A transfers the ownership of certain lands to B, C and D by way of gift with a condition that they shall not divide the property for 10 years. Examine the validity of the condition.

Question: A transfers the ownership of certain lands to B, C and D by way of gift with a condition that they shall not divide the property for 10 years. Examine the validity of the condition. [BJS 1977]

Find the answer to the mains question of Property Law only on Legal Bites. [A transfers the ownership of certain lands to B, C and D by way of gift with a condition that they shall not divide the property for 10 years. Examine the validity of the condition.]

Answer

Section 10 of the Transfer of Property Act, 1882 talks about the condition restraining alienation. It states 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.

Section 10 stipulates that any condition imposed on the transferee which would amount to an absolute restraint on the right of the transferee to dispose of his interest in the property shall be void. The property must be transferred to the transferee subject to the condition.

In Mohd Raza v. Abbas BandiBibi,(1932) 59 IA 236, a condition imposing restriction for a particular time or transfer to a specific person has been held to be void.

However, where the restraint does not take away the power of alienation of the transferee substantially but only limits it to some extent, the restraint is partial. A partial restraint is valid and enforceable. In the words of George Jessel,

" the test is whether the condition takes away the whole power of alienation substantially; it is question of substance and not of mere form. You may restrict alienation in many ways, you may restrict it by prohibiting it to a particular class of individuals or you may restrict alienation by restricting it to a particular time".

In Renand v. Tourangeaon, (1867) LR 2 PC 4., it was held that a condition that the transferee shall not transfer the property for a period of twenty years is an absolute restriction and thus void. If it were a condition that the transferee shall not transfer the property for a period of 3 years, it would be a partial restraint and thus valid.

Moreover, a condition that transferee shall not transfer the property by way of gift, is a partial restraint and thus valid.

Thus, applying the provision above and judicial precedent to the present case at hand, where A transfers the ownership of certain lands to B, C and D by way of gift with a condition that they shall not divide the property for 10 years, it is imposing two restrictions i.e., no alienation by way of gift and for 10 years. Such restriction is void by virtue of section 10 of the Transfer of Property Act.