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Transferee Pendent Lite Viz A Viz Lis Pendence

Introduction:-

There are divergent views on the interpretation of section 52 of TPA and the doctrine of lis-pendence. Whether, there is any resemblance between the provisions of section 52 TPA and the essentials of lis-pendence in any manner. This dilemma is sought to be cleared by the present article.

The owner of the property has every right to alienate the same in any manner whatsoever he likes. No restrictions on his right can be imposed to alienate the said property. Even if the property has been transferred subject to a condition or limitation absolutely restraining the transferee from parting with or disposing of his interest in the property is void. Such like restrictions are imposed in the sale deed/conveyance deed executed by the local bodies or Govt. department regarding the residential plots/flats/industrial plot. The sole purpose of posing such restrictions on the use of the property is that nobody is able to convert a residential property into commercial or an industrial plot into a residential plot by carving out the sub-plots. Such like bodies are competent to impose such restrictions on the use of property. However, no restriction can be put on the right of alienation of the property. If such like restrictions are maintained and upheld, then, the purpose of ownership of a property will be rendered nugatory and otiose.

Section 10 of the Transfer of property act is reproduced as under :-

Section 10 of Transfer of Property Act prohibits putting of such like restriction on alienation of the property and the same is introduced as under:-

10. Condition restraining alienation.- Where property is transferred subject to a condition or limitation absolutely restraining the transferee or any person claiming under him from parting with or disposing of his interest in the property, the condition or limitation is void, except in the case of a lease where the condition is for the benefit of the lessor or those claiming under him: provided that property may be transferred to or for the benefit of a women (not being a Hindu, Muhammadan or Buddhist), so that she shall not have power during her marriage to transfer or charge the same or her beneficial interest therein.

According to this section, any condition, restraining the person from disposing his property is void. However, a question which frequently arises in the civil litigation is that if the person/ defendant disposes of or alienates the property in its entirety or in parts, then what are the consequences thereof. A lot of time is wasted in deciding this question by the courts. The questions, which arise are, as to whether the transferee pendent lite is to be impleaded as a party to the lis or not or whether any right is given to him to file a separate written statement or whether he can independently defend the said case.

Lis pendence viz a viz section 52 of Transfer of Property Act; comparative study;

The Indian legal jurisprudence is primarily based on the British legal jurisprudence. Most of the acts, now in force in India, were enacted during the period the British ruled India. The Transfer of Property Act, 1882 was brought on the statue book by the British Empire. Though, the provisions of entire TPA were not made applicable in the State of Punjab, yet, certain provisions were made applicable to the State of Punjab from time to time. It may be mentioned here that in England, there is no act governing the Transfer of Property. Certain principles and phrases are in vogue in England viz. Caveat Emptor, Lis pendence etc. which were applicable to the Transfer of property. Most of the case law is based on the sole premise of the interpretation of lis pendence given to it by our judiciary.

Generally, when the provisions of Transfer of Property Act are taught to the law students in a law college, it is usually said that Section 52 of the Transfer of Property Act contains the principles of lis pendence. In this section, it is nowhere provided that any alienation made during the pendency of any litigation shall be subject to the final outcome of the suit. The British people knew that there are certain deficiencies in the principle of lis pendence. To overcome the said short comings, they enacted section 52 of the Transfer of Property Act in an entirely different manner, then the interpretation of Phrase lis pendence, which governed Britain.

Section 52 of the Transfer of Property Act.

52. Transfer of property pending suit relating thereto.-During the 1[pendency] in any Court having authority 2[3[within the limits of India excluding the State of Jammu and Kashmir] or established beyond such limits] by 4[the Central Government] 5[* * *] of 6[any] suit or proceedings which is not collusive and in which any right to immoveable 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.

7[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.]

For applicability of this section, the following requirements are essential.

i) There has to be a suit or proceedings pending.

ii) The said suit or the proceedings must be pending in any court, having authority within the limits of India. The word court has been defined in section 2 of CPC.

iii) The proceedings must not be collusive.

The word collusion has been defined by Hon'ble Supreme Court of India in "Sukhnandan Singh etc. v. Jamaiat Singh, AIR 1971 SC 1158" as under:-

"Collusion in judicial proceedings is normally associated with secret arrangement between two persons that one should in2stitute a suit against the other in order to obtain the decision of the judicial tribunal for some sinister purpose. In such a proceedings, the claim put forward is fictious, the contest feigned or unreal and the final adjudication, a mask, design to give false appearance of a genuine judicial determination and this is generally done with the object of confounding third parties. In such a proceedings, the contest is a mere sham."

This rule was followed by Hon'ble Mr. Justice V.K. Jhanji, of Punjab and Haryana High Court in judgment "Ram Singh v. Sohan Lal, 1994(2) RRR 668".

iv) Any right to immovable property is directly and specifically in question.

v) The property cannot be transferred or otherwise dealt with by any party to the suit or proceedings, so as to effect the rights of any other party, thereto under any decree or order, which may be made therein.

vi) The said alienation must be made under the authority of the court and on such terms as it may impose.

