Section 10 of The Transfer of Property Act, 1882

Condition restraining alienation: 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: provided that property may be transferred to or for the benefit of a women (not being a
Hindu, Muslim or Buddhist), so that she shall not have power during her marriage to transfer
or charge the same or her beneficial interest therein.

Explanation:
If any property is transferred, there can be no condition restraining alienation, except in the
case of lease or for the protection and benefit of a Christian Women until the period of her
marriage. If a transfer made, has a condition or limitation which restricts alienation for the
purpose other than lease or for the benefit of a Christian women, the condition or limitation is
deemed to be void.

Case Laws:
Shri Ramachandra Bhakta vs Shri Krushna Chandra Bhakta and Ors.
(1999)
Facts: The suit property-Bari land, by a deed of family arrangement, was executed by the
plaintiff and his father on one side and Nidhi Bhokta (defendant No. 1) on the other
incorporating a pre-emptory clause that if any of the aforesaid parties wants to sell the land
allotted to his share, then the other party, if prepared to purchase the said property, the
demised land cannot be sold to any third party. However, if the party is unable or not
interested in purchasing the land on the market value, then it can be sold to any third party.
It was alleged that NK violating the aforesaid stipulation in the deed, alienated the suit
property to SKCB by registered sale deed, for a consideration of Rs. 500/-. The plaintiff,
therefore, brought a suit for declaration that the sale deed is illegal and void and for a
direction to the NB to execute the sale deed in respect of the suit property in favour of the
plaintiff, failing which the Court may execute the suit sale deed and for permanent
injunction. The NB however, took the plea that he has offered to sell the suit property to the
SRB, but since the plaintiff declined to purchase, he had sold the same to SKCB and as such,
there has been no breach of contract.
Decision: The prohibition contained in Section 10 of the Transfer of Property Act is
operative against absolute restraint on alienation only and not against a partial restraint.

Canbank Financial Services Ltd vs The Custodian & Others (2004)

Facts: Andhra Bank (Respondent No. 3) is a nationalized bank. Andhra Bank Financial
Services Limited (Respondent No. 4) is a company wholly owned by Andhra Bank. Canbank

Mutual Fund (CBMF) is a subsidiary company of Canara Bank, another nationalized bank.
The Appellant herein is also a subsidiary of Canara Bank.
In or about 1989, Canbank Mutual Fund floated an open ended investment scheme known as
CANCIGO on an assured return of 12.5% p.a. payable half yearly; the lock in period where for
was one year. A stipulation was also made to the effect that transfers are not permitted.
Hiten P. Dalal (Respondent No. 2) was a registered stock broker. Respondent No. 3 (Andhra
Bank) at his request applied for CANCIGO units of face value of Rs. 11 crores. Similarly,
Respondent No. 4 (Andhra Bank Financial Services Limited) also at the request of HPD
applied for CANCIGO units of face value of Rs. 22 crores. Indisputably, the payment of
application money for purchase of said CANCIGO units was to be made, out of the money
lying in the bank account of HPD. The AB and ABFS Ltd. complied with said request of HPD.
The CANCIGO certificates received by the AB and ABFS Ltd. were handed over to the HPD.
The interest accruing from the CANCIGO received by the AB and ABFS Ltd. was also
credited to the account of HPD. The said Respondents did not claim any right, title or
interest therein.
Decision: A beneficial trust has been created. The same would, thus, be transferable as
otherwise it would be hit by Section 10 of the Transfer of Property Act. Section 10 would not
be attracted only when the restriction as to alienation is only partial. A stipulation taking
away the whole power of alienation substantially is a question of substance and not of form.
Section 10 limits the application of such stipulation.

Shyamal Ranjan Mukerjee vs Nirmal Ranjan Mukerjee (2007)

Question of Law:
1. Whether the Temple which is abode of the Deity is alienable even if there is no such
prohibition in the Deed of Dedication?
2. Whether the properties other than Temple vested in the Deity are alienable?
Decision: Section 10 of the Transfer of Property Act makes it clear that if property is subject
to a condition absolutely restraining the transferee or any person claiming under him from
parting or disposing of his interest in property, such condition is void, except in case of lease.
But, since it is connected with a persons belief and faith, it cannot be alienated.
A writ of mandamus is further issued commanding State of Uttar Pradesh not to permit any
alienation of any property attached with any Temple and other Religious Institutions (Mutts,
Temples, specified Endowments which also includes Samadhis and other Religious
Institutions) etc. without prior permission of the District Judge concerned.

