SECTION 10: Restrictions on Alienatio

Austin has de ned ownership as the right to inde nite uses, unlimited duration, and unrestricted
disposition of the property. Fredrick Pollock has de ned ownership as a complete allowance of
power of usage and disposal. Ownership of the property carries with it certain basic rights, such as a
right to have the title to the property, a right to possess and enjoy it to the exclusion of everyone
else, and a right to alienate it without being dictated to, save in accordance with a provision of law.
An absolute right to dispose of the property indicates that the owner can sell it for consideration or
can donate it for religious or charitable purposes he may gift it to anyone, mortgage it or put it up
for lease.

Save with the help of law, no other person can interfere with this power or right of the owner or
dictate to him, what should be the manner of alienation, should he alienate or not, or even what kind
of use it should be put to. In short, this right of alienation, that is one of the basic rights of the
owner, cannot be unreasonably encroached upon by anyone through a private agreement. This
general rule is applicable despite there being an express contract to the contrary, and prevents the
transferor from controlling the power of alienation of the transferee once the interest in the property
is transferred

Can alienation of property be restrained

Section 10 to 18 of the Transfer of Property Act, 1882 state the rules for alienation of property
• Section 10 lays down that where the transferee is absolutely restrained from transferring his
interest in his property to another person because of a condition which came along when the
property was transferred to the transferee, then this condition will be made void. The
transfer, from the transferor to the transferee would remain valid.  
• For example, A transfers some property to B as a gift but with the condition that while A is
alive, B must not transfer the property to any other person. This condition will be held void
as it absolutely restrains B from transferring his interest in the property to another person.

This is commonly known as the ‘rule against alienability’. The Transfer of Property Act is based on
the principle that there can be a free transfer of property and has been speci cally made with regard
to free transfer. If conditions restraining transfer are imposed, then the free transfer would be
restricted and there would be no use for the Transfer of Property Act

However, only conditions mandating ‘absolute restriction’ are void. There are conditions which call
for partial restraint to be observed with regard to the transfer of property. If we are to determine
whether a condition is absolute or partial, then one must look at the substance of the condition, and
not merely the words. Therefore, restraints can be classi ed into two categories

Alienation refers to the process of a property owner voluntarily giving or selling the title of their
property to another party. When property is considered alienable, that means the property is able to
be sold or transferred to another party without restriction. This is based on the general rule of
jurisprudence “alienatio rei prae fertur juri accrescendi” that is to say that alienation is favoured
by law rather than accumulation

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 Section 10 of Transfer of Property Act, 188

Where property is transferred subject to the condition or a 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 the limitation is void, except in the case of lease where the condition is for
the bene t of the lessor or those claiming under him
Provided that property may be transferred to or for the bene t of a women (not being a Hindu,
Muhammadan or Buddhist), so that she shall not have power during her marriage to transfer or
charge the same or her bene cial interest therein[3]

Conditions Restraining Alienatio

Whenever any person who is the owner of any property and is competent to transfer the property,
may transfer such property either with or without condition. Such conditions act as limitations or
restrictions on the rights of the transferee. Conditions concerning transfer may either be condition
precedent or condition subsequent

Condition precedent means the terms of transfer of property imposes a certain condition which must
be ful lled before a person can take interest in the property. Condition subsequent requires the
transferee to ful ll the conditions imposed upon him immediately after the property is vested

In the case of Omwati v. State of Haryana[4], it was held by the High Court of Punjab-Haryana that
any restriction imposed by the government on the alienation of property cannot operate from the
retrospective effect without enabling the provision in the statute

Absolute restrai
Restrain on alienation is said to be absolute when it totally takes away the right of disposal. Section
10 of the Act says that when any condition or limitation imposed which absolutely restrains the
transferee from disposing of his interest then such restriction will be treated as void and will not
have any effect

However, the transfer will be treated as valid. Section 10 relieves the transferee of an immovable
property from any such absolute restrain placed on his right to deal with the property in his as
owner. Section 10 applies to a case when any property is transferred with any such condition or
limitation which restricts transferee from disposing of his interest for making such a condition
invalid the restrain must be absolute restrain

