Condition Restraining Alienation Of Property By Donee In A Gift Deed Is Void: SC [Read Judgment]

The Supreme Court has observed that a condition in the gift deed that the donee shall not alienate the subject property is a void condition as per Section 10 of the Transfer of Property Act.

The issue in this appeal was whether the condition imposed in a gift deed that "the donee or his younger brothers who may be born hereafter have no right to alienate the schedule property in any manner whatsoever by way of sale, gift mortgage or otherwise" is void or not. The Trial Court had held that this condition is void, but the High Court held that it is valid.

The bench comprising Justices Ashok Bhushan and Navin Sinha referred to Section 10 of the Transfer of Property Act on Condition restraining alienation. It observed:

Section 10 expressly provides 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 13 his interest in the property, the condition or limitation is void. According to Section 10 any condition restraining the transferee the right of alienation is void. A plain reading of Section 10 of Transfer of Property Act makes it clear that the condition in the gift deed dated 05.06.1957 that defendant No. 1 shall not alienate the property is a void condition..

The bench approvingly quoted the observation in Brij Devi vs. Shiva Nanda Prasad, AIR 1939 Allahabad 221, in which the High Court had dealt with a contention that that Section 126 is an absolute exception to Section 10 and that in view of the terms of the former Section the donor was entitled to impose a condition entitling him to revoke upon any event happening including an alienation by the donee, provided that event did not depend on the will of the donor. In the said judgment, it was so observed:

"It is the duty of the Court to give full effect to every Section of an enactment. We see no difficulty in reconciling the provisions of Sections 10 and 126. Section 10 embodies the general principle that a transfer of immovable property may not impose a condition restraining the transferee from alienating the interest conveyed to him absolutely except in the case of a lease where the condition is for the benefit of the lessor. This general provision, in our judgment, applies to all transfers including gifts. Apart from the condition restraining alienation by a lessee, there is no other exception"

The Court also reproduced the following observations made in another recent Allahabad HC judgment in Prem Kali vs. Deputy Director of Consolidation, Sitapur and others, 2016(116) ALR 794:

A bare reading of Sections 10 and 126 of Act, 1882, shows that Section 10 lays down that in a transfer, the condition restraining alienation, cannot be inserted. Section 126 of Act, 1882 lays down that on happening of certain condition, not depended on the will of the donor, the gift can be suspended or revoked. Present case is not covered under Section 126. According to the respondent, gift can be conditional. But there is no question as to whether a gift can be conditional but the real question is that condition, which has been specifically prohibited under Section 10 of Act, 1882 can be imposed in the gift or not. There is no reason to hold that the condition which is specifically prohibited under Section 10 of Act, 1882 is not applicable to gift.

The bench also rejected another contention that gift deed was hit by Section 13 of the Transfer of Property Act. It said:

The reference of donee and his younger brothers or their male children was made while enumerating the conditions as contained in the gift deed. The condition was put on the donee and his younger brothers who may be born after the execution of the gift deed. The condition put on person unborn is entirely different from execution of gift deed in favour of a person who is not born. Thus, the gift was clearly a gift in favour of defendant No.1 and not in favour of unborn person, thus, Section 13 has no application in the facts of the present case. 

Case name: SRIDHAR vs. N. REVANNA 
Case no.: CIVIL APPEAL NO.1209 OF 2020 
Coram: Justices Ashok Bhushan and Navin Sinha
Counsel: Senior Advocates Jayant Kumar Sud and S.S. Javali

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