- Ananya Singh (Vivekananda Institute of Professional Studies)
INTRODUCTION
Rosher v. Rosher addresses both partial and absolute limits on property alienation. This is a leading case that is still being mentioned in Indian documents today. Being a strong authority in this highly contested subject brings much-needed clarity.
Ownership of the property entails some essential rights, such as the right to hold title to the property, the right to possess and enjoy it to the exclusion of others, and the right to transfer it without being compelled to do so, unless required by law. An absolute right to dispose of property suggests that the owner can sell it for consideration, donate it for religious or charitable reasons, give it to anybody, mortgage it, or lease it. Except with the assistance of the law, no one may interfere with the owner’s authority or right to prescribe the mode of alienation, whether he should alienate or not, or even what type of use it should be put to. In summary, the right of alienation, which is one of the essential rights of the owner, cannot be unjustly encroached upon by anybody through the private agreement. Regardless of who they are, the general rule applies without express contract to the contrary and forbids the transferor from controlling the transferee’s power of alienation once the interest in the property is transferred.
The extent to which a person transferring real or personal property may limit the transferee’s subsequent disposal has long been a source of concern for courts. Restrictions on alienation refer to limitations on the transferee’s right to transfer property at any time and in any way.
FACTS OF THE CASE:
J. B. Rosher, who passed away, owned Trewyn Manor, which included both Trewyn House and Lower Trewyn. He also had properties in the counties of Monmouth and Hereford. In a will dated November 12, 4561, he vowed that his manor and all of his other holdings will pass to his son Jeremiah Lilburn Rosher. In his will, it was noted that if the son wishes to sell the entire property, that is the manor and the estates of the two counties, he shall first offer it to his mother, J. B. Rosher’s wife, for 3000 pounds as a whole or at a comparable price for any part thereof.
The mother will be entitled to do so for whatever amount of years, even if his son wants to rent out the Trewyn house for longer than three years and will be paid an annual rent of twenty-five pounds. Also, if he leases out Lower Trewyn for more than 7 years, the mother will have the option of renting it out for an additional 7 years and receiving 35 pounds per year in rent.
After his death, the widow filed the lawsuit against his son. The exceptional case was presented by permission for the court’s decision pursuant to Order XXXIV of the Rules of Court 1875.
The case indicated that the genuine selling worth of the manor and estate Trewyn, as well as all of the testator’s other estates in the counties of Monmouth and Hereford, was 15000 pounds or more at the time of the testator’s death and the date of the will. The genuine leasing value of the Trewyn House and Lower Trewyn was 100 pounds per year.
ISSUES BEFORE THE COURT:
The widow claims that the son cannot sell or rent the residence without her agreement and in accordance with the will. The son, on the other hand, believes that the requirements constitute limits on the alienation of property, which are void, and thus he has the right to further transfer the property.
Two questions were presented to the court in this special case:
- Whether the son was entitled, under the true interpretation of the will, to sell, mortgage, or charge the estates devised to him by the will, or any part of them, without first giving the widow the opportunity to purchase the property that was intended to be sold, mortgaged, or charged at the price specified in the will, at a proportionate price named in the will, or at a proportionate price according to the quantity dealt with, as the case may be, or whether the will’s provisions and instructions regarding the option of purchase were void.
- Whether or not the terms associated with renting the premise are null and invalid or have no bearing on whether the son was allowed to let the premises of Trewyn House or Lower Trewyn without first making an offer to the mother under the genuine interpretation of the will.
ARGUMENTS STATED BY COUNSELS:
The widow’s attorney declared that there is a legitimate restriction on the transfer of property. Only when it comes to purchasing and selling is the son subject to these restrictions. When it comes to mortgaging or chopping timber, there is no limit. The widow’s attorney claims that there is very little restriction and that the son is free to mortgage the property at any time because there is no legal provision prohibiting it. Then he highlighted the ruling in In re Macleay, “where the court ruled that the constraint was permissible since it was relatively restricted.”
