Muhammad Raza v Abbas Bandi Bibi (1932)

This is the authority for the proposition that a partial restraint on alienation is valid. Section 10 avoids only a condition absolutely restraining alienation; it says nothing about a restraint that leaves the transferee a real, if narrowed, power to dispose. Muhammad Raza holds that a condition forbidding transfer outside the family is such a partial restraint, and binds.

It is also the standing Indian authority that a family arrangement is judged more indulgently than a gift or a conveyance, and it is a rare case where the Board applies the justice, equity and good conscience formula expressly.

In 1868 Sughra Bibi sued her cousin Afzal Husain claiming a half share in immovable property in Oudh. The litigation ended in a compromise decree of 19 September 1870. Under the compromise Sughra Bibi was to marry Afzal Husain, and both his wives — his first wife Fatima Begam and Sughra Bibi — were from that time to be declared permanent owners, malik mustaqil, of a moiety each of the entire Mahal Shadipur, and to be so entered in the public records. The critical stipulation followed: "The said females shall not have power to transfer this property to a stranger; but the ownership thereof as family property shall devolve on the legal heirs of both the above-named wives, from generation to generation".

The management and collections were to remain with the husband. Sughra Bibi afterwards alienated to the appellants, who were admittedly strangers in the sense of the document. The respondent claimed on Sughra Bibi's death.

1. Did Sughra Bibi take an absolute estate or only a life estate with a remainder to her heirs? 2. If absolute, was the restriction against transfer to a stranger repugnant to that estate and therefore void?

The appeal failed, and the decree of the Chief Court was affirmed with costs.

The Board did not decide the first question. It said it might have "some difficulty in holding that Sughra Bibi took nothing more than a life estate", and proceeded on the assumption most favourable to the appellants — that she took an absolute estate of inheritance — because even on that footing the restriction bound her.

1. The restraint was partial, not absolute. The Board's formulation is the sentence to learn:

"their Lordships think that the restriction was not absolute but partial; it forbids only alienation to strangers, leaving her free to make any transfer she pleases within the ambit of the family."

The Board also held that the word stranger here "means any one who is not a member of the family", and the appellants were strangers in that sense.

2. The document was a family arrangement, not a gift. Raghunath Prasad Singh v Deputy Commissioner, Partabgarh, relied on for the appellants, was distinguished because there the restraint was absolute and was attached to a gift by will. Here the instrument "was not a deed of gift, or a conveyance, by one of the parties to the other, but was in the nature of a contract between them as to the terms upon which the ladies were to take". Title was genuinely in dispute; the compromise gave her what she claimed upon conditions.

3. Justice, equity and good conscience. By s. 3 of the Oudh Laws Act 1876 the court was to act, in default of other rules, "according to justice, equity and good conscience". The Board asked whether it offends that standard to hold such an agreement binding, and answered that a person who takes property on an express agreement not to alienate outside the family can hardly complain, adding that "family arrangements are specially favoured in Courts of equity".

4. The statute confirms the position. The Board then made the observation for which Indian courts cite the case: "it seems clear that after the passing of the Transfer of Property Act in 1882, a partial restriction upon the power of disposition would not, in the case of a transfer inter vivos, be regarded as repugnant: see s. 10 of the Act." The transaction here predated the Act, so this is strictly a confirmation rather than the ground of decision — but it is the reason the case governs s. 10 in India.

5. The English authorities point the same way. On Waghela Rajsanji v Shekh Masludin, equity and good conscience generally means English law where applicable; and in England a partial restraint is good even on a testamentary gift. In In re Macleay Sir George Jessel MR upheld a condition on a devise in fee that the devisee should "never sell out of the family", saying this had been the law since Coke; Doe d. Gill v Pearson is to the same effect.

1. A partial restraint on alienation is not repugnant to an absolute estate and is valid. A condition forbidding transfer to a stranger — that is, outside the family — while leaving the owner free to transfer within the family, is partial. 2. Where the instrument is a family arrangement compromising a disputed claim, and not a gift or conveyance, the conditions on which the property was taken bind the taker, and equity favours such arrangements.

Section 10 avoids a condition "absolutely restraining the transferee or any person claiming under him from parting with or disposing of his interest in the property". The word doing the work is absolutely. Rosher v Rosher (case 06) shows that a formally partial condition may be absolute in substance; Muhammad Raza shows that a genuinely partial one is good. Together they are the whole of s. 10 for examination purposes.

Note also what the Board did not decide: whether Shia law permits a vested remainder in the heirs of a living person. It expressly left that "somewhat abstruse problem" open.