Smt. Ram Peary And Others v. Gauri And Others

Prem Prakash, J. (for himself and on behalf of Hari Swarup J.) (Decision of Division Bench, D/- 28-3-1977):— Doubting the correctness of the decision of this Court in Ganga Charan v. Bans Bahadur Singh (AIR 1975 All 25) a learned Single Judge of this Court has made this referring order which posits the following: Whether Section 52 of the Transfer of Property Act is subject to 19(b) of the New Specific Relief Act.

2. Section 19(b) of the Act says that Specific performance of a contract may be enforced against (a) either party thereto; (b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract. The Counsel appearing on behalf of the subsequent purchaser has contended that until the suit of earlier ‘contractor’ is decreed, the contract to sell and purchase between him and the vendor is nothing but an agreement which does not create any interest in immoveable property. The title to the property has validly passed from the vendor and resides in the subsequent transferee; the sale to the latter is not void but only voidable at the option of the “earlier contractor.” It would, therefore, be illogical to direct the vendor in a suit brought for specific performance of contract by the prior contractor, to convey to him, by a decree which is ultimately passed in the suit of the prior contractor, the estate which by then has come to belong to the subsequent transferee and is not his.

3. Reference was made to Durga Prasad v. Deep Chand (AIR 1954 SC 75) where their Lordships laying down the form of the decree which has to be adopted in such a suit observed (at page 81):

“In our opinion, the proper form of decree is to direct specific performance of the contract between the vendor and the plaintiff and direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the plaintiff. He does not join in any special covenants made between the plaintiff and his vendor; all he does is to pass on his title to the plaintiff.” On the other side, it has been maintained that there is no foundation for either proposition; for they seem to be in direct opposition to the established rule as the effect of the lis pendens and that brings us to Section 52 of the Transfer of Property Act which embodies the doctrine known as the doctrine of lis pendens.

4. The principle on which the doctrine rests was spoken by Cranworth L.C in the leading case of Bellamy v. Sabine ((1857) 44 ER 842 at p. 843) as follows:

“It is scarcely correct to speak of lis pendens as affecting a purchaser through the doctrine of notice, though undoubtedly the language of the Courts often so describes its operation. 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.

Where a litigation is pending between a plaintiff and a defendant as to the right to a particular estate, the necessities of mankind required that the decision of the Court in the suit shall be binding, not only on the litigant parties, but also on those who derive title under them by alienations made pending the suit, whether such alienees had or had not notice of the pending proceedings. If this were not so, there could be no certainty that the litigation would ever come to an end.”

5. The Privy Council had adopted the same principle in Faiyaz Husain Khan v. Munshi Prag Narain ((1907) 34 Ind App 102) 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.

6. Story in his work on Equity IIIrd Edition para 406 expounded the doctrine of lis pendens in the terms as follows:—

“Ordinarily, it is true that the judgment of a court binds only the parties and their privies in representations or estate. But he who purchases during the pendency of an action, is held bound by the judgment that may be made against the person from whom he derives title. The litigating parties are exempted from taking any notice of the title so acquired; and such purchaser need not be made a party to the action. Where there is a real and fair purchase without any notice, the rule may operate very hardly. But it is a rule founded upon a great public policy; for otherwise, alienations made during an action might defeat its whole purpose, and there would be no end to litigation. And hence arises the maxim pendente lite, nihil innovetur; the effect of which is not to annul 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.”

(emphasis supplied by us).

7. In the light of these principles we have got to consider whether in the event of a conflict arising between the doctrine of lis pendens enshrined in Section 52 of the Transfer of Property Act and the rule availing a subsequent transferee without notice, contained in Section 19(b) of the Specific Relief Act either the one or the other should prevail. Ordinarily, it is true that the title acquired by the subsequent purchaser is good, the sale to him being not void. But he who pruchases during the pendency of the suit is bound by the decree, that may be made against the person from whom he derives title. The litigating parties are exempted from the necessity of taking any notice of a title so acquired (see Samarendra Nath Sinha v. Krishna Kumar Nag (AIR 1967 SC 1440)). As to the vendor and the prior contractor it is as if no such title existed. Section 52 places a complete embargo on the transfer of any right to immoveable property pending suit, which is directly and specifically in question in such a litigation; it enacts that during the pendency of the suit in which any right to immoveable property is “directly and specifically in question, the property cannot be transferred or otherwise alienated by any party to the suit so as to affect the rights of any other party thereto under any decree.”

8. Thus, in the present case it may be that the subsequent transferee was entirely ignorant of any right on the part of the contractor, and also of the pendency of the suit filed against the vendor by such contractor, yet as the transfer was made to him by the vendor after the institution of the suit of the contractor and, while it was pending, the subsequent purchaser cannot set up against the contractor any right from which his vendor is excluded by the decree. The title of the subsequent purchaser is good against him on the ground of breach of covenant, but against the plaintiff contractor who seeks specific performance of the contract against the vendor, the subsequent transferee can be in no way better position than the vendor himself. It is well settled that in a suit for specific performance of contract in respect of immoveable property a right to immoveable property is directly and specifically in question. (see Gauri Dutt Mahraj v. Sheikh Sukur Mohammad (75 Ind App 165) : (AIR 1948 PC 147)).

