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Summary of the Opinion

Factual and Procedural Background

The property originally belonged to Chhatarpat Singh (6 1/4 biswa). Upon his death it was inherited equally by his two sons Kanhai and Gokul. Kanhai's sons were Makhan and Gandharp. Gokul's son Badri inherited his father's share; Badri died without issue and his half share passed to his mother Musammat Dhan Kunwar.

Multiple mortgages were created by family members: (1) 1 March 1889: simple mortgage of 6 1/4 biswas by Dhan Kunwar and Gandharp in favour of Jagannath (father of appellant Parsotam Narain); (2) 8 July 1889: mortgage by way of conditional sale of 4 biswas 13 biswansis by the same mortgagors in favour of Nand Ram; (3) 8 August 1890: simple mortgage of 2 biswas to Ganga Ram, whose rights were sold to Parsotam Narain on 10 June 1902; (4) 16 September 1891: usufructuary mortgage of 6 1/4 biswas by Gandharp and Makhan to another Jagannath (different person).

Parsotam Narain brought a suit under the first mortgage (dated 1 March 1889) against Gandharp and Dhan Kunwar; Dhan Kunwar died during the suit and Makhan was substituted as her representative. Subsequent mortgagees were made parties. A decree for sale was passed on 11 May 1896 but the property was not sold despite execution taken out from time to time.

A second suit for foreclosure based on the conditional sale (8 July 1889) was brought by the heirs of Nand Ram against Gandharp, Makhan and prior and subsequent mortgagees. Although they were mortgagees of 4 biswas and 13 biswansis, they claimed the whole 6 1/4 biswas on the ground of offering to redeem the prior mortgage. A decree for foreclosure in respect of the whole 6 1/4 biswas was made on 20 December 1901; that decree was assigned to Parsotam Narain on 20 June 1902.

Makhan sold his one-fourth share (about 1 biswa) to Chheda Lal on 4 July 1902. On 9 July 1902 Parsotam Narain applied for an order absolute for foreclosure under Section 87 of the Transfer of Property Act; Chheda Lal was not made a party and it does not appear he had notice of the purchase. An order absolute for foreclosure was made on 6 September 1902, after which Parsotam took possession and obtained mutation of names.

Chheda Lal then instituted the present suit for possession of the share he purchased, offering to redeem the conditional sale (in favour of Nand Ram) and the first and third mortgages. The trial court entered a decree in his favour conditional on redeeming the first mortgage; the lower appellate court affirmed that decree. The appellant (Parsotam Narain) appealed to the court whose opinion is summarized here.

Legal Issues Presented

  1. Whether the order absolute for foreclosure, made under Section 87 of the Transfer of Property Act against the vendor, is binding on a purchaser (Chheda Lal) who purchased the vendor's share after the decree nisi under Section 86 but before presentation of the application for an order absolute.
  2. Whether the lis pendens terminated with the decree under Section 86 of the Transfer of Property Act or continued until the final order was made under Section 87 (i.e., whether the purchase was pendente lite).

Arguments of the Parties

Appellant's Arguments

  • The decree for foreclosure dated 20 December 1901 related to the whole 6 1/4 biswas and, having been made absolute, the property vested absolutely in the appellant Parsotam Narain; therefore the plaintiff (Chheda Lal) acquired no title by his purchase.
  • The decree and the subsequent order absolute for foreclosure are binding on the plaintiff under the rule of lis pendens.

Respondent's Arguments

  • The plaintiff purchased Makhan's share before the application for an order absolute for foreclosure was made and therefore that order is not binding on the plaintiff.
  • The plaintiff retained the right to redeem the mortgage upon which the decree for foreclosure was passed.
  • Because the plaintiff was not made a party to the proceedings relating to the order absolute, he should not be foreclosed of his right of redemption; to deprive him of redemption would be a hardship.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Higgins v. Shaw Authority for the proposition that a decree which is not final (e.g., a decree to account) binds as lis pendens. Used to support the proposition that interlocutory or non-final decrees in a suit can still have binding effect as lis pendens and that lis pendens continues until a final decree is passed.
Bellamy v. Sabine (1857) 1 De G. & J., 556 Principle that allowing alienations pending a suit to prevail would create uncertainty about the termination of litigation (policy underlying lis pendens). Relied on to justify adherence to lis pendens notwithstanding arguments of hardship to the purchaser; the court emphasized certainty of litigation termination.
Chunni Lal v. Abdul Ali Khan (1901) 1 L.R., 23 All., 331 Holds that a decree under Section 88 of the Transfer of Property Act is a decree nisi and the suit does not terminate until an order absolute is made under Section 89. Applied analogically to hold that a decree under Section 86 is also a decree nisi and the lis pendens continues until an order absolute under Section 87.
Shivjiram Sahebram Marwadi v. Waman Narayan Joshi (1897) I.R., 22 Bom., 939 Holds that execution proceedings give continuance to the lis pendens. Invoked to support the view that post-decree steps (execution or order absolute) keep the lis pendens alive until completion of the decree's execution.
Qadir Bakhsh v. Jwala Prasad S.A. No. 294 of 1902 (decided 20 April 1904) Referenced in the opinion. The court observed that in that case the question of lis pendens was not raised or considered; it was not treated as authority for the lis pendens point.

