Conditions restraining alienation and repugnant restrictions
Property Law · Unit I · Topic 3 of 21 · 6 min read
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Cases checked to exist. Read the judgment before quoting a holding.
Every case cited here has been checked to exist — the citation resolves and names the right parties. The propositions attributed to each case have not been verified line by line against the judgment. Case names link through to the full judgment: read it before quoting a holding in an examination answer, and never carry a proposition from notes into court on trust.
1. Section 10: condition restraining alienation
Section 10 provides that 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. The transfer itself stands; only the condition falls away, and the transferee takes free of it.
The section has two exceptions, discussed below: a lease, and property transferred to or for the benefit of a woman.
2. Absolute and partial restraint
Only an absolute restraint is void. Whether a restraint is absolute is a question of substance, not form. A condition that leaves the transferee no real power of alienation is absolute even if it is phrased as permitting some transfers.
- Rosher v. Rosher (1884). A testator left an estate to his son with a condition that if the son wished to sell during his widow's lifetime, he must first offer it to her at £3,000. The estate was worth about £15,000. The condition was held void: forcing a sale at a fifth of the value was in substance an absolute restraint.
- Partial restraints. A restraint limited to a class of persons, or which leaves the transferee substantial freedom, is treated as partial. In Muhammad Raza v. Abbas Bandi Bibi (1932), the Privy Council upheld a condition in a compromise that the property should not be transferred outside the family, treating it as a partial restraint.
- Restraint for a limited time. A condition forbidding transfer for the transferee's whole life is absolute; one forbidding transfer for a short, defined period is more readily treated as partial, though courts look at the effect in each case.
A restraint is also distinguished from a covenant for pre-emption or repurchase, which gives the transferor a right to buy back if the transferee chooses to sell. Such a covenant does not prevent alienation and is not hit by section 10.
3. The exceptions
- Lease. A condition in a lease restraining the lessee from assigning or sub-letting is valid where it is for the benefit of the lessor or those claiming under him. The lessor has a legitimate interest in choosing who occupies his property.
- Woman. Property may be transferred to or for the benefit of a woman (not being a Hindu, Muhammadan or Buddhist) so that she shall not have power during her marriage to transfer or charge it or her beneficial interest in it. This is the old English “restraint on anticipation”, designed to protect a married woman's property from her husband's pressure. It applies only during marriage, and in India it is of narrow use because of the excluded communities.
4. Section 11: restriction repugnant to the interest created
Section 11 provides that where, on a transfer of property, an interest therein is created absolutely in favour of any person, but the terms of the transfer direct that such interest shall be applied or enjoyed by him in a particular manner, he shall be entitled to receive and dispose of such interest as if there were no such direction.
Section 10 deals with restraints on alienation; section 11 deals with restrictions on enjoyment. A gift of a house absolutely to B “on condition that he shall live in it himself and not let it out” gives B an absolute interest; the direction is repugnant to it and he may ignore it.
The section has an important qualification in its second paragraph. Where an absolute interest in one piece of immovable property is transferred and the direction is for the beneficial enjoyment of another piece of property retained by the transferor, the direction can be enforced. A sells plot X to B, keeping plot Y next door, and stipulates that B shall not build above two storeys so as to block light to Y. This is a valid restrictive covenant for the benefit of Y. The rule applies only to absolute interests; where the interest is limited, as in a lease or a life estate, the transferor may control how it is enjoyed.
5. Section 12: condition making interest determinable on insolvency
Section 12 provides that where property is transferred subject to a condition or limitation making any interest therein, reserved or given to or for the benefit of any person, to cease on his becoming insolvent or endeavouring to transfer or dispose of the same, such condition or limitation is void.
The purpose is to protect creditors: a person cannot hold property on terms that it vanishes the moment his creditors try to reach it. The section does not apply to a condition in a lease for the benefit of the lessor or those claiming under him. A forfeiture clause entitling the lessor to re-enter if the lessee becomes insolvent is valid, and section 111(g) recognises it.
6. Problem
A gifts his farmhouse to his nephew B by a registered deed “on condition that B shall never sell, mortgage or lease the farmhouse, and that if B does so the property shall revert to A.” Two years later B sells the farmhouse to C. A sues to recover it.
Issue. Whether the condition against alienation is valid, and whether B's sale attracts the reverter.
Law. Section 10 makes void a condition absolutely restraining the transferee from parting with or disposing of his interest; the transfer survives free of the condition. A partial restraint may be valid, but the test is substance (Rosher v. Rosher). Section 12 makes void a condition by which an interest ceases on the holder's attempting to transfer it.
Application. The condition forbids every form of alienation for all time. It is an absolute restraint. The reverter clause is a limitation making B's interest cease if he tries to dispose of it, which section 12 also strikes down. The gift to B is valid, B took an absolute interest, and his sale to C passes good title.
Conclusion. A's suit fails. Had the condition merely required B to offer the farmhouse first to A at market price, it would not have restrained alienation and could have been enforced as a right of pre-emption.
How this is examined
A short note on “Condition restraining alienation” or “Restraint on anticipation”, and sometimes a 10-mark question combining sections 10 to 12. Give the text of section 10, the absolute / partial distinction with Rosher v. Rosher, both exceptions, then section 11 with the second-paragraph exception and section 12 with the lease exception. A problem like the one above is the usual form.
Now try the real questions: Property Law past question papers.