Rule
A covenant is a promise in a deed about land: the covenantor promises to do, or not to do, something with the property. The key question is whether it binds only the original parties (a personal covenant) or also later owners (a covenant that runs with the land).
S.40 has two limbs. First, where a person has a right to restrain the use of another's land in a particular manner for the more beneficial enjoyment of his own land, that right can be enforced against a later owner. Second, where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of land (but not amounting to an interest or easement), it can be enforced against a transferee. In both cases the transferee is bound if he took with notice or as a gift, but not if he bought for value without notice.
S.40 follows the equity of Tulk v Moxhay. A buyer who knows of a restriction pays a price that reflects it. He cannot take that benefit and then ignore the restriction.
| Provision | Subject |
|---|---|
| S.40, TPA | Restriction on use of land, and obligation annexed to ownership: bind a transferee with notice or a gratuitous transferee |
| S.11, TPA | Direction on enjoyment of an absolute interest: void, except one securing the beneficial enjoyment of other land |
| S.2(h), ICA | Contract defined (applicable to personal covenants) |
| English equity | Tulk v Moxhay (1848): restrictive covenants bind successors in equity |
Requirements
| # | Requirement | What to check |
|---|---|---|
| 1 | A right to restrain use, or a contractual obligation, annexed to the land | It concerns the use of the property, not a purely personal promise |
| 2 | It does not amount to an interest in the land or an easement | Otherwise the law of interests or easements applies instead |
| 3 | The person enforcing it is entitled to its benefit | Under the first limb, it must benefit his own land |
| 4 | The transferee took with notice, or as a gift | Actual or constructive notice; a buyer for value without notice is free |
A promise to spend money or do work (repair a wall, maintain a road) is generally treated as personal and does not bind later owners (Austerberry). Restrictive covenants and contractual obligations such as a contract for sale or a right of pre-emption do bind a transferee with notice.
Types of covenants
| Type | Nature | Binds Successors? | Example |
|---|---|---|---|
| Positive covenant | Promise to do something | Generally no, if it requires spending money or work (Austerberry) | "I will maintain the boundary wall" |
| Restrictive (negative) covenant | Promise not to do something | Yes, against a transferee with notice or a gratuitous transferee (S.40) | "I will not build above 2 floors" |
| Personal covenant | Between original parties only | No (privity of contract) | "I will pay Rs. 5,000 per month for garden maintenance" |
| Covenant running with land | Annexed to the property itself | Yes (binds all subsequent owners) | "No commercial activity on this plot" |
Restrictions that benefit other land (S.11)
S.11 lets a transferee of an absolute interest ignore a direction on how to enjoy it. Its second paragraph saves one case: a direction about one piece of land made to secure the beneficial enjoyment of another piece of land. The transferor can still enforce that direction.
| Feature | Rule |
|---|---|
| Scope | Directions on the use of transferred land that benefit other land |
| Validity | Enforceable by the transferor |
| Example | A developer sells plots on condition of "residential use only" to protect the other plots in the scheme |
| Contrast | Other directions on enjoyment of an absolute interest can be ignored (S.11, first paragraph) |
Lease covenants (S.108)
In a lease, both positive and negative covenants that touch the land bind an assignee of the lease while he holds it (privity of estate). Under S.108(j) the original lessee also stays liable after assigning. This differs from freehold land, where positive covenants generally do not run.
| Freehold (S.40) | Leasehold (S.108-110) |
|---|---|
| Restrictive rights and contractual obligations annexed to ownership bind a transferee with notice (S.40) | Both positive and negative covenants run |
| Positive covenants to spend money or do work are generally personal | Lessee's obligation to repair, pay rent etc. binds assignees |
| Based on Tulk/Austerberry distinction | Based on "privity of estate" (lease creates mutual obligations) |
Illustrations
1. Restrictive covenant runs
- Facts: A sells part of his land in Jubilee Hills to B by a registered deed with the covenant "no commercial establishment shall be run on this plot". B later sells to C, whose deed does not mention it. C opens a restaurant.
- Result: A can get an injunction against C.
- Why: The restriction benefits A's retained land, and C has constructive notice through the registered deed (S.40, S.3).
2. Positive covenant does not run
- Facts: B promises A that B will maintain the shared boundary wall at his own expense. B sells his plot to C.
- Result: A cannot make C maintain the wall. A can sue only B.
- Why: A covenant to spend money is personal (Austerberry).
3. Notice through registered rules
- Facts: The registered deeds of a gated community say no flat may be used as a commercial office. D buys a flat without reading them.
- Result: D cannot use the flat as an office.
- Why: D has constructive notice. If the restriction were unregistered and D, a buyer for value, had no actual notice, he would not be bound.
4. No land to benefit
- Facts: A, who keeps no land nearby, sells a house to B on the covenant that it shall only ever be painted white. B sells to C.
- Result: C is not bound.
- Why: The covenant does not benefit any land of A's, so it is personal to B.