Court's Reasoning and Analysis

The court began by identifying the decisive issue: whether the order absolute for foreclosure made against the vendor binds a purchaser who bought after the decree nisi under Section 86 but before an application for an order absolute under Section 87 was presented. The court grounded its analysis in the doctrine of lis pendens as formulated in Section 52 of the Transfer of Property Act, observing that lis pendens continues during the active prosecution of a suit or proceeding and terminates upon the final decision of the suit or proceeding.

The court reviewed authorities (treatises and cases) to establish that a decree which does not put an end to the suit is not a final decree for lis pendens purposes. It cited Higgins v. Shaw and other authorities to show that interlocutory decrees or decrees nisi bind as lis pendens while the litigation continues, because the court retains the power to modify or vacate such orders and matters remaining to be done by the court keep the suit alive.

Applying that principle to foreclosure procedure, the court reasoned that a decree under Section 86 of the Transfer of Property Act is a decree nisi: the right to redeem remains and the suit is not finally determined until an order absolute under Section 87 is passed. Only when an order absolute is made are "the defendant and all persons, claiming through or under him" absolutely debarred from redemption and the debt treated as discharged. Therefore the litigation continued beyond the decree under Section 86 until the order absolute under Section 87 was made.

The court reinforced this conclusion by analogical citation to Chunni Lal v. Abdul Ali Khan concerning Section 88/89 and by reference to decisions and commentary holding that execution proceedings or steps required to give effect to the decree keep lis pendens alive until possession has been delivered or the decree executed.

Addressing the respondent's contentions, the court rejected the argument that because proceedings for an order absolute had not actually been instituted at the time of purchase the sale was not pendente lite. The court held that since the suit did not terminate with the decree under Section 86, the sale must be deemed to have been made pendente lite. The court also considered the hardship argument (that the purchaser was not made a party to the order absolute proceedings) but found that the policy underlying lis pendens—avoiding uncertainty in litigation termination—weighed against permitting such alienations to prevail. The court additionally noted that the plaintiff had notice of the mortgage and did not discharge it immediately; the six months allowed for payment under the decree had expired before the plaintiff's purchase, so the court found no compelling hardship.

On this analysis the court concluded that the plaintiff's purchase was pendente lite and that he was bound by the subsequent order absolute for foreclosure made on 6 September 1902.

Holding and Implications

APPEAL ALLOWED; THE PLAINTIFF'S SUIT IS DISMISSED.

The court held that the purchase by the plaintiff (Chheda Lal) was pendente lite, and he is therefore bound by the order absolute for foreclosure dated 6 September 1902. That order vested the property absolutely in the appellant (Parsotam Narain); accordingly, the plaintiff acquired no title to the share he purchased and cannot maintain his suit. The court allowed the appeal, discharged the decrees of the two lower Courts, and dismissed the plaintiff's suit with costs in all Courts.

Implications for the parties: the appellant obtains absolute title under the order absolute for foreclosure; the plaintiff's purchase is void as against the foreclosure order and he loses any right to possession. The opinion applies established principles of lis pendens to foreclosure procedure and does not purport to create a new legal rule beyond applying those principles to the facts; no claim of establishing a novel precedent is made in the opinion.

    Chheda Lal v. Parsotam Narain

    1. One Chhatarpat Singh was the owner of a 6 1/4 biswa share of zamindari. He had two sons, Kanhai and Gokul, who inherited his property in equal shares. Kanhai's sons were Makhan and Gandharp. Gokul had a son Badri who inherited his share of the property. Badri having died without issue, his half share passed to his mother, Musammat Dhan Kunwar.

    2. The following mortgages of the property of Chhatarpat Singh were made by the different members of his family:

    (1) On 1st March 1889, Dhan Kunwar and Gandharp made a simple mortgage of 6 1/4 biswas in favour of Jagannath, father of the appellant, Parsotam Narain.

