Conditions Restraining Alienation and Repugnant Conditions (Sections 10, 11, 12)

Sections 10, 11 and 12 of the Transfer of Property Act, 1882 strike at three different categories of condition that the transferor may seek to attach to a transfer. Section 10 voids a condition absolutely restraining alienation by the transferee. Section 11 voids a direction on the manner in which a property transferred absolutely shall be applied or enjoyed. Section 12 voids a condition that makes the transferee's interest cease on his becoming insolvent or endeavouring to transfer. The three sections rest on a single underlying principle, drawn from Coke upon Littleton: a condition repugnant to the interest created is void.

The unifying logic is that the right of transfer, the right of enjoyment, and the right to be free of forfeiture-on-insolvency are incidents of beneficial ownership. The transferor cannot, by private arrangement, sever these incidents from the right of property and abrogate the law. The chapter takes each section in turn, develops the distinction between absolute and partial restraint, the line between Section 10 and Section 11, and the line between Section 11 and Section 31, and closes with the lease and married-woman exceptions and the statutory-prohibition carve-out.

Section 10 — The Statutory Anchor and the Principle

Section 10 reads: 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. The proviso saves the case of a transfer to a married woman who is not a Hindu, Mahomedan or Buddhist, by which she shall not have power during marriage to transfer or charge the property.

The principle was stated in Coke upon Littleton: a feoffment on condition that the feoffee shall not alien the land is void, because when a man is enfeoffed of lands or tenements, he has by law the power to alien them; if such a condition were good, it would oust him of the power the law gives him, which is against reason. Master of the Rolls Fry in Re Parry and Daggs echoed the rule: from the earliest times the courts have leant against any device to render an estate inalienable; it is the policy of the law always to make estates alienable, and it is immaterial by what device it is attempted to prevent the owner from exercising the power of ownership. Justice Kekewich in Metcalfe v Metcalfe applied the same rule to gifts of personalty.

Condition Distinguished from Limitation

The condition referred to in Section 10 is a condition subsequent as defined in Section 31 — a condition that divests an estate already vested. "Limitation," by contrast, is an English term for words used in a conveyance to define the nature of the estate created. The Indian rule, in construing a deed, is whether the words are words of limitation or words of purchase. "To A and his heirs" — the words "and his heirs" are words of limitation indicating that A has an absolute estate. "To A for life and after his death to his heirs" — the heirs are direct objects of an independent and distinct gift. Words of limitation that denote an estate of inheritance do not, of themselves, imply a restriction on alienation; the question is whether a separate condition has been superadded.

If the transfer is otherwise valid, a condition in restraint of alienation is void and the transfer stands. A bequest of an absolute estate subject to a condition that neither the devisee nor his heirs may alienate the estate except for religious purposes is a valid bequest with a void condition for repugnancy. Where, however, the limitations are such as to create an estate not recognised by law — as in Tagore v Tagore, where the testator attempted an estate-tail unknown to Hindu law — the transfer itself fails.

Absolute Restraint Is Void

The section says that a condition absolutely restraining alienation is void. The test of whether a condition takes away the whole power of alienation is, as Master of the Rolls Jessel said in Re Macleay, a question of substance, not of form. Re Rosher, Rosher v Rosher illustrates the point: the testator devised an absolute estate to his son with a proviso that if the son sold during the lifetime of the testator's wife, she should have an option to purchase at one-fifth of the market value. The condition was held to be in effect an absolute restraint and void. Re Elliot, Kelly v Elliot reached the same conclusion: a tea plantation devised absolutely with a direction to pay a substantial sum out of the proceeds of any sale was held to be a repugnant restraint and void.

The position is settled across the High Courts. A provision in a partition deed prohibiting alienation of the share allotted absolutely to each coparcener without the consent of the other sharers is invalid as an absolute restraint. A condition in a will prohibiting the legatee from alienating his property is void; the legatee may ignore the condition and sell to whomsoever he likes. Where a husband settled property on his wives subject to a condition that they could not alienate without his consent, the condition was held to be void. The Supreme Court in Sridhar v N Revanna (2020) 11 SCC 221 confirmed that a condition in a gift deed restricting the right of the donee to alienate the property is a void condition.

