Building Up or Tearing Down? The Shifting Landscape of Height-Restrictive Covenants in India

Imagine a developer acquires a prime plot in Mumbai, with plans approved for a 40-storey tower, only to be halted by a clause in a 1951 sale deed prohibiting any structure taller than the "original garages." This scenario is not hypothetical. It lies at the heart of a growing legal battle in urban India: the clash between historic restrictive covenants and the pressing need for modern redevelopment. While these "negative covenants" were once essential for planned development, courts are now forced to weigh the sanctity of old promises against the realities of a rapidly changing city.

The Legal Foundation: How Covenants 'Run with the Land'

A covenant is a legal promise within a property deed that dictates what a landowner can or cannot do. Negative covenants, which restrict certain actions, have their roots in English common law, designed to maintain order and uniformity in neighborhoods before formal planning laws existed.

The principle that these promises could bind future owners was established in the English decision, Spencer's Case (1583). This case laid down the foundational "touch and concern" test: for a covenant to be binding on subsequent owners, it must relate directly to the land itself, not be a merely personal promise. The doctrine was further refined in Tulk v. Moxhay (1848), which established that a subsequent purchaser who buys land with notice of a restrictive covenant is bound by it in equity.

Indian law adopted these principles in Section 40 of the Transfer of Property Act, 1882. This provision states that an obligation restricting the use of land, created for the beneficial enjoyment of another property, can be enforced against a subsequent buyer who had notice of it. This effectively allows restrictive covenants to "run with the land" not as an interest in the property, but as an obligation annexed to its ownership.

The Indian Battleground: A Tale of Two Judgments

The High-Water Mark of Enforcement: Bomi Mistry v. Kesharwani Co-operative Housing Society Ltd. (1992)

This case is a landmark precedent for the strict enforcement of negative covenants. The dispute involved a 1951 conveyance deed for a property known as "Ratan Villa," which included a covenant forbidding the vendor or his successors from building any structure "higher than the present garages" on the remaining land. When a co-operative society later purchased the remaining land and planned a multi-storey building, the plaintiff sought to enforce the height restriction.

The Bombay High Court upheld the covenant, granting an injunction. The court's reasoning was clear:
a. The purpose of a covenant is to prevent a breach, not to make someone pay damages for it.
b. When parties enter into a contract "with their eyes open," the court's duty is to enforce that bargain, regardless of convenience or the amount of damage.
c. Even a significant change in the neighbourhood does not automatically render a covenant obsolete; in fact, in a crowded city, a covenant preserving open space could become even more valuable.

A Shift Towards Pragmatism: Pashmina Cooperative Housing Society Ltd. v. Latif Hassambhoy (2024)
Decades later, the same court demonstrated a significant shift in perspective. In Pashmina, the court refused to enforce a 19th-century covenant that restricted building height to just seven feet on a property on Peddar Road, Mumbai.

The court observed that the area had undergone “drastic changes,” with numerous high-rise buildings now surrounding the plot. It held that the restriction was “obsolete as a result of changes in the character of the property or the neighbourhood” and no longer served a meaningful purpose. Enforcing it would unfairly block lawful redevelopment that complied with current planning regulations.

Practical Guidance for Stakeholders

The evolving legal landscape surrounding height covenants requires a proactive and strategic approach. Whether you are buying, building, or protecting a property, here is some practical guidance.

For Developers and Buyers: Look Before You Leap
a. Dig Deeper in Due Diligence: Go beyond a standard title search. Specifically instruct your legal team to look for restrictive covenants in the entire chain of title documents. Remember, a covenant’s registration is only effective as notice if it is properly indexed against the property you are buying.
b. Assess the 'Why': Don't just read the restriction; evaluate its modern-day relevance. A covenant designed to protect a view that has long been obstructed by skyscrapers may be deemed obsolete by a court, as seen in the Pashmina case.
c. Negotiate a Release: If a covenant poses a genuine threat to your plans, the most effective strategy is to identify the beneficiaries and negotiate a formal, registered release before you invest further.

For Landowners and Beneficiaries: Protect Your Rights

a. Demonstrate the Ongoing Benefit: Be prepared to prove that the covenant provides a tangible and continuing benefit to your property, such as protecting its value, privacy, or access to light and air. A court is unlikely to enforce a restriction that serves no practical purpose.
b. Act Swiftly and Decisively: If a breach occurs, do not delay. Any hesitation to enforce your rights could be interpreted as waiver or acquiescence, potentially weakening your claim for an injunction.

For Housing Societies and Property Managers: Plan for the Future

a. Audit Your Title Deeds: Proactively review your property’s title documents to identify any restrictions that could impact future redevelopment. Understanding these limitations early can save significant time and expense later.
b. Balance Progress with Legal Risk: When considering redevelopment, carefully weigh the potential gains from increased FSI against the legal costs and risks of challenging a covenant. An early legal opinion can help the managing committee make an informed decision.

The Future of Urban Redevelopment

The jurisprudence on negative covenants is at a crossroads. While courts remain reluctant to extinguish private contractual rights lightly, decisions like Pashmina signal a pragmatic shift. The sanctity of a century-old promise is now being balanced against the urgent public interest in optimal land use and housing development. For developers, investors, and landowners, this means that the fine print in old deeds has never been more important. The enduring power of these covenants will ultimately depend not just on what was written, but on whether their original purpose can still find relevance in the ever-changing skyline of modern India.