the
transfer.11These conditions are those conditions which are to be fulfilled after transfer. These
conditions affect the rights of the transferees after transfer.
This provides that if a property is transferred subject to a condition or limitation restraining the
transferees right of parting with or disposing his interest in the property absolutely, then such a
condition is void. This general rule is referred to as the rule against inalienability. The rule
against inalienability gives effect to the overarching principle behind the Transfer of Property Act
that, generally, all property should be transferable. Therefore, any condition that restrains
alienation is considered void. The transferee can ignore such a condition and continue his
enjoyment of the transferred property as if such a condition did not exist in the first place.
However, while an absolute restraint is void, a partial restraint may not be. For instance, a partial
restraint that restricts transfers only to a class of persons is not invalid. However, if the transfer is
restricted to being allowed only to specific individuals, then it is an absolute restraint and hence,
void.
Categorization of restraints
Since alienation of property is the sole prerogative of the owner of the property, he is empowered
to sell it at any point of time, for any consideration, to nay person, and for any purpose. There are
certain integral components of the very term alienation and include selection purely at the
discretion of the transferor or the transferee and the time or consideration for the transfer. A
restraint on alienation thus would include a condition that dictates to him when to sell it, to sell it
at how much consideration, or how to utilise the consideration; to whom to sell or for what
purpose he should sell. These restraints can appear in the following ways:12

Restraints on transfer for a particular time

Restraints directing control over consideration/money;
Restraints with respect to persons/transferee; and

11 G.P. Tripathi, The Transfer of Property Act, 1882, 15th ed., (Central Law Publications,

Allahabad: 2005)
12 Dr. PoonamPradhanSaxena, Property Law, 2nd Ed. (Lexis Nexis:Nagpur, 2011)
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Restraints with respect to sale for particular purposes or use of property

Absolute restraint
Absolute restraint refers to a condition that attempts to take away either totally or substantially
the power of alienation.13 Section 10 says that where property is transferred subject to a condition
or limitation which absolutely restraints the transferee from parting with or disposing of his
interest in the property is a void condition. Restraint on alienation is said to be absolute when it
totally takes away the right of disposal. In the words of Lord Justice Fry 14, from the earliest
times, the courts have always learnt against any devise to render an estate inalienable.15
Section 10 relieves a transferee of immovable property from an absolute restraint placed on his
right to deal with the property in his capacity as an owner thereof. As per section 10, a condition
restraining alienation would be void. Section applies to a case where property is transferred
subject to a condition or limitation absolutely restraining the transferee from parting with his
interest in the property. For making such a condition invalid the restraint must be an absolute
restraint.
Two persons purchased securities in their own names with the money belonging to a third
person. And on his instructions they deposited the securities in the name of that person and also
the interest accruing on them in that persons account. The securities carried the stipulation that
they were not to be transferred. In order to wipe out his liability to another person, that third
person tendered the securities to his creditor by way of satisfaction to hold them as a beneficiary.
It was held that from the very beginning a beneficial interest was created in favour of the person

13 Bhavani Amma Kanakadevi v CSI Dekshina Kerela Maha Idavaka, AIR 2008 Ker 38
14 In re, Parry and Dags (1886) 31 Ch D 130
15 Zoroastrian Co-operative Housing Society v District Registrar Co-opertaive Societies (Urban), AIR
2005 SC 2306
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with whose monies the securities were purchased and, therefore, his beneficial interest was
transferable because otherwise the whole transaction would have been hit by section 10.16
Condition imposing absolute restraint on the right of disposal is a void condition and has no
effect. For example, a person makes a gift of a property to another person (transferee) with a
condition that he will not sell it. This condition imposes an absolute restraint. If the transferee
sells that property, the sale will be valid because conditions imposing absolute restraint are
void. Amade a gift of a house to Bwith a condition that if B sold the house during the lifetime
of As wife, she should have an option to purchase it, for Rs. 10,000. The value of the house was
Rs. 10,000. This was held to be having the effect of absolute restraint and was void. 17 The
provision of law against absolute restriction on alienation is founded on the principle of public
policy, namely that there should be free transferability of property. A transfer of property for
construction of a college contained a condition that if the college was not constructed; the
property would not be alienated. Rather it would be re-conveyed to the person transferring it. The
condition was held to be void and, therefore, not capable of being enforced.18
Where the settler intending to create a life estate in favour of his son-in-law M, handed over the
title-deeds of the said property to M indicating that he had divested himself of all rights in the
property but imposed absolute perpetual restraint on alienation, it was held that the restraint was
void since the transfer was an absolute transfer in favour of M. Under the provisions of section
10, the sale deed made by the heirs of M in favour of appellants was a valid sale because the
heirs were entitled to ignore the restraint on alienation and deal with the property as absolute
owners.19
The condition restraining lessee from alienating leasehold property is not illegal or void.20
16 Canbank Financial Services Ltd. V Custodian, (2004) 8 SCC 355
17 Rosher v Rosher, (1884) 26 Ch D 801
18 DhavaniAmmaKankadevi v C.S.I. Dekshina Kerala MahaIdavaka, AIR 2002 Ker 38
19 Kannamal v Rajeshwari, AIR 2004 NOC 8 (Mad)
20 RaghuramRao v Eric P. Mathias, AIR 2002 SC 797
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Absolute And Partial Restraint On Alienation

