Transfer of Property Act (TPA)
Burden of an Obligation Annexed to Ownership under Section 40: Restrictive Covenants, and How They Differ from Easements
A builder selling plots wants the purchasers to keep their buildings low, so that the plots he retains keep their light and their view. He has no easement, and he acquires no interest in the land he sells; what he has is a covenant. Section 40 decides how far that covenant travels. It binds a transferee who takes with notice of it, and one who takes for nothing, but not a purchaser who paid value and knew nothing. The covenant does not run with the land as an interest in it — it runs with notice, and stops at the first purchaser who had none.
Figure 1: The covenant passing from owner to owner, and the purchaser at whom it stops
1. The Section
Section 40, TPA Where, for the more beneficial enjoyment of his own immoveable property, a third person has, independently of any interest in the immoveable property of another or of any easement thereon, a right to restrain the enjoyment in a particular manner of the latter property; or where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immoveable property, but not amounting to an interest therein or easement thereon; such right or obligation may be enforced against a transferee with notice thereof or a gratuitous transferee of the property affected thereby, but not against a transferee for consideration and without notice of the right or obligation, nor against such property in his hands. |
2. The Two Limbs
Limb | Content | Typical instance |
|---|---|---|
The restrictive covenant | A right, held for the more beneficial enjoyment of the claimant's own immoveable property and independent of any interest or easement in the other's land, to restrain the enjoyment of that land in a particular manner | 'No building above two storeys' · 'no trade to be carried on' · 'the plot to be used for residence only' |
The obligation annexed to ownership | The benefit of an obligation arising out of contract and annexed to the ownership of immoveable property, not amounting to an interest in it or an easement over it | The right of a purchaser under a contract of sale, enforceable against a subsequent transferee who takes with notice of the contract |
3. What Must Be Shown
- The claimant owns land for whose more beneficial enjoyment the right exists, in the case of the first limb. A covenant taken for no land at all — a covenant in gross — does not attract the section.
- The right is not an interest in the burdened land, and not an easement. The section says so expressly, and the distinction matters for the reasons set out below.
- The covenant is in substance negative — a restraint on the manner of enjoyment. A covenant requiring the owner to spend money or to do positive acts does not sit comfortably within the first limb.
- The transferee took with notice, or took gratuitously. A purchaser for value without notice takes free, and the property in his hands is free too.
4. Section 40 and an Easement
Point | An easement | A section 40 right |
|---|---|---|
Nature | An interest in the servient land — a right in alieno solo | Not an interest in the land at all; a right or an obligation resting on contract |
Governing law | The Indian Easements Act, 1882 | This section, and the general law of contract |
Attachment | Appurtenant to a dominant heritage, and inseparable from it — section 6(c) | Held for the beneficial enjoyment of the claimant's own land, but not annexed to it as an interest |
How it passes on a transfer | Automatically, as a legal incident of the dominant heritage — section 8 | It does not pass as an incident; it binds a later owner only through notice |
Against whom | Against the servient owner and all who take from him | Against a gratuitous transferee and a transferee with notice, but not a purchaser for value without notice |
Content | May be positive or negative — a right to do, or to prevent | The first limb is confined to restraining the enjoyment of the land in a particular manner |
5. The Origin of the Rule
Tulk v. Moxhay Section 40 is the Indian statutory form of the equity recognised in Tulk v. Moxhay (1848) 2 Ph 774, where the owner of a garden square in London sold it subject to a covenant to keep it uncovered by buildings. A later purchaser, who bought with notice of the covenant, was restrained from building on it. The reasoning was that it would be inequitable for a purchaser who knew of the restriction to buy at a price reflecting it and then disregard it. The Indian section keeps the substance and fixes its limits: notice is the test, and a purchaser for value without notice is outside it. |
6. Where Section 40 Connects
- With section 11. The second paragraph of section 11 preserves a direction imposed on one piece of immoveable property to secure the beneficial enjoyment of another piece belonging to the transferor. Section 40 supplies the machinery by which such a direction is enforced against successors in title.
- With section 39. The two sections are drafted in parallel and use the same notice formula, one for maintenance and the other for covenants and contractual obligations.
- With section 53A. The second limb — an obligation arising out of contract and annexed to ownership — is the doctrinal home of the rights of a purchaser under an agreement for sale, which section 53A protects in possession.
- With section 3. Everything turns on notice, including registration and possession as constructive notice.
Retention aid An easement passes with the land; a section 40 right passes with notice. And the reason is stated in the section itself: the right exists independently of any interest in the property of another or of any easement thereon. |
7. Landmark Cases
📖 Tulk v. Moxhay, (1848) 2 Ph 774 Held: A purchaser who bought a garden square with notice of a covenant restricting building upon it was restrained from building. The price he paid reflected the restriction, and it would be inequitable to allow him to sell the land at a higher value the next day by disregarding the covenant. Ratio: A negative covenant entered into for the benefit of the covenantee's own land is enforced against a later purchaser with notice. |
8. Related Topics and Provisions
- Transferee With Notice vs Transferee for Consideration Without Notice — the distinction the section turns on
- Section 39, TPA — the parallel provision on maintenance
- Section 11, TPA — the second paragraph, preserving a direction that protects the transferor's other land
- Transfer of an Easement Apart from the Dominant Heritage, Section 6(c) — the contrast with an easement
- Notice under Section 3 — registration and possession as constructive notice
- Section 53A, TPA — part performance, and the rights of a purchaser under an agreement for sale