Restrictions for a Particular Time

Re Rosher is also authority for the rule that a condition restraining alienation during a lifetime is invalid. The duration is irrelevant where the substantive effect is to deprive the owner of the power to alienate during a substantial period of the estate's life.

Partial Restraint Is Valid

A condition only partially restraining alienation is valid; in the case of partial restraint, Section 10 is not attractive. The line between absolute and partial restraint is one of substance, examined case by case. The settled categories of valid partial restraints are these:

1. Restraint to a particular family or community. The Privy Council in Muhammad Raza v Abbas Bandi Bibi 59 IA 236 held that a condition restraining the transferee from transferring outside the family is not absolute and is valid. The Supreme Court in K Naina Mohamed v A M Vasudevan Chettiar (2010) 7 SCC 603 affirmed the same principle for restrictions aimed at preventing property from passing to a third party. Mahmud Ali v Brikodar Nath AIR 1960 Ass 178 upheld a partition condition that the share could only be sold to members of the community.
2. Restraint for a particular time. A sale-deed permitting the transferee to part with the land to any other person, but not within five years, was held in Loknath Khoud v Gunaram Kalita AIR 1986 Gau 52 not to be hit by Section 10 or 11.
3. Restraint to a particular religion or co-operative class. The Supreme Court in Zoroastrian Co-operative Housing Society Ltd v District Registrar, Co-op Societies (Urban) AIR 2005 SC 2306 upheld a co-operative society's bye-law restricting members from alienating to a non-Parsi person as a partial restraint.
4. Pre-emption clause. A condition that if the vendee sells, the vendor shall have the option of buying back at a fair price is not an absolute restraint — and may not even be a restraint, but a recognised right of preemption attached to the chain of title much like a transfer by an ostensible owner attaches the doctrines of Section 41. The doctrinal complication is that such clauses interact with the rule against perpetuity in Section 14, considered separately.
5. Restraint that requires consent of a third party. A clause in a lease deed that the lessee's interest shall not be transferred without the written permission of the deputy commissioner does not impose a complete ban on transfer and is not void under Section 10.

A condition in a kharposh grant by a zamindar that the subject-matter is not liable to attachment and sale in execution does not amount to an absolute restraint and is not void under Section 10 — though it may be void under Section 12 (see below).

Substance over Form — Bombay's Family Test

The Bombay High Court in Manohar Shiviam Swami v Mahadeo Guruling Swami AIR 1988 took the family test further. The sale-deed contained a condition that the property should not be sold to anybody outside the family of the vendor. The vendee sold to the vendor's first cousins. The court held that first cousins were within the vendor's stock, and there was no breach of the covenant; even assuming a breach, the condition would have been void under Section 10. The decision is sometimes read as endorsing the broader Privy Council position that the family test is liberal — the doctrine accommodates the underlying social purpose of keeping property within the lineage.

Agreement in Restraint of Alienation — A Personal Covenant

Section 10 strikes at conditions on the estate; it does not, of itself, strike at agreements that bind the transferee personally. The Allahabad High Court in Devi Dayal v Ghasita AIR 1929 All 607 considered a separate unregistered agreement under which the vendee promised not to transfer except back to the vendor at the same price. The court held the agreement to be "a special personal contract between the parties which was binding on them and could be enforced against a transferee with notice." The doctrinal effect of the decision is that an invalid condition in restraint of alienation may yet operate as a personal covenant binding the covenantor personally, and creating an obligation enforceable against a transferee from him with notice under Section 40 — read together with the chapter on notice — actual and constructive.

Restriction in Compromise and in Family Arrangement

A compromise is not a transfer to which Section 10 applies. A compromise operates as an admission that the party has no right to alienate; the title so admitted may be a restricted interest under Section 6(d) or 6(dd) — non-transferable in itself. The Privy Council in Mata Prasad v Nageshar Sahai upheld as a family settlement a compromise between a widow and a nephew under which the nephew's title was admitted but he was restrained from alienating during the widow's lifetime — "prudent and reasonable in the circumstances of the case." The same logic applies to a memorandum of family arrangement: a partition and family arrangement is not a transfer, and Section 10 does not strike directly at conditions in such arrangements, although the Karnataka High Court in K Muniswamy v K Venkataswamy AIR 2001 Kant 246 held that the principle of Section 10 may apply where the case is one of absolute ownership and a total restraint on the right of alienation would be against public policy.