He continues by saying that the restriction does not pertain to alienation, but rather considers a scenario and offers a method for alienating the property in that circumstance.
The son’s attorney argued that the condition is null and unenforceable since it places an absolute restriction on the sale of the property. According to him, it’s acceptable to have a scenario in which a property can solely belong to a single individual or group of people. However, the fault lies in the consideration’s constraint. The possessor is prohibited from charging a full simple fee for the property by the fixed price, which is far less than the property’s real market value at the time the will was written.
OUTCOME OF THE CASE:
The court determined that the restriction is total in nature and will be null and invalid. To quote him:
“I intend to handle it as though it has always been, ‘During the widow’s life you shall not sell,’ as I believe that forcing him to sell the estate for only one-fifth of the asking price and give away four-fifths is tantamount to constraint when it comes to selling at it.”
The court went on to say that the Chief Justice had ruled in the Bragg and Tanner case that any restriction on the consideration for the sale of property is invalid since it goes against the spirit of the law.
ANALYSIS AND APPLICATION OF CASE:
Any property owner who possesses the legal capacity to do so may transfer their holdings unconditionally or subject to restrictions. Transfers that are subject to constraints are referred to as conditional transfers. Conditions are limitations or restrictions on the rights of the transferees. These terms might be conditions antecedent or conditions subsequent. Antecedent terms are set before the transfer and are fulfilled only if the transfer really occurs. The requirements listed below are those that need to be met following the transfer. These requirements have an impact on the transferees’ post-transfer rights.
According to this, if a property is transferred with a restriction or condition that prevents the transferee from giving up or selling his interest in the property entirely, the restriction or condition is null and void. The Rule against Inalienability is the name given to this broad principle.
The main idea of the Transfer of Property Act, which states that all property should typically be transferred, is put into practice by the rule against inalienability. As a result, any clause that prohibits alienation is regarded as null and invalid. The transferee may choose to disregard this requirement and carry on using the transferred item as if it had never been there in the first place.
Partial constraints, on the other hand, might not be invalid whereas absolute restraints are. For example, it is acceptable to have a partial restriction that limits transfers to a certain group of people. But if the transfer is limited to being permitted to a certain number of people, then it is a complete restriction and is thus null and void.
CATEGORIZATION OF RESTRAINTS:
Since the owner of the property has the exclusive right to alienate it, he or she may sell it at any moment and for any amount of money to anybody for any reason. The word “alienation” encompasses several essential elements, such as the transferor or transferee’s sole discretion in choosing and the contemplation or timing of the transfer. One way to prevent alienation would be to impose a condition on him that would specify when and how much to sell it for, as well as who to sell it to and for what reason. These limitations may manifest in the subsequent manners:
- Limitations on transfers for a specific period of time
- Constraints governing the allocation of resources or consideration
- Limitations concerning individuals who are transferees and
- Limitations on the sale of land for specific uses or purposes
ABSOLUTE RESTRAINT:
Absolute constraint is a situation that seeks to eliminate or significantly reduce the power of alienation. Section 10 states that a restriction or limitation that prohibits the transferee from parting with or disposing of his interest in the property is invalid. An ultimate restraint on alienation is one that completely removes the right of disposal. Lord Justice Fry stated, “From the earliest times, the courts have always learnt against any devise to render an estate inalienable.”
Section 10 exempts a transferee of immovable property from an absolute restriction on his ability to interact with the property in his position as its owner. A condition restraining alienation would be invalid under section 10. Section applies when property is transferred subject to a condition or limitation that prevents the transferee from disposing of his interest in the property. To make such a condition invalid, the constraint must be total.
Two people bought assets in their own names using money belonging to a third individual. And, per his orders, they placed the securities and the interest in that person’s account. The securities were not transferable. To eliminate liability, a third party transferred the securities to their creditor as a beneficiary in exchange for payment. It was ruled that from the very beginning a beneficial interest was established in favour of the individual with whose funds the shares were acquired, and so his beneficial interest was transferable since otherwise the whole transaction would have been hit by section 10.