Section 11 of The Transfer of Property Act, 1882

Restriction repugnant to interest created: 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.
Where any such direction has been made in respect of one piece of immoveable property for
the purpose of securing the beneficial enjoyment of another piece of such property, nothing in
this section shall be deemed to affect any right which the transferor may have to enforce such
direction or any remedy which he may have in respect of a breach thereof.

Explanation:
If a property is transferred absolutely in favour of the transferee, then any condition or terms
of transfer, restricting the full enjoyment of the property (i.e.) repugnant to the interest
created, then the transferee is empowered under sec 11 of TP Act to receive and dispose the
property as if there was no such condition.

Case Laws:
Atika Begum, Amina Bi, Hajira and 2 Ors. vs Haji A.A.M. Abdulla,
Habbeb and 113 Ors. (2002)
Facts: The suit property consists of land, market, bazaar, stalls, houses and other
superstructure, known as Parachery Market, situated on the western side of Govindappa
Naicken Street, Madras-1 was purchased by the ancestors of the plaintiffs 1 and 2 as well as
the defendants 1 to 113 out of their common fund, and the same is owned by the plaintiffs
and defendants jointly by inheritance, sale and gift. Hafiz Mohammed Ghouse, executed a
registered will, which contains a list of sharers who were entitled to the suit property and the
number of shares held by each one of them. In the said registered deed, HMG declared
himself as the Manager of the suit property on behalf of the co-owners and stipulated a
condition that a sharer could sell his share to another sharer alone; and the property should
not be divided by metes and bounds, and put into individual possession.
Decision: While Section 10 of the Transfer of Property Act deals with a restriction against
the transfer of interest conveyed absolutely, Section 11 of the Transfer of Property Act deals
with the restrictions on the enjoyment of such interest conveyed absolutely. In fine, while
Section 10 refers to a restriction on the transfer of property, Section 11 refers to a restriction
on the enjoyment of the property. The principle behind Section 11 is that a condition
repugnant to the interest created absolutely is void. It is well settled in law that a partition is
not actually a transfer of property. The partition signifies the surrender of a portion of a joint
right in exchange of a similar right from the co-sharer. The partition effects a change in the
mode of enjoyment of property, but is not an act of conveying property from one to another.
In other words, partition is a process, in and by which, a joint enjoyment is transformed into
an enjoyment severally. Hence, partition is not actually a transfer of property, but would only
signify the surrender of a portion of a joint right in exchange of a similar right from the other

co-sharer or co-sharers. A right of partition, therefore, being an incident of joint ownership

of property, any restriction repugnant to such right or interest is invalid as per Section 11 of
the Transfer of Property Act.