Restraint on Mode of Alienation

If the restraint is on the mode of alienation rather than on alienation itself, it is not a restraint within Section 10. A pre-emption clause in a settlement deed is not a restrictive condition; it merely grants a right of first offer of sale and thereafter to third parties. The same reasoning applies to a clause that requires alienation by sale only (not by gift), or by registered instrument only — these are restrictions on form, not on substance.

Restraint Against Alienation in a Gift

Section 126 permits a gift to be made on an agreed condition that it may be revoked on the happening of an event not depending on the will of the donor. But the Section 126 condition must not be repugnant to Sections 10 and 12. Where a deed of gift provided that the donee or his successor had no right to transfer, and that any transfer would be invalid and the donor or his successor would have a right to revoke, the condition was held to be invalid. By contrast, a condition that the donor may revoke the gift if the donee transfers without the donor's consent is valid: it operates as a personal covenant of revocation rather than as a restriction on the donee's interest, and the last paragraph of Section 126 expressly protects transferees for consideration without notice.

Restraint on the Transferor — Clog on Equity of Redemption

Section 10 refers to a restraint on the transferee, or those claiming under him. It does not, of itself, address a restraint on the transferor. Such a restraint may arise on a transfer of a partial interest — most importantly, on a mortgage. Where the mortgage contains a condition that prevents the mortgagor from exercising his right of redemption, the condition is struck down as a clog on the equity of redemption, on equitable principles independent of Section 10. The doctrine is developed in the chapter on the rights and liabilities of the mortgagor.

Lease — The First Exception

A lease is an exception to the rule against absolute restraint on alienation. The exception arises from the very nature of a lease — a transfer of property for a time, or in perpetuity, but in which the lessor retains an interest. A condition in a lease that the lessee shall not sublet or assign is valid (Section 108(j) read with the words "in the absence of a contract to the contrary"). The validity is unaffected by the lease being permanent. A condition requiring the lessee to pay a fourth of the purchase money as nazar to the lessor on assignment is valid. The exception sits comfortably alongside sales under Section 54, where ownership passes absolutely and Section 10 is inflexible — the doctrinal asymmetry tracks the structural asymmetry between transfer of full ownership and transfer of a limited interest. A condition in a perpetual lease that the lessee's right shall be heritable but not transferable is not void.

The words in Section 10 "when the condition is for the benefit of the lessor or those claiming under him" have been read in two ways. The Madras High Court has held that every restriction on assignment is for the benefit of the lessor, and the words are merely explanatory. The Allahabad High Court has read the words as requiring the restriction to be accompanied by a right of re-entry, a position that the 1929 amendment to Section 111(g) made explicit — the breach of a condition against alienation will not work a forfeiture unless the condition reserves a right of re-entry. Without re-entry, the breach gives the lessor only a right to damages and an injunction; the assignment itself is not invalidated.

Involuntary Alienation Is Not a Breach

An involuntary alienation does not constitute a breach of a condition against alienation in a lease. The Calcutta High Court in Galak Nath v Mathura Nath stated the rule: "a general restriction on assignment does not apply to an assignment by operation of law taking effect in invitum as a sale under an execution." An assignment by the official liquidator of a company, or by the official assignee in insolvency, is not a breach. There may, however, be express prohibition of alienation in execution; if so, it will be enforced — though the lessee's failure to satisfy the judgment creditor and allow the property to be attached and sold may itself be read as breach.

Married Woman — The Second Exception (Proviso)

The proviso to Section 10 recognises a restraint on the power of anticipation in the case of a married woman who is not a Hindu, Mahomedan or Buddhist. The clause was historically introduced in marriage settlements: property was settled on married women for their separate use, without power to sell or charge the corpus. The English common-law rule that a woman's property became her husband's on marriage was abrogated by Section 4 of the Indian Succession Act, 1865. The Married Women's Property Act, 1874, was passed to establish the separate property of married women married before 1 January 1866. Section 8 of that Act, after the 1929 amendment, expressly provides that decrees passed against a married woman cannot be executed by the attachment or sale of property she is restrained from alienating during marriage. The proviso to Section 10, in conjunction with the 1929 amendment, gives statutory force to this protection.