In Achammal v. Rajamanickam Krthikeyan[5], Will contained a direction that the property

bequeathed should be applied or enjoyed in a particular manner. The court said that once a property
is bequeathed absolutely, a condition imposing restraining would be void. Therefore, the Court
came to the conclusion that the legatee was entitled to receive the property and deal with the
property as if no such condition was there in the will

When any such property is transferred with condition which absolutely restrains the transferee from
alienating such property or disposing of his interest then such condition will be treated as void

The owner of the property has liberty to sell the property to whomsoever he may desire at any time
and for any consideration. There are certain integral components while transferring the property and
it is totally at discretion of the transferor to decide the time and consideration of transfer. Restrain
on alienation of property can be with respect to time, person, consideration and purpose
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 • Restriction imposed with respect to time: When any condition is imposed upon transferee
which directs him or absolutely restricts him to sell the property for particular period of time
then such condition or restriction would be treated as void. For e.g.- If Virat sells his house
to Rahul with a condition that he should not sell it for ten years then such condition would
be treated as void. But is any such condition if imposed by transferor in terms of transfer
upon transferee and it is for the bene t of transferor and for short period of time then such
condition or restriction would be treated as valid.

• Restrain imposed with respect to consideration:

When transferor has imposed a condition upon transferee that he should sell it only for a
xed price speci ed by him or directs him that the property should be sold only at market
price and out of the sale proceeds something should be paid to speci c person or for speci c
purpose then such conditions would act as a restrain on transfer of property and would be
void. Such conditions cannot be imposed by transferor upon transferee which absolutely
restrains him from disposing or parting of his interest in the property.
For e.g.- If Mahi sells his house to Rohit for Rs.20,000 and imposes a condition that if in
future if Rohit wants to sell this house then can sell it only for Rs. 15,000. Condition will be
treated as void as Rohit is at liberty to sell the house for any consideration.

• Restrain imposed with respect to person:

When there is any restriction which is imposed by the transferor which directs the transferee
that he can only sell it after obtaining the prior approval from any speci c person then such
restriction will be treated as clog on property and such restriction is void but if a condition
that he can only transfer it to speci c person can be either partial or restrain. For e.g.- If A
sells his property to B with a condition that if in future if B wants sell it, he would only sell
it to daughter A. Such condition would be treated as void. 

• Restrain imposed with respect to purpose:

If any property which is transferred by the transferor which directs the transferee that if in
future, he wants to sell it, then he may sell it only for speci c purpose. Such restrain would
act as absolute restrain on the power of transferee to transfer his interest as per his
convenience and will.

• Transferee is at liberty to sell his property to any and for any speci c purpose desire.
Therefore, any such condition imposed upon him in the terms of transfer would act as void
and the transferee may ignore such conditions and may sell it any one and for any purpose
he may desire.

• Conditions that the property should be sold for religious purpose, or for any other purpose
such as construction of educational institution would operate as void as being repugnant to
the right of alienation[6]

In Kannamal v. Rajeshwari, AIR 2004 NOC 8 (Mad), a life estate was to be created in favour of
‘M’, but the transferor gave an absolute restriction along with the property transfer to M, whilst
divesting himself of all his interests in the property. This restraint was held to be void as there was
an absolute transfer.

In Mohd Raza v. Abbas BandiBibi,(1932) 59 IA 236, a condition imposing restriction for a

particular time or transfer to a speci c person has been held to be void.
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Partial Restrai
Section 10 of the Act has only provided for absolute restrain and it silent on partial restrain[7].
When any such transfer which does not take away the rights of alienation it is considered to be
partial restrain. Partial restrain as regard to time, place or person is valid and enforceable

For e.g. A transfer property to B with a condition that he should further not alienate in the favor of
D who is trade competitor A. It contains partial restrain and is considered to be valid. A total restrain
on the right of alienation is void but partial would be considered as valid and binding. This rule is
based on sound policy of free circulation[8]. A condition which is imposed in the bye-laws that the
property cannot be sold to non-Parsi will operate as valid condition[9].