Partial restraint
Section 10 has only provided for absolute restraints. It is silent about the partial restraints. Where
the restraint does not take away the power of alienation absolutely but only restricts it to certain
extent, it is a partial restraint. Partial restraint is valid and enforceable. In words of Sir George
Jesel, the test is whether the condition takes away the whole power of alienation substantially; it
is question of substance and not of mere form. You may restrict alienation in many ways, you
may restrict it by prohibiting it to a particular class of individuals or you may restrict alienation
by restricting it to a particular time.
A total restraint on right of alienation is void but a partial restraint would be valid and binding.
This rule is based on sound public policy of free circulation.21
A restriction for a particular time or to a particular or specified person 22 has been held to be
absolute restriction. A compromise by way of settlement of family disputes has been held to be
valid in Mata Prasad v Nageshwar Sahai23, although it involved an agreement an agreement in
restraint of alienation. In this case, dispute was as to succession between a widow and a nephew.
Compromise was done on terms that the widow was to retain possession for life while the title of
21 K. Muniaswamy v K. Venkataswamy, AIR 2001 Kant 246
22 Mohd. Raza v Abbas BandiBibi, (1932) 59 IA 236
23 (1927) 47 All 484
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the nephew was admitted with a condition that he will not alienate the property during the
widows life time. The Privy Council held that the compromise was valid and prudent in the
circumstances of the case.
While an absolute restraint is void, a partial restraint may not be. For instance, a partial restraint
that restricts transfers only to a class of persons is not invalid. However, if the transfer is
restricted to being allowed only to specific individuals, then it is an absolute restraint and hence,
void. How is it determined if a restriction is absolute or partial? In order to determine whether a
restriction is absolute or partial, one must look at the substance of the restraint and not its mere
form. Ordinarily, if alienation is restricted to only family members, the restriction is valid.
However, where in addition to that restriction, a price is also fixed which is far below market
value and no condition is imposed on the family members to purchase, then the restraint is an
absolute one and hence, void, although in form, it is a partial restraint. Even if such a
substantially absolute restriction is limited by a time period that is, it applies for a specific time
period only, it remains void.

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Exceptions to the general rule

Section 10 provides two exceptions to the rule against in alienability. First, Section 10 does not
prohibit conditions or limitations in the case of a lease, which are beneficial to the lessor or those
claiming under him. Second, property may be transferred for the benefit of a woman who is not a
Hindu, a Muslim, or a Buddhist, such that she shall not have the power to transfer theproperty or
change her interest therein during her marriage. This exception is based on the doctrine of
coverture that operated in England in the nineteenth century. There, women could be given
property for their enjoyment without the right to alienate theproperty during her marriage. The
rule protected women from being forced to alienate their property in favour of their husbands.
However, despite the abolition of the doctrine of covertures in England, this exception continues
to remain on the statute books in India.
Lease
Conditional transfer is valid in the case of lease where the condition is for the benefit of the
lessor or those claiming under him. Lease is a transfer of a limited interest where the lessor
(transferor) reserves the ownership and transfers only the right of enjoyment to the lessee
(transferee). A lessor can impose a condition that the lessee will not assign his interest or sublease the property to any other person. Such a condition will be valid. This exception is
applicable to permanent leases too. The Supreme Court has held that this section does not carve
out any exception with regard to perpetual or permanent lease. Thus, any condition restraining
the lessee from alienating leasehold property is not invalid.24
A condition in the ease that the lessee shall not sublet or assign his interest to anyone during the
tenure of the lease is valid.25 Similarly, a stipulation in the contract of lease that the lessee would
not sublet the premises and if he does, he would have to pay a fourth of the consideration
as nazaar to the lessor, 26is valid and enforceable. A condition in the lease deed that the lessee