Statutory Prohibitions Override the Section

The Supreme Court in Laxman Tatyaba Kankate v Taramati Harishchandra Dhatrak (2010) 7 SCC 717 held that transfer of property is not always impermissible, but is subject to conditions prescribed by statute. A statutory bar on alienation will override the provisions of the TP Act — including the rules on the transfer of actionable claims and the substantive rules of every transfer-mode in Chapter II. The Court in State of Rajasthan v Aanjaney Organic Herbal Pvt Ltd (2012) 10 SCC 283 confirmed that a statutory restriction on transfer of land by a member of a Scheduled Caste to a person other than a Scheduled Caste is not hit by Section 10. The doctrinal position is that Section 10 strikes at private restraints that conflict with the law's policy of free alienability; it has no quarrel with statutory restraints that themselves fix the policy.

Section 11 — Restriction Repugnant to Interest Created

Section 11 reads: 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 off such interest as if there were no such direction. The second paragraph saves a direction made in respect of one piece of immovable property for the purpose of securing the beneficial enjoyment of another piece of property of the transferor.

Sections 10 and 11 rest on the same principle but address different objects. Section 10 strikes at restraints on transfer; Section 11 strikes at restraints on enjoyment. A restraint on transfer is repugnant to any interest in property, whether absolute or limited, because the right of transfer is an incident of ownership at every level — even an interest created for the benefit of an unborn person under Section 13 cannot be coupled with a restraint on its later alienation. A restriction on enjoyment is repugnant only to an absolute interest. A restriction on enjoyment of a limited interest — a leasehold, a life-estate, a usufruct — is not repugnant; it merely defines the limit of the interest itself. The illustrations to Section 11 capture the line:

1. A makes an absolute gift of a house to B with a direction that B shall reside in it. The gift is absolute and the direction is void. B may live in the house or not as he pleases.
2. A makes a gift of a house to B on condition that the gift will be forfeited if B does not reside in it. The condition is valid: the gift is no longer absolute but subject to a condition of defeasance under Section 28 or 31.
3. A by sale conveys an absolute interest in a farm to B. The deed contains a direction that B shall not cut down the trees. The direction is invalid.
4. A assigns a life interest in a farm to B for her maintenance. The deed contains a direction that B shall not cut down the trees. The direction is valid — the interest is limited and the direction defines the limit.

Section 11 vs Section 31 — The Direction-Condition Distinction

The basic distinction between Section 11 and Section 31 turns on four points: (i) Section 11 deals with a direction; Section 31 deals with a condition; (ii) Section 11 applies where an interest is created absolutely; Section 31 applies where the interest is qualified by a condition superadded. A direction to enjoy in a particular manner, attached to an absolute interest, is void under Section 11. A condition of defeasance — that the interest shall cease on the happening of a stated event — is valid under Section 31, because the interest itself is no longer absolute; it is conditional from the start.

Restrictions for Beneficial Enjoyment of One's Own Land

The second paragraph of Section 11 saves a direction in respect of one piece of immovable property made for the purpose of securing the beneficial enjoyment of another piece of property retained by the transferor. The classic case is the sale of a house with a covenant restricting the buyer from raising the wall above a certain height to preserve light and air to the seller's adjoining property. The Allahabad High Court in Bhagwat Prasad v Damodar Das AIR 1976 All 67 held that the second paragraph can be enforced only by the transferor — a contract binds only the parties to it; Section 40 does not assist a transferee of another portion of the property unless the covenant runs with the land.

The Kerala High Court in Santhakumaran v Vivekanandan 2016 (1) KLT 841 took the doctrine further. The parents of two sons assigned part of their property to one son with covenants for the construction of a compound wall and the maintenance of a gate. The other son later purchased the residential property retained by the parents. The court held that the second paragraph saves the restrictions made for the beneficial enjoyment of the remaining property of the transferor, and that the benefit, once clearly annexed to one piece of land, passes by assignment of that land and runs with it. The covenant is therefore enforceable by the transferee of the dominant tenement, even where the original transferor is no longer a party to the litigation.

