Rule
A conditional transfer is a transfer whose interest depends on a condition. A condition precedent must be met before the interest vests. A condition subsequent operates after the interest has vested and can bring it to an end or shift it to another person.
The TPA deals with conditions in two groups. S.10 to S.12 strike down certain restraints (on alienation, on enjoyment, and on insolvency or attempted alienation). S.25 to S.34 deal with conditional transfers: when a condition is valid, when it is fulfilled, and what happens to gifts over.
Owners may attach conditions to what they give, as part of their freedom of ownership. But that freedom is not absolute. The law strikes down conditions that are impossible, unlawful or repugnant to the interest created, to prevent control from the grave and to protect public policy.
| Provision | Subject |
|---|---|
| S.10 | Condition absolutely restraining alienation: void (lease condition for the lessor's benefit excepted; proviso for property given to a woman, not Hindu, Muslim or Buddhist, so that she cannot transfer it during her marriage) |
| S.11 | Absolute interest with a direction on how to apply or enjoy it: the transferee may ignore the direction (except a direction for the beneficial enjoyment of adjoining land) |
| S.12 | Condition making an interest cease on insolvency or attempted alienation: void (lease excepted) |
| S.25 | Interest dependent on a condition fails if the condition is impossible, forbidden by law, fraudulent, injurious, immoral or opposed to public policy |
| S.26 | Condition precedent: substantial compliance is enough |
| S.27 | Ulterior disposition takes effect when the prior disposition fails |
| S.28 | Ulterior transfer on the happening or not happening of a specified uncertain event |
| S.29 | Condition subsequent: must be strictly fulfilled before a gift over takes effect |
| S.30 | Invalid ulterior disposition does not affect the prior disposition |
| S.31 | Condition that the interest ceases on a specified uncertain event (subject to S.12) |
| S.32 | Such a condition must itself be valid |
| S.33 | Condition to do an act, no time fixed: broken when performance is made impossible |
| S.34 | Time fixed: extra time where performance is prevented by the fraud of the person who gains from non-fulfilment |
Requirements
A condition attached to a transfer survives only if it passes these checks.
| # | Check | Section | If it fails |
|---|---|---|---|
| 1 | It is possible to perform | S.25 (precedent), S.32 (subsequent) | Precedent: interest fails. Subsequent: condition ignored |
| 2 | It is lawful, not fraudulent, not injurious, not immoral, not against public policy | S.25, S.32 | Same as above |
| 3 | It does not absolutely restrain alienation | S.10 | Condition void; transferee takes free |
| 4 | It does not direct how an absolute interest must be enjoyed | S.11 | Direction ignored; transferee may enjoy freely |
| 5 | It does not end the interest on insolvency or an attempt to transfer | S.12 | Condition void |
Many guides number these rules wrongly. Restraint on alienation is S.10, restraint on enjoyment is S.11 and the insolvency condition is S.12. Substantial compliance is S.26 and strict compliance is S.29. S.27 and S.28 deal with ulterior dispositions, not restraints.
Condition precedent (S.25 and S.26)
A condition precedent must be fulfilled before the transferee can take the interest. Until then he has only a contingent interest. S.25 makes the interest fail if the condition is impossible or unlawful. S.26 says the condition is fulfilled if it is substantially complied with.
| Rule | Effect |
|---|---|
| Must be possible | Impossible condition: the interest fails and nothing passes (S.25) |
| Must be lawful | Condition forbidden by law, fraudulent or injurious: the interest fails (S.25) |
| Must not be immoral or against public policy | The interest fails (S.25) |
| Substantial compliance suffices | Exact literal compliance not needed (S.26) |
S.26 itself gives the test. A must marry with the consent of C, D and E; E dies and A marries with the consent of C and D: the condition is fulfilled. But marrying first and getting consent afterwards is not fulfilment.
Condition subsequent (S.28 to S.32)
A condition subsequent operates after the interest has vested. If the specified event happens (or does not happen), the interest ceases (S.31) or passes to another person (S.28).
| Rule | Effect |
|---|---|
| Must be strictly fulfilled before a gift over takes effect | S.29 |
| Impossible or unlawful condition | Invalid (S.32). The interest does not cease |
| Invalid gift over | The prior interest is not affected (S.30) |
| Condition on insolvency or attempted alienation | Void (S.12, to which S.31 is subject) |
| Act to be done, no time fixed | Broken only when the transferee makes it impossible, permanently or indefinitely (S.33) |
The interest has already vested. Taking a vested right away is harsh, so the law asks for strict fulfilment and reads any doubt against forfeiture.