Thus, the bare reading of this section, does not in any way suggest that the alienation shall be subject to the final outcome to the suit. The moment a suit is filed regarding any immovable proprety, the re3striction or alienation comes into force on the date of filing of the suit, for which no order of injunction is required to be passed by any court. The party, who intends to alienate the property or otherwise, alienate the property, transfer the property or deal with the property has to seek the permission of the court, where the suit is pending and the court may permit any such party to do so or such terms as it may impose.

There are few judgments of Punjab and Haryana High court, which have applied the principles laid down in section 52 Transfer of Property Act in its true letter and spirit. Hon'ble Mr. Justice Ashok Bhan (as his lordship then was) has observed in Sunita Jain v. Chander Kanta, 1996 (1) RRR 331 as under:-

"8. I have ordered that the property be transferred only after taking possession from the court and bringing on record the proposed vendees, in order to bind them to the decree which may ultimately be passed in the suit, to safeguard the interest of both the parties, which under the facts and circumstances of the present case, is just and proper."

Similarly, Hon'ble Justice Mr. V.K.Jhanji, in case "Kusum Tondon v. Kanwal Tondon, 1997(2) RCR (Civil) 364" has gone a step further and has held that

"However, in order to protect the interest of appellants, if any, in that suit, it is ordered that in case the respondents alienate the property, they would make aware the vendee about the pendency of litigation by making a mention of the same in the sale deed."

However, the said procedure is not being followed. Application for injunction for restraining the alienation of property remains pending for years together, resulting into first appeal, revision and SLP to the Supreme Court of India. Any such proceedings are not required in view of the provisions of section 52 of the Transfer of Property Act are applied in its true sense to any such proceedings or suits. It is often observed in the judgements that alienation if any, will be subject to the principle of lis pendence.

Consequences of alienation:-

A defendant may feel frustrated by the long pendency of the suit. Out of sheer frustration or just to complicate the matters, he alienates the property to third person after suppressing the fact of the pendency of the litigation. Sometime, the transferee pendent lite comes to know about the proceedings only when the summons in the execution are served on him. He shocked like hell. His entire savings in purchasing the property come at a stake.

The Hon'ble Supreme Court of India in the judgement in case Civil Appeal No. 10325 of 2010 (Arising out of SLP Civil) No.163 of 2010) decided on 08.12.2010 in case title "T.G. Ashok Kumar v. Gobindammal and other", in para no.13 has held as under:-

It is necessary to refer to the hardship, loss, anxiety and unnecessary litigation caused on account of absence of a mechanism for prospective purchasers to verify, whether a property is subject to any pending suit or a decree or attachment. At present, a prospective purchaser can easily find out about any existing encumbrance of a property either by the inspection of the Registration Registers or by securing a certificate relating to encumbrances (i.e. copies of the entries in the registration registers from the jurisdictional Sub-Registrar under section 57 of the Registration Act, 1908). But a prospective purchaser has no way of ascertaining whether there is any suit or proceeding pending in respect of the property, if the person offering the property for sale does not disclose it or deliberately suppresses the information. As a result, after parting with the consideration (which is many times the life time savings) the purchaser gets a shock of his life, when he comes to know that the property purchased by him a subject to litigation and that it may drag on for decades and ultimately, deny him title to the property. The pendente lite purchaser will have to wait for the litigation to come to an end or he may have to take over the responsibility of conducting the litigation, if the transferor loses interest after the sale.........

The Apex court of India has aptly described the condition of the transferee pendent lite, when he is duped by the defendant by selling the property which is subject matter of litigation.

Amendments made in the State of Maharashtra and Gujrat in section 52 of Transfer of Property Act.

In the State of Maharashtra and Gujrat, an amendment was made to Section 52 of the Act, by adding sub-section 2, which provides as under:-

"2: Every notice of pendency of a suit or proceedings referred to in Sub-Section-1 shall contain the following particulars namely:-

(a) The name and address of the owner of the immovable property or any other person, whose right to immovable property in question;

(b) The description of the immovable property, the right to which is in question;

(c) The court in which the suit or proceedings is pending;

(d) Nature and title of the suit or proceedings, and;

(e) The date on which, the suit or proceedings was instituted.

The Hon'ble Supreme Court of India, expressed the hope that Law Commission and the parliament ought to consider the incorporation of such amendments or suitable amendments in section 52 of TPA to cover the existing void in title verifications or due diligence procedures. Nothing has been done so far by the Law commission or by the Central Government to comply with the directions given by the Apex Court of India till date. Provisions can also be made for compulsory registration of the decrees and in regard to attachment of immovable properties.

In Punjab, if an entry is made in the Municipal or revenue record maintained by a local authority, regarding the above said particulars, an unwary purchaser will stay his hands in purchasing any such property and invest his life time earnings and feels cheated thereafter.

A lot of litigation will be curtailed which is pending in the courts in Punjab in this regard.

Till date, no amendment has been made either by the Central Govt. or by the State of Punjab in section 52 of the Transfer of Property Act in consonance with sub-section (2) inserted by them on the statue book.