    (2) On 8th July 1889, the same persons (Dhan Kunwar and Gandharp) made a mortgage by way of conditional sale of 4 biswas 13 biswansis in favour of one Nand Ram.

    (3) On 8th August 1890, Dhan Kunwar and Gandharp made a simple mortgage of 2 biswas to Ganga Ram, who, on 10th June 1902, sold his rights as mortgagee to Parsotam Narain, appellant.

    (4) On 16th September 1891, Gandharp and Makhan made a usufructuary mortgage of 6 1/4 biswas to one Jagannath, who was a different person from the mortgagee under the first mortgage.

    3. Parsotam Narain brought a suit under the first mortgage of the 1st of March 1889, against the mortgagors, Gandharp and Dhan Kunwar. The latter having died during the pendency of the suit, Makhan was made a party as her legal representative. The subsequent mortgagees were also joined as parties. A decree for sale was passed on 11th May 1896 against all the defendants. Execution of the decree was taken out from time to time, but the mortgaged property was not sold.

    4. Upon the second mortgage of 8th July 1889, a suit for foreclosure was brought by the heirs of Nand Ram against Gandharp and Makhan and the prior and subsequent mortgagees; and although the plaintiffs to that suit were mortgagees of 4 biswas and 13 biswansis, they included in their claim the whole of the 6 1/4 biswas on the ground that they had offered to redeem the prior mortgage. A decree was made in their favour on the 20th of December 1901, for foreclosure in respect of the whole of the 6 1/4 biswas. This decree was assigned to Parsotam Narain, appellant, on 20th June 1902.

    5. On 4th July 1902, Makhan sold his one-fourth share in the property amounting to 1 biswa and odd to the plaintiff, Chheda Lal.

    6. On 9th July 1902, Parsotam Narain made an application for an order absolute for foreclosure under Section 87 of the Transfer of Property Act, but did not make Chheda Lal a party. It does not appear that he had notice of the purchase by Chheda Lal. Makhan, however, was impleaded in the proceedings. On 6th September 1902, an order absolute for foreclosure was made in respect of 6 1/4 biswas, and on the strength of this order possession was taken and mutation of names was obtained by Parsotam Narain.

    7. Thereupon the present suit was brought by Chheda Lal, the purchaser from Makhan, for possession of the share purchased by him. He offered to redeem the conditional sale in favour of Nand Ram, as also the first and third mortgages. The Court of first instance made a decree in his favour conditional upon his redeeming the first mortgage, and this decree has been affirmed by the lower appellate Court. Hence this appeal.

    8. It is contended on behalf of the appellant that as the decree for foreclosure, passed on the 20th December 1901, related to the whole of the 6 1/4 biswas and has been made absolute, the property has vested absolutely in the appellant Parsotam Narain and the plaintiff has acquired no title to any part of it under his purchase. On behalf of the respondent it is urged that as the plaintiff had purchased Makhan's share before the application for an order absolute for foreclosure was made, that order is not binding on the plaintiff, and he has still the right to redeem the mortgage upon which the decree for foreclosure was passed. In answer to this contention the learned vakil for the appellant urges that the decree and the order absolute for foreclosure are binding on the plaintiff under the rule of lis pendens.

    9. There can be no doubt that if the plaintiff is bound by the order absolute for foreclosure he has acquired no title under his purchase and has no right to maintain the suit That the decree nisi for foreclosure, passed on the 20th December 1901, is binding on him can admit of no doubt, as his purchase was of a date subsequent to the date of the decree and the decree was obtained against his vendor. The question to be determined therefore, is whether the order absolute for foreclosure, passed against his vendor is equally binding on him. It is conceded that it would be binding if the purchase was made pendente lite. This leads to the question whether the lis terminated with the decree under Section 86 of the Transfer of Property Act or continued till the final order was made under Section 87.