Void restraints (S.10 to S.12)
S.10: restraint on alienation
A condition absolutely restraining the transferee from parting with the property is void, and the transferee takes free of it. A condition in a lease for the benefit of the lessor (for example, no subletting) is valid.
| Restraint | Validity |
|---|---|
| "You shall never sell this property" | Void (absolute restraint) |
| "You shall not sell for 10 years" | Debatable: courts ask whether it substantially takes away the power to alienate |
| "You shall not sell to X" | Partial restraint; generally valid |
| "You shall not sell outside the family" | Partial restraint; upheld (Mohammad Raza v Abbas Bandi Bibi) |
| "Lessee shall not sublet" (in a lease) | Valid (S.10 exception for leases) |
A partial restraint, limited by time, person or manner, may be valid because it regulates the power to alienate without destroying it. The test is substance: a restraint that leaves only a nominal power to sell is absolute in effect.
S.11: restraint on enjoyment
Where an interest is given absolutely but the deed directs that it be applied or enjoyed in a particular manner, the transferee may enjoy and dispose of it as if there were no such direction. "I give this house to B absolutely, but B shall never live in it": B may live in it.
The exception: a direction about one piece of land made to secure the beneficial enjoyment of another piece of land (for example, not to build above a height so as to protect the neighbouring house's light) can still be enforced.
S.12: insolvency or attempted alienation
A condition that an interest shall cease when the holder becomes insolvent or tries to transfer it is void. A lease condition for the lessor's benefit (forfeiture on the lessee's insolvency) is valid.
Condition precedent and condition subsequent compared
| Basis | Condition precedent (S.25, S.26) | Condition subsequent (S.28 to S.32) |
|---|---|---|
| When it operates | Before vesting | After vesting |
| Effect on interest | Interest does not vest until fulfilled | Interest vests at once; ends or shifts if the event occurs |
| Non-fulfilment | Interest fails | Interest continues |
| Impossible condition | Interest fails (S.25) | Condition invalid; interest continues (S.32) |
| Unlawful condition | Interest fails (S.25) | Condition invalid; interest continues (S.32) |
| Compliance standard | Substantial (S.26) | Strict (S.29) |
| How courts read it | Liberally, in favour of the transferee | Strictly, against forfeiture |
| Position meanwhile | Contingent interest | Vested but defeasible interest |
Illustrations
1. Condition precedent: passing an examination
- Facts: A father transfers a plot to his son "to vest when you pass the LLB examination". The son dies before passing.
- Result: The interest never vests. The plot stays with the father or his estate.
- Why: Passing the examination is a specified uncertain event, so the son had only a contingent interest (S.21). It never vested because the condition was never met.
2. Impossible condition precedent
- Facts: A transfers land to B "on condition that B walks a hundred miles in an hour".
- Result: The transfer fails. B gets nothing.
- Why: An interest dependent on an impossible condition fails (S.25, illustration (a)).
3. Substantial compliance
- Facts: A transfers Rs.5,000 to B on condition that B marries with the consent of C, D and E. E dies, and B marries with the consent of C and D.
- Result: The condition is fulfilled and B takes the money.
- Why: Substantial compliance with a condition precedent is enough (S.26, illustration (a)). Had B married first and obtained the consents afterwards, he would not have fulfilled it (illustration (b)).
4. Unlawful condition precedent
- Facts: X transfers land to Y "on condition that Y commits robbery and gives the proceeds to charity".
- Result: The transfer fails. Y takes nothing.
- Why: The condition is forbidden by law (S.25). Compare S.25, illustration (c): a transfer on condition that the transferee murders C is void.
5. Condition subsequent that operates
- Facts: A father gives his son a house with the condition: "If my son ever sells alcohol from this property, the house shall pass to my daughter." The son opens a liquor shop there.
- Result: The son's interest passes to the daughter.
- Why: The specified event has happened and the condition is strictly fulfilled (S.28, S.29).
6. Impossible condition subsequent
- Facts: A transfers property to B "but if B flies to the moon without any vehicle, it shall pass to C".
- Result: B keeps an absolute interest. C gets nothing.
- Why: The condition is invalid (S.32), and an invalid gift over does not affect the prior interest (S.30).
7. Unlawful condition subsequent
- Facts: A transfers land to B "but if B does not give false evidence in the pending case, the land shall revert to A".
- Result: The condition is invalid. B keeps the land.
- Why: An event that could not lawfully be a condition for creating an interest cannot be a condition for ending it (S.32).
