Conditions straining alienation valid or Not

Section 10 of the Act states that when a 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 a condition or restriction is void, and not the transfer itself.

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However, there are two exceptions to the above section. They are as follows:

  • In the case of a lease where the condition is for the benefit of the lessor or those claiming under him.
  • Where the property is transferred for the benefit of a woman, not being Hindu, Mohammedan or Buddhist so that she shall not have power during her marriage to transfer the property.

The principle, underlying this section, is that a right of transfer is incidental to, and inseparable from, the beneficial ownership of the property. An absolute restraint on that power is repugnant to the nature of the estate and is an exception to the very essence of the grant.

The restraint on alienation may be absolute or partial. An absolute restraint is void, a partial restraint is not. If the restraint is on the mode of alienation, it is not restraint within the meaning of this section.

If there is a valid transfer, the condition in restraint of alienation is void and the transfer stands. Thus the bequest of an absolute estate subject to a condition that neither the donee nor his heirs should alienate the estate except for religious purpose is valid bequest but the condition is void for repugnancy.

 

Thus, where a deed of a gift provides that the donee or his successor had no right to transfer the property and, if they did transfer, the same would be invalid and the donor or his successor would have the right to revoke the gift and such a condition would be invalid.

 

Validity of agreements or covenants not to alienate 

An agreement for consideration that the parties, thereto, shall not alienate certain properties for a limited time will be valid. However, an agreement, preventing alienation in perpetuity or for a indefinite period, would be opposed to public policy and therefore, not valid.

Thus where a deed of a gift provided that the donee or his successor had no right to transfer the property and if they did transfer, the same would be invalid and the donor or his successor would have the right to revoke the gift such a condition would be invalid.

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1 Comment

  • Manjunath says:

    A Housing Co-op society stipulates in the sale deed on allotment of sites to its members that such a site cannot be sold to non members at any time? Is this condition in the sale deed valid?

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  • Rukmani Kumar

    Dear Sir, I am extremely thankful for the information provided and doubts cleared to me by email. thank you again sir !

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