Injunction to restrain alienation should be granted in exceptional cases

To sum up:
(a) Section 52 of the TP Act provides adequate protection to the parties from transfers pendente lite and such transferees are neither required to be impleaded nor can claim impleadment. They cannot even resist execution proceedings.
(b) In Mumbai (as also elsewhere as and when amended provisions are made applicable) plaintiffs could (or rather ought to) have notices of their suits registered under Section 18 of the Indian Registration Act, in view of the amended provision of the TP Act and the Registration Act. They cannot 47 AOGJR-542.10
seek to restrain adversary by an injunction by refusing to go in for registration of the lis.
(c) Rule 1 of Order XXXIX of the Civil Procedure Code enabling Court to grant temporary injunctions to restrain transfers pendente lite is only an enabling provision, recognizing the power in the Court to issue such injunction and does not imply that because there is power, it must be exercised. The provision could be invoked only if protection provided by Section 52 of the TP Act is shown to be inadequate.
(d) In the face of protection provided by Section 52 of the TP Act, Courts should be cautious in examining the claims by plaintiffs of irreparable loss if injunction to restrain alienations is refused.
(e) In suits for specific performance/right to develop against the recorded/rightful owners, Courts may consider if an injunction would 48 AOGJR-542.10
cause greater inconvenience to a rightful owner by being deprived the right to deal with his property for the sake of a claim which is yet to mature into right and which metamorphosis rests in the discretion of the Court and is not certain.
(f) Courts may consider necessity of imposing suitable conditions to protect plaintiffs' interests short of granting injunction - like seeking undertaking that no equities would be claimed, on account of sale/development of properties; effecting sales only after putting transferees to notice that their rights would be subject to suit etc.. Interests of prospective purchasers would also be protected if plaintiffs in such cases register the lis, though it may be optional.

Bombay High Court

M/S. Kachhi Properties vs All Residents Of At & on 3 August, 2010
Bench: R. C. Chavan

JUDGMENT:

1. A common question about the necessity of granting a temporary injunction to restrain a defendant from creating third party interests/alienating the property pending suit, 6 AOGJR-542.10

in the face of provisions of Section 52 of the Transfer of Property Act, 1882 (hereafter referred to as "the TP Act") has been raised in these appeals. It was ably argued by learned counsel for the parties therein, unfolding various facets of the question. Before adverting to the factual aspects, it would be useful to first deal with this question.

2. It is common for plaintiffs in suits related to property to seek temporary injunction only to restrain defendant from alienating the property or creating third party interests, during the pendency of the suit. Such prayers are made mostly in suits for partition and separate possession of shares in joint family property, suits for specific performance of an agreement of sale, development agreement, suits by plaintiffs in possession of property, seeking to avoid a transfer either executed or to be executed, or suits by plaintiffs not in possession of the property transferred to them, where transferor repudiates the transfer, and the like.

3. In such cases, where the plaintiffs may have established a prima facie case, the question that would arise is whether in the 7 AOGJR-542.10

face of provisions of Section 52 of the TP Act, a plaintiff could complain that he would suffer irreparably if an injunction to restrain creation of third party interests is not issued, and could it be held that balance of convenience would lie in favour of granting such an injunction?

4. In the case of Sharad Jamnadharji Mor v. Arjun Yeshwant Dhanwatey & anr., reported in 2009 (4) Bom.C.R. 523, I had held that refusal of temporary injunction by the trial Court need not be interfered with, in view of protection statutorily provided by Section 52 of the TP Act. Arguments advanced in these appeals provided an opportunity to re-examine the question as also the correctness of the logic of judgment in Sharad Mor's case (supra).

5. Before proceeding to consider several judgments cited, it would be useful to quote for ready reference the provisions of Section 52 of the TP Act amended by Bombay Act XIV of 1939.

"52. Transfer of property pending suit relating thereto.- (1) During the pendency in any Court having authority within the limits of India excluding the State of Jammu and Kashmir 8 AOGJR-542.10

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, if a notice of the

pendency of such suit or proceeding is registered under section 18 of the Indian Registration Act, 1908, the property after the notice is so registered 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.

(2) Every notice of pendency of a suit or proceeding referred to in sub- section (1) shall contain the following particulars, namely:-

(a) the name and address of the owner of immovable property or other

person whose right to the immovable property is in question;

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

(c) the Court in which the suit or proceeding is pending;

(d) the nature and title of the suit or proceeding; and

(e) the date on which the suit or proceeding was instituted.

9 AOGJR-542.10

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 proceedings 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."

(amended portion shown in bold/italics)

Section 2 of the Amending Act provides that the Act shall apply to properties situated wholly or partly in the City of Bombay (now Mumbai) from the date of notification in the official gazette (which has been issued) and provides for similar notification extending applicability of the Amending Act to other areas to be issued (which is not shown to have been issued). Thus the amended provisions apply to properties in Mumbai and the unamended section applies to rest of the State. Simultaneously Section 18 of the Registration Act was amended to provide for registration of notices of pending suits. 10 AOGJR-542.10

6. Shri Thorat, learned senior counsel who appeared for the appellants in Appeal From Order No.542 of 2010, not only painstakingly caused all the judgments relevant for deciding the issue being researched and placed for my consideration, he also eruditely elaborated on the pros & cons of holding that a temporary injunction may not be granted in such cases. Additionally, he submitted that if such a proposition has not been laid down for over a hundred years, in spite of the fact that Section 52 of the TP Act is on the statute book since 1882 and Order XXXIX of the Code of Civil Procedure since 1908, there may be no warrant for so holding now. With this preface the cases cited may now be looked into.

