Source: Supreme Court 

Why in News? 

A bench of Justice Dipankar Datta and Justice Manmohan held that Section 10 of Transfer of Property Act, 1882 does not apply to government allotments. 

• The Supreme Court held this in the case of The State of Telangana v. Dr. Pasupuleti Nirmala Hanumantha Rao Charitable Trust  (2025). 

What was the Background of The State of Telangana v. Dr. Pasupuleti Nirmala Hanumantha Rao Charitable Trust  (2025) Case?   

• The case involves an appeal filed challenging the judgment dated 5th July 2022 of the High Court of Telangana, which dismissed the Appellant-State's Writ Appeal. 
• The dispute concerns land located at Chinnathimmapur village, Mulugu Mandal, Medak District. 
• The High Court held that the Respondent-Trust is the absolute owner of the land, as the Appellant-State had sold the land at market value. 
• The High Court determined that the State could not place conditions restricting land enjoyment after selling it at market value, considering such restrictions void under Section 10 of the Transfer of Property Act, 1882 (TPA). 
• The Appellant-State argues that the land was allotted under the Telangana Alienation of State Lands and Land Revenue Rules 1975, which allows for conditional alienation of land. 
• The District Collector of Medak had allotted the land on 8th February 2001 under G.O.Ms. No. 635 dated 2nd July 1990, with specific conditions regarding land usage. 
• The Appellant-State contends they intended to allot the land to a charitable trust for public benefit, not to sell it outright. 
• The Appellant alleges that the Respondent-Trust executed a General Power of Attorney on 18th June 2011 without referencing the original allotment conditions. 
• The Appellant claims the Power of Attorney holder developed a colony called 'Eden Orchard' on the land and sold plots to third parties without disclosing the original allotment conditions. 
• The Respondent-Trust argues that the alienation was a sale at market value, not a concessional allotment, and contained only a general condition without specifying exact purpose. 
• The Respondent further contends that any restrictive conditions would violate Section 10 of the TPA, as held by the High Court. 
• The Respondent also argued that the resumption order dated 19th January 2012 violated principles of natural justice. 

What were the Court’s Observations? 

• The Supreme Court identified three key issues: whether the land transfer was a sale or an allotment, whether conditions were imposed, and whether such conditions would violate Section 10 of the TPA. 
• The Court determined that the land in question (Ac. 3.01 gts in Survey No.72/31) was Government (Poramboke) land as per records declared in 1989. 
• The Respondent-Trust, being a charitable organization, had applied for land allotment which was processed according to G.O.Ms. No.635 dated 2nd July 1990. 
• The District Collector of Medak conditionally allotted the land on 8th February 2001 under the Telangana Alienation of State Lands and Land Revenue Rules, 1975. 
• The allotment came with three specific conditions: the land must be used only for the purpose allotted, construction work must be completed within two years, and trees must be planted in open areas. 
• The Court found that the land transfer was an allotment under a statutory scheme, not a sale as claimed by the Respondent-Trust and determined by the High Court. 
• The Court observed that while no specific purpose was mentioned in the allotment letter, the land could only be used for charitable purposes as it was allotted to a charitable trust. 
• The Respondent-Trust had previously acknowledged the conditional nature of the allotment in their correspondence dated 29th November 2011 and in their writ petition. 
• The Court determined that the High Court erred in treating the transaction as a sale, ignoring the statutory scheme of alienation/allotment. 
• The Court ruled that Section 10 of the TPA does not override or eclipse the Rules of 1975 and Board of Revenue Standing Orders, as they operate in a completely distinct legal space. 
• The Court noted that in 2011, Dr. Pasupuleti Niramala Hanumantha Rao executed a General Power of Attorney without disclosing the conditions of the allotment, which reflected malafides. 
• The Court found that the Respondent-Trust violated the conditions of allotment by developing a colony and selling plots to third parties, which constituted "fraud on the statute." 
• Based on these findings, the Supreme Court set aside the High Court judgments and allowed the appeal.

What is Section 10 of TPA? 

• Section 10 of the TPA prohibits conditions in property transfers that absolutely restrain the transferee from disposing of their interest in the property. 
• Any condition or limitation that completely prevents the new owner from selling, gifting, or otherwise transferring the property is considered void and unenforceable under law. 
• The law considers such absolute restraints on alienation to be against public policy as they unduly restrict property rights and impede the free flow of property in the market. 
• There is a specific exception for lease agreements, where conditions restricting transfer are allowed if they benefit the lessor (landlord) or those claiming under the lessor. 
• Another exception exists for property transferred to certain women (excluding Hindu, Muslim, or Buddhist women), where conditions may be imposed preventing them from transferring the property during their marriage. 
• This section essentially balances property rights with freedom of contract, ensuring that once property is transferred, the new owner generally has full rights to further transfer it. 
• The principle behind this section is that the law favors free alienability of property and generally disapproves of perpetual restrictions on property transfers.