Exceptions to Section 1
Whenever any property is transferred which absolutely restrains transferee from disposing of his
interest then such restrain would be considered as void. However, there certain exceptions to rule of
restrain on alienation. Exceptions are in the favor of lessor and other in the favor of married woman

• Lease: A condition in the lease deed, lessor can impose a condition that lessee shall not sub
lease it. A condition imposed in the lease deed that lessee will have to surrender the property
in the event that lessor needs to sell the property will be considered to be valid condition.
Thus, any condition restraining lessee from alienating leasehold property is not invalid.

• Married Women: Section 10 provides second exception in relation to married woman who
is non-Hindu, Mohammedan or Buddhist. It provides that property may be transferred to or
for the bene t of a woman (not being Hindu, Mohammedan or Buddhist), in such cases
transferor can impose a condition which restricts the right to alienate the property further
and such condition would not be considered as void

In a condition restricting alienation based on the time period in which it cannot be alienated, the
time period must be a short one coupled with a bene t for the transferor or it will be deemed to be
an absolute condition and avoided. Where the time period was 5 years and the further bene t was
attached saying that the transferee should re-purchase the property for a higher price in that time,
and if he doesn’t, the purchaser may alienate the property. This was held valid as a partial condition.
This is the case of Loknath Khound v. Gunaram Kalita[6]

A restriction specifying that alienation must only be made on obtaining the consent of some person
is usually held void, but it may be validated as a partial condition in some cases. In Mahamudali
Majumdar v. Brikondar Nath [7], it was held that the transferor himself while selling the property
to one outsider, cannot place a condition that binds him to sell the property to the members of the
transferor’s family only

# CASE LAW 1: ROSHER V ROSHER [(1884) 26 CHD 801

[The test to determine whether a restraint is absolute or only partial, depends upon the effect and not
on the form of words laying down the condition.
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 FACTS: A Testator devised an estate to his son (or his heirs) subject to a condition that if he should
desire to sell the estate, during the life time of testator's wife, she would be given an option to
purchase the estate at a price of £300, while the value of the  property was £15,000. (option to
purchase the property at one- fth of its value)
After the expiration of that period, the widow would have the option to occupy the premises, for the
period in excess of three years, at a xed nominal rent. If the tenancy exceeded a period of seven
years, again she was entitled to occupy the property for a xed rent. The son or his heirs were under
an obligation therefore to offer the premises to widow rst, and only when she declined to take it,
could they let it out to other persons

ISSUE: 1.Whether the son was entitled to alienate the estate, without rst offering to the widow the
option to purchase the premises
2. Whether the provisions and directions contained in the will in reference to the option of purchase
were null and void.

OBSERVATION

EFFECT OF THE CONDITIONS IMPOSED IS PRIMARY

The court observed that the test to determine whether a restraint is absolute only partial, depends
upon the effect and not on the form of words laying down the condition. If the effect is absolute, it
would be struck off as bad howsoever clear language may have been used.

Reference was drawn to the Bragg and Tanner case the Chief Justice held that any restraint
whatsoever on the consideration for sale of property is void as it will circumvent the spirit of the
law.

BASED ON THE FACTS OF THE CASE

Thus, in this case it was held that a condition to sell property at 1/5th of its value even to a limited
period was an absolute restraint during that period and is hence void. The throwing away at 1/5th
value (irrespective of whatever might have been its market value), is equivalent to a restraint upon
selling at all (ie. 'during the life time of widow, you, shall not sell'")

HELD: This was held to be a effect an absolute restraint and void

In Gayashi Ram v. Shahabuddin[xxx], the sale deed contained a clause that the transferee would not
transfer the property to any person either by way of sale, gift or even mortgage except the transferor
or his heirs. The court held that this condition is void and therefore invalid