7. Advocate Ms Gauri Godse, appearing for the appellants in Appeal From Order No.248 of 2010 cited judgment of a Division Bench of this Court in Nathaji Anandrav Patil v. Nana Sarjerao Patil, reported in 1907 Vol.IX BLR 1173. In that case, the question was not of grant of temporary injunction. One Nathaji had filed a suit against Balubai in 1885 to recover possession of Survey Nos.161 and 162 on the allegation that he was adopted son of Balubai. The suit was dismissed by the Sub-Judge on 11 AOGJR-542.10

22-2-1886 but on appeal, the District Court reversed the judgment and decreed the suit in 1890 and the High Court confirmed the decree on 14-1-1892 but claim of Balubai to Survey Nos. 161 and 162 was expressly excepted and reserved . When the appeal before the District Court was pending, on 14-4-1886 Balubai sold Survey No.161 to Hajarimal. Balubai and Nana filed Suit in 1895 against Nathaji for possession of the land. The trial Court decreed the suit. On appeal, in the District Court, a consent decree was passed in 1898 whereby Survey No.162 went to Balubai and Nana, while Survey No.161 went to Nathaji. In 1905 Hajarimal filed a suit claiming possession of Survey No.161 from Nathaji. The trial Court dismissed Hajarimal's suit holding that purchase by him on 4-1-1886 from Balubai, when an appeal was pending in the District Court was hit by doctrine of lis pendens. On appeal the District Court held that consent decree was not an order in a contentious proceeding so as to extend the doctrine of lis pendens. The High Court framed an issue as to whether Balubai (the vendor of Hajarimal) was the owner of the property on 14-4-1886, when Hajarimal purchased it, and remanded the suit. While doing so on the principle of lis pendens the Court observed 12 AOGJR-542.10

as under:

"See Turner L.J.'s judgment in Bellamy v. Sabine [(1857) 1 De G.&J. 585]. "No case, so far as I am aware, has yet occurred in which the doctrine has been applied so as to affect the title of the alienee of a defendant by

virtue of a claim not interfering with the title of the plaintiff in the pending litigation."

It will of course be remembered that the doctrine of lis pendens is not based on the equitable doctrine of notice but on the ground that it is necessary to the administration of justice that the decision of the Court in a suit should be binding not only on the litigant parties but on those who derived title from them pendente lite whether with notice of the suit or not - see Bellamy v. Sabine [(1857) 1 De. G.&J. 566]. This being so no question of priority can arise to defeat the plaintiff's claim herein "pending litigation."

The authorities are clear that

the conveyance to the plaintiff herein pendente lite cannot be said to be void ab initio. If that had been

intended s.52 must have been differently worded, whereas the section expressly says that 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. The effect of the

13 AOGJR-542.10

doctrine is not to annul the conveyance but only to render it

subservient to the rights of the

parties to the litigation. Thus, the Master of the Rolls said in The Bishop of Winchester v. Paine [(1805) 11 Ves. 197] "Ordinarily, it is true, the decree of the Court binds only the parties to the suit. But he, who

purchases 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. As to them it is as if no such title existed. Otherwise suits would be indeterminable: or which would be the same in effect, it would be in the pleasure of one party, at what period the suit should be determined." And the Vice-Chancellor in Metcalfe v. Pulvertoft, [(1813) 2 Ves.&B. 204] says:- "The effect of the maxim

pendente lite nihil innovetur," understood as making the conveyance wholly inoperative, not only in the suit depending but absolutely to all purposes in all future suits and all future time, is founded in error."

In Landon v. Morris [(1832) 5

Sim. 263] it is said: "The principle of the decision in The Bishop of

Winchester v. Paine is admitted, that a purchaser pendente lite, is bound by the decree made against the person from whom he purchases." And it must be remembered that Cranworth L.C. in Bellamy v. Sabine [(1857) 1 De.G.&J. 580} says "pendente lite neither party 14 AOGJR-542.10

to the litigation can alienate the property in suit so as to affect his opponent."

(emphasis supplied)

8. In Pramatha Nath Roy v. Jagannath Kishore Lal Singh Deo, reported in 16 Indian Cases 359, decided on 7-5-1912 (relied on by a Division Bench of Calcutta High Court in AIR 1988 Calcutta 25 discussed later), the question was squarely one of refusal of temporary injunction by a trial Court during the pendency of suit for specific performance of agreement to lease. Section 52 of the TP Act was not noticed. The observations of the Court in para 2 show that it followed English judgments holding that doctrine of lis pendens was quite a new doctrine and the Court eventually directed that an injunction may be granted or plaintiff may furnish security in the sum of Rs.1000/- and an undertaking by the plaintiff to compensate the defendant in the event of dismissal of suit.

9. The learned counsel supporting grant of injunction therefore claimed that in spite of `lis pendens', an injunction could and ought to be issued on the basis of this judgment. After having considered the judgment in the 15 AOGJR-542.10

light of these arguments, it cannot be held that the judgment is an authority for such a proposition; first because it takes no note of Section 52 of the TP Act and proceeds on an English judgment (based on common law which evolved from precedent to precedent) observing that the doctrine was `new', though the Court also noticed judgment of Court of Appeal to the contrary. Thus the judgment is based on reluctance to apply the doctrine of lis pendens, and without noticing that it was a part of Indian Statute Law and therefore cannot prevail in the face of the judgment of the Division Bench of this Court in Nathaji Anandrav Patil s case (supra).

10. In Nagubai Ammal and others v. B. Shama Rao and others, reported in AIR 1956 SC 593, the question was not of granting temporary injunction, but as to when the lis commences for the purpose of Section 52 of the TP Act and also of the distinction between collusive and fraudulent proceedings for the purpose of Section 52. In this regard the Court held that a collusive proceeding is where two persons agree that one should institute a suit against the other in order to obtain a decision from Court for some sinister purpose; while in a 16 AOGJR-542.10

fraudulent proceeding the claim is untrue and by practising fraud upon the Court it is intended to injure the opponent. The Court also considered the position of a transferee pendente lite and held that as between the transferor and transferee the sale is valid but is of no effect against the decree holder. Thus the judgment does not have a direct bearing on the issue involved.