Key Cases
Tulk v Moxhay (1848) 2 Ph 774
- Facts: Tulk sold the garden in Leicester Square with a covenant that it would be kept as a garden. A later buyer, Moxhay, who knew of the covenant, planned to build on it.
- Held: Moxhay was restrained by injunction. A buyer with notice of a restrictive covenant is bound in equity.
- Principle: Restrictive covenants bind successors with notice even without privity of contract. S.40 adopts this.
Austerberry v Corporation of Oldham (1885) 29 Ch D 750
- Facts: A covenant to make and maintain a road was sought to be enforced against a later owner of the land.
- Held: The covenant to repair could not be enforced against the successor.
- Principle: Positive covenants requiring money or work do not run with freehold land.
Rambaran Prosad v Ram Mohit Hazra AIR 1967 SC 744 (decided 1966)
- Facts: A partition award between two brothers gave each a right of pre-emption over the other's share, with no time limit.
- Held: The covenant bound the brothers' successors, was not void for perpetuity, and could be enforced against a transferee with notice under S.40.
- Principle: A contractual obligation annexed to ownership binds a transferee with notice or a gratuitous transferee (S.40 para 2).
Distinctions
| Basis | Restrictive Covenant | Easement |
|---|---|---|
| Source | Contract (agreement between parties) | Grant, prescription, or statute |
| Nature | Negative obligation (refrain from doing) | Right to USE another's land (affirmative) |
| Creation | Deed containing the covenant | Express grant, implied grant, or 20-year use |
| Registration | Required for constructive notice | Not mandatory for prescriptive easements |
| Remedy | Injunction + damages | Declaration + injunction |
| Extinguishment | Release by benefited owner; merger | Unity of ownership; non-user for 20 years |
| Governing law | S.40 TPA (covenants) | Indian Easements Act, 1882 |
| Basis | Covenant Running with Land | Personal Covenant |
|---|---|---|
| Binds successors | Yes (transferees with notice) | No (original parties only) |
| Nature | Restrictive, or a contractual obligation annexed to ownership (S.40 para 2) | Positive or negative |
| Annexed to | Land/property | Person |
| Benefit | Must benefit dominant land | May not benefit any land |
| Notice | Binds a transferee with notice or a gratuitous transferee, not a buyer for value without notice | Irrelevant (contract between parties) |
| Duration | Until released or property merged | Duration of contract |
| Example | "No commercial use" | "I will paint your house annually" |
Exam Scenario
A owns two adjoining plots in a residential colony. He sells Plot 2 to B by a registered deed with the covenant "no structure above the ground floor shall be built on Plot 2", to protect light and air to his house on Plot 1. B builds a single-storey house and sells Plot 2 to C, who plans a 3-storey block. C says he never agreed to the covenant. Advise A.
Approach
- Met: A has a right to restrain the use of Plot 2 for the better enjoyment of his own Plot 1 (S.40, first limb).
- Met: The right is not an easement or an interest in Plot 2.
- Met: C has constructive notice, because the covenant is in the registered deed of Plot 2 (S.3, Explanation I).
- Issue: C's defence that he never agreed fails. Lack of privity does not matter under S.40.
Conclusion: C is bound by the height restriction.
Remedy: A can sue for an injunction restraining C from building above the ground floor. C may have a claim against B only if B's deed promised the plot was free of restrictions.
Recall Check
- What is the distinction between a positive and a restrictive covenant?
- Under S.40, what conditions must be met for a covenant to bind a subsequent transferee?
- Why do positive covenants generally not run with the land?
- Who is not bound under S.40, even if the obligation is annexed to the land?
Flashcards
What is a covenant in property law?
A promise contained in a deed relating to land, by which one party undertakes to do or refrain from doing something with respect to the property.
What does S.40 TPA provide?
Two things. (1) Where a person, for the more beneficial enjoyment of his own land, has a right to restrain the use of another's land in a particular manner; and (2) where a third person is entitled to the benefit of a contractual obligation annexed to the ownership of land (not amounting to an interest or easement). Either can be enforced against a transferee with notice or a gratuitous transferee, but not against a transferee for value without notice.
Do positive covenants run with the land in India?
Generally no, where the covenant requires spending money or doing work (the Austerberry rule is followed). S.40 binds a successor with notice to restrictive rights and to contractual obligations annexed to ownership, such as a contract for sale or a pre-emption covenant (Rambaran Prosad v Ram Mohit Hazra).
What is the "notice" requirement in S.40?
The transferee must have actual notice, or constructive notice (for example, the covenant is in a registered deed of the property: S.3 Explanation I). A gratuitous transferee is bound even without notice. A transferee for value without notice is not bound.
What principle from *Tulk v Moxhay (1848)* is adopted in Indian law?
A restrictive covenant binds a subsequent purchaser with notice, even without privity of contract. Equity enforces the restriction because the buyer took with knowledge of the burden.
What happens if there is no dominant tenement benefiting from the covenant?
The covenant is personal only and does not run with the land under the first limb of S.40, which needs a right held "for the more beneficial enjoyment of his own immoveable property".