In Manohar Shivram Swami v. Mahadeo Guruling Swami[xxxi], A and B were rst cousins. A made
a will of his property in favour of B. On A’s death, B acquired the title of the property and sold it to
C, who was also the brother of A. The sale deed contained a condition that if C wanted to sell the
property, he would sell it to the seller’s Jangam (caste) family and not to anybody else. The court
held that the condition incorporated in the sale deed absolutely restrained C from parting with his
interest in the property and therefore was void. The court upheld the validity of sale affected by C.
This decision of Bombay High Court comes as a surprise as the condition here in fact was not to
sell out of the family, which in a number of cases has been held to be a partial restraint, and binding
on the parties

Brahamanand v.  Smt. Roshan Dev (1994

A sale absolute interest is transferred in the vendee any absolute restraint on the right of the vendee
is repugnant to the concept of sale and it would be forbidden under this section and, therefore, any
 



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 condition, even if entered into immediately after the sale providing that neither vendor nor his heirs
will alienate or dissipate or fritter away the land is violative of Section 10

# CASE LAW 2: ZOROASTRIAN COOP. HOUSING SOCIETY LTD. v DISTRICT

REGISTRAR, COOP. SOCIETIES (URBAN)[(2005) 5 SCC 632

FACTS: https://www.legalmaxim.in/zoroastrian-co-operative-housing-society-ltd-v-district-
registrar-co-op-societies-urban-2005-5-scc-632

The Tribunal, High Court held that the bye-law restricting membership to Parsis was a restriction on
the right to property and the right to alienate property and, therefore, was invalid in terms of Article
300-A of the Constitution or that such a bye-law would amount to a restraint on alienation and
hence would be hit by Sec. 10 of the T.P. Act.

CONTENTION
Appellan
• Under Article 19(1)(c) of the Constitution, Parsis had a fundamental right of forming an
association and that fundamental right cannot be infringed by thrusting upon the association,
members whom it does not want to admit or against the terms of its bye-laws. 

• He also contended that there was nothing in the Act or the Rules which precluded a society
from restricting its membership to persons of a particular persuasion, belief or tenet

• He also submitted that there was no absolute restraint on alienation to attract Sec. 10, T.P.
Act but a partial restraint, valid in law. 

Responden
• The learned Counsel for the respondents contended that Sec. 4 of the Act clearly indicated
that no bye-law could be recognised which was opposed to public policy. 

• A bye-law restricting membership in a cooperative society, to a particular denomination,

community, caste or creed was opposed to public policy and consequently, the authorities
under the Act and the High Court were fully justi ed in rejecting the claim of the Society
and such a restraint was clearly invalid in terms of Sec. 10, T.P. Act.

OBSERVATION

Validity of the Bye Laws of the Gujarat Cooperative Societies Act

It could not be held that the formation of such a society under the Act would be opposed to public
policy and consequently liable to be declared void. The appellant Society was formed with the
object of providing housing to the members of the Parsi community; it is open to that community to
try to preserve its culture and of life and in that process, to work for the advancement of members.
There is nothing is the Gujarat Cooperative Societies Act which precludes the formation of such a
society.

Section 10 has no application to Transfer of Membership

The court further observed: Sec. 10, TP. Act cannot have any application to transfer of membership.
Transfer of membership is regulated by the bye-laws. The bye-laws in that regard are not in
challenge and cannot effectively be challenged in view of what we have held above. Sec. 30 of the
 



 

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 Gujarat Cooperative Societies Act itself places restriction in that regard; it restricts the right of a
member to transfer his share only in favour of the Society or to a member of the Society and when
the committee has approved such transfer

Society imposed a Partial Restraint, Not Absolute

Sec. 10 relieves a transferee of immovable property from an absolute restraint placed on his right to
deal with the property in his capacity as an owner thereof. As per Sec. 10, a condition restraining
alienation would be void. The section applies to a case where property is transferred subject to a
condition or limitation absolutely, training the transferee from parting with his interest in the
property.
• The bye-laws provide that he should have the prior consent of the Society for transferring
the property or his membership to a person quali ed to be a member of the Society. These
are restrictions in the interests of the Society and its members and consistent with the object
with which the Society was formed. It is also not possible to say that such a restriction
amounts to an absolute restraint on alienation. 