11. In Jayaram Mudaliar v. Ayyaswami and others, reported in (1972) 2 SCC 200, on 23-6-1956 Ayyaswami filed a suit against Muniswami Mudaliar and others for partition of family properties. On 7-7-1958, Muniswami and his four sons executed sale deed in respect of some properties which were subject-matter of the suit. On 15-7-1960, Jayaram purchased some other properties in the suit at public auction held for recovery of arrears for a pump-set purchased by Muniswami. Jayaram got himself impleaded as defendant. The plaintiff amended the plaint and alleged that both the sales were hit by rule of lis pendens and that the public auction was collusive and fraudulent. The trial Court held that both the sales were hit by rule of lis pendens. The District Court confirmed the decree. The High Court held that auction 17 AOGJR-542.10

sale would not be hit by the rule of lis pendens to the extent loans were taken for the improvement of suit properties and asked the trial Court to decide this aspect in final decree proceedings. In a separate but concurring judgment, S.M. Sikri, C.J., held that the principle of lis pendens does not affect a valid charge or mortgage on the property already existing when a suit is filed. M.H. Beg and A.N. Ray, JJ., after considering the provisions of Section 52 of the TP Act held in para 47 of the judgment as under:

"47. It is evident that the doctrine, as stated in Section 52, applies not merely to actual transfers or rights which are subject-matter of litigation but to other dealings with it "by any party to the suit or

proceeding, so as to affect the right of any other party thereto". Hence, it could be urged that where it is not a party to the litigation but an outside agency, such as the tax collecting authorities of the Government, which proceeds against the subject-matter of litigation, without anything done by a litigating party, the resulting transaction will not be hit by Section

52. Again, where all the parties which could be affected by a pending litigation are themselves parties to a transfer or dealings with property in such a way that they cannot resile from or disown the transaction impugned before the Court dealing with 18 AOGJR-542.10

the litigation, the Court may bind them to their own acts. All these are matters which the Court could have properly considered. The purpose of Section 52 of the Transfer of Property Act is not to defeat any just and equitable claim but only to subject them to the authority of the Court which is dealing with the property to which claims are put forward."

12. In Rajendra Singh and others v. Santa Singh and others, reported in (1973) 2 SCC 705, again the question was not one of grant of temporary injunction, but whether the rule of lis pendens arrests the running of period of limitation during the pendency of suits. While dealing with this question, the Court observed as under in para 15 of the judgment:

"15. The doctrine of lis pendens was intended to strike at attempts by parties to a litigation to circumvent the jurisdiction of a court, in which a dispute on rights or interests in immovable property is pending, by private dealings 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. Alienees acquiring any immovable property during a litigation over it are 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. The whole

19 AOGJR-542.10

object of the doctrine of lis pendens is to subject parties to the litigation as well as others, who seek to acquire rights in immovable property, which are the subject-

matter of a litigation, to the power and jurisdiction of the Court so as to prevent the object of a pending action from being defeated."

13. The only judgment which directly deals with question of grant of temporary injunctions in cases where plaintiff could have protection of Section 52 of the TP Act is one of a Division Bench of the Calcutta High Court in Smt. Muktakesi Dawn and others v. Haripada Mazumdar and another, reported in AIR 1988 Calcutta 25. Paragraphs 4 and 5 of the judgment which deal with the question may be usefully reproduced as under:

"4. Mr. Roy Chowdhury has secondly urged that an injunction restraining the defendant from transferring the suit property was absolutely unnecessary as no post- suit transfer by the defendant can adversely affect the result of the suit because of the provisions of S. 52 of the T.P. Act whereunder all such transfers cannot but abide by the result of the suit. It is true that the doctrine of lis pendens as enunciated in S.52 of the T.P. Act takes care of all pendente lite

transfers; but it may not always be 20 AOGJR-542.10

good enough to take fullest care of the plaintiff's interest vis-a-vis such a transfer. The suit giving rise to the impugned order is one for

specific performance of sale in respect of the suit property and if the defendant is not restrained from selling the property to a third party and accordingly a third party purchases the same bona fide for

value without any notice of the

pending litigation and spends a huge sum for the improvement thereof or for construction thereon, the equity in his favour may intervene to persuade the Court to decline, in the exercise of its discretion, the equitable relief of specific performance to the plaintiff at the trial and to award damages only in favour of the plaintiff. It must be noted that R.1 of O.39 of the Code clearly provides for interim injunction restraining the alienation or sale of the suit property and if the doctrine of lis pendens as enacted in S.52 of the T.P. Act was regarded to have provided all the panacea against pendente lite transfers, the Legislature would not have provided in R.1 for interim

injunction restraining the transfer of suit property. R.1 of O.39, in our view, clearly demonstrates that, notwithstanding the Rule of lis pendens in S.52 of the T.P. Act,

there can be occasion for the grant of injunction restraining pendente lite transfers in a fit and proper case.

5. Mr. Mukherjee, appearing for 21 AOGJR-542.10

the respondents has drawn our attention to an old Division Bench decision of this Court in Promotha Nath v. Jagannath, (1913) 17 Cal.LJ 427 where it has been observed that a Court will in many cases interfere and preserve property in status quo during the pendency of a suit in

which the rights to it are to be

decided and though the purchaser

pendente lite would not gain title, the Court will prevent by injunction the embarrassment that would be caused to the original purchaser in his suit against the vendor. And it has been ruled there on the authority of Turner, LJ in Hadley v. London Bank of Scotland, (1865) 3 De GJ & S 63 at 70 that if there is a clear valid contract for transfer, the

Court will not permit the transferor afterwards to transfer the legal

estate to third person, although such third person would be affected by lis pendens. Mr. Muhkerjee has drawn our attention to Dr. S. C. Banerji's

Tagore Law Lectures on Specific Relief (2nd Edition, page 592) where the decision in Promotha Nath (supra) has been approvingly referred to and also to Fry's Treatise on Specific Performance (6th Edition) where the same rule has been enunciated as a general principle on the authority of Turner, L.J., in Hadley v. London Bank of Scotland (supra). We accordingly reject this contention of Mr. Roy Choudhury that the impugned order of injunction restraining pendente lite transfer ought not to have been granted as the rule of lis pendens, as enacted in Section 52 of 22 AOGJR-542.10

the T.P. Act, is there to take care of such transfer."