Section 12 — Determinable Interest on Insolvency or Attempted Alienation

Section 12 reads: 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 off the same, such condition or limitation is void. Nothing in the section applies to a condition in a lease for the benefit of the lessor or those claiming under him.

The object of Section 12 is to protect the creditors of the transferee. Without the section, a condition of defeasance on insolvency would prevent the property from vesting in the official receiver or official assignee. The bar covers both insolvency and "endeavouring to transfer or dispose off" — the words "dispose off" reach settlements designed to insulate the property from the consequences of the transferee's later financial decisions. The classic illustration is a settlement in trust for oneself until death or bankruptcy and thereafter on one's wife: on the settlor being adjudged insolvent, the life interest vests in the official receiver despite the condition.

Provident Fund and Stock Broker's Card

A provident-fund rule that a member purporting to transfer or assign his share or interest in the fund forfeits his interest was held invalid under Section 12. By contrast, a rule of a Stock Brokers' Association forfeiting a defaulting member's card of membership was held outside the section — the card is neither property in the relevant sense nor a transfer; it is an institutional privilege.

Lease Exception Again

Leases are again an exception. A covenant determining a lease in the event of the insolvency of the lessee is valid. The condition applies to the insolvency of the person who has the term created by the lease; if the lessee assigns the term and then becomes insolvent, the condition does not apply to the assignee. Insolvency of the lessee will not work a forfeiture unless the lease provides for re-entry on the happening of insolvency — Section 111(g), as amended in 1929, makes the position explicit. Section 114A then provides for relief from forfeiture in such cases.

Reading Sections 10, 11 and 12 Together

The three sections form an internally consistent block. They police the intersection between the transferor's draftsmanship and the transferee's right to enjoy, transfer, and resist forfeiture. The exam-aspirant must apply them in this order, after first establishing that the property and the transferor have cleared the gates of Section 7:

1. Identify the interest. Is it absolute or limited? An absolute interest passes through all three sections; a limited interest is policed by Section 10 (transfer) and Section 12 (forfeiture) but not by Section 11 (enjoyment).
2. Classify the condition. Is it a restraint on transfer (Section 10), a direction on enjoyment (Section 11), or a forfeiture-on-insolvency clause (Section 12)?
3. Test for absolute or partial restraint. Under Section 10, an absolute restraint is void; a partial restraint is valid. Under Section 11, only restrictions on absolute interests are struck down. Under Section 12, the condition is void in all cases except in a lease for the benefit of the lessor.
4. Apply the exceptions. Lease (all three sections), married woman not Hindu/Mahomedan/Buddhist (Section 10 proviso), beneficial enjoyment of another piece of property of the transferor (Section 11 second paragraph), statutory prohibitions (override the sections).

Leading Authorities

The doctrinal trunk rests on a small set of decisions. Re Rosher, Rosher v Rosher [1884] 26 Ch D 801 settled that a condition operating as an effective absolute restraint is void, even if dressed as a partial restraint. Re Macleay (1875) supplied the substance-over-form test. Muhammad Raza v Abbas Bandi Bibi 59 IA 236 settled that a partial restraint to family is valid. Zoroastrian Co-operative Housing Society Ltd v District Registrar AIR 2005 SC 2306 settled that a partial restraint by community is valid. K Naina Mohamed v A M Vasudevan Chettiar (2010) 7 SCC 603 affirmed the family-test rule and clarified that it does not violate the rule of perpetuity. Sridhar v N Revanna (2020) 11 SCC 221 applied Section 10 to a gift-deed condition. Devi Dayal v Ghasita AIR 1929 All 607 settled that an invalid condition may yet operate as a personal covenant enforceable under Section 40 against a transferee with notice. Bhagwat Prasad v Damodar Das AIR 1976 All 67 fixed the rule that Section 11's second paragraph runs only with the transferor's land, subject to the assignment principles in Santhakumaran v Vivekanandan. Laxman Tatyaba Kankate v Taramati Harishchandra Dhatrak (2010) 7 SCC 717 settled that statutory bars on alienation override Section 10. The chapter on landmark cases on TPA traces these decisions in the larger doctrinal arc.

