The Supreme Court has stated that interim injunctions to stop transfers during a pending case can be granted in suitable situations, even with the rule of lis pendens in place.
The Supreme Court noted that Rule 1 of Order 39 in the CPC shows that, despite the Rule of lis pendens in Section 52 of the Transfer of Property Act, there are situations where an injunction can be granted to stop transfers while a case is ongoing. The Court accepted the Appellant’s appeal, overturning the Gujarat High Court’s decision that had lifted an injunction on selling or transferring the disputed property. The Bench restored the Trial Court’s ruling to keep the current situation unchanged and instructed the Respondents not to add any new claims on the property while the case is still active. Justices J.B. Pardiwala and R. Mahadevan remarked, “It is important to understand that Rule 1 of Order 39 of the Code allows for an interim injunction to prevent the sale or transfer of the property in question. If the doctrine of lis pendens in Section 52 of the T.P. Act was seen as a complete solution against transfers during a case, the Legislature would not have included Rule 1 to allow for such injunctions. Rule 1 of Order 39 clearly indicates that, even with the Rule of lis pendens in Section 52 of the T.P. Act, there are valid reasons to grant an injunction against transfers while a case is pending.”
Chirag M. Shroff represented the Appellant, while Adithya Koshi Roy represented the Respondents. The disputed property was bought together in 1991 through registered sale deeds. Later, a jewellery showroom was set up on the property with everyone’s involvement, but the business stopped in 2013. In 2019, the Appellant found out that one of the Respondents had sold the property to his son, another Respondent, using a power of attorney from 1995, without informing anyone. The sale was for Rs. 1.70 crore, much lower than the property’s market value of over Rs. 20 crore at that time. Upset by this, the Appellant filed a civil suit to declare the sale deed invalid and to seek a permanent injunction.
The Trial Court issued an interim injunction to stop the Respondent from handling the property. However, the Gujarat High Court overturned this decision, claiming the Appellant was harassing the Respondent and using political power. The Supreme Court later reversed the High Court’s decision, stating it accepted the Respondent’s defense too readily. The Bench emphasized that Appellate Courts should not interfere with Trial Courts’ discretionary orders unless they are clearly wrong or against established legal principles. Citing the case of Wander Ltd. v. Antox India P. Ltd. (1990), the Bench noted that appellate review of temporary orders should be limited. It stated that appellate courts should not replace the Trial Court’s discretion unless it was exercised in a clearly unreasonable or unjust manner, or if the court ignored established legal principles regarding temporary injunctions.
The Court pointed out that right after the High Court canceled the trial court’s order for an interim injunction, the third defendant engaged in a deal that established a third-party claim on the property in question. The order in question shows that the plaintiffs had specifically asked the High Court to pause its decision so they could appeal, but this request was denied. The Court found it puzzling why the High Court acted so quickly to change the status of the property when the case was still active in the trial court and the parties’ rights had not yet been determined.
The Court emphasized that the transfer of property by the Respondent to a third party while the appeal was ongoing fell under the doctrine of lis pendens as stated in Section 52 of the Transfer of Property Act. “High Courts should not easily overturn the trial court’s decisions unless those decisions do not meet the established criteria. Ignoring these important factors makes the High Court’s order inadequate and undermines the goal of providing fair and reasoned justice,” the Court stated. As a result, the Court concluded, “Given the above, this appeal is successful and is granted. The High Court’s order is overturned… The respondents must keep the current status of the property and cannot create any new claims on it.” Thus, the Supreme Court approved the Appeal.
Cause Title: Ramakant Ambalal Choksi v. Harish Ambalal Choksi & Ors. (Neutral Citation: 2024 INSC 913)
Appearance:
Appellant: AOR Chirag M. Shroff; Advocate Mahima C Shroff,
Respondents: Advocate Adithya Koshi Roy; AOR Nikhil Goel