(emphasis supplied)

14. As to para 5 quoted above, a separate comment is unnecessary since judgment in Pramatha Nath's case (supra) is already discussed in the earlier part of the judgment. The only reason for holding that an injunction could still be issued is that otherwise the Legislature would not have provided under Order XXXIX, Rule 1 for grant of an injunction restraining alienation or sale. Section 52 of the TP Act was held to be not a panacea and that in spite of the rule of lis pendens there could be occasions for grant of temporary injunction.

15. There can be no doubt that there could always be cases where rule of lis pendens may be inadequate to prevent the mischief and a temporary injunction to prevent such mischief would be warranted. This would imply that a person claiming injunction in such a situation would have to show that protection under Section 52 of the TP Act is not adequate. Merely because there is a power, its exercise could not be sought as a matter of course; or simply because its exercise is unlikely to 23 AOGJR-542.10

hurt the defendant; for, while granting injunction the Court must see that plaintiff makes out a case of irreparable loss and it is not for the defendant to prove that he would suffer if an injunction is issued. After plaintiff proves irreparable loss comes the question of balance of convenience or rather balance of inconvenience, when the Court would enquire as to who would suffer greater inconvenience and decide whether injunction ought to be granted.

16. These equitable considerations came in for a scrutiny before the Supreme Court recently in Kishorsinh Ratansinh Jadeja v. Maruti Corporation and others, reported in (2009) 11 SCC 229. The respondent therein had filed a special civil suit for specific performance of an agreement for development of certain lands for a co-operative housing society. The respondent-developer sought an interim injunction to restrain the owners from disturbing its possession and from creating third party interests. Civil Court refused to grant injunction. Appeal to the High Court was withdrawn with direction for expeditious disposal of the suit. The suit was decreed for refund of earnest money. The developer filed a 24 AOGJR-542.10

first appeal to restrain the owners from alienating the land or creating third party interests. The High Court did not grant injunction, but directed that if property in question is dealt with in any way, that would be subject to decision of appeal. The parties published conflicting notices. When this was brought to the notice of the High Court, on 22-4-2008 the High Court directed that the properties should not be sold. The developer then filed another application for injunction pointing out construction going on. The High Court directed on 7-5-2008 that to avoid multiplicity, no construction be raised on the land and if further construction was attempted, the police authorities were directed to stop the construction. This order was challenged before the Supreme Court. It was pointed out to the Court that in the first order passed by the High Court, it had embodied the principles of Section 52 of the TP Act. 280 plots had been sold to different purchasers by registered sale deeds and they had started construction after obtaining requisite permission. The second order of the High Court, restraining sales was also assailed as uncalled for. It was contended that the third (the impugned) order was passed 25 AOGJR-542.10

without considering the basic principles of prima facie case, balance of inconvenience and irreparable loss, as also the conduct of the parties. On behalf of the developer, among other things, it was submitted that since injunction was in force for more than ten months, without disturbing the same, the High Court could be asked to decide the appeals expeditiously. In this context, it may be useful to see as to what the Supreme Court observed:

"30. On a careful consideration of the submissions made on behalf of the respective parties, the scenario which emerges is that while on the one hand Respondent 1 is strongly in favour of the status quo of the suit lands being maintained during the pendency of the suit for specific performance filed by it, the appellant and the other joint owners have projected a case of both balance of convenience and inconvenience and irreparable loss on being restrained from developing their own property by Respondent 1, purportedly on the

basis of a spurious document."

"34. It is quite obvious that the High Court was completely oblivious to the facts of the case and passed different orders at different times on the applications filed at regular intervals by Respondent 1 Corporation. The reasoning provided 26 AOGJR-542.10

in the interim order dated 22-4-2008, is, to say the least, legally untenable.

35. Having passed an order earlier on 29-2-2008, based on the principle of lis pendens, the Division Bench of the High Court in its second order dated 22-4-2008, observed that when the first appeal was admitted and the matter in dispute as regards the property in question was sub judice, the properties in question should not be sold and passed an order which was contrary to the initial order which was made in keeping with Section 52 of the Transfer of Property Act."

"38. This is not a case where the appellant and the co-owners had violated any restraint order passed by the Court in transferring the

plots in question to the said 280 transferees. The said transfers were effected at a point of time when

there was no injunction or restraint order against the appellant and the other owners of the property and as far as the said transfers are concerned, the only order that could have been passed on the said application is the order which was passed at the first instance on

29-1-2008 (sic 29-2-2008), based on the principles of Section 52 of the Transfer of Property Act, 1882. The restraint order on the transferees must, therefore, be held to be bad and liable to be set aside.

39. As far as the lands which 27 AOGJR-542.10

the appellant and the other joint owners have been restrained from

alienating by the second order dated 22-4-2008 are concerned, we are of the view that in the event the order of 22-4-2008 is set aside, Respondent 1 can be compensated in terms of

money and no irreparable loss and injury will be caused to it on

account thereof.

40. On the other hand, if the owners of the property remain restrained from developing the same, it is they who will suffer severe prejudice, as they will be deprived of the benefit of the user of their land during the said period. The

balance of convenience and inconvenience is against the grant of such an injunction. The success of the suit for specific performance filed by Respondent 1 depends to a large extent on tenuous proof of

genuineness of the agreement sought to be enforced after 19 years, despite the finding of the trial

court that the suit was not barred by limitation."

17. The Supreme Court then set aside the second and third orders of the High Court dated 22-4-2008 and 7-5-2008. Other observations of the Supreme Court about relevance of conduct, nature of relief of specific performance are all equally important and significant but need not be extensively quoted.

28 AOGJR-542.10

18. While considering balance of inconvenience and irreparable loss, Civil Courts would have to see as to what is the preventive relief sought or what mischief is sought to be prevented. Ordinarily, while seeking an injunction to restrain transfers during the pendency of a suit, it is submitted that if injunction is not issued, it will lead to multiplicity of proceedings, by being required to chase parties who may claim to be bona fide purchasers without notice. The judgment of the Supreme Court in Sanjay Verma v. Manik Roy and others, reported in (2006) 13 SCC 608 = AIR 2007 SC 1332 is possibly a complete answer to such contentions.

