Settlement Deed Clause Divesting Daughter Of Property Upon Marriage Is Void: Kerala High Court

The Kerala High Court has held that a clause in a settlement deed providing that a daughter would lose her rights over gifted property if she married is void as being contrary to law and public policy.Justice Easwaran S. delivered the judgment in a regular second appeal. The dispute arose from a 1965 settlement deed executed by a father in favour of his daughter. The deed transferred 10 cents of property to the daughter but contained a restrictive clause stipulating that if she “married” or “became a nun”, her rights in the property would cease and the property would devolve upon her brother.The daughter married in 1971 and later moved to Germany. She subsequently discovered that her brother had mutated the property in his own name and was exercising rights over it on the strength of the restrictive covenant.A suit was instituted seeking declaration of title and possession, contending that the clause restraining her from marrying while retaining ownership of the property was void ab initio.The trial court dismissed the suit on the ground of limitation and upheld the validity of the condition. However, the first appellate court reversed the decision, holding that the restrictive covenant was unenforceable. The order of the appellate Court was challenged before the High Court. The appellant-brother argued that the condition attached to the gift of liability or reservation made therein is valid insofar as the enjoyment of the gift is concerned. Reliance was placed on the High Court decision in Thankappan v V. Chellappan [2020 (4) KHC 98], and Supreme Court decision in Smt. Rukhamanbhai v Shivram and Others [1981 KHC 691] to contend that under a deed of settlement condition attached to the gift of liability or reservation made therein is valid insofar as the enjoyment of the gift is concerned. The appellant also argued that the suit was barred under Article 58 of the Limitation Act, 1963. The respondent contended that the transfer had taken effect absolutely upon execution of the deed and that any subsequent condition restraining marriage was void in law.The Court noted that Section 26 of the Indian Contract Act, 1872 provides that agreement in restraint of marriage is void. It further noted that Section 4 of the Transfer of Property Act incorporates principles of contract law into property transfers, while Section 25 of the Transfer of Property Act invalidates conditions in transfers that are forbidden by law or opposed to public policy.The Court thus observed that when these provisions are read together, any clause in a property transfer that penalises marriage cannot be legally sustained and is opposed to public policy. “When Section 4 and Section 25 of the Transfer of Property Act, 1882, is read in conjunction, it is beyond cavil that any condition incorporated in a deed of transfer which is forbidden in law or opposed to public policy is void and cannot take effect. Viewed in the above perspective, certainly the restrictive covenant in the settlement deed that the property will revert back to the son, if the plaintiff marries cannot be upheld by the courts and is void and the plaintiff is entitled to ignore the same.” Court noted. The Court further noted that the second condition that the plaintiff will lose the property if she becomes a nun also has a similar effect. The Court added that under Section 11 of the Transfer of Property Act, which provides that where an absolute interest is created in favour of a transferee, any direction restricting enjoyment of that interest can generally be ignored.The Court distinguished precedents relied on by the appellant concerning conditional gifts, observing that the present transfer was not conditional in its inception. Instead, it was an absolute transfer burdened with a subsequent restrictive clause.“However, in the present case, the transfer in favour of the plaintiff cannot be termed as conditional. It is an absolute transfer. However, a further clause is incorporated that, if she becomes a nun or gets married she will lose the interest in the property.” Court noted. The Court noted that when a condition of restraint is imposed in a deed which is otherwise prohibited under law, the said condition becomes void and therefore, the transfer in favour of the plaintiff becomes absolute and not conditional. “This court is unable to agree with the contention of the appellant that in the present case also, the settlement deed must be construed as a conditional one. The infirmity attached to the deed is that, it incorporates a condition which is forbidden by law and opposed to public policy. If a settlement deed contains a clause which is forbidden by law and against public policy, the said clause becomes inoperative and the donee is entitled to ignore the condition and take the property dehors the condition.” Court held. The Court also rejected the appellant's argument that the suit was barred by limitation under Article 58 of the Limitation Act.With these observations, ...

Settlement Deed Clause Divesting Daughter Of Property Upon Marriage Is Void: Kerala High Court

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Settlement Deed Clause Divesting Daughter Of Property Upon Marriage Is Void: Kerala High Court

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