Section 10 of the Transfer of Property Act, 1882 deals with the condition restraining alienation of property. It states that when the 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, such condition or limitation is void. However, there are exceptions to this rule, such as in the case of a lease where the condition is for the benefit of the lessor or those claiming under him, or in the case of a transfer for the benefit of a woman who is not a Hindu, Muslim, or Buddhist, which is intended to protect her rights.
Section 10 of the Transfer of Property Act, 1882 aims to ensure that property remains freely transferable, preventing the creation of conditions that would restrict a property's transferability.
Absolute Restraint on Transfer
The court has in various instances decided upon the word absolutely restraining as provided in section 10 of the Transfer of Property Act.
In the Roshar v Roshar case, Mr. A devised his estate to his son with a proviso that if the son desired to sell the estate or any part of it during the lifetime of his wife then she would have the option to purchase the same for 3000 pounds and the same should be offered to her at such price on the death of the testator. The market value of the property was more than 15000 pounds, the court held that the condition was imposing absolute restrain on the right of alienation because the transferee was compelled to transfer the property five times below the market price thus void.
In Brahmananda v Roshni Devi, a person transferred the property with a condition that if in the future the transferee intended to dispose of the property then the transferor would have the right to purchase it back for 500 Rupees, the transferor sold the property to the transferee for 500 Rupees. After 15 years the transferee disposed of the property to the other person then, the transferor challenged the transfer on the grounds that it was not a valid transfer because he had the right to purchase it back for 500 Rupees. The court held that such a condition amounts to be an absolute restraint on the right of alienation of the transferee, therefore such a condition is void as per section 10 of the Transfer of Property Act.
In Sridhar v N. Revanna, the donor executed two gift deeds in favour of the donee. The gift deed contained a condition that the donee and his younger brother hereafter have no right to alienate scheduled property. After some time, the donee sold that particular gifted property, the donor challenged the transfer of property made by the donee on the ground of violation of the condition of the gift. The question here was that whether donee was bound by the condition attached by the donor. The court held that the condition restraining the donee from alienation of gift cannot be imposed and such a condition is void under section 10 of the Transfer of Property Act.
Partial Restraint
Section 10 of the Transfer of Property Act clearly declares such transfer of the property to be void under which certain absolute restrictions are imposed on the transferee on alienation of the property. In case of a partial restraint, this section provides no such restrictions, and it act as an exception to section 10. The court has time and again discussed section 10 in relation to the partial restrain in the alienation of the property by the transferee.
In the case of Muhammad Raza v Abbas Bandi Bibi, the privy council held that if the only condition which one of restraining the transferee from transferring the property outside the family, then it would not amount to be an absolute restrain but only a partial one, therefore not come under the prohibition of section 10 of Transfer of property act. The same reasoning was also followed in Manohar Shivaram v. Mahadeo Swami.
Similarly in the case of Zoroastrian Coop. Housing society Ltd. V. Dist. Registrar Coop. Societies, the court said that when a person accepts membership in a cooperative society by submitting himself to its by-laws and securing an allotment of a plot of land or a building in terms of a by-laws, and places on himself a qualified restriction in his rights to transfer the property by stipulating that the same would be transferred back to the society or with the prior consent of the society to a person qualified to be a member of the society than it cannot be held to be as an absolute restrain on alienation offending section 10 of Transfer of property act.
Exception to Section 10
A lease is an exception to the rule against an absolute restraint on alienation. This exception arises from the very nature of a lease which is a transfer of property for a time, or in perpetuity, but in which the lessor necessarily retains an interest. Thus, a condition in a lease that the lessee shall not sublet, or assign is valid.
The proviso recognizes married women as another exception to the restraint on the power of anticipation in the case of a
married woman who is not a Hindu, Mahomedan, or Buddhist. This proviso provides that the property may be transferred to or for the benefit of the women so that she shall not have the power to transfer or charge the same or her beneficial interest during the marriage. This exception is designed to protect her rights and interests in the property and to protect the property from the hand of her husband and his family.