Over the course of history, numerous legal scholars and academicians including John Locke[1] and Richard Overton[2] have hailed the ‘right to property’ as being the cornerstone of natural and inalienable rights bestowed upon humankind. This right has become central to the ideals of Liberal Democracies all around the world, including India – where it is protected by the Constitution itself. The right stemming from the right to ownership of private property per se, would be the right of its owners to enjoy the said property freely and transfer its’ ownership to whomsoever they may please and in whichever manner. This act of ‘alienating’ property can be termed as the voluntary transfer of property and possession of lands, tenements, or other things, from one person to another. It is particularly applied to absolute conveyances of real property.[3]
A part of the bundle of property rights bestowed upon the proprietor, the right of alienation specifically, is set in opposition to the rights of possession and use, the alienation of which may extend to properties both tangible and intangible and real and personal. Besides, such alienation may be undertaken in numerous ways including those by sale, mortgage, lease, hire, bail or pledge. Moreover, such alienations to property may be restrained in two ways: absolute and partial, the former of which is explicitly declared to be void under s.10 of the Transfer of Property Act, 1882.4
This section,[4] based on the principle brought about through the Latin maxim of
‘alienatio rei prae fertur juri accrescendi’ that reads as ‘accumulation is preferred over alienation’ as the framers in all likeness, preferred economic joie de vivre rising from investments due to the constant transfer of land over the stagnation of property in the hands of a select few. It is due to this, that one may assert that the owner of a property must have unequivocal control over such land and its’ alienation. However, living in a Democratic Socialist country, where the judiciary has frequently invoked affirmative action[5] with respect to the rights of religious minorities and socially-backward groups, the restraints on alienation metamorphoses into a double-edged sword.
In a 2005 ruling, the Supreme Court in Zoroastrian Co-Operative Housing Society Limited v. District Registrar Co-Operative Societies[6], held that restraints precluding the subsequent-sale or further alienation of property to non-Parsis qualified as a ‘partial restraint’ and not an ‘absolute restraint’ under s.10 of the Transfer of Property Act.8 The justification behind such ruling was that the restrictive covenant prohibited merely the sale of said property to “outsiders” – in this case, non-Parsis – and ensured that the property remained only with members of the ‘society’ – whose membership was anyways exclusive to the Parsi community.
The Court’s rejection of the notion of the restraints being ‘absolute’ in this case, may stem from their reliance on a highly strict and textual interpretation while deducing that the petitioners had a “qualified freedom to transfer property” which was sought “voluntarily” so as to not attract the provisions of an ‘absolute restraint’ under s.10 of the Transfer of Property Act.[7]
The judgement was duly criticised by the media and many eminent legal scholars through multiple discourses for upholding laws contrary to what many believed to be in direct conflict with the basic framework and spirit of the Constitution while working towards the preservation of communitarian cultural interests of a minority and their ‘way of life’ – something that was highlighted through the article ‘Choosing the chosen’ by Geoffrey Graber[8] that interpretations under communitarian lenses preferred fulfilment of group rights over individual rights.
Furthermore, it may be construed through an in depth reading of the judgement that the Court’s decision with respect to its’ interpretation on the restraints on the transferors is that such restraint is, in fact, of an absolute nature as the sheer number of non-Parsis who are being excluded is far greater than the members of the Parsi community qualified to purchase the land. This grossly restricts the transferor’s pool of interested buyers and even diminishing the value of the property.
Additionally, such restraints on alienation based wholly on religious, cultural and linguistic grounds are in conflict with the ideals of justice, equality and fraternity as inscribed in, none other than, the preamble of our Constitution. The permissibility of the setting-up of colonies created wholly for the benefit of and exclusive to only members of a specific group would be against the notion of fostering ‘fraternity’ – the feeling of brotherhood and sisterhood among citizens of this country. How do we expect sentiments of harmony and peaceful cohabitation among peoples of diverse faiths and ideologies to blossom when the interpretation of the Apex Court facilitates certain sections of the society to isolate the themselves? The recognition of such exclusivity and passing it off as minority rights under the veil of ‘partial restraints’ under the Transfer of Property Act has an adverse bearing on a higher value being the principles of equality and fraternity. This approach makes it clear that the interpretation adopted by the Supreme Court is contrary to the aforementioned twin Constitutional ideals.
March of law witnessed some kind of discomfort with the interpretation in the Zoroastrian Co-operative Housing case[9] and this is evident in the judgement of the High Court of Delhi in the case of Delhi Dayalbagh Co-operative House Building Society Ltd. v. The Registrar Co-operative Societies & Ors.12 In this case, the Court, while distinguishing the Zoroastrian Co-operative Housing case[10] held that the membership of a housing society which was extended to only members of a specific religious sect was an ‘absolute restraint’ under s.1014 and declared such covenants on alienation to be void. The Court explained that the Zoroastrian Co-operative Housing case[11] – which was specific to the Parsi community – stemmed from the rationale that earlier there was no legislative prohibition impeding the establishment of such societies and that the Parsis were a recognised minority and a shrinking community.