19. In Sanjay Verma's case (supra) the Supreme Court was considering an appeal against order passed by High Court allowing impleadment of transferees pendente lite in the suit for specific performance which was pending before the trial Court. In the suit a declaration was sought that defendant No.1 had no right to execute sale deeds in favour of defendant Nos.2 to 5. Permanent injunction to restrain the defendants from interfering with peaceful possession of the plaintiff was sought. A 29 AOGJR-542.10

temporary injunction was sought and granted by the trial Court (presumably only to protect possession, since there is no reference to restrain alienations). One of the defendants then transferred the property to one Shyam Kumar who in turn transferred it to Manik Roy and another. These transferees applied for impleadment before the trial Court which held that the transfers were hit by Section 52 of the TP Act and rejected the prayers. They questioned this order before the High Court which allowed the petition and directed that they be added as parties. The plaintiffs questioned this order before the Supreme Court contending that the effect of Section 52 of the TP Act had been totally lost sight of. While supporting the order, respondents placed reliance on judgment of the Supreme Court in Bibi Zubaida Khatoon v. Nabi Hassan Saheb and another, reported in 2004 (1) SCC 191. The Supreme Court held that the judgment in Bibi Zubaida Khatoon's case (supra) was in fact against the respondents' stand claiming impleadment. In paras 10 and 11, the Court quoted with approval from previous judgments in Sarvinder Singh v. Dalip Singh and others, reported in 1996 (5) SCC 539 and Dhurandhar Prasad Singh v. Jai Prakash University and 30 AOGJR-542.10

others, reported in 2001 (6) SCC 534 to the following effect:

"It would, therefore, be clear that the defendants in the suit were

prohibited by operation of Section 52 to deal with the property and could not transfer or otherwise deal with it in any way affecting the rights of the appellant except with the order or authority of the court. Admittedly, the authority or order of the court had not been obtained for alienation of those properties. Therefore, the alienation obviously would be hit by the doctrine of lis pendens by operation of Section 52. Under these circumstances, the respondents cannot be considered to be either necessary or proper parties to the suit."

"In Dhurandhar Prasad Singh v. Jai Prakash University and Others (2001 (6) SCC 534) it was noted as follows: 2001 AIR SCW 2674.

"7. Under Rule 10 Order 22 of the Code, when there has been a devolution of interest during the pendency of a suit, the suit may, by leave of the court, be continued by or against persons upon whom such interest has devolved and this entitles the person who has acquired an interest in the subject-matter of the litigation by an assignment or creation or devolution of interest pendente lite or suitor or any other person interested, to apply to the court for leave to continue the suit. 31 AOGJR-542.10

But it does not follow that it is obligatory upon them to do so. If a party does not ask for leave, he

takes the obvious risk that the suit may not be properly conducted by the plaintiff on record, and yet, as

pointed out by Their Lordships of the Judicial Committee in Moti Lal v. Karrabuldin [ILR (1898) 25 Cal 179] he will be bound by the result of the litigation even though he is not

represented at the hearing unless it is shown that the litigation was not properly conducted by the original party or he colluded with the adversary. It is also plain that if the person who has acquired an interest by devolution, obtains leave to carry on the suit, the suit in his hands is not a new suit, for, as Lord Kingsdown of the Judicial Committee said in Prannath Roy Chowdry v.

Rookea Begum [(1857-60) 7 MIA 323], a cause of action is not prolonged by mere transfer of the title. It is the old suit carried on at his instance and he is bound by all proceedings up to the stage when he obtains leave to carry on the proceedings."

The Court then concluded in paras 12 and 13 as under:

"12. The principles specified in Section 52 of the T.P. Act are in accordance with equity, good conscience or justice because they rest upon an equitable and just

foundation that it will be impossible to bring an action or suit to a

32 AOGJR-542.10

successful termination if alienations are permitted to prevail. A transferee pendente lite is bound by the decree just as much as he was a party to the suit. The principle of lis pendens embodied in Section 52 of the T.P. Act being a principle of public policy, no question of good faith or bona fide arises. The principle underlying Section 52 is that a litigating party is exempted from taking notice of a title acquired during the pendency of the litigation. The mere pendency of a suit does not prevent one of the

parties from dealing with the property constituting the subject- matter of the suit. The Section only postulates a condition that the alienation will in no manner affect the rights of the other party under any decree which may be passed in the suit unless the property was alienated with the permission of the Court.

13. Above being the position, the High Court's view is clearly indefensible and is set aside."

(emphasis supplied)

20. This should put at rest all apprehensions about multiplicity of proceedings or plaintiff being required to chase transferees. If such transferees cannot seek impleadment, plaintiff would be under no obligation to chase them or file proceedings 33 AOGJR-542.10

against them. He could simply execute the decree which he obtains and such transferees pendente lite would not even be able to raise an obstruction. If there be any doubts in this regard - about transferee pendente lite being able to resist the decree - they are set at rest by judgment of the Supreme Court in Usha Sinha v. Dina Ram and others, reported in (2008) 7 SCC 144.

21. In Usha Sinha's case (supra), the respondents had filed a title Suit No.140 of 1999 on 10-4-1999 against five defendants. Defendant Nos.4 and 5 sold their share during the pendency of suit to the appellants. Suit was decreed. Appellants filed Suit No.226 of 2001 with the prayer that decree in respondents' suit of 1999 was null and void, as fraudulent, collusive, etc.. The respondents contested this suit. The respondents also took out execution proceedings No.10 of 2002. The appellants filed an application under Order XXXIX, Rules 1 and 2 and Order XXI, Rule 29 for injunction to restrain execution proceedings, till decision of Suit No.226 of 2001. This application was rejected by the Court on 16-8-2003. The appellants then filed application before executing Court for stay of 34 AOGJR-542.10

proceedings. The executing Court stayed further proceedings by order dated 20-11-2003. The respondents i.e., the decree holder filed a revision petition before High Court, which allowed the revision and set aside the order of the executing Court; which order was challenged before the Supreme Court. In this context, the Court observed as under:

"18. Before one-and-half century, in Bellamy v. Sabine (1857) 1 De G&J 566, Lord Cranworth, L.C. proclaimed that where a litigation is pending between a plaintiff and a defendant as to the right to a particular

estate, the necessities of mankind require that the decision of the

court in the suit shall be binding not only on the litigating 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."