• The restriction, if any, is a self-imposed restriction. It is dif cult to postulate that such a
quali ed freedom to transfer a property accepted by a person voluntarily, would attract Sec.
10. At best, it is a partial restraint on alienation. Reference was drawn to Mohd. Raga v
Abbas Bandi Bibi (1932) and Gummanna Shetty v Nagaveniamma which stated that Such
partial restraints are valid if imposed in a family settlement, partition or compromise of
disputed claims.

• Further, the fact that the rights of a member/allottee over a building of plot is attachable and
saleable in enforcement of a decree or an obligation against him cannot make a provision
like the one found in the bye-laws, an absolute restraint on alienation to attract Sec. 10. 

DECISIO
We are, therefore, satis ed that the nding that the restriction placed on rights of a member of the
society to deal with the property allotted to him must be deemed to be invalid as an absolute
restraint on alienation is erroneous. Respondent 3 is restrained from entering the property or putting
up any construction therein on the basis of any transfer by Respondent 2 in disregard of the bye-
laws of the Society and without the prior consent of the Societ

Ratanlal v Ramanuj Das AIR 1944 Nag 18

Where the property was given by father to the son under a family arrangement with a condition that
with respect of a portion of it, the son was prohibited from making any alienation during the life
time of the father, it was held to be not an absolute restraint and therefore was valid and binding on
the son.

Aulad Ali & Ali Athar AIR 1927 All

A condition that if any coparcener wanted to sell his share the other coparceners would have a right
to buy it, is valid

#CASE LAW 3: MUHAMMED RAZA V ABBAS BANDI BIBI (AIR 1932 PC 158)

FACTS: A transfer was made with a condition that the transferee should not sell it to a stranger but
only to members within the family (in a compromise in the family arrangement, property was given
to a widow with a condition that she would not alienate the property outside the family).
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 Issue: The question was whether such a partial restriction on alienation is so inconsistent with an
otherwise absolute estate, that it must be regarded as repugnant

The terms of the compromise were binding that the restriction as to alienation was only partial and
that such a partial restriction was neither repugnant to law nor to justice, equity and good
conscience

"It seems clear that after the passing of the Transfer of Property Act in 1882 a partial restriction
upon the power of disposition would not, in the case of a transfer inter vivos, be regarded as
repugnant.

In view of the terms of Sec. 10, and in the absence of any authority suggesting that before the Act a
different principle was applied by the Courts in India, their Lordships think that it would be
impossible for them to assert that such an agreement as they are now considering was contrary to
justice, equity and good conscience.

The court observed that family arrangements are specially favoured in the courts of equity. Thus,
where a person is allowed to take property upon the express agreement that it shall not be alienated
outside the family, a direct breach of it is not justi able. Such a condition may stem from a desire to
conserve the property within a speci c family or community, of which both the parties are
members.

HELD: The transferee had no power to alienate to the appellants ('strangers' to her in case) and
upon her death, the respondents (legal heirs) would be entitled to the property

"

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Section 11 : RESTRICTION ON FREE ENJOYMENT OF PROPERTY

Repugnant conditions
• Section 11 of the Transfer of Property Act contains conditions which are inconsistent with
the nature of the interest transferred are repugnant conditions. These conditions come with
the transfer when the transfer confers to the transferee, absolute interests in the property.
Any condition with a transfer of absolute interests in the property will be void.

• When a property is transferred absolutely, it must be transferred along with all its legal
incidents. In Manjusha Devi v. Sunil Chandra, AIR 1972 Cal 310, the parties entered into a
sale for a piece of land. In the sale deed, it was mentioned that the buyer could only use the
land for setting up a factory for jute textile manufacturing. It was held that this condition
was invalid as the absolute interests in the land had been transferred to the buyer and he
could use it as he pleased.

