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Transfer Of Property Is Not Void If Made When The Suit Is Pending But Also Dependson The Outcome Of The Case: G T Girish Vs Y Subbaraju (D)

Mahima Prabhu ,
  21 January 2022       Share Bookmark

Court :
SUPREME COURT OF INDIA
Brief :

Citation :
CA. NO. 380 OF 2022

DATE OF JUDGMENT:
18/01/2022

BENCH:
JUSTICE K.M. JOSEPH AND JUSTICE P.S. NARASIMHA

PARTIES:
PETITIONER: G.T. GIRISH
RESPONDENT: Y. SUBBARAJU

SUBJECT

The Supreme Court issued a ruling under Section 52 of the Transfer of Property Act that clarifies the theory of "lis pendens."

LEGAL PROVISION

Section 52 of Transfer of Property act, 1882 – Doctrine Of Lis Pendens.

OVERVIEW

1) The Bangalore Development Authority (hereafter known to as "the BDA") allocated the plaint schedule property, that comprised of a plot, to the first defendant (now dead) on April 4, 1979. On April 4, 1979, the BDA and the first respondent engaged into a lease-cum-sale agreement depending on the allocation.

2) On May 14, 1979, the first defendant was taken into custody. On November 17, 1982, the first defendant signed a deal with the appellant to perform the site's sale and purchase agreement within 3 months of the plaintiff receiving the sale deed from the BDA.

3) On the 1st of March 1983, and the 26th of April, 1984, the appellant sent the first respondent letters requesting that she sign the sale transaction. The appellant had been in violation, according to the first respondent, who sent a response letter 08.05.1984.

4) The arrangement had expired, and the petitioner's deposit had been forfeited. The petitioner filed the lawsuit, demanding specific performance, upon filing notice on February 14, 1985.

5) The first respondent deceased on 18.07.1994, following submitting a Written Statement on 14.08.1986, anticipating the lawsuit. The petitioner named the defendant's spouse as Defendant-1 (a).

6) On June 19, 1996, the BDA issued a sale deed on behalf of the son of respondent no. 1 and defendant 1(a). Following that, the son signed a sale deed on behalf of the second respondent. It is also undisputed that the first defendant's son, defendant-1(a), was impleaded as defendant-1(b) in the lawsuit in 1997.

7) In 1997, the second respondent was impleaded as the second respondent in the lawsuit. Official Statements were filed by defendant-1(b) and defendant-2. The Trial Court dismissed the lawsuit for specific performance but ordered the restitution of Rs.50,000 plus 9% interest. The Lawsuit was deemed to be competent by the High Court.

8) The second respondent was also deemed to be a bona fide buyer for price without having received notice of the Agreement to Sell dated 17.11.1982.

9) The High Court also ruled that the transfer made on behalf of the second respondent was illegal.

10) The shift on behalf of the second respondent was done at a period when the very first defendant's son was not even a participant to the lawsuit, according to the tribunal. The claim that the transference was not affected by the Lis Pendens Principle was upheld by this Trial Court. This decision was overturned by the High Court.

ISSUES

1) Whether the transfer of property is considered void only because it is made when the suit is pending?

JUDGMENT ANALYSIS

1) Having conflicting views from that of the High court, the Supreme court stated that neither the fact that transferee received no notice nor the bona fides in his act were of any significance to the application of Section 52.

2) The Supreme court stated that this was not a void deed if a transaction was made lis pendens because it was a settled principle. This did establish rights between both the parties involved in the transaction.

3) The rights of a party to a lawsuit who transfers his right through a sale was therefore forfeited. The only thing that Section 52 of the Transfer Property Act said was that any transfer performed while the case is pending was susceptible to the outcome of the case. When a transaction is completed while a case is underway, it is not nullified but however, the transferee cannot use bona fides as a justification.

4) Hence, it was also noted that similarly, the Lis Pendens Doctrine should not be confused with the concept of good faith or bona fides. In other terms, the transferee or recipient of property sold off by a party cannot establish that he acted lawfully or bona fide.

5) This allows the court as well as the litigants in a lawsuit or action that otherwise meets Section 52's conditions to continue with the case on the assumption that the court's judgment will not be thwarted or postponed when the day of final reckoning comes.

6) The Supreme Court remarked that the High Court considered the Principle of Notice/Constructive Notice in reaching the conclusion that perhaps the transference on behalf of the petitioner is barred by lis pendens. The Supreme Court, dissenting with the High Court's reasoning, stated that the Principle of Notice and Constructive Notice was utterly irrelevant and inapt.

7) The notion that the transferee had no knowledge or acted reasonably in engaging into the agreement had no bearing on whether Section 52 should be applied to the transaction.

8) The court stated that this contrasted with Section 19(1)(b) of the Specific Relief Act, which made these criteria applicable in the first place. The petitions were hence permitted, and the High Court's decision was overturned.

CONCLUSION

The Lis Pendens doctrine is founded on the principle "pendente lite nihil innovetur." This implies that nothing new should be added while the case is being litigated. The Doctrine of Lis Pendens is incorporated into Section 52 of the Transfer of Property Act, 1882 (for short, "the TP Act"), that is predicated on equity and public policy. It stipulates the independent judicial process with total effectiveness. The Supreme Court issued a ruling under Section 52 of the Transfer of Property Act that clarifies the theory of "lis pendens." The Supreme court hence overturned the High Court’s judgment stating that the Doctrine of Notice and constructive notice would be deemed inapplicable if hit with Lis Pendens.

 
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