Pitfalls in Examination Answers

Three pitfalls recur. First, treating every restriction in a sale-deed as void under Section 10 — the section strikes only at absolute restraints, and partial restraints (family, community, time) are routinely valid. Second, applying Section 11 to a limited interest — the section applies only to absolute interests, and a restriction on enjoyment of a leasehold or life-estate is not within it. Third, conflating the doctrine of election under Section 35 with the doctrine of repugnant conditions — election is about a transferor purporting to transfer property he has no right to transfer and conferring a benefit on the owner; the repugnancy doctrine is about the transferor attaching impermissible conditions to a transfer he is otherwise entitled to make. The two are doctrinally and structurally distinct.

Frequently asked questions

What is the difference between an absolute and a partial restraint on alienation?

An absolute restraint is one that, in substance, deprives the transferee of the power to alienate — Re Rosher v Rosher held that an option to repurchase at one-fifth of market value during the wife's lifetime was, in substance, an absolute restraint, even though dressed as a partial one. A partial restraint leaves a substantial power of alienation intact. The Privy Council in Muhammad Raza v Abbas Bandi Bibi held that a restriction confining transfer to family members is partial and valid. Section 10 strikes only at absolute restraints; partial restraints are valid. The test, drawn from Re Macleay, is one of substance, not form.

Why is a lease exempt from Section 10?

Because of the very nature of a lease — a transfer of property for a time or in perpetuity in which the lessor necessarily retains an interest. The lessor's reversion is a real interest, and a condition that the lessee shall not sublet or assign is for the protection of that retained interest. Section 108(j) makes this explicit: a lessee may transfer his interest "in the absence of a contract to the contrary," so the parties may agree to restrict assignment. The 1929 amendment to Section 111(g) clarified that breach of such a restriction will not work a forfeiture unless the lease reserves a right of re-entry.

Can an invalid condition in restraint of alienation operate as a personal covenant?

Yes. The Allahabad High Court in Devi Dayal v Ghasita AIR 1929 All 607 held that an unregistered separate agreement that the vendee would not transfer except back to the vendor at the same price was "a special personal contract between the parties which was binding on them and could be enforced against a transferee with notice." The doctrinal effect is that an invalid condition may yet operate as a personal covenant binding the covenantor personally, and creating an obligation enforceable against a transferee from him with notice under Section 40. The condition fails as part of the estate but survives as a personal contract.

What is the difference between Section 10 and Section 11?

Both rest on the same principle that a condition repugnant to the interest created is void. Section 10 strikes at restraints on transfer; Section 11 strikes at restraints on enjoyment. Section 10 applies to any interest, whether absolute or limited, because the right of transfer is an incident of all ownership. Section 11 applies only to absolute interests — a restriction on enjoyment of a limited interest such as a lease or life-estate is not repugnant; it merely defines the limit of the interest. The illustrations to Section 11 sharpen the line: a direction to reside in a house gifted absolutely is void; a direction to leave trees standing on a life-estate granted for maintenance is valid.

What is the basic distinction between Section 11 and Section 31?

Section 11 deals with a direction attached to an interest created absolutely; Section 31 deals with a condition attached to an interest that is itself conditional from the start. A direction to enjoy property in a particular manner, attached to an absolute gift, is void under Section 11. A condition of defeasance — "the gift will be forfeited if the donee does not reside in the house" — is valid under Section 31, because the interest is conditional, not absolute. The illustration captures the line: a direction that B shall reside (void); a condition that the gift fails if B does not reside (valid).

Why is a condition forfeiting property on the transferee's insolvency void under Section 12?

The object of Section 12 is to protect the creditors of the transferee. Without the section, a condition of defeasance on insolvency would prevent the property from vesting in the official receiver or assignee, defeating the policy of insolvency law. The bar reaches both insolvency and "endeavouring to transfer or dispose" — the words extend to settlements designed to insulate the property from later financial decisions. The exception is a lease, where the lessor's interest in continuing to receive rent from a non-insolvent lessee justifies a forfeiture clause; even in a lease, the forfeiture works only if the lease reserves a right of re-entry under Section 111(g).