"20. In Vijayalakshmi Leather Industries [AIR 2003 Mad 203] it was urged that the provisions of Rules 98 and 100 of Order 21 of the Code had limited application to the transferee of the judgment-debtor and could not extend to "a chain of transactions" where the transferee of the judgment- debtor had transferred his interest. 35 AOGJR-542.10

21. Referring to statutory provisions and case-law, the Court negatived the contention, stating: (Vijayalakshmi case (AIR 2003 Mad 203, p.206, para 13)

"13. If such contention of the

learned Senior Counsel for the appellant is to be accepted, then we are closing our eyes regarding the intention of the statute. It is

obvious while interpreting the provisions of the statute, the court must give due weight to the intention of the statute in order to give

effect to the provisions. If any

narrow interpretation is given and thereby the purpose of the statute is being defeated, the courts must be careful to avoid such interpretations. If we look at Section 52 of the Transfer of Property Act and Rule 102 of Order 21 CPC, it is very clear that the

intention of Parliament with which the statute had been enacted is that the rights of one of the parties to the proceeding pending before the court cannot be prejudiced or taken away or adversely affected by the action of the other party to the same proceeding. In the absence of such restriction one party to the proceeding, just to prejudice the other party, may dispose of the

properties which is the subject-

matter of the litigation or put any third party in possession and keep away from the court. By such actions of the party to the litigation the other party will be put to more

hardship and only to avoid such

36 AOGJR-542.10

prejudicial acts by a party to the litigation these provisions are in existence. When in spite of such

statutory restrictions, for the transfer of the properties, which are the subject-matter of litigation by a party to the proceedings, the courts are duty-bound to give effect to the provisions of the statute."

22. The above observations, in our opinion, lay down correct proposition of law.

23. It is thus settled law that a purchaser of suit property during the pendency of litigation has no right to resist or obstruct execution of decree passed by a

competent court. The doctrine of

"lis pendens" prohibits a party from dealing with the property which is the subject-matter of suit. "Lis

pendens" itself is treated as constructive notice to a purchaser that he is bound by a decree to be entered in the pending suit. Rule 102, therefore, clarifies that there should not be resistance or obstruction by a transferee pendente lite. It declares that if the resistance is caused or obstruction is offered by a transferee pendente lite of the judgment-debtor, he

cannot seek benefit of Rules 98 or 100 of Order 21.

24. In Silverline Forum (P) Ltd. v. Rajiv Trust, (1998) 3 SCC 723, this Court held that where the

resistance is caused or obstruction is offered by a transferee pendente 37 AOGJR-542.10

lite, the scope of adjudication is confined to a question whether he was a transferee during the pendency of a suit in which the decree was passed. Once the finding is in the affirmative, the executing court must hold that he had no right to resist or obstruct and such person cannot seek protection from the

executing court. The Court stated: (SCC pp.727-28, para 10)

"10. It is true that Rule 99

of Order 21 is not available to any person until he is dispossessed of immovable property by the decree- holder. Rule 101 stipulates that all questions `arising between the parties to a proceeding on an application under Rule 97 or Rule 99' shall be determined by the

executing court, if such questions are relevant to the adjudication of the application'. A third party to the decree who offers resistance

would thus fall within the ambit of Rule 101 if an adjudication is

warranted as a consequence of the resistance or obstruction made by him to the execution of the decree. No doubt if the resistance was made by a transferee pendente lite of the judgment debtor, the scope of the adjudication would be shrunk to the limited question whether he is such a transferee and on a finding in the affirmative regarding that point the execution court has to hold that he has no right to resist in view of the clear language contained in Rule

102. Exclusion of such a transferee from raising further contentions is 38 AOGJR-542.10

based on the salutary principle

adumbrated in Section 52 of the

Transfer of Property Act."

(emphasis supplied)

[See also Sarvinder Singh v. Dalip Singh, (1996) 5 SCC 539]

21. We are in respectful agreement with the proposition of law laid down by this Court in

Silverline Forum. In our opinion, the doctrine is based on the principle that the person purchasing property from the judgment debtor during the pendency of the suit has no independent right to property to resist, obstruct or object execution of a decree. Resistance at the

instance of transferee of a judgment debtor during the pendency of the proceedings cannot be said to be

resistance or obstruction by a person in his own right and, therefore, is not entitled to get his claim adjudicated."

"30. As held in Bellamy, the

fact that the purchaser of the

property during the pendency of the proceedings had no knowledge about the suit, appeal or other proceedings is wholly immaterial and he/she cannot resist execution of decree on that ground."

"32. In our judgment, the High Court was also right in observing that if the appellant succeeds in the suit and decree is passed in her favour, she can take appropriate

39 AOGJR-542.10

proceedings in accordance with law and apply for restitution. That,

however, does not preclude the decree-holder from executing the decree obtained by him. Since the appellant is a purchaser pendente lite and as she has no right to

offer resistance or cause obstruction and as her rights have not been crystallised in a decree, Rule 102 of Order 21 of the Code

comes into operation. Hence, she

cannot resist execution during the pendency of the suit instituted by her. The order passed by the High Court, therefore, cannot be said to be illegal, unlawful or otherwise contrary to law."

22. Thus a plaintiff need not at all worry about transfers pendente lite and so, occasions for invoking powers under Order XXXIX, Rules 1 and 2 would arise only in rare cases where the plaintiff can demonstrate that rule of lis pendens is inadequate to protect plaintiff's interest.

