The Supreme Court states that the Doctrine of Lis Pendens is relevant when a petition is filed in the registry but is in a faulty condition.
The Supreme Court ruled that the doctrine of lis pendens is relevant when a petition for review is in the registry but is defective. This decision came from review petitions regarding a judgment made by a three-Judge Bench in August 2022, which allowed an appeal against a ruling from the Telangana High Court. The three-Judge Bench, including CJI D.Y. Chandrachud, Justice J.B. Pardiwala, and Justice Manoj Misra, stated, “The purpose of lis pendens is to prevent the court’s process from being undermined. Without this doctrine, a defendant could undermine the suit by selling the property in question. This is clearly explained in Section 52, which defines ‘pendency.’ The Amending Act 20 of 1929 changed ‘active prosecution’ to ‘pendency’ and added an explanation for ‘pendency of suit or proceeding.’ ‘Pendency’ starts from the ‘date of institution’ until the ‘disposal.’ The respondents’ claim that lis pendens does not apply because the petition was defective in the registry is not valid.” The Bench further noted that the review proceedings were “instituted” within the thirty-day limitation period, meaning the doctrine of lis pendens applies at the “institution” stage, not when the Court issues a notice.
The petitioner started legal proceedings under Article 137 of the Constitution along with Order XLVII Rule 1 of the Supreme Court Rules 2013 to review the 2022 judgment. The Court had previously allowed an appeal, partially granting the suit for specific performance by ordering the registration of the property in the petitioner’s name based on the amount paid. The main question was whether the judgment had a clear error that justified a review. In 1994, the original owners agreed to sell land to the vendors, and after the full payment, the entire property was handed over.
Although the full payment was made, a sale deed was never signed, but an irrevocable power of attorney was given to the vendors. The vendors then made an agreement to sell the property to the petitioner. In 2000, the petitioner sent a legal notice to the respondents asking them to accept the remaining payment and sign the sale deed. After sending a second notice, the respondents claimed that the execution was too late due to the limitation period. As a result, the petitioner filed a suit for specific performance. The Trial Court dismissed the suit, leading to an appeal. The High Court partially accepted the appeal, but the Apex Court ruled that the suit was barred by limitation. Consequently, review petitions were submitted.
The Supreme Court, considering the facts, stated, “Clauses 3, 21, and 23 do not imply a fixed time for executing the sale agreements. Therefore, the limitation is determined by the second part of Article 54. The three-year limitation mentioned in Article 54 starts from when the plaintiff is aware that performance has been denied. The petitioner/plaintiff became aware of the refusal only through the reply dated April 14, 2000, to the first legal notice.” The Court noted that the limitation under Article 54 begins from the date the petitioner received the refusal reply, and regardless of whether the suit was filed in August 2002 or July 2002, it was still within the limitation period.
“Before the 2018 amendment, Section 10 stated that the Court could choose to enforce specific performance of a contract when (a) there is no way to determine the actual damage from non-performance; or (b) when the agreed act is such that monetary compensation would not provide sufficient relief. The Explanation indicated that unless stated otherwise, the court assumes that monetary compensation is not adequate for breaches involving immovable property. The agreements to sell do not challenge this legal assumption,” it stated. The Court further mentioned that this case is appropriate for the Court to use its discretion to order specific performance. It also pointed out that the doctrine of lis pendens, as outlined in Section 52 of the Transfer of Property Act, prevents the transfer of property under litigation, with the only exception being transfers authorized by the court under its terms.
If one party in a lawsuit transfers the property involved (or part of it) to someone else, that new party must accept the outcome of the case, even if they were not aware of it. The Court stated that Section 52 of the Transfer of Property Act applies to the buyer once the sale happens after the review petition is filed. Any transfer made while the case is ongoing is affected by the final decision of the court. Therefore, the Supreme Court approved the review petitions and reinstated the High Court’s ruling.
Cause Title: M/s Siddamsetty Infra Projects Pvt. Ltd. v. Katta Sujatha Reddy & Ors. (Neutral Citation: 2024 INSC 861)
