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Abstract

The doctrine of lis pendens is recognized in India under Section 52 of the Transfer of Property Act, 1882^[1] (‘Act’). It is a principle on the premise that for the better administration of justice, it is essential that parties to the litigation does not transfer title of immovable property under dispute and that the Judgment and Decree of the Court binds not only the parties to the litigation, but also such parties who acquire title during the pendency of the litigation from those parties who are parties to it, whether with notice of such litigation or without notice.^[2] As far as an Arbitration proceeding is concerned, the Section 52 of the Act does not explicitly include or exclude an Arbitration proceeding. The Section contains words such as ‘Court’, ‘Suit’, and ‘Proceedings’, in it, without having defined what they are or what they include and exclude in it, nor are they defined anywhere in the Act. Whether the word ‘Court’ would include in its realm the ‘Arbitral Tribunal’, and the words ‘Suit’ or ‘Proceeding’ would also include an Arbitration Proceeding needs to be looked into, and in this context, it is pertinent to look into the judgments laid down by various Courts in India and their reasoning for extending the doctrine of lis pendens to the Arbitration proceedings.

Introduction

The underlying principle governing the doctrine of lis pendens can be found in the judgment of Lord Justice Turner in the leading case of Bellamy V Sabine^[3] which says – “It is, as I think, a doctrine common to the courts of law and equity, and rests, as I apprehend, upon this foundation – that it would plainly be impossible that any action should or could be brought to a successful termination, if alienation pendente lite were permitted to prevail. The plaintiff would be liable in every case to be defeated by the defendant’s alienating before the judgement or decree, and would be driven to commence his proceedings de novo, subject again to be defeated by the same course of proceedings”. The doctrine prohibits transfer of title to an immovable property, unto a third party, during the pendency of a lis in which the property in question is the subject matter of the lis. Any action in violation of this principle, so as to affect the rights of a Plaintiff over a property in question in the lis, although not makes it invalid, but it nevertheless makes it subservient to the rights of the Plaintiff, provided he succeeds in the lis. If the Plaintiff fails in the lis, then only the pendente lite transferee’s rights over the immovable property prevails.

An Arbitration proceeding in India, however, is not held in the Courts of Law, but before an Arbitral Tribunal which is mutually constituted by the parties to the lis. More often than not, an Arbitral Tribunal is constituted by the competent Court of Law, under the relevant provisions of The Arbitration and Conciliation Act, 1996, when the parties are unable to constitute a mutually agreeable Arbitral Tribunal. The word ‘Court’, as is used in Section 52 of the Transfer of Property Act, or in general, has not been defined in the Act. So are also the words ‘Suit’ and ‘Proceeding’ found in Section 52, which makes it ambiguous whether or not the benefit of the doctrine of lis pendens is available to a party to an Arbitration proceeding, during the pendency of which the Respondent has transferred the property under lis to a third party purchaser. 

Doctrine of lis pendens and arbitral proceedings in India

The broad purpose of the doctrine of lis pendens is to maintain the title over an immovable property under dispute unaffected during the pendency of the lis, so that the party in whose favor the title accrues at the end of the lis may enjoy the benefit of the judgment and decree, which if not done, then the very purpose of adjudication of the lis becomes useless. The principle enumerated in the case of Bellamy v. Sabine has been adopted by the Privy Council in the case of Faiyaz Hussain v. Munshi Prag Narrain – (1907) 34 Ind App 102, quoted in AIR 1978 All 318, where they lay stress on the necessity for final adjudication and observation that otherwise there would be no end to litigation and justice would be defeated.

The issue was discussed at length by the Hon’ble High Court of Punjab and Haryana, in the case of Sardar Singh v. Mohan Lal Major and Others^[4] and it was held, referring to a judgment of the Hon’ble Supreme Court of India, in the case of Satish Kumar and Others v. Surinder Kumar and Others – AIR 1970 SC 833, that an Arbitration Award is not a mere waste paper but has some legal effect and is binding on the parties, and further held that Award is a final adjudication of a Court of the parties’ own choice. The Court further held that, in the background of the facts involved in the said case, that Krishan Lal by his own act and conduct rather tried to nullify the effect of the Award by transferring portion of the suit land in favor Sajjan Singh, and that since Krishan Lal had no right, title or interest in the Schedule property after the award, he could not transfer the same in favor of Sajjan Singh.

The Hon’ble High Court of Delhi, in the case of Iqbal Singh v. Mahender Singh and Another^[5] held that once the Arbitration proceedings commences, the suit property becomes sub-judice and any transfer during the pendency of the Arbitration proceeding would be hit by section 52 of the Transfer of Property Act. The Hon’ble High Court of Punjab and Haryana, in the case of Swaran Singh v. Arjun Singh and Others^[6] held that principles of lis pendens will apply to arbitral proceedings if the award has the stature of the decree enforceable in a Court of Law.

Conclusion

Interestingly, we may note that challenging the validity of an Arbitral Award is made by approaching the jurisdictional District Court, under Section 34 of the Arbitration and Conciliation Act, 1996, and thereafter, to the jurisdictional High Court, under Section 37 of the Act. Both being Courts of Law, and the proceedings being before them, by a natural corollary it can be understood that the doctrine of lis pendens is applicable if a property is alienated or otherwise dealt with, so as to affect the rights of the parties, during the pendency of these proceedings. It, therefore, can be argued, based on the precedents on the point, that doctrine of lis pendens is applicable to Arbitral proceedings and the word ‘Court’ as used in Section 52 of the Act also refers to an Arbitral Tribunal. Even if it is assumed that the said provision is not applicable to Arbitral proceedings, the principles governing the same would be applicable. Section 52 of the Act is such a provision which is based on justice, equity and good conscience^[7].

References

1. Sohoni, V. S. (2014). Sohoni’s Transfer of Property Act (4th ed.). Allahabad: Premier Publishing Company. Retrieved October 2020
2. Mitra, B.B and Sengupta – Transfer of Property Act
3. Vakil, Darshaw – Transfer of Property Act
4. Sardar Singh v. Mohan Lal Major and Others – AIR 1990 P&H 254
5. Iqbal Singh v. Mahender Singh and Another – 2012 SCC OnLine Del 5852
6. Swaran Singh v. Arjun Singh and Others – 2013 SCC OnLine P&H 26883

^[1] Section 52 of Transfer of Property Act, 1882: Transfer of Property pending suit relating hereto: During the pendency in any Court having authority within the limits of India excluding the State of Jammu and Kashmir or established beyond such limits by the Central Government of any suit or proceedings which is not collusive and in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose.

Explanation: For the purpose of this section, the pendency of a suit or proceeding shall be deemed to commence from the date of the presentation of the plaint or the institution of the proceeding in a Court of competent jurisdiction, and to continue until the suit or proceeding has been disposed of by a final decree or order and complete satisfaction or discharge of such decree or order has been obtained, or has become unobtainable by reason of the expiration of any period of limitation prescribed for the execution thereof by any law for the time being in force.

^[2] Krishnabai v Savalram AIR 1927 Bom 95

^[3] 1 De G&J 566

^[4] AIR 1990 P&H 254

^[5] 2012 SCC OnLine Del 5852

^[6] 2013 SCC OnLine P&H 26883

^[7] Lov Raj Kumar v. Daya Shankar: AIR 1986 Del 364

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