23. The learned counsel for the appellants in some of the appeals placed reliance on a judgment of this Court in Rukhana Enterprises v. Ashoka Marketing Ltd. & Ors., reported in 2010 (1) Bom.C.R. 765, where this Court had allowed impleadment of a transferee pendente lite. The learned counsel submitted that this 40 AOGJR-542.10

had been done after considering several judgments including those of the Supreme Court. The learned counsel overlooks the fact that what was allowed by this Court was a chamber summons taken out by the plaintiff himself for impleadment of subsequent purchasers and for seeking relief of cancellation of subsequent transfer. Though not necessary, if the plaintiff chose to implead the transferees, such impleadment cannot be equated to claim of transferee to be impleaded or being in a position to resist passing of decree or its execution. Therefore, this judgment cannot lead to the conclusion that transferee pendente lite poses a threat to plaintiff's right.

24. Judgment of the Supreme Court in Anand Nivas Private Ltd. v. Anandji Kalyanji's Pedhi and others, reported in AIR 1965 SC 414, has nothing to do with temporary injunctions under Order XXXIX in cases of transfers pendente lite covered by Section 52 of the TP Act as may be seen from paras 20 and 21 of the judgment which read as under:

"20. One other matter remains to be dealt with. It was said, and this is not in dispute, that the sub-

letting to the appellant took place after the landlords had filed their 41 AOGJR-542.10

suit against the tenant which resulted in a decree for ejectment to which I have earlier referred. It was contended that the appellant was, therefore, bound by the decree in view of Section 52 of the Transfer of Property Act. On behalf of the appellant it was said that the section was amended so far as Bombay was concerned by Bombay Act 14 of 1939 and the amended section required certain notice to be given before the sub-letting could be affected by the principle of lis pendens stated in the section. I do not think it

necessary to deal with this contention for in my view, even

Section 52 as it stands in the

Transfer of Property Act without any amendment does not affect the sub- letting in this case.

21. The first thing that I wish to point out is that, that section does not make any transfer of property illegal. Therefore, the section does not justify the view that the sub-letting to the appellant, assuming it was a transfer of property, as to which doubts may legitimately arise, was in any way unlawful or invalid. If any authority is needed for this proposition, reference may be made to Veyindramuthu Pillai v. Maya Nandan [(1920) ILR 43 Mad 696. All that

Section 52 does is to provide that pending a litigation concerning property, the property cannot be

transferred so as to affect the

rights of any party thereto under the decree that may be passed in the

42 AOGJR-542.10

suit. The only effect then of the section is that the rights of the decree-holder under the decree are not to be affected by the transfer."

25. The learned counsel for the parties in support of grant of temporary injunction in such cases submitted that if the property is likely to be subjected to an irreversible change, an injunction ought to be issued and for this purpose relied on a judgment of the Supreme Court in Gangubai Babiya Chaudhary v. Sitaram Bhalchandra Sukhtankar, reported in AIR 1983 SC 742. In that case defendant Nos.1 and 2, the recorded owners of the property had entered into a partnership for development of land with defendant Nos.3 and 4 presumably on the whole plot admeasuring 17000 sq.metres, out of which the plaintiffs claimed title in respect of 8006.04 sq.metres of land. The plaintiffs too seemed to have executed an irrevocable power of attorney in favour of another developer and therefore the Supreme Court observed that it was a fight by proxy. The observations of the Court that the Court was satisfied that it was not a case where injunction could be refused, or the opinion that if the respondents are allowed to use the FSI for whole land, including land in dispute, 43 AOGJR-542.10

the situation may become irreversible by the time the suit was decided, came in the context of facts of that case and cannot lead to an inference that development of property in dispute would lead to irreversible change or that therefore a rightful owner should be restrained. And it would always be questionable as to what is not reversible. If Court so desires, it could always direct the property to be restored to its original position and may caution the parties while refusing injunction that no equities would be claimed, which will be a lesser restraint than wholesale denial of right to deal with the property. It may be recalled that in Kishorsinh Ratansinh Jadeja's case (supra) the Supreme Court had held in para 40 that if owners of the property remain restrained from developing property they would be severely prejudiced by being deprived of their own land during the pendency of the suit.

26. Reliance by learned counsel for the parties on judgment of a learned single Judge of this Court in Abdul Salam v. Sheikh Mehboob, reported in 2006 (2) Mh.L.J. 277 to support their contention that there could be instances where even transfer pendente lite could be disregarded by Courts and therefore it is safe 44 AOGJR-542.10

to secure the rights by getting an injunction are misplaced. The judgment is given in the context of facts peculiar to that case and it is held that doctrine of lis pendens would not apply in that case.

27. The learned counsel submitted that only a transfer in violation of an order of injunction would be no transfer and would not confer any right, title or interest. For this purpose they relied on a judgment of a Division Bench of this Court in Keshrimal Jivji Shah and another v. Bank of Maharashtra and others, reported in 2004 (3) Mh.L.J. 893. There can be no doubt that a transfer in breach of an injunction would not confer any rights, but it does not follow that if an injunction is not in force, transfers could be validly made, for, it would set at naught Section 52 of the TP Act.

28. It was also submitted that rule of lis pendens embodied in Section 52 of the TP Act does not annul the conveyance but merely makes it subservient to the rights of parties to the litigation and for this purpose reliance was placed on a judgment of this Court in Dinkar Dada Mahadik v. Shrirang Dada Mahadik and others, reported in 1992 Mh.L.J. 248. The 45 AOGJR-542.10

plaintiff need not be concerned about annulment of the conveyance as long as it does not affect his rights. Therefore this judgment too is unhelpful to make out a case of grant of injunction to restrain alienations pending a suit.