24 RaghuramRao v Eric P. Mathias, AIR (2002) SC 797

25 Raja JagatRanvir v Bagriden, AIR 1973 All 1
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would compulsorily have to surrender the lease in the event the lessor needs to sell the
property27 again is valid.
Married women
Restraints on the power of alienation in dispositions in favour of married woman, who are not
Hindu, Mohammedans or Buddhists, will be valid. This proviso was introduced to serve a similar
purpose as English law in this regard. The English Courts recognized the rule that it was open to
the settler or transferor to insert a clause in the deed of settlement or transfer, by way of a
restraint on anticipation, that is, to restrain her from anticipating the future income of the
property and from encumbering it or alienating it while she is under husbands protection and
shelter.
The section is enacted to check that the transferor shall not impose an absolute restraint on the
power to alienate that interest or right which was transferred to the transferee. Therefore, a
limited interest in property can be created in favour of a transferee, but a restraint on the power
to alienate that limited interest will be invalid.
Relevant cases
In Rosher v. Rosher28, a person A died leaving behind his wife W and a son S. He left his entire
property to S, under his Will. The will provided that S had to first offer the property for sale and
also had to sell her at L 3000 while the market price was L 15000. The court held that these
restrictions amounted to an absolute restraint on Ss and his heirs power of alienation and were
therefore void.

26 Sardakripa v Bepin Chandra, AIR 1923 Cal 679

27 Rama Rao v Thimappa, AIR 1925 Mad 732
28 Supra Note 8
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In Gayashi Ram v. Shahabuddin29, the sale deed contained a clause that the transferee would not
transfer the property to any person either by way of sale, gift or even mortgage except the
transferor or his heirs. The court held that this condition is void and therefore invalid.

In Manohar Shivram Swami v. Mahadeo Guruling Swami30, A and B were first cousins. A made a
will of his property in favour of B. On As death, B acquired the title of the property and sold it to
C, who was also the brother of A. The sale deed contained a condition that if C wanted to sell the
property, he would sell it to the sellers Jangam (caste) family and not to anybody else. The court
held that the condition incorporated in the sale deed absolutely restrained C from parting with his
interest in the property and therefore was void. The court upheld the validity of sale affected by
C. This decision of Bombay High Court comes as a surprise as the condition here in fact was not
to sell out of the family, which in a number of cases has been held to be a partial restraint, and
binding on the parties.
Repugnant conditions
Section 11 of the Transfer of Property Act deals with repugnant conditions. Repugnant
conditions are those that are inconsistent with the nature of the interest transferred. Section 11
prohibits the imposition of any condition directing the transferee to apply or enjoy in a particular
manner, any interest that is transferred absolutely in a particular manner. Such conditions or
directions are void and the transferee is entitled to receive property as if such a condition did not
exist in the first place. The transfer itself is, however, not invalidated. These conditions are
inconsistent with the nature of the interest transferred. Therefore, they are called repugnant
conditions.
Illustration: A and B enter into a sale deed for a piece of land. The terms of the sale deed
provides that the piece of land should be used for the purposes of starting a factory for the
manufacture of jute textiles only. This condition is invalid. B can enjoy the land in any manner
that he chooses and the sale deed itself continues to be valid.
29 AIR 1935 All 493
30 AIR 1988 Bom 116
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Thus, no life interest can be created in favour of a vendee in a contract of sale. 31 A gift restraining
enjoyment is void.32 Payment of certain amount to the vendor out of the profits of property by
way of rent after sale is illegal.33 A direction in restraining of partition in a gift or will is void
even thought the restriction is limited in time to the sons attaining majority.34
The exception to this rule according to the second paragraph of Section 11 is that if the transferor
owns another piece of immovable property, he may, for the benefit of that property, impose a
restriction on the enjoyment of that by him. In such a case, the restriction on the enjoyment of the
interest would be valid and saved by Section 11 of the Transfer of Property Act.
Positive and negative conditions or covenants
Conditions or directions that the transferor may impose upon the transferee to secure better
enjoyment of his own property can be of two types: positive or affirmative conditions, i.e., they
direct the transferor to do something and negative conditions, i.e., they restrain the transferee
from doing a particular thing. These conditions are called covenants.35
For example, A transfers a land to B, and puts a condition, that he would leave open a four feet
wide space adjoining As own land, and would not build upon it. On this land there is also a onefoot open drain, and the second condition in the transfer deed directs the transferee to maintain
this drain by carrying necessary repairs from time to time. The first covenant, that requires the
transferee not to build upon four feet wide land, is a negative covenant as it is in nature of not to
do a particular thing, while the second condition or covenant is a positive one, as it requires the
transferee to do a particular thing, i.e. to maintain the drain in proper shape and to carry
necessary repairs.
31 Manjusha Devi v Sunil Chandra, AIR 1972 Cal 310
32 N. Manekal v BaiSavita, CA No 959 of 1963 decided on Oct 1(SC)
33 State of Rajasthan v Jeo Raj, AIR 1990 Raj 90
34 Umrao Singh v Baldeo Singh, AIR 1933 Lah 201
35 Supra at 3
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Section 10 and Section 11: Differences

