A Condition in a Gift deed which restrains the right to alienation of a property is void

Kandeep Shravan | SASTRA Deemed to be University | 9th July 2020

Sridhar & Anr. Versus N. Revanna & Ors

Facts:

The Great-grandfather of the plaintiffs – Muniswamappa, and the grandfather of one of the defendants were absolute owners of property scheduled for suit. Muniswamappa executed a gift deed favoring the 1^st Defendant (his grandson). A condition was mentioned in the deed which denied the right to alienate the scheduled property by the donee and his younger brothers. However, the first defendant had made arrangements to sell the property to the 2^nd and 3^rd Defendants by way of sale deeds. A suit was filed by the plaintiff claiming the property and ownership. The defendant stated that he was in need of money and was unaware of the legal hindrances upon alienation of the suit property. The Trial Court held that the plaintiffs were unable to prove that they possessed absolute right over the suit schedule property. The Trial Court accordingly dismissed the suit stating that the defendant’s execution of sale deeds in favor of the other two defendants was valid and the condition specifying the donee not being eligible to alienate the property was void. But when appealed to the High Court, it was it was held that otherwise. The High Court was of a conflicting view and granted interim relief to the plaintiffs stating that they were entitled to receive the remuneration back which was taken by the 1^st Defendant by sale deeds execution. 

Issues:

1. Whether a donee has a right to alienate property arising out of a gift deed and a condition restricting that is binding in law?
2. Can the condition be declared void?

Law involved: Section 10, Transfer of Property Act.

Section 10 explicitly states that when a property is transferred is subject to a limitation or condition which restrains the transferee or any other person concerned with the party claiming under him from parting with or disposing interest in the property, the condition is said to be void. Any condition restraining the transferee’s right of alienation is void.

Judgment:              

The Supreme Court held that the gift deed was certain. The court was of the view that the 1^st Defendant had the right to transfer the property received by a gift deed and also stated that the High Court erred in its holding and the order was accordingly set aside. As per section 10 of the transfer of property act, it can be expressly held that the donee not alienating the property is a void condition. The plaintiffs had no entitlement for declaration. The appeal was dismissed.

Analysis:

Scrutinization of the gift deed revealed that the gift was from the plaintiff’s great grandfather – Muniswamappa to the grandson who was a five-year old minor (who was represented by his father) and not in favour of an unborn person. The condition was pertaining to the donee and the younger brothers who may be born after the gift deed execution. Hence, Section 13 of the Transfer of Property Act cannot be applied in the instant case.