Own­ers free to trans­fer or dis­pose of prop­erty, con­di­tions don’t ap­ply

Sell­ing or trans­fer­ring prop­erty is an in­her­ent right of ev­ery owner, which can­not be de­nied to him or her by im­po­si­tion of re­stric­tive con­di­tions

HT Estates - - HTESTATES - Su­nil Tyagi

Ex­e­cu­tion and reg­is­tra­tion of sale deed for an im­move­able prop­erty trans­fers and con­veys absolute ti­tle of the prop­erty in favour of the buyer. How­ever, in cer­tain cases, when a sale deed for an im­move­able prop­erty is be­ing ex­e­cuted, the con­cerned par­ties in­cor­po­rate cer­tain con­di­tions in the doc­u­ment that im­pose re­stric­tions or­con­straints on the right of the buyer to sell or trans­fer the prop­erty.

The Trans­fer of Prop­erty Act, 1882 deals with such re­stric­tions or con­straints. Any con­di­tion or lim­i­ta­tion re­strain­ing the buyer from part­ing with or dis­pos­ing of his in­ter­est in the prop­erty is void ac­cord­ing to the act. Two ex­cep­tions to this rule are:

In the case of a lease where such re­stric­tion or­con­di­tion is im­posed for the ben­e­fit of the lessor, and

Where a prop­erty is trans­ferred to or for the ben­e­fit of a woman who is not a Hindu, Mus­lim or Bud­dhist, with a con­di­tion that she shall not have power dur­ing her mar­riage to trans­fer or cre­ate any en­cum­brance in the sale of prop­erty trans­ferred to her

The above men­tioned rule has been in­cor­po­rated into the Act to en­cour­age sale and pur­chase of prop­erty with­out re­stric­tion on fu­ture trans­fer . It is based on the ba­sic prin­ci­ple that trans­fer­ring a prop­erty can­not be sep­a­rated from giv­ing the ben­e­fi­cial ownership of the prop­erty to the trans­feree/ buyer. There­fore, the con­di­tion by which an absolute re­straint is im­posed against the trans­fer of that prop­erty is con­sid­ered to be void. Sell­ing or trans­fer­ring the prop­erty is an in­her­ent right of ev­ery owner and re­stric­tive con­di­tions can­not be im­posed on him or her.

One of the ex­am­ples of abso- lute re­straint can be where A ( owner of a prop­erty) agrees to sell it to B (the buyer)for ₹ 1 lakh. While ex­e­cut­ing of the sale deed, A puts a con­di­tion in the sale deed that if B ever in­tends to part with or sell or trans­fer the house in the fu­ture, B must sell the house to A or heirs of A and to no one else. Such a con­di­tion would fall in the cat­e­gory of absolute re­straint as it af­fects the ben­e­fi­cial en­joy­ment of the house by B. Ben­e­fi­cial en­joy­ment of the house by B in­cludes his right to sell it or dis­pose it in any other way.

The con­sis­tent view of the courts has been that an absolute re­straint is void but a par­tial re­straint is not.

For ap­pli­ca­bil­ity of this rule, two es­sen­tial con­di­tions are re­quired:

There must be a trans­fer of prop­erty and

There must be a con­di­tion which ab­so­lutely re­strains the trans­feree/ buyer from alien­ation/trans­fer of such prop­erty

This rule ap­plies to only those con­di­tions which im­pose an absolute con­di­tion on the alien­ation/ trans­fer of prop­erty. How­ever, there may be cer­tain con­di­tions, which par­tially re­strain the right of the owner of the prop­erty to alien­ate/trans­fer the prop­erty. Such spe­cific con­di­tions which par­tially re­strain the owner from alien­at­ing/ trans­fer­ring the prop­erty have been held to be valid by var­i­ous courts on var­i­ous oc­ca­sions.


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