Madras High Court
Guruswamy Nadar vs P. Lakshmi Ammal (Died) And Thirteen ... on 19 October, 2000
Author: R. Jayasimha Babu
Bench: R. Jayasimha Babu, A.K. Rajan
ORDER R. Jayasimha Babu, J.
1. The appeal arises from a suit for specific performance. That suit was filed on the basis of an agreement dated 4.7.1974 under which the first defendant in the suit had through her husband and power of attorney holder contracted to sell a house property for a sum of Rs.30,000. Though the trial Court dismissed that suit, that suit has been decreed by the learned single Judge of this Court. The suit had been dismissed by the trial Court even after holding that the agreement was genuine that the defendants had set up a false story that the second defendant had signed the agreement in a stupor induced by consumption of liquor. The suit was dismissed on the ground that the subsequently added defendant who is the appellant before us was a bona fide purchaser for value and, therefore, no decree for specific performance could be passed against him.
2. That subsequent purchase by the appellant was on 5.5.1975, two days after the suit for specific performance was filed, that suit having been filed on 3.5.1975. The trial Court did not consider the applicability of Section 52 of the Transfer of Property Act to this transaction. In appeal, the learned single Judge while upholding the findings of fact recorded by the trial Court held that the plaintiff was entitled to succeed as though the subsequent purchaser was found to have made the purchase bona fide and for value as also without notice of the agreement, nevertheless his sale was subordinate to the decree that could be made in the suit for specific performance which had been instituted prior to the sale in favour of the subsequent purchaser who is the appellant before us.
3. That finding of the learned single Judge has been assailed before us by the learned counsel for the appellant. It was submitted by him that Section 19 of the Specific Relief Act clearly and explicitly provides that there can be no decree for specific performance against a person who had subsequently purchased the property for value and had made the purchase bana fide, and further had made the purchase without notice of the agreement sought to be specifically enforced in the suit. Counsel submitted that the sale deed executed by the vendor of the appellant was certainly binding on the vendor and is against the whole world, that the document was supported by consideration and, therefore, in the light of the finding about his not being aware of the prior agreement, the dismissal of the suit should have been affirmed by the learned Judge while exercising appellate jurisdiction.
4. Counsel for the first respondent, who was the plaintiff in the trial Court, submitted that Section 52 of the Transfer of Property Act which sets out the principle of lis pendens in sufficiently clear terms sets out as to when a suit is said to be pending, the explanation to Section 52 pinpoints the time of commencement of the pendency, as the time of the filing of the suit, and inasmuch as the sale in favour of the appellant took place two days after the suit had been filed, the doctrine of lis pendens would be attracted. Counsel in this context relied upon a decision of the Full Bench of the Allahabad High Court in the case of Smt.Ram Peary and others v. Gauri, , as also the decision of a Division Bench of this Court in the case of M.M.S. Investments Ltd. v. Veerappan, V., .
5. The Allahabad High Court in its judgment referred to the case of Faiyaz Husain Khan v. Munshi Prag Narain, 1907 (34) IA 102 which in term referred to the case of Bellamy v. Sabine, 1857 (44) ER 842 and the enunciation of the principle of lis pendens by Cranworth L.C. therein, who observed:
"It affects him not because it amounts to notice, but because the law does not allow litigant parties to give to others, pending the litigation, rights to the property in dispute, so as to prejudice the opposite party."
The rights acquired by a purchaser of a property which is the subject matter of litigation in the Court in a suit instituted prior to the date of the purchase, are subject to the ultimate decision of the Court in the suit which had already been instituted. That is because one of the parties to the suit was the vendor, and that party could not be allowed to act to the prejudice of the opposite party who succeeds in the suit, by setting away the property during the pendency of the suit.
6. Reference was also made in that judgment, to story's work on Equity IIIrd Edition which contains the statement, ".....And hence arises the maxim pendents lite, nihil innovetur; effect of which is not to annual the conveyance, but only to render it subservient to the rights of the parties in the litigation. As to the rights of these parties, the conveyance is treated as if it never had any existence; and it does not vary them."
7. Thus by reason of the doctrine of lis pendens, the conveyance effected by the party to the suit subsequent to the date of the institution of the suit and before the decree, is subordinated to the rights of the parties to the suit as determined at the end of the trial in the pending suit.
8. The object of the doctrine of lis pendens is to ensure the parties who come to Court seeking relief are enabled to secure that relief effectively after the trial, by subordinating the rights acquired by third parties through any of the parties to the suit during the pendency of the litigation, to the ultimate decree passed in the suit. Such persons would be bound by the decree whether or not they are parties to the suit.
9. The Full Bench of the Allahabad High Court held that Section 19(1)(b) of the Specific Relief Act does not constitute an exception to the Rule of lis pendens set out in Section 52, but is subject to it.
10. That question of the scope of Section 19(1)(b) vis-a- vis Section 52 of the Specific Relief Act vis-a-vis Section 12 of the Transfer of Property Act was also considered by this Court in the case of M.M.S. Investments Ltd., . It was held by the Court that bar of lis pendens would apply to a person who purchases the property after the suit for specific performance is filed.
11. We are in complete agreement with the law so laid down. Section 52 of the Transfer of Properly Act reads as under:
"Transfer of Property pending suit relating thereto. -- During the pendency in any Court having authority within the limits of India excluding the Stale of Jammu and Kashmir or established beyond such limits by the Central Government of any suit or proceeding 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 the decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose.
Explanaiion:--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."
12. Section 19 of the Specific Relief Act has not been given overriding effect vis-a-vis Section 52 of the Transfer of Property Act. Where the property in respect of which specific performance of a contract is sought is immovable property, Section 52 of the Transfer of Property Act is clearly attracted, as that provision explicitly states that in a suit or proceeding 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 the decree or order which may be made therein, except under the authority of the Court. While Section 19(b) of the Specific Relief Act may protect a purchaser who makes the purchase bona fide in good faith and without notice of the original agreement, if such purchase is made by him before a suit for specific performance is instituted, in respect of an agreement obtained by the plaintiff prior to the date of the sale in favour of the subsequent purchaser, that provision will not immunize a purchaser who makes such purchase after the institution of the suit from the effects of the decree that may be passed in the suit. The decree made in such suit would bind the subsequent purchaser whether or not he is a party to the suit.
13. The fact that the purchaser was in fact made a party to the suit, and that he was made a party after considerable lapse of time from the date of his purchase, would not on that score render the doctrine of lis pendens in Section 52 inapplicable to that purchaser. What is dealt with in Section 52 of the Act is the transfer or other manner of dealing by a party to the suit. The subsequent purchaser is affected not merely because he is a purchaser, but because he chose to purchase from a person who was a party to a pending suit, and any rights that he secures from such a party would be passed against that party.
14. We, therefore, do not find any substance in this appeal, and the same is dismissed. However, the parties shall bear the respective costs.
15. We do not find it necessary to wait for service of any further notice on the original vendors, one of whom, it is stated is no more, as the appeal is being dismissed. This will not come in the way of the execution of the decree by the decree-holder as all the concerned parties were parties before the lower Court.