Serious Action:-

A serious action for disobedience of the provisions of section 52 under order 39 rule 2 A CPC, ought to be taken by imposing punishment on the seller as provided therein. It has also been noticed that in the registration manual, at the time of registration of sale deed, the Sub Registrar requires that an entry should be made in the document to the effect that no case is pending in any court of law in India regarding the said property. Most of the time, the sellers conceal this fact about the pendency of the case by inserting a false recital. A criminal case ought to be taken against such unscrupulous persons in a quick manner to reduce the frauds being committed by them.

The judicial view that in proceedings for taking action for disobedience of injunction, the plaintiff is required to prove the case beyond all reasonable doubts, just like a criminal case. It is humbly submitted that proceedings under order 39 rule 2A CPC or disobedience of injunction are not criminal proceedings but are provided in the court of Civil Procedure. In civil cases, the case is decided on the basis of preponderance of probabilities while a criminal case has to be proved beyond any shadow of doubt. In the cases, regarding alienation of the property only documentary evidence is sufficient to prove the breach of injunction and no oral other evidence is required to be led. In case, the courts will take a strict penal action against persons who disobey such order, the majesty of law will be upheld. No one will dare to take the law lightly.

Rights of the Transferee Pendente Lite:-

Once the property is sold during the pendency of litigation, various contingencies come into existence between the parties to the suit and transferees pendent lite which are discussed hereinafter:-

1) Impleadment of Transferee Pendente lite. There is a divergent view taken by various courts, as to whether the transferee pendent lite has to be impleaded as a party to the suit or not. In case, the transferee pendent lite is impleaded as a party, then, notice is sent to him, which again leads to unnecessary prolonging of litigation. Who has to make an application for impleadment of the transferee pendent lite as a party to the suit, is also a matter of dispute.

2) Rights of the Transferee pendent lite. Here, again there are divergent views are taken by the various court, as to whether the transfer pendent lite has to be given an opportunity to file a written statement or not. This is also one of the bone of contention as to what plea can be taken by the transferee pendent lite in the written statement. In most of the judgments, it has been held that he cannot take a plea which was not originally taken by the defendant in a suit, who has made the alienation. It is said that he is to swim and sink along with original defendant. Whether, the transferee pendent lite ought to be given an opportunity to cross examine the witness already examined and to cross examine the witnesses a fresh.

3) Plea of bonafide purchaser:- Filing of the suit is a notice to the entire world. No person can feign ignorance regarding the pendency of the suit. Otherwise in view of the explanation attached in section 52 of the Transfer of Property Act, a suit is deemed to have been commenced from the date of presentation of the plaint or institution of the proceedings in a court of competent jurisdiction, if the date of alienation, is after the presentation of the plaint, then, he is dubbed as transferee pendent lite.

I am already sent a representation to the State of Punjab for making asuch amendment on the lines of the amendment made by State of Mahrashtra and Gujrat, be also made applicable to Punjab.

The true and correct interpretation of section 52 as suggested above, will reduce the number of cases, pending before the Civil courts on account of the illegal alienation made by the unscrupulous defendant to dupe the innocent and unwary purchasers. Even the criminal litigation on the ground of fraud will also come to an end, will also be minimum, as in case, if an entry is made in the records, regarding the pendency of the case, then, no person will purchase the property and involve himself in litigation.

It is also settled principle of law that in case there is no express provisions contained in the act, then, the court invoking the inherent powers u/s 151 of the Code of Civil Procedure, can pass order on the first date of hearing that an entry regarding the pendency of the suit or proceedings shall be made in the concerned record and impose such conditions as contained in section 52 of TPA, so that the innocent purchaser is not involved in uncalled for litigation.

Conclusion:-

In the end, it is humbly suggested that the followings steps ought to be taken by the courts while disposing of the application for injunction seeking the relief of alienation;

a) The seller ought to take permission from the court to sell the property.

b) The seller ought to bring the proposed purchasers on the court file, as parties to the suit.

c) The seller ought to make a recital in the Transfer Deed about the pendency of the case.

d) Any other condition, which may be imposed by the court viz. deposited of the sale consideration in court, so that if the defendant is found entitled to the property in suit, he can be suitably compensated and does not have take resort to separate proceedings for the same.

[1*] The author passed degree in Master of Laws from the Panjab University Chandigarh in the year 1978. He has been practicing on civil side at Ludhiana. He has been a guest professor in Panjab University Regional Centre, Ludhiana. The author has written various articles, which have been published in the journals. The author has also addressed various webinars on facebook/youtube on various legal aspects to enlighten the younger generation. He had judged various moot competitions held in PURC, Ludhiana. Contact No. 9814712425, email: advocateajayjindal@gmail.com, Ch.No.425, 4th Floor, Advocates Complex, District Courts, Ludhiana, Punjab.

[2*] The co-author started visiting the courts since may, 2011 and completed his law graduation from Panjab University, Chandigarh and is regularly doing practice on Civil Side. Email:-Abhayjindal14@yahoo.co.in, M No. 9814912425

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