Positive and negative conditions

• Positive conditions: These are those conditions imposed on the transfer where the transferor
imposes a condition on the transferee to do some act. For example, A transfers land to B, on
the condition that he shall maintain and keep lling up the well on that plot of land. This
condition is positive.

• Negative conditions: These are those conditions imposed on the transfer when the
transferor imposes a condition on the transferee to not do some act. For example, A transfers
land to B, on the condition that he shall leave open a four feet wide space on the land, and
would not build anything on it.

Difference between Section 10 and Section 1

• Section 10 speci es that in a transfer with condition that absolutely restrains the
alienation of the property by the transferee, the condition will be deemed to be void.

• Section 11 speci es that in a transfer where absolute rights in the property have also
been alienated to the transferee, and where a condition is imposed that the transferee
cannot, in spite of having the absolute right in the property, do an act for his
enjoyment of the property, such condition will be deemed to be void.

• Thus, the differences in these sections are that in Section 10 the condition is deemed
void due to absolute restrainment and in Section 11, the condition is deemed void due
to the transfer being of absolute nature.   

Sec. 11 is practically a corollary to Sec. 10. In other words, Sec. 10 relates to the power of the
owner to alienate the property, and makes total restraint on it void, while Sec. 11 protects the power
of the owner to enjoy the property in any manner whatsoever, without there being dictation from
anyone. However, both sections seek to restrain the owner of the property to unduly interfere with
the rights of the owner of the property once the property has passed to him along with all the right

Sec. 11. 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 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 was no such direction
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 Where any such direction has been made in respect of one piece of immovable property for the
purpose of securing the bene cial 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.

One of the essential legal incidents of ownership of property is the right of free enjoyment of the
thing owned. Sec. 11 lays down that any condition restraining the enjoyment of property which is
transferred absolutely is void. The principle is that a condition will be void, if it detracts from the
very completeness of the interest created

When a property is transferred absolutely (e.g. sale, exchange or unconditional gift; but not a lease
or a mortgage or a grant for life), it must be transferred with all its legal incidents; the vendor is not
competent to sever from the right of property incidents which the law inseparably annexes to it, and
thereby to abrogate the law by a private arrangement. Thus, the following restrictions are void

(i) A condition attached with transfer of an absolute interest in estate that the grantee will reside in a
particular place in estate

(ii) The transferee should always let the land at a de nite rent or cultivate it in a particular manner

(iii) A condition in a deed depriving the co-owner of his claim to partition in respect of common
property. Similarly, a direction not to partition property until all the sons attained majority

(iv) A transfers his house to B with the condition that B would not demolish it

(v) A gift restraining enjoyment

Where A executes a lease of his house to B with a condition that he would live in it, and would not
use it for commercial purposes, and B opens a shop in the premises, A can sue B for violation of the
lease deed and stop him from using the same for commercial purposes. However, where A (owner
of a house occupied by two tenants) sells it to B with a condition that I would not collect rent from
the tenants or evict them, these conditions would not be binding on B, as they would be repugnant
to the interest that is created in his favour by this absolute transfe

Exception to Sec. 1

According to it (second para of Sec 11) the transferor may impose conditions restraining the
enjoyment of land if such conditions are for the bene t of the transferor’s adioining land' (rule laid
in Talk v Maxhy case). The transferor is competent to issue such direction if it has been made in
respect of one piece of immovable property for the purpose of securing the bene cial enjoyment of
another piece of property, and he is also competent to enforce such direction or any remedy which
be may have in respect of a breach thereof. Such conditions can be enforced only by the transferor
and not by the transferee of the other portion of the property (Leela v Ambujakshy AIR 1989 Ker
308). For example, A makes an absolute gift of a house to B, and directs that B shall not raise it
higher, so as to obstruct the passage of light and air to A's adjoining house, the direction will be
valid
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 Sec. 40. (Burden of obligation of imposing restriction on us

According to Sec. 40, "where, for the more bene cial enjoyment of h own immovable property, a
third person has, independently of any interes of land) in the immovable property of another, a right
to restrain the enjoyment in a particular manner of the latter property, such right may be enforced
against a transferee with notice thereof or a gratuitous transferee of the property affected thereby,
but not against a transferee for consideration and without notice of the right.