In other words, the Delhi High Court’s pragmatist reasoning behind the superseding of ‘individual rights’ over ‘group rights’ held true as the intent of the society was only to provide housing to its’ members and was nowhere connected to the promotion of any religious proceeding or activity. Indulging in the sale of these properties for a profit was declared as impermissible. Moreover, the imposition of restrictions on the pool of buyers culminated in a stark decrease in the number of eligible purchasers. Furthermore, the transferor’s right to get a fair price for his property is relegated due to the gross limitation on the number of eligible candidates due to the restrictive covenants.
Due to the underlying circumstances, the reasoning of Court in the pragmatist and consequentialist interpretation of the judgement in the Dayalbagh Co-operative Housing case[12] – wherein individual autonomy overrides group rights – appeals more to me over the textual and literal interpretation of Zoroastrian Co-operative Housing case[13] – in which communitarian interests are safeguarded. Its’ broader understanding of the objectives of the housing society and its’ consideration of the economic aspect, more specifically, of the losses caused to the transferor due to the restrictive covenants makes the verdict of the Dayalbagh Co-operative Housing case18 a far more suitable one.
However, I believe a more purposive interpretative approach would more appropriate in deciphering such cases in the near future wherein, a standard of reasonableness pertaining to whether such restraint is of greater utility than the injury caused to the transferor would needed to be established.
This brings me to the final part of this paper. In her informative article, ‘Inalienability and the Theory of Property Rights’,[14] Susan Rose-Ackerman raises anew one persistent question that has worked itself into the fabric of our general law: Why should there be any restraints on the alienation of property?
In a post-globalisation modern world that espouses the philosophy of equality, secularism, fraternity and the fast-emerging notion of ‘global citizenship’, the continuation of restraints seems to be an aberration to such ideals. More importantly, in addition to them fostering negative feelings among different peoples of a country and being in violation to many constitutional principles, restraints have time over time proven to be highly detrimental economically to the transferor and in a highly capitalist and individualist world, staunch capitalists and libertarians contend that profit is supreme. Therefore, I conclude by asserting that, restraints on alienation of property should be done away with in the foreseeable future.
[1] John Locke (1689), Second Treatise of Civil Government, § 27.
[2] Micheline Ishay (2008), ‘The History of Human Rights: From Ancient Times to the Globalized Era’, University of California Press, pp. 91–94.
[3] Black’s Law Dictionary <https://thelawdictionary.org/alienation/> accessed 17 April 2018. 4 S.10 Transfer of Property Act, 1882.
[4] S.10 Transfer of Property Act, 1882.
[5] Ashwini Deshpande (2012), ‘Social Justice Through Affirmative Action in India: An Assessment’, <http://research.economics.unsw.edu.au/scho/WEE/papers/Ashwini%20Deshpande1.pdf> accessed 18 April 2018.
[6] Zoroastrian Co-Operative Housing Society Ltd v. District Registrar Co-Operative Societies AIR 2005 SC 2306. 8 S.10 Transfer of Property Act, 1882.
[7] ibid
[8] Geoffrey Graber (2000), Choosing the Chosen: The Validity of Racial Restrictions on the Alienation of Property in Israel and the United States, 73 S. Cal. L. Rev. 437 Southern California Law Review January 2000.
[9] Zoroastrian Co-Operative Housing Society Ltd v. District Registrar Co-Operative Societies AIR 2005 SC 2306.
[10] Zoroastrian Co-Operative Housing Society Ltd v. District Registrar Co-Operative Societies AIR 2005 SC 2306. 14 S.10 Transfer of Property Act, 1882.
[11] Zoroastrian Co-Operative Housing Society Ltd v. District Registrar Co-Operative Societies AIR 2005 SC 2306.
[12] Delhi Dayalbagh Coop. House Building Society Ltd. v. The Registrar Cooperative Societies & Ors 195 (2012) DLT 459.
[13] Zoroastrian Co-Operative Housing Society Ltd v. District Registrar Co-Operative Societies AIR 2005 SC 2306. 18 Delhi Dayalbagh Coop. House Building Society Ltd. v. The Registrar Cooperative Societies & Ors 195 (2012) DLT 459.
[14] Susan Rose-Ackerman (1985), “Inalienability and The Theory of Property Rights”, Faculty Scholarship Series. 580, <http://digitalcommons.law.yale.edu/fss_papers/580> accessed 17th April 2018.
Bhrigu A. Pamidighantam 
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