    10. By Section 52 of the Transfer of Property Act which formulates well known rules on the subject, lis pendens continues during the active prosecution of a contentious suit or proceeding; so that it terminates upon the final decision of the suit or proceeding. "But the lis pendens is not terminated where the decree does not put an end to the suit." (Sugden on Vendors and Purchasers, p. 760.) In Fisher on Mortgages it is stated on the authority of Higgins v. Shaw Dr, and War., 356 that" a decree which is not final, as a decree to account, which puts no end to the matters in question, binds as lis pendens." (4th Edn., pp. 548, 549.) The same appears to be the law in America. Bennet in his work on Lis Pendens, observes that the decree or judgment to be final must be of "such a character as puts a conclusion to the matters in question in the suit. Interlocutory decrees or orders cannot have that effect, although they may purport to settle the rights of the parties. The Court, however, still would have power to modify or vacate them, and for all purposes-of notice or binding force, lis pendens will continue notwithstanding such orders or decrees." (See Hukum Chand on the law of Res Judicata, p. 698.) It is thus clear that lis pendens continues until a final decree is passed in the suit. The decree under Section 86 of the Transfer of Property Act in a suit for foreclosure is a decree nisi only and does not finally terminate the litigation. The right to redeem still subsists, and it is only when an order is made under Section 87 that "the defendant and all persons, claiming through or under him" are absolutely debarred of all right to redeem and the debt secured by the mortgage is deemed to be discharged. Until, therefore, an order absolute is passed under this section, it cannot, as it seems to me, be said that the litigation has terminated and that a final decree in the suit has been passed. This appears to be the law in America under "which lis pendens continues until possession is delivered under the decree for foreclosure. It is stated in Bennet on Lis Pendens (p. 120) that" although it is true in a general sense, that lis pendens ceases with the rendition of judgment or entry of final decree, yet in the case of a foreclosure of a mortgage on real estate, it cannot be said that lis pendens ceases upon the making of the master's deed after sale under the decree, Where something remains to be done by the Court in the execution of its judgments and decrees, other than can be done without order of Court by the merely ministerial officers of the Court, lis pendens continues until this decree is executed. So in the case of the foreclosure of a mortgage it continues until the purchaser has been put into possession of the property ". (Hukum Chund, p. 697, and Ghose on Mortgages, 3rd Edn., p. 792.) To the same effect is the following observation in Van Fleet's Former Adjudication (Vol. II, p. 1098): "In a foreclosure suit in equity the Court is not functus officio until the decree is executed by delivery of possession, and the lis pendens does not cease until that is done." In the analogous case of a decree under Section 88 of the Transfer of Property Act, it was held by this Court in Chunni Lal v. Abdul Ali Khan (1901) 1. L.R., 23 All., 331 that such a decree being only a decree nisi and not a final decree, the suit in which it is passed does not terminate until an order absolute is made under Section 89 and that a purchase made before the passing of an order absolute is a purchase pendente lite. The Bombay High Court held in Shivjiram Sahebram Marwadi v. Waman Narayan Joshi (1897) I.R., 22 Bom., 939 that execution proceedings "give continuance to the lis pendens." Upon these authorities it must be held that the purchase made by the plaintiff in this case was a purchase pendente lite and he is bound by the order absolute for foreclosure made on 6th September 1902. It is urged on his behalf that as his purchase was made during the interval between the date of the decree under Section 86 and that of the presentation of the application for an order absolute for foreclosure, it was made when no proceedings were pending, and therefore the rule of lis pendens does not apply to his case. The answer to this contention is that, although proceedings for an order absolute had not actually been instituted when the plaintiff made his purchase, yet as the suit did not terminate with the decree under Section 86 but must be deemed to have continued till the making of the order absolute, the sale took place pendente lite. It is next argued that as the plaintiff by his purchase acquired the right of redemption and as he was not made a party to the proceedings relating to the order absolute, he was not foreclosed of his right of redemption, and it would be a great hardship to him were he to be deprived of his right of redemption in consequence of an order made in proceedings to which he was not a party. There is no doubt much force in this contention, but the principle upon which the rule of lis pendens is founded as laid down in Bellamy v. Sabine (1857) 1 Dc. G, and J., 556 is that there would be no certainty as to the termination of litigation if alienations pending a suit were allowed to prevail. As for hardship, it was the plaintiff's own fault that immediately after his purchase he did not pay off the amount of the mortgage, of which he undoubtedly had notice. In the present instance the six months allowed by the decree for payment of the mortgage money had expired long before the purchase of the property by the plaintiff. So that there can be no question of hardship in the case of the plaintiff. In Qadir Bakhsh v. Jwala Prasad S.A. No. 294 of 1902, decided on the 20th April 1904 to which the learned vakil for the respondent has referred, the question of lis pendens was not raised or considered.

    11. As for the above reasons the plaintiff must be held to have purchased the property in suit pendente lite, he is bound by the order absolute for foreclosure passed on the 6th of September 1902, and as that order vested the property absolutely in the appellant, the plaintiff has acquired no right to it and cannot maintain the suit. I accordingly allow the appeal, discharge the decrees of both the Courts below and dismiss the suit of the plaintiff respondent with costs in all Courts.

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    Comments

    Chheda Lal v. Parsotam Narain
    (Jun 28, 1906)