When a person transfers his immovable property, the transferee is often required to enter into a
covenant whereby the transferor imposes on the transferee conditions restraining the enjoyment of
land transferred for the bene t of adjoining land. The 'conditions restraining are known as
coremants covenant is an agreement in writing creating an obligation, which may be positive or
negative in nature

Positive covenant (burden on land) - It stipulates the performance of some act or the payment of
money. Its enforcement necessitates compelling the covenantor to put his hand into his pocket. For
example, a covenant that the transferee would form the strip of land (attached to the transferred
property) into a road and would ever afterwards keep it in repair. (1) Negative covenant (bene ts of
a covenant) - A restrictive covenant which forbids the commission of some act eg. not to erect 8
buildings

In determining whether there is a positive or negative covenant, it is the substance of covenant and
not its form that matters. For example, if n a covenant, to build on it is allowed, but if sell any
building the licencee would pay 1/4th of the sale-price to the owner. The condition was negative
and restrictive, it being in substance a restriction on licencees selling the land (Prabbu Narain y
Ramzan, 41 All 417)

Covenant running with the lan

A covenant is said to run with the land, when either the liability to perform it, or the right to take
advantage of it, passes to the transferee of the land. For example, a covenant in a lease for renewal
thereof is one running with the land, and may be enforced against all transferees. Similarly, a
covenant for title runs with the land

A covenant which runs with the land is one which binds the land in its inception, or which affects
the nature, quality or value of the land; it must be one that touches or concerns the land, i.e. it must
enhance the value of the land or bene t it in some other way. For example, a covenant to pay rent
and right to have quiet enjoyment. Again, suppose A grants sub-soil rights to a mining company and
the company agrees to pay damages if the surface land caves in or subsides. This is a covenant
running with the surface land

All covenants are binding as between the transferor and transferee. Sometimes, they are enforceable
even against the purchasers from the transferee and they are then said to "run with the land" (i.e.
such covenant are attached to the land irrespective of who is the owner of such land). A negative or
restrictive covenant always runs with the land, while a positive covenant never runs with the land

A (owner of a house) sells the adjoining land to B with a condition that B would leave open some
area for the seller's bene t. A died and his successors sued the assigns of B to enforce the covenant,
when he attempted to build upon it. They can do so as this covenant ran with the land [Rogers v
Hosegood (1900) 2 Ch 288].
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 A combined reading of Sec. 11 and Sec. 40 will bring out the following points:
(1) By virtue of Sec. 11, the original transferee is bound by all covenants (positive or negative)

(2) By virtue of Sec. 40, the subsequent transferee (a purchaser from the original transferee) is
bound only by negative/ restrictive covenant. A positive covenant cannot be enforced against a
subsequent transferee [Haywood v Brunswick P.B. Building Society (1881) 8 QBD 403;
Austerberry v Corp. of Oldhan (1889) 29 ChD 750]

In the latter case, A conveyed land adjoining his own land t with a condition that he would maintain
and repair a road on to to which B agreed. B later sold the land to C, and A sold his land to D. D
sued C to enforce the covenant. It was held that he I could not do so as a (positive) covenant i.e. a
burden on land can be enforced only if it amounts to either a grant of a easement, or a rent charge or
an estate or interest in land

(3) To bound a subsequent transferee for a negative covenant the covenant must be for the bene t of
adjoining land, and must be annexed to the covenantee's land. Further, such transferee for
consideration must have ‘notice of the said covenant

(4)A subsequent transferee for consideration and without notice is not even bound by a negative
covenant

(5) A gratuitous transferee (a transferee without consideration) is bound by such covenant, whether
he has notice of it or not