8. Strict reading of a condition subsequent
- Facts: A transfers property to B, "but if B fails the GATE exam, the property reverts to A". B scores low but passes.
- Result: B keeps the property.
- Why: B did not "fail", and a condition subsequent must be strictly fulfilled (S.29).
9. Absolute restraint on alienation
- Facts: A grandmother gifts a flat to her granddaughter: "you shall never sell, mortgage or otherwise alienate it".
- Result: The restraint is void. The granddaughter can sell the flat.
- Why: An absolute restraint on alienation is void (S.10).
10. Partial restraint
- Facts: A father gifts land to his son: "you shall not sell this land to anyone outside our family".
- Result: The condition is likely valid.
- Why: A restraint limited to strangers is partial and does not destroy the power to sell (Mohammad Raza v Abbas Bandi Bibi).
11. Lease restraint
- Facts: A lease of a shop says the tenant shall not assign or sublet without the landlord's written consent.
- Result: The condition is valid. Subletting without consent can lead to forfeiture if the lease so provides.
- Why: S.10 saves a lease condition made for the lessor's benefit.
12. Direction on enjoyment
- Facts: A transfers a car absolutely to B, "but B shall never drive it; it shall stay parked".
- Result: B may drive the car.
- Why: A direction on how an absolute interest is to be enjoyed can be ignored (S.11).
13. Insolvency condition
- Facts: A gifts property to B, "but if B becomes insolvent, it goes to C".
- Result: The condition is void. B keeps the property.
- Why: A condition ending an interest on insolvency is void (S.12).
14. Restraint on marriage
- Facts: A transfers property to B, a widow, "on condition that she never remarries". Separately, A gives property to D "if D does not marry before turning 21".
- Result: The absolute restraint on remarriage is invalid. The partial restraint on D may be valid.
- Why: An absolute restraint on marriage is treated as opposed to public policy (S.25, S.32). A reasonable, limited restraint is not.
Key Cases
Rambaran Prosad v Ram Mohit Hazra AIR 1967 SC 744, (1967) 1 SCR 293 (decided 1966)
- Facts: An arbitration award partitioning family property between two brothers contained a mutual covenant of pre-emption, with no time limit.
- Held: The covenant bound the brothers' successors and assignees, and it was not void for perpetuity because a contract for sale creates no interest in land.
- Principle: A pre-emption covenant only limits to whom the owner must first offer the land. It creates no interest in land, so the perpetuity rule (S.14) does not apply, and it binds a transferee with notice or a gratuitous transferee (S.40).
Mohammad Raza v Abbas Bandi Bibi, AIR 1932 PC 158, (1932) 59 IA 236 (Privy Council)
- Facts: Under a family compromise, Sughra Bibi took property on the term that she would not transfer it to strangers outside the family.
- Held: The restraint was partial, not absolute, so it was valid and binding.
- Principle: S.10 voids only an absolute restraint. A restraint that leaves a real power to sell within a class is valid.
Distinctions
| Basis | Void condition precedent (S.25) | Void restraint (S.10 to S.12) |
|---|---|---|
| Effect on transfer | The interest fails | Only the condition is void; the transfer stands |
| Transferee's position | Gets nothing | Gets the property free of the condition |
| Logic | If you cannot enter, you never got in | You got in; the fence around you is removed |
| Example | "To B if B kills C": the transfer fails | "To B absolutely; B shall never sell": B takes absolutely |
| Aspect | Absolute restraint (S.10: void) | Partial Restraint (potentially valid) |
|---|---|---|
| Scope | Total prohibition on all alienation | Limited by time, person, or manner |
| Validity | Always void | May be valid if reasonable |
| Examples | "Never sell" or "never mortgage" | "Do not sell to X" or "do not sell outside the family" |
| Transferee's position | Takes free of condition | Bound by condition |
| Policy | Prevents dead capital | Balances freedom with donor's reasonable wishes |
Exam Scenario
A gifts a house to B on two conditions: (i) "B shall not sell, mortgage or otherwise alienate the house at any time"; (ii) "B shall use the house only as a residence and never for commercial purposes." B wants to sell to C and also to turn the ground floor into a shop. Advise B.
Approach
- Not met: Condition (i) survives only if it is not an absolute restraint. It bars every kind of alienation for all time, so it is void under S.10.
- Not met: Condition (ii) directs how an absolute interest is to be enjoyed. Under S.11, B may enjoy it as if there were no such direction. The adjoining-land exception does not apply.
