Transfer of property when case is pending
When a property is under a pending court case, the property can be transferred to a third party without court’s prior permission, if there is no specific court order prohibiting its transfer.
In such a transfer, the transferee is bound by the ensuing judgement of the suit. This principle is called lis pendens in law.
Doctrine of lis pendens
Lis pendens means during litigation nothing should be changed. This principle ensures non-interference of third party during litigation.
The doctrine of lis pendens comes under Section 52 of the Transfer of Property Act, 1882. Lis pendens literally means a pending suit.
The doctrine states that a property under a pending suit should not be transferred to a third-party during a pending suit in such a way it affects the rights of any party concerned with the property. That means, no new interest should be created by way of transfer of a property during the pendency of a suit relating to it.
The whole object of the doctrine of lis pendens is to subjugate all the parties to a pending litigation of a property, to the authoritative decision of the Court.
The doctrine aims to prevent cunning circumvention of the object of a pending litigation, by the parties. The doctrine reflects the control which a court acquires over property involved in a pending suit until its final judgment.
The doctrine prevents the parties litigating before it may not remove any part of the subject matter outside the power of the Court to deal with it and thus make the proceedings infructuous.
Transfer of property act defines the doctrine
This doctrine is embodied in Section 52 of the T P Act says,
“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 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 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.”
A transfer, which does not create, any right is legal
A transfer of property normally creates some new interests or rights in the property. Hence, the transfer of property under a pending litigation cannot be normally done or permitted if it creates any new interest that may defeat the purpose of litigation itself.
If a transfer does not create or extinguishes any new right or liability such a transfer can be done. Such a transfer during a pending litigation is perfectly legal.
SC interprets the meaning of Section 52 of the TP Act
The Supreme Court (SC) in Dev Raj Dogra and others v Gyan Chand Jain and others interpreted the meaning of the Section 52 of the T P Act and laid down the pre-conditions as follows:
- A suit or a proceeding in which any right to immovable property must be directly and specifically in question, must be pending;
- The suit or the proceeding shall not be a collusive one;
- Such property during the pendency of such a suit or proceeding cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the right of any other party thereto under any decree or order which may be passed therein except under the authority of Court. In other words, any transfer of such property or any dealing with such property during the pendency of the suit is prohibited except under the authority of Court, if such transfer or otherwise dealing with the property by any party to the suit or proceeding affects the right of any other party to the suit or proceeding under any order or decree which may be passed in the said suit or proceeding.
Mere pending of a litigation does not affect the right to alienate
A mere pendency of any litigation of whatever nature does not affect a person’s right to alienate the property.
In fact, a sale of property, during a pending litigation cannot give to the purchaser a cleaner, better title than what the seller already owns. The purchaser’s right to the property is always subject to the outcome in the pending litigation.
A bona fide purchaser, even when he did not know of the pending litigation, cannot take a defence that he did not know about the pending litigation. The buyer must be beware of the facts relating to the property (Lakshmi V P v State of Kerala).
Transfer in a pending litigation is not void
In Hardev Singh v Gurmail Singh, the SC observed that Section 52 of the Act does not declare a pendente lite transfer by a party to the suit as void or illegal, but only makes the pendente lite purchaser bound by the decision of the pending litigation.
Thus, if during the pendency of any suit in a court of competent jurisdiction, in which any right of an immovable property is in question, such immovable property cannot be transferred by any party to the suit so as to affect the rights of any other party to the suit under any decree that may be made in such a suit.
Purpose of lis pendens is to prevent defeat of a litigation
In Rajender Singh and Ors v Santa Singh and Ors, the SC holds that the doctrine of lis pendens was intended to strike at the attempts by parties to a litigation to circumvent the jurisdiction of a court, which deals with a case on any immovable property, by private transfer which may remove the subject matter of litigation from the ambit of the court’s power to decide a pending dispute or frustrate its decree.
To sum up
A buyer of an immovable property, during a pending litigation, is held to be bound by an application of the doctrine, by the decree passed in the suit even though they may not have been impleaded in it.
In other words, the transfer is valid if the transferee is bound by the decree just as much as he was a party to the suit.