The condition placing absolute constraint on the right of disposal is invalid and has no effect. For example, a person may donate a property to a transferee with the condition that they will not sell it. This circumstance imposes full constraint. If the transferee sells the property, the sale will be legitimate as the terms requiring absolute constraint are void.
A gifted a house to B with the stipulation that if B sold it during the wife’s lifetime, she might acquire it for Rs. 10,000. The home was worth Rs 10,000. This was deemed to have the effect of ultimate constraint and therefore invalid. The provision of legislation against total limitation on alienation is based on the idea of public policy, which states that property should be freely transferable. A transfer of property for the building of a college included the provision that if the college was not built, the property would not be alienated. Rather, it would be relayed to the individual transferring it. The condition was determined to be invalid and so incapable of being enforced.
PARTIAL RESTRAINT:
Section 10 only provides for absolute limits. It is quiet about the partial constraints. There, the constraint does not completely eliminate the force of alienation, but rather limits it to a certain amount. It’s a partial constraint. Partial constraint is legitimate and enforceable. According to Sir George Jesel, “the test is whether the condition considerably reduces the capacity of alienation; it is an issue of substance rather than form. You may restrict alienation in a variety of ways, including prohibition. You can limit estrangement to a certain group of people or to a specific period of time.
A whole constraint on the right to alienation is void, however a partial restraint is legitimate and binding. This guideline is based on strong public policy that promotes free circulation.
A limitation imposed for a certain period of time or on a specific individual has been deemed absolute. In Mata Prasad v Nageshwar Sahai, a compromise to address family problems was deemed acceptable, despite the fact that it included an agreement to prevent alienation. In this instance, the argument was about succession between a widow and a nephew. The compromise was reached on the premise that the widow keep possession for life, while the nephew’s title was accepted with the stipulation that he not alienate the property during the widow’s lifetime. The Privy Council determined that the compromise was lawful and appropriate under the circumstances of the case.
OTHER RELEVANT CASES:
- Gayashi Ram vs. Shahabuddin.
The selling document includes a provision stating that the transferee would not sell, gift, or mortgage the property to anybody other than the transferor or his heirs. The court ruled that this condition is defective, and so invalid.
- Manohar Shivram Swami v. Mahadeo Guruling Swami
A and B were first cousins. A left his possessions to B. When A died, B obtained the title to the property and sold it to C, who was also A’s brother. The selling document said that if C wished to sell the property, he would only sell it to the seller’s Jangam caste family and not to anybody else. The court ruled that the condition included in the sale deed completely prohibited him from selling his stake in the property and so was unlawful. The court maintained the legality of the sale impacted by C. This ruling by the Bombay High Court is surprising because the condition here was not to sell out of the family, which has been determined in a number of cases to be a partial constraint and binding on the parties.
- K. Muniswamy vs. K Venkataswamy
A family division was achieved, with one stipulation in the partition document stating that the mother and father may only enjoy the assets during their lifetimes, and that after their deaths, the property would be divided equally among the two sons. Because of the development of a life interest, the parents were unable to alienate the property during their lives. The parents sold their property to one of their sons. The other son contested the legitimacy of the sale. The court decided that a limitation banning them entirely from transferring the property amounted to a total restraint on alienation and was thus undesirable in the light of the law.
CONCLUSION:
The Rosher v. Rosher rule emphasises caution and has significant implications for property transfers. The application of Section 10 of the Transfer of Property Act 1882 is critical in understanding whether terms or limits mentioned in the transfer deed would be considered lawful. However, in the absence of an objective criterion to assess the same, because it is a question of fact to be resolved on a case-by-case basis, it may lead to arbitrary and ambiguous claims about what fundamentally constitutes a total constraint as opposed to a partial restraint. Furthermore, this is emphasised by the fact that a conduct is assessed by its substance, and diverse interpretations of substance may exist.