- Issue: Planning law or a registered building scheme may still restrict commercial use, independently of S.11.
Conclusion: Both conditions fail. B takes the house absolutely.
Remedy: B can sell to C and may use the ground floor as a shop, subject only to zoning law. A cannot enforce either condition.
Scenario 2
Ravi gifts a flat to his daughter Seema on conditions: (a) she shall not sell it during Ravi's lifetime; (b) she shall not marry outside the community; (c) if she becomes insolvent, the flat shall go to Ravi's son Ajay. What interest does Seema have?
Approach
- Issue: Condition (a) is a restraint limited in time. Whether it is valid depends on whether it substantially takes away her power to sell. A ban on all sales for an uncertain period like Ravi's lifetime is close to absolute and is likely void under S.10.
- Issue: Condition (b) is a partial restraint on marriage. It is usually treated as valid unless the court regards it as opposed to public policy (S.32).
- Not met: Condition (c) ends her interest on insolvency, so it is void under S.12. The gift over to Ajay fails, and her interest is not affected (S.30).
Conclusion: Seema has an absolute interest in the flat, free of (a) and (c). Condition (b) may survive as a partial restraint.
Remedy: Ajay has no claim if Seema becomes insolvent. If Seema marries outside the community, the effect of (b) depends on whether it is framed as a condition subsequent with a valid gift over.
Recall Check
- What is the difference between a condition precedent and a condition subsequent in terms of when the interest vests?
- Under S.10, what type of restraint on alienation is void, and what is the exception?
- Why does the law require strict compliance for conditions subsequent but only substantial compliance for conditions precedent?
- Which sections deal with restraint on enjoyment and with the insolvency condition?
Flashcards
What is a condition precedent in property law?
A condition that must be fulfilled before the transferee's interest vests. Until it is fulfilled the transferee has only a contingent interest (S.25 and S.26 TPA).
What is a condition subsequent?
A condition that operates after the interest has vested. If the specified event happens (or does not happen), the interest ceases or passes to another person (S.28 and S.31 TPA).
What happens when a condition precedent is impossible?
The interest fails, so the transferee gets nothing (S.25).
What happens when a condition subsequent is impossible?
The condition is invalid, so the interest does not cease (S.32). If the condition carried a gift over to another, the invalid ulterior disposition does not affect the prior one (S.30). The transferee keeps the interest free of it.
What does S.10 declare void?
A condition or limitation absolutely restraining the transferee, or anyone claiming under him, from parting with or disposing of his interest. Exception: a condition in a lease for the benefit of the lessor.
What is the compliance standard for conditions precedent?
Substantial compliance is enough (S.26). Exact literal fulfilment is not required.
What is the compliance standard for conditions subsequent?
Strict compliance (S.29). A gift over on breach takes effect only if the condition is strictly fulfilled, and courts read such conditions against forfeiture.
Why is absolute restraint on alienation void?
Because it makes the property inalienable (dead capital) and is repugnant to the nature of ownership. S.10 strikes it down; the transferee takes free of it.
What is a condition precedent under S.25?
A condition that must be fulfilled before the interest takes effect. S.25 makes the interest fail if the condition is impossible or unlawful; S.26 says substantial compliance is enough.
What is a condition subsequent under S.28 and S.31?
A condition that, if a specified uncertain event happens (or does not happen), makes a vested interest cease or pass to another person. It must be strictly fulfilled (S.29) and must itself be valid (S.32).
What is the effect of an impossible condition precedent under S.25?
The interest dependent on it fails (S.25), so the transfer does not take effect.
What is the effect of an impossible condition subsequent under S.32?
The condition is invalid, so it is ignored and the interest continues (S.32 read with S.30).
Under S.12, is a condition defeating interest on insolvency valid?
No. A condition making an interest cease on the transferee's insolvency, or on his attempt to transfer it, is void (S.12). Exception: such a condition in a lease for the lessor's benefit is valid.
When is a condition restraining marriage void?
The TPA has no express section. A condition absolutely restraining marriage is treated as opposed to public policy, so it fails under S.25 (condition precedent) or is invalid under S.32 (condition subsequent). A partial or reasonable restraint, such as not marrying before 21, may be valid.
What does S.27 provide about ulterior transfers?
Where an interest is given to one person with an ulterior disposition of the same interest to another, and the prior disposition fails, the ulterior disposition takes effect, even if the failure did not happen in the way the transferor contemplated. But if the parties intended the ulterior disposition to take effect only on failure in a particular manner, it takes effect only if the prior disposition fails in that manner.