Lis Pendens Doctrine Does Not Bar Property Purchaser From Seeking Impleadment In Suit : Supreme Court

The Supreme Court reiterated that a registered sale deed cannot be held to be void merely because it was executed during the pendency of a suit in relation to the property. The doctrine of lis pendens under Section 52 of the Transfer of Property Act 1882 does not render the pendente lite transfer void.

The Court also held that there is no bar for impleadment of the transferee who has purchased the suit property via a registered sale deed during the pendency of the suit. 

The Court clarified that the transferee's knowledge of the underlying suit (pendente lite) would not preclude him from pleading impleadment in the underlying suit. In other words, Section 52 of the Transfer of Property Act cannot be employed to deny the impleadment of the transferee to the underlying suit even though the transferee has knowledge of the pendency of a suit.

Reversing the findings of the High Court, the bench comprising Justices Vikram Nath and Satish Chandra Sharma stated that the doctrine of lis pendens as provided under Section 52 of TPA does not render all transfers pendente lite to be void ab initio. It only impacts the rights of the persons who are party to the pending litigation.

“At the outset, it appears pertinent to reiterate the settled position that the doctrine of lis pendens as provided under Section 52 of the Act does not render all transfers pendente lite to be void ab-initio, it merely renders rights arising from such transfers as subservient to the rights of the parties to the pending litigation and subject to any direction that the Court may pass thereunder.”, the Court said.

In the present case, the appellant/transferee purchased a property against which litigation was pending in the court. The appellant, who was not an original party in the suit sought impleadment to the suit under Order 1 Rule 10 of CPC as a necessary party. The impleadment was sought on the ground that the original parties might have disturbed the title of the appellant in the suit property which he had purchased during the pendency of the suit after paying due consideration.

However, the plea of impleadment was denied on the ground that the appellant was not a bona fide purchaser as the registered sale deed was executed during the pendency of the suit and he had full knowledge of the pending litigation.

Rejecting the High Court's reasoning, the Judgment authored by Justice Satish Chandra Sharma stated that a sale deed cannot be declared null and void if it was registered during the pendency of the suit. The Court said that the law of impleadment provides an opportunity for the transferee to defend its title owing to a weak transferor or a possibility of collusion with the opposite party.

“Therefore, the mere fact that the RSD was executed during the pendency of the Underlying Suit does not automatically render it null and void. On this ground alone, we find the Impugned Order to be wholly erroneous as it employs Section 52 of the Act to nullify the RSD and on that basis, concludes that the impleadment application is untenable. Contrary to this approach of the High Court, the law on impleadment of subsequent transferees, as established by this Court has evolved in a manner that liberally enables subsequent transferees to protect their interests in recognition of the possibility that the transferor pendente lite may not defend the title or may collude with the plaintiff therein.”, the court observed.

“While that is the admitted position, there exists no bar to the impleadment of transferees pendente lite with notice. Permitting the impleadment of a transferee pendente lite is, in each case, a discretionary exercise undertaken to enable a purchaser with a legally enforceable right to protect their interests especially when the transferor fails to defend the suit or where there is a possibility of collusion.”, the court added.

Therefore, the Court concluded that since the Appellant has a registered sale deed in his favor and has therefore seemingly acquired an interest in the Subject Land, therefore it would be in the interest of justice if the Appellant was entitled to impleadment in the Underlying Suit to protect his interests.

Counsels For Petitioner(s) Mr. C.A Sundaram, Sr. Adv. Mr. Abhishek Gupta, AOR Mrs. Rohini Musa, Adv. Mr. Jafar Inayat, Adv. Mr. Kuldeep Yadav, Adv.

Counsels For Respondent(s) Mr. Huzefa Ahemdi, Sr. Adv. Mr. Anuj Bhandari, AOR Mr. Rajat Gupta, Adv. Mr. V.k. Shukla, Sr. Adv. Mr. Harikumar V., AOR Mr. Anupam Mishra, Adv. Mr. Govind R, Adv. Mrs. S Krishna, Adv. Ms. Rajnandini, Adv. Mr. Abhisar Bhanu, AOR Ms. Megha Karnwal, AOR Mr. Anupam Kishore Sinha, AOR

Case Title: YOGESH GOYANKA VERSUS GOVIND & ORS.

Citation : 2024 LiveLaw (SC) 457

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