Section 11 talks about restriction repugnant to interest created. The difference between Section
10 and Section 11 is that the former deals with a case of an absolute prohibition against
alienation of an interest created by a transfer and the latter deals with the absolute transfer of an
interest followed by a restriction on its free enjoyment. That is, under Section 10, whatever
interest was conveyed, large or small, limited or unlimited, such interest cannot be made
absolutely inalienable by the transferee. Under Section 11, when once an interest has been
created absolutely in favour of a person, no fetters can be imposed on its full and free enjoyment.
Where, however, the interest created is itself limited, its enjoyment must also be limited; for
example, when a widows interest under Hindu Law is granted to a woman, a direction that she
should enjoy only the usufruct without either encumbering the corpus or committing acts of
waste would be valid. But a condition in a deed depriving a co-owner of his or her claim to
partition in respect of the common property would be bad, because, the right to partition is an
essential ingredient of co-ownership.
The insolvency exception
Section 12 provides that where property is transferred subject to a condition or limitation leaking
any interest therein, reserved or given to or for the benefit of any person, to cease on his
becoming insolvent or endeavoring to transfer or dispose of the same, such condition or
limitation is void.
Nothing in this section applies to a condition in a lease for the benefit of the lessor or those
claiming under him.

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Although this relates to the restrictions on transfer of property, it is actually an exception to
another general rule provided in Section 31 of the Transfer of Property Act.
Illustration: A transfers his property to B with the condition that should B become insolvent,
then his interest in the property would cease. B later becomes insolvent and A seeks to enforce
the condition. In such a case, the condition would be void and B will continue to have interest in
the property.

Condition for the benefit of the lessor

The insolvency exception has been created to prevent a transferee from defrauding his creditors
in such an eventuality by allowing the property to revert back to the grantor through such a
condition. Once again, there is an exception to this rule in the case of a lease, which allows a
lessor to impose such a condition for his benefit in the lease. This implies that a lessor may
stipulate that if a lessee should become insolvent, the lease may be forfeited and the lessor may
re-enter the leased property. Hence, a covenant determining a lease in the event of the insolvency
of the lessee is valid,36 but if the lessee assigns the lease and then becomes insolvent, the
condition does not apply.37 Thus, although there are general rules that prohibit any restrictions
from being imposed on the enjoyment of the interest in the property after a transfer is made;
there are certain exceptions to it. Most of these revolve around transfer of leases since the lessor
retains significant interests in the property even after the lease agreement is executed.

36 Vyankatraya v Shivrambhat, (1883) ILR 7 Bom 256

37 Smith v Gronow, (1891) 2 QB 394
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Absolute And Partial Restraint On Alienation

Conclusion
Section 10 lays down that where property is transferred subject to a condition absolutely
restraining the transferee from parting with his interest in the property, the condition is void. The
principle underlying this section is that a right of transfer is incidental to, and inseparable from,
the ownership of the property. The rule that a condition of absolute restraint is void is founded
also on the principle of public policy allowing free circulation and disposition of property. It is
only a condition which absolutely restrains the transferee from disposing of the interest that is
rendered void. A condition imposing partial restraint may be valid. The test is whether the
condition takes away the whole power of alienation substantially; it is a question of substance
and not of mere form. The section provides two exceptions; one in case of married women and
other in favour of lessor. Moreover, every citizen has a right, under Article 300A of the
Constitution of India, to property and such a right is not to be deprived except in accordance with
law. Even under Article 19 of the Constitution of India the citizen has a fundamental right to
reside and settle down in any part of the Indian Territory. If there is a law made by the
appropriate legislature, the same should be examined from the stand point of whether it is
reasonable restriction or otherwise.

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