Monday, May 27, 2024

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MODEL ANSWERTPA

CONDITION RESTRAINING ALIENATION

Explain the principle laid down under section 10 of TPA with respect to condition restraining alienation.

Section 10 lays down that where property is transferred subject to a condition absolutely restraining the transferee from parting with the interest in property, such condition is void. Conditional transfers may incorporate a condition prior to the transfer or subsequent to the transfer.

Conditional restraint:
These conditions are called conditions precedent. In such cases, it is only if the condition is fulfilled that the transfer would take place, and if it is a condition that is either opposed to public policy or is unlawful or immoral, the transfers subject to such conditions would also become void. If the condition is such which is impossible to perform, then again this conditional transfer would be void.

X agrees to transfer his house to Z on the condition that B must marry his daughter D, within one year. D dies within a month of this agreement without marrying B. The condition becomes impossible to perform and the transfer would not take place.

Subsequent restraint:
These conditions are subsequent to the transfer. The time for compliance with this condition is after the transfer takes place and the property or an interest in the property vests in the transferee. Here, if the transfer is subject to a condition that prevents the transferee from disposing of or parting with his interest in the property that vested in him through this transfer, the condition would be void, but the transfer would remain perfectly valid. This means that even if the condition is incorporated with mutual agreement, the fulfillment of it is not binding on the transferee. He can ignore it, and the original transferor would be without any remedy. He cannot sue for cancellation of the transfer or for claiming damages for breach of contract.

For example, A a husband settles property on his wife W and provides in the settlement deed that W would have no power to sell the property without his consent. W took the property and sold it without his consent. A would have no remedy and the sale effected by W would be perfectly valid. The condition incorporated in the deed, namely that W had to obtain her husband’s consent for selling the property, was in the nature of a restraint on her power to alienate the property as an owner, and is therefore void.

The underlying principles behind this rule are that of equity, justice and good conscience, that prevent the transferors from incorporating conditions in the transfer deeds that are repugnant to the nature of interest that is created. Power of alienation is one of the basic rights of the owner and an attempt to encroach upon this right or to control it even after the property has been vested in the transferee, is statutorily prohibited. Section 10 applies only to transfers made by the act of the parties and does not apply to Court sales.

Under section 10, absolute restraints are declared void, however partial restraint may be allowed. The use of the term ‘absolutely’ suggests that where the restriction is partial it will be permitted. This means that some or little control over the power of alienation, of the present owner by the previous owner is allowed.
An absolute restraint is one that takes away the power of alienation completely or substantially except for religious purposes whereas partial restraint is one that imposes some restriction on the power of alienation but the transferee is substantially free to alienate property in a wide variety of ways.

In the case of Attwater v. Attwater (1853) 18 Beav 330, it was held that if power of alienation is restricted to a particular person, only then it is void as an absolute restraint whereas If the power of alienation is exercisable in favour of a class of persons, it would be considered as a partial restraint.

In the case of Renand v. Taurangean (1867) LR 2 PC4, it was held that a condition that transferee shall not transfer the property for a period of 3 years is a partial restraint and thus valid. However, if the restriction is for a period of 20 years, it was held to be an absolute restraint.

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