The Invisible Handcuffs: Understanding Restraints On Property Alienation
Is your right to sell your property truly absolute? Unravel the intriguing
world of section 10 and discover the hidden limitations.
Section:10 Condition Restraining Alienation
In cases where property is transferred with a condition or limitation that
completely restricts the transferee or anyone claiming their rights from selling
or transferring their interest in the property, such conditions or limitations
are considered invalid. However, there is an exception in the situation of a
lease, where the condition benefits the lessor or those connected to them.
Additionally, there is an exception of allowing property to be transferred to or
for the benefit of a woman (excluding Hindus, Muslims, or Buddhists). In such
cases, she may not have the authority during her marriage to transfer or
encumber the property or her beneficial interest in it.
Possessing an ownership of the property comes with inherent rights, including
the entitlement to hold its title, the privilege to exclusively possess and
relish it without interference, and the freedom to transfer it as desired,
except as regulated by legal provisions. An absolute right to dispose of the
property indicates that the owner has the authority to trade it for value, offer
it for religious or charitable objectives through donation, provide it as a
gift, utilize it as collateral for a loan, or make it available for lease.
aforesaid, except through legal means, no external party can infringe upon this
authority or entitlement of the owner, nor can they instruct the owner on the
method of transfer, whether to transfer at all, or the specific purpose for
which the property should be utilized.
Right to alienation represents a fundamental entitlement of property owners,
safeguarding them from unjust intrusion by others. This fundamental principle
holds true even in cases where there is a specific contract suggesting
otherwise. Additionally, it ensures that the original owner cannot impede the
transferee's ability to transfer ownership interest in the property once it has
Unveiling The Legal Tapestry: Zoroastrian Coop. Housing Society Ltd. V. Registrar, Coop. Societies
Any law which provides for these special privileges to this class would not
violate fundamental rights like Articles 14 (right to equality), 19 (1)(f) and
31 (then right to property), 19(1)(e) (right to settle anywhere in the country)
and even Article 21 (right to life and personal liberty) and 22 (protection
against preventive detention). It was unthinkable in a constitutional
democracy�. CJI quoted on Article 35A demolished case.
In the pivotal judgment of Zoroastrian Coop. Housing Society Ltd. v. Registrar,
Coop. Societies (Urban), 2005, a society was formally registered under the
Bombay Co-operative Societies Act. Its primary objective was to construct
residential houses. The society's regulations explicitly restricted membership
solely to Parsis. Additionally, the bye-laws contained a clause prohibiting
members from transferring houses to non-Parsis.
The Bombay High Court ruled that
any byelaw within a cooperative housing society that discriminates based on
religion, race, or caste, hindering an individual's ability to transfer
membership and property rights, is legally unacceptable. Constraints on
transferring membership and property rights to individuals outside the Parsi
community were deemed unlawful.
Moreover, by applying Section 10 of the Transfer
of Property Act in this case, it is evident that a condition or limitation on
property transfer preventing the transferee or their successors from selling or
transferring their interest is invalid. The byelaw imposing restrictions on a
member, preventing the alienation of property to a non-Parsi, is prima facie
The case was appealed to the Supreme Court, where the Court concluded that an
individual who joins a cooperative society and agrees to adhere to its rules,
including the stipulation that property can only be transferred with the
society's prior approval to an eligible society member, does not impose a
complete restraint on property transfer.
Therefore, this does not violate
Section 10 of the TP Act. As a result, the High Court's decision, asserting that
the restriction barring society members from selling their allotted property to
non-Parsis constituted an absolute prohibition on property transfer and was
unsustainable, was overturned by the Supreme Court. The Supreme Court clarified
that the provision in the bylaws, restricting sales to Parsis rather than non-Parsis,
constituted a partial limitation rather than an absolute one.
The Constitutional Validity Of Article 300a: A Study Of The Right To Property In The Indian Constitution
Exploring the complexities of the ruling by the Supreme Court has been met with
significant concern and debate. On the surface, it appears to conflict with
fundamental rights enshrined in the Indian Constitution, specifically Article
19(1)(f) and Article 31 (now repealed with Article 300A).
rights are deeply woven into the very fabric of the Constitution, and their
erosion could potentially leave irreparable damage. These fundamental rights,
guaranteeing freedom of trade, profession, and property, are intricately woven
into the very fabric of the Indian Constitution. They cannot be summarily
dismissed without causing irreparable damage to the Constitution's delicate
balance and its overarching commitment to individual liberties.
In 1978, the forty-fourth Amendment to the Constitution instigated a pivotal
transformation in the status of the right to property, reshaping its definition
and impact. This amendment marked a significant shift by abolishing Article 31,
thereby relocating the right to property from the domain of fundamental rights.
Instead, it was redefined as an ordinary constitutional right through the
introduction of Article 300A, which succinctly declares:
"No person shall be
deprived of his property save by authority of law." Post the 44th Amendment, the
right to property became a dual entity-an entrenched fundamental human right as
well as a constitutional right. The prerogative to transfer land stands as a
natural extension of the right to possess land and cannot be annulled without
due legal sanction. The construct of land ownership embodies a spectrum of
entitlements, with the right to transfer being a fundamental component.
Furthermore, ensconced within the segment entitled "Right to Freedom," this
article bestows upon citizens the entitlement to acquire, possess, and dispose
of property. The interlinkage between property and freedom is unequivocally
evident, requiring little exposition to underscore this intrinsic connection."
"Constitutional Intent and Cooperative Societies: Rights, Restrictions, and
Public Policy"- The legislation under Article 46 of the Indian Constitution
places a mandatory responsibility on states to safeguard the interests of
scheduled castes and tribes against social injustice and exploitation. Several
states, including Bihar, Madhya Pradesh, Rajasthan, Orissa, and West Bengal,
have enacted laws to protect property rights of individuals from minority
While the argument aligning Articles 14 and 15 with the
Constitution's preamble appears compelling, which prohibits discrimination based
on religion or origin, particularly in cooperative societies, it is essential
for the Court to consider the foundational principles governing these societies
across states as per Cooperative Societies Acts. This means that an individual
might face refusal of membership in a cooperative society if they reside outside
its operational area.
Shouldn't every citizen possess the fundamental right to
reside or conduct business anywhere within the nation, including applying for
membership in any cooperative society irrespective of their residential
location? Can a Registrar justify the rejection of such a member citing public
This dilemma challenges the notion of limiting a society's operational
boundaries. Consequently, we opine that adherence to the statutory definition of
public policy should take precedence. Compelling societies to contravene their
bye-laws, which restrict membership based on their criteria, would not be
In conclusion, it's crucial to recognize that while enforcing a decree or
obligation through the attachment and sale of a member's rights in a building or
plot cannot align with provisions allowing absolute restrictions on alienation
in the bye-laws, certain conditions-like member qualifications or stipulations
for voluntary transfers to the cooperative society or qualified members with
consent-do not necessarily constitute absolute restraints on alienation.
our confidence in the determination that the restrictions imposed within the
Society on a member's rights amount to absolute restraints on alienation and,
consequently, infringe upon their property rights protected by Article 300A of
the Constitution of India remains steadfast.
Written By: Mr. Avi Jain, 4th Year B.COM., LL.B.(Hons.) Student at Gujarat National Law University, Gandhinagar.
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