29. Advocate Thorat, learned senior counsel for the appellant in Appeal From Order No.542 of 2010 submitted that for over 100 years Section 52 of the TP Act as also Order XXXIX, Rule 1 of the Civil Procedure Code exist, and if for a century it has not been felt necessary to refuse injunctions to alienate on the ground that such claim is redundant in view of Section 52, there must be a good reason and so such a restrain may not now be imposed. This is undoubtedly a point to ponder. However, in the face of judgments which clearly hold that such transferees pendente lite have no right to be impleaded or to even obstruct the execution proceedings, wastage of judicial time in trial and Appellate Courts on an utter redundancy, which may only give some mental solace to a plaintiff may have been tolerable in the past, but cannot be allowed to continue now with tremendous pressure on judicial time at all levels. Available time 46 AOGJR-542.10

must be utilised judiciously by prioritizing cases where there are real disputes demanding Judge's time. The magnitude of the problem would become apparent from the fact that almost 25 such appeals, claiming injunctions in disregard of Section 52 of the TP Act, have been lined up for adjudication today. Therefore, this argument of letting things be as they are cannot be accepted.

30. To sum up:

(a) Section 52 of the TP Act provides adequate protection to the parties from transfers pendente lite and such transferees are neither required to be impleaded nor can claim impleadment. They cannot even resist execution proceedings.

(b) In Mumbai (as also elsewhere as and when amended provisions are made applicable) plaintiffs could (or rather ought to) have notices of their suits registered under Section 18 of the Indian Registration Act, in view of the amended provision of the TP Act and the Registration Act. They cannot 47 AOGJR-542.10

seek to restrain adversary by an injunction by refusing to go in for registration of the lis.

(c) Rule 1 of Order XXXIX of the Civil Procedure Code enabling Court to grant temporary injunctions to restrain transfers pendente lite is only an enabling provision, recognizing the power in the Court to issue such injunction and does not imply that because there is power, it must be exercised. The provision could be invoked only if protection provided by Section 52 of the TP Act is shown to be inadequate.

(d) In the face of protection provided by Section 52 of the TP Act, Courts should be cautious in examining the claims by plaintiffs of irreparable loss if injunction to restrain alienations is refused.

(e) In suits for specific performance/right to develop against the recorded/rightful owners, Courts may consider if an injunction would 48 AOGJR-542.10

cause greater inconvenience to a rightful owner by being deprived the right to deal with his property for the sake of a claim which is yet to mature into right and which metamorphosis rests in the discretion of the Court and is not certain.

(f) Courts may consider necessity of imposing suitable conditions to protect plaintiffs' interests short of granting injunction - like seeking undertaking that no equities would be claimed, on account of sale/development of properties; effecting sales only after putting transferees to notice that their rights would be subject to suit etc.. Interests of prospective purchasers would also be protected if plaintiffs in such cases register the lis, though it may be optional.

APPEAL FROM ORDER NOS.542, 543, 544 AND 545 OF 2010

31. With these parameters, it may be necessary to examine the merits of these appeals, which arise out of orders passed below 49 AOGJR-542.10

application Exhibit-5 in Special Civil Suit Nos.574, 575, 576 and 577 of 2010. The suit properties are owned by the respondents/defendants in each suit. They allegedly agreed to sell it to the appellants/developers for various sums and were paid small earnest amounts, which they sought to refund by sending drafts which the plaintiffs did not encash. Agreements to sell were executed on 27-12-2009 in one case, and 31-12-2009 in the other three cases. But before this the defendants had already entered into an agreement on 18-12-2009 with Salunkhes, presumably also developers. The appellants therefore filed suits for specific performance and since the property was subject either to tenancy laws, or of new tenure, sought a direction to enable the plaintiffs to obtain requisite permissions from the tenancy/revenue authorities. By applications Exhibit-5, they prayed for simply an injunction to restrain the defendants from creating third party interests. These applications were rejected by the learned trial Judge.

32. The appellants have not shown as to how protection of Section 52 of the TP Act would be inadequate or why an injunction would 50 AOGJR-542.10

additionally be necessary. Hence it cannot be said that the learned trial Judge erred in rejecting the applications for injunction. In view of this the appeals are dismissed.

APPEAL FROM ORDER NO.330 OF 2010:

1. Applying these parameters to the facts of the present case, it would be clear that the appellant has not made out a case for grant of injunction. The appellant, original plaintiff, claimed that the defendant had agreed to sell the suit property to him and had executed an agreement of sale, which the defendant branded to be a loan transaction. The defendant claimed to have repaid the amount. Since the defendant refused to execute sale deed, appellant filed suit for specific performance of agreement of sale and by application Exhibit-5 prayed for a temporary injunction to restrain the defendant from creating third party interests in the property.

2. The learned trial Judge held that the appellant had not even made out a prima facie case, and so refused injunction. This finding is not shown to be erroneous, given the material available at that pre-trial stage 51 AOGJR-542.10

before the trial Judge. That apart, there is nothing to show as to how protection under Section 52 of the TP Act would be inadequate to secure interests of the plaintiff.

3. In view of this, the appeal is dismissed.

APPEAL FROM ORDER NO.248 OF 2010:

1. In this case the plaintiffs agreed to purchase the property for a sum of Rs. 4,95,000/- and claimed to have paid the entire consideration from time to time. The defendants had promised to handover the possession of the flat and to execute the necessary agreement. The plaintiffs found that the defendants were avoiding to execute the necessary agreement and, therefore, the plaintiffs gave a notice to the defendants. The defendants stated that it was in fact a loan transaction which loan they had repaid and, therefore, there was no question of the plaintiffs being entitled to specific performance of the contract. The plaintiffs had also sought an injunction to restrain the defendants from transferring the property or creating any third party interest during the pendency of the suit. The learned 52 AOGJR-542.10

trial Judge held that the plaintiffs had not made out a prima facie case and had not shown that they would suffer irreparably if an injunction was not issued. He also held that the balance of convenience was not in favour of issuance of an injunction and therefore rejected the application for injunction. On the material as is available, it cannot be said that the learned trial Judge erred in refusing injunction since the plaintiffs wanted the specific performance of contract for sale of property which would lie in the discretion of the Court. It cannot be said that the plaintiffs, as of right, would be entitled to specific performance. In any case, the plaintiffs have not been able to show that there are any circumstances to indicate that protection under Section 52 of the TP Act would be inadequate to secure the interest of the plaintiffs. This appeal too is, therefore, dismissed.

(R.C. CHAVAN, J.)

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