Inderjeet Singh Sial And Anr vs M/S. Karam Chand Thapar And Ors
(2012)
Facts: The appellants are the heirs of one Sardar Pishora Singh Sial. SPS obtained a mining
lease from the erstwhile Government of Central Provinces for extraction of coal in 420.27
acres of land. He also obtained in the same village for prospecting of coal, an area measuring
242.29 acres. In anticipation of obtaining the lease and the licencee he entered into a
contract with Karam Chand Thaper and Brothers Ltd. to assign his rights in the lease and
prospecting licence when maturing. On obtaining, he sought and received permission from
the Government for transferring those two rights to KCT and Bros. Ltd. The Government
however secured there under for itself payment of due royalty from SPS until a particular
date and thereafter from the said company. On such permission being granted, a sale deed
was executed by SPS in favour of KCT and Bros. Ltd. This first assignee later assigned its
rights, interests and obligations in favour of the second assignee M/s. Rawanawara Collieries
and in the same pattern, the second assignee sold its rights, interests and obligations to the
third assignee M/s. Oriental Coal Company Ltd. The lease and licence was for a period of
thirty years starting from particular dates as embodied in the initial deeds.
There are distinct two royalties which are playing their part. First is the royalty which
Pishora Singh, legally bound, had undertaken to pay to the State Government on obtaining
mining and prospecting rights. The second "royalty" figuring is embodied in the assignment
deed Ex.D-5 wherein royalty has been undertaken to be paid by Karam Chand Thapar and
Bros. Ltd. to Pishora Singh to the extent and manner stipulated therein as part of the
consideration for assignment, over and above the royalty payable to the State.
The liability to pay such stipulated royalty to Pishora Singh ultimately rested on the three
afore-mentioned assignees, jointly as well as severally. And in the discharge of that liability
undisputedly periodic payments had been made to Pishora Singh (including his heirs) for
about 20 years. Then suddenly, as is the case, the assignees cooled off and stopped making
payments. Ultimately, the heirs of Pishora Singh Sial filed a suit against the three assignees
for recovery of the sums of royalty then fallen due, together with interest; total claim then
being for Rs.2,32,627.18 up to a certain period and on quantities of coal despatched.
Decision: The defendants' first appeal before the High Court of Madhya Pradesh was placed
before a Division Bench of two Hon'ble Judges.
Judge 1: The stipulated payment was meant to be royalty as such and thus not claimable by
the plaintiffs as individuals.
Judge 2: Held that the term in the deed directing payment of royalty or rent would be
offensive to the enjoyment of absolute rights and thus hit by the provisions of Section 11 of
the Transfer of Property Act.
Appeal to the SC via SLP: It may be true that the document, written in English language, may
have been prepared by a lawyer and was entered into between persons conversant with the
vocabulary employed in mining leases. Yet these factors per se cannot conclude the matter

that the word "royalty" used in the document was meant to be royalty as such. If intelligence
and responsibility is to be attributed to the draftsman and the contracting parties for using
the word "royalty" in that technical sense, then it cannot be imagined that they would have
overlooked the status of the contracting parties inter se. We cannot thus assume that they
were well versed in one aspect and not in the other. Strictly speaking, had the draftsman and
the signatories to the deed meant "royalty" as such, then they could not have omitted to
identify who had the sovereign prerogative or the State part to play. The word "royalty" thus,
in the deed was used in a loose sense so as to convey liability to make periodic payments to
the assignor for the period during which the lease would subsist; payments dependent on the
coal gotten and extracted in quantities or on despatch.
The commodity goes by its value; not by the wrapper in which it is packed. A man is known
for his worth; not for the clothes he wears. Royal robes worn by a beggar would not make
him a King. The document is weighed by its content, not the title. One needs to go to the
value, not the glitter. All the same, we do not wish to minimise the importance of the right
words to be used in documents. Therefore, we are of the view that the word "royalty" was
used in the deed mis-descriptively and was really meant to cover an important item of the
consideration due for future payments. Section 54 of the Transfer of Property Act clearly
postulates that sale is a transfer of ownership in exchange for a price paid or promised to be
paid or part paid and part promised. In either situation title to the property would get
transferred.

Bhavani Amma Kanakadevi vs C.S.I. (2007)

Facts: Plaint schedule property having an extent of 1.12 acres belonged to Parameswaran
Pilla, the original plaintiff, the Appellants are his legal heirs. It was sold to respondent C.S.I.
Dakshina Kerala Maha Idavaka for the purpose of construction of a private college for a
consideration of Rs.11,200/-. There is a clause in the sale deed that if by any reason a college
could not be constructed, respondent vendee shall reconvey the property for the same
consideration to the plaintiff. Contending that no college was constructed and as provided
under sale deed, plaintiff is entitled to get the property reconveyed by respondent and
respondent is attempting to dispose the property to third parties. Respondent resisted the
suit contending that clause in Ext.A2 to reconvey the property to the plaintiff is void under
Section 10 of Transfer of Property Act.
Decision: Though Ext.A2 does not contain a specific clause prohibiting respondent from
alienating the property to third parties, there is an implied clause that in the event of failure
to construct a college, the property shall be reconveyed to the assignor at the same price
thereby shutting out any other option. It is an absolute restraint on the right of respondent to
deal with the property including alienation, which is void as provided under Section 10.