(6) Exception - Between a lessor and lessee, even a positive covenant bind a transferee from lease,
and the question of notice is immaterial

Rationale - A 'negative covenant' is like the bene t of a covenant and thus runs with the land so that
it can be enforced by the transferee to the person who has the bene t of the covenant (Le.
covenantee). A positive covenant' is a burden of a covenant and thus even though it be annexed to
the land, it will not bind the transferees. The reason for this rule is If a person sells land with a
covenant he would not get full value. Why should a purchaser from him be then allowed to ignore
the covenant and sell it free of covenant and get better value

LEADING CASE: TULK V MOXHAY [(1848) 2 PHILL 774

BENCH: LORD COTTENHA

FACTS: X, the owner of vacant land and several houses surrounding it (forming a square), had sold
the vacant land to E, who covenanted that he would keep it in the same condition (ie. unburdened
with buildings) and thus maintain the ground (vacant) and square garden by carrying out suf cient
and proper repairs The ground passed by diverse intermediary conveyances with the same covenant.
Finally Y purchased it, and he wanted to construct a building thereon, although he had notice of the
covenant. X led a suit and an injunction restraining Y from building

ISSUE: Whether an equitable covenant limiting the use of a property could ‘run with the land’ and
bind a future owner of the property

OBSERVATION
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 THE SUBSEQUENT PURCHASER HAD NOTICE: Since a covenant is a contract between
the vendor and the vendee, it may be enforced against a subsequent purchaser who has notice
of the contractual obligation of his vendor, even though it does not run with the land

This position was clearly unjust, since X had legitimate interest in preserving the amenities of the
surrounding parts which he had retained. Impressed by the justice of X's claim, Lord Cottenham,
LC. cast about to nd same reason for granting the injunction. He found himself able to do so by
holding that since Y had notice, his conscience was affected by the covenant

EQUITABLE INTEREST: In other words, the decision in favour of X amounted simply to this,
that he had an equitable interest in the enforcement of the covenant. Thus a new class of equitable
interest was created in order to supply the de ciencies of the common law.
This interest as de ned and modi ed by subsequent authorities has now become restrictive or
negative covenant of modern law. It was contended by the defendant that the vendee could not
violate contract, but the purchaser from him may violate. The court observed that if this contention
is accepted, it would be impossible for an owner to sell any part of his property without incurring
the risk of rendering what he retains worthless.

RULES REGARDING COVENANT: : It was further contended by the defendant in this case that
the covenant does not run with the land. The court observed that question is not whether the
covenant does not run with land, but whether the party be permitted to use the land in a manner
inconsistent with the contract entered into. The court in this case, thus, laid down two rules
(i) Covenants between the transferor and the original transferee are always enforceable
(ii) Negative covenants are binding on the subsequent transferee with notice

POSITION OF EQUITY: It was held that no one purchasing with notice of an equity can stand in
a different situation from that of the party from whom he purchased; and therefore, Y who was
aware of the conditions in the contract, irrespective of their character, was bound by it.

HELD

(1) A covenant between vendor and purchaser on the sale of land, that the purchaser and his assigns
will use or abstain from using the land in a particular way, is enforceable in equity against all
subsequent purchasers with notice
(2) This is so regardless of the question whether the covenant runs with the land so as to be binding
on subsequent purchasers at law

The general rule of the TP Act is that the purchaser gets all the rights which the transferor had in
that property. But, in the above case, the transfer was subjected (a condition imposed) to bene cial
enjoyment of the transferor's property. The rule in Talk v Maxhay forms an exception to Sec. 11 and
also incorporated in rst para of Sec. 40.

FINAL ANSWER:

A full ownership confers upon its owner complete liberty of action with regard to its enjoyment,
disposition and management, so that if a transfer of such interest were accompanied by a condition
that the transferee should always let the land at the de nite rent or cultivate it in a particular manner,
the condition would be void on the ground of its repugnancy with absolute ownership
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