9. As Story has put it in the passage above quoted, the effect of the doctrine of lis pendens is not to annul the conveyance but only to render it subservient to the rights of the parties in the litigation. The conveyance in favour of the subsequent purchaser is treated as if “it never had any existence”. The conveyance in favour of the subsequent purchaser thus yields to the adjudication of the rights obtained by the contractor, in the consequence of a decree obtained against the vendor in a suit for specific performance of the contract. In Durga Prasad v. Deep Chand (AIR 1954 SC 75) (supra) their Lordships were dealing with the form of the decree in a suit directing specific performance of contract between the vendor and the plaintiff and in that connection, with a view to convey to the plaintiff, without cancelling the subsequent sale, they without enforcing the contract against the subsequent purchaser, directed him to join in the conveyance so as to pass on the title which resided in him to the plaintiff. It was not a case falling within the mischief of Section 52 of the Transfer of Property Act.

10. In our opinion, therefore, when the doctrine of lis pendens renders a transfer made during the pendency of the suit subservient to the rights of the plaintiff seeking specific performance of a prior contract entered into by the vendor in his favour and when on account of the operation of the doctrine of lis pendens such conveyance is treated as if it had never any existence, the subsequent transferee, even though he had obtained the transfer without notice of the original contract, cannot set up against plaintiff-contractor any right; for it would defeat the rule of lis pendens which is founded upon public policy. And considered in that manner, Section 52 of the Transfer of Property Act is not subject to Section 19(b) of the Specific Relief Act.

11. We may yet arrive to a similar conclusion in a different manner. “A judgment inter partes raises an estoppel only against the parties to the proceeding in which it is given, and their privies, for example, those claiming or deriving title under them.” (Halsbury's Laws of England, Third Edition, Volume 15, para 372). The transferee pendents lite would be treated as a representative in interest of the parties to the suit and the judgment which has been pronounced, in the absence of fraud and collusion, would have the effect of finally determining the rights of the parties and the cause of action which would sustain the suit in which the doctrine of lis pendens applied would be merged in the judgment duly pronounced in what may be described as the previously decided suit. The decision being res judicata would bind not only the parties thereto but also the transferees pendente lite from them.

12. In a case to which besides the vendor the subsequent transferee is also impleaded in the array of the defendants, the judgment is final and binding not only on the parties to the original contract but also the transferee pendente lite from vendor. The conveyance in favour of the subsequent purchaser is treated as if it never had any existence. There would then be no lis or action which would survive, enabling the subsequent purchaser to take the defence of bona fide transfer for value without notice of the original contract. Accordingly, we take the view that lis pendens affects the transferee pendente lite and Section 52 of the Transfer of Property Act is not subject to Section 19(b) of the new Specific Relief Act. The conveyance in favour of the subsequent purchaser pending the suit brought by the plaintiff contractor for specific performance of the contract between him and the vendor is taken “as if it had never any existence.”

13. Let the papers be laid before the learned Single Judge with the answer given in the above.

14. K.S Verma, J. (Decision of single bench, D/- 20-4-1977):— During the course of the arguments in the above noted appeal it was submitted that the sale in favour of the respondents 2 and 3 was hit by the doctrine of lis pendens. In this respect issue No. 6 was framed which is as follows:—

“Whether the sale deed in favour of the defendants 2 and 3 was executed by the defendant No. 1 during the pendency of the suit? If so, its effect on plaintiffs rights?”

15. The trial court by its judgment and decree dated 29th October, 1968 has recorded a categorical finding in these terms:

“that the plaint by the plaintiff was filed in the Court before the sale deed in favour of defendants 2 and 3 was executed. The suit was pending in the court at the time of the execution of the sale deed.”

16. It has come in evidence that the sale deed was executed on 27th June, 1966. The suit was filed on 27th July, 1966 and was registered the same day. The trial court has recorded a finding that the suit of the plaintiff was filed much earlier before the execution of the sale deed. Against the decree passed by the trial court the plaintiff filed an appeal before the District Judge which came up for hearing before the Civil Judge, Unnao. The lower appellate court dismissed the appeal. Against the decree passed by the lower appellate court the second appeal was filed in this Court.

17. One of the questions arising in the second appeal was referred to a Division Bench. The question was whether Section 52 of the Transfer of Property Act was subject to Section 19(b) of the new Specific Relief Act. The point was answered by the Division Bench as follows:—

“We take the view that lis pendens affects the transferee pendente lite and Section 52 of the Transfer of Property Act is not subject to Section 19(b) of the new Specific Relief Act. The conveyance in favour of the subsequent purchaser pending the suit brought by the plaintiff contractor for specific performance of the contract between him and the vendor is taken as if it had never any existence.”

18. After the question had been answered by the Division Bench the papers again came up before this court for the decision of the appeal. On behalf of the respondents Sri M.K Seth contended that the lower appellate court has not recorded a clear finding on issue No. 6. He submitted that the finding as to when the sale deed was executed and when the suit was filed has assumed importance in view of the answer given by the Division Bench. From a perusal of the judgment of the lower appellate court I find that the lower appellate court has not recorded a clear finding on issue No. 6 as has been done by the trial court.

19. I accordingly direct that the Civil Judge, Unnao, shall record a clear finding on issue No. 6. The finding shall be recorded on the basis of the evidence already on the record and in the light of the pleadings of the parties.

20. The finding shall be returned to this court within three months from the date of the receipt of the record by the Civil Judge, Unnao. The parties may file such objections as they may desire against the findings recorded by the lower appellate court within two weeks of the receipt of notice. The record of this case shall be transmitted to the Civil Judge, Unnao forthwith to enable him to comply with the orders of this Court.

21. Order accordingly.