In this blogpost, Harsha Asnani, student, NIRMA University, Ahmedabad writes about the overview of the doctrine of lis pendens in India. The article also covers various case laws that govern this principle by way of Section 52 of Transfer of Property Act, 1882.
In general parlance, lis pendens refers to a pending legal action or a formal notice of a legal action. The doctrine of Lis Pendens has been inscribed in the Indian Legislative regime by way of Section 52 of The Transfer of Property Act, 1882. The section states that
“Transfer of property pending suit relating thereto.— 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 immoveable 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 purposes 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”
The major idea lying behind Section 52 is that in a suit, which is still pending in terms of its determination, the status quo should be maintained and therefore it should remain unaffected by the act of any of the parties to the suit. It makes it expressly clear that in a case where the dispute between any of the parties is with regard to the right of any immovable property, such property cannot be transferred by any of the parties to the suit which as a result may affect the rights of the other party involved in the dispute. This principle does not get eliminated after the dismissal of the suit. After the dismissal of the suit and before filling of the appeal, the ‘lis’ continues to exist and hence the defendant can be prevented from transferring the property to the prejudice of the plaintiff. The explanation to the said section makes it clear that the lis shall be deemed to have commenced from the date when the plaint shall be presented in the court and shall continue to exist till the time such suit or proceeding has been decided and a final order or decree has been obtained accompanied with complete satisfaction or discharge of such degree or order.
In order to constitute Lis pendens the following conditions must be satisfied:-
1) There should be a pending suit or proceeding;
2) The suit or proceeding must not be collusive one;
3) The suit or proceeding must be pending in a Court of competent Jurisdiction;
4) The suit or proceeding must be one in which a right to immovable property is directly and specifically in question;
5) The property directly and specifically in question must be transferred during such pendency;
6) The transfer by any party to the suit must affect the right of other parties till the time the case is finally disposed of.
Confirming to this principle, The Supreme Court in the case of Jayaram Mudaliar vs. Ayyaswami has held that the objective of this section is not to deprive the parties of any just or equitable claim but to ensure that the parties subject themselves to the jurisdiction and authority of the court which shall decide the claims that are put before it. In another case of Hardev Singh v. Gurmail Singh, it was held that the Section 52 does not render any transfer of a disputed property void or illegal, but instead brings the purchaser within the binding limit of the judgement that shall be pronounced on the disposal of dispute. In any case where a transfer is made during the pendency of the suit, if the suit is disposed off in favour of the transferor then the transferee rights shall prevail whereas on the other hand if the rights of the transferor are recognised only to a certain extent or part of the property then the transferee’s right shall also extend up to the limit till which the right of transferor exists.
The preliminary assumption behind the doctrine of lis pendes is that if the parties to a dispute are not prohibited from transferring any of the property then successive alienations shall take place. In such a situation it would become impossible that the action or suit be successfully terminated. With this as a consequence, the court would be unable to dispense its function of protecting the suitors from future injuries. The principle imbibed in this section finds its genesis in the Common Law maxim of ut lite pendent nihil innovator i.e. during the pendency of litigation; no new rights shall be introduced. As a rule of justice equity and good conscience, this principle gets applied even in those laws where the Act is not applied.
Non – applicability of the lis pendens doctrine
Lis pendens does not necessarily get applied in every case. Following are Certain instances where this doctrine does not get applied:
• A sale made by the mortgagee in the exercise of the power as conferred by the mortgage deed. The principle of lis pendens shall not be applied in this case and therefore the sale remains valid, though made during the pendency of a suit filed by the mortgagor.
• In matters of review;
• In cases where the transferor is the only party affected;
• In cases of friendly suits;
• In cases where the proceedings are collusive;
• In cases of execution proceedings where the order is passed against the intervener. In such matters, an appropriate remedy shall be a suit filed under order 2, rule 63 of the Code of Civil Procedure, 1908;
• In case of suits involving pending transfers by a person who is not a party to the suit;
• In cases where the property has not been properly described in the plaint;
• In cases where the subject matter of rights concerned in the suit and that which are alienated by transfer are different.
The language used in this section in no way prohibits any of the parties from making a transfer of the property. The only indication that it makes in lieu of such transfers is that the new purchasing party shall also be subject to the final order that shall be pronounced by the court of competent jurisdiction. The transferee shall be only entitled to the title so transferred.
The doctrine of lis pendens is applied to a case to prevent the right of a third party and not for the person or party to the suit making such transfer. This statutory right is made for the third party in order to set aside the alienation with the ultimate aim of protection of his own rights.
However, there is one exception that lies to this rule if Lie Pendens i.e. the Court if it deems fit can permit any of the parties to the suit to transfer the property on such terms that are fit and proper to impose.
Recommendations by the Law Commission in its 157th report
The Law Commission has recommended that there are certain changes that should be brought in the section so as to protect the interest of the person making the purchase. There is a lot of anxiety, loss and hardship faced by such people in lack of adequate means of knowing that whether a suit or proceeding is lying in lieu of that property or not. If the state of affairs is known to the purchaser after the deal is settled, it comes to him as a big shock. All these inconveniences, risk and misery, should be reduced. Some satisfactory and reliable recourse should be enacted so that all the details regarding pendency of a suit can be made known to every prospective purchaser for example title verification and due deligent procedures etc.