Guruswamy Nadar Vs. P.Lakshmi Ammal(D) Through LRS. & Ors  INSC 772 (1 May
A.K.MATHUR & LOKESHWAR SINGH PANTA
CIVIL APPEAL NO.6764 OF 2001 A.K. MATHUR, J.
1. This appeal is directed against the order dated 19.10.2000 passed by the
Division Bench of the Madras High Court whereby the Division Bench has
dismissed the appeal affirming the judgment and decree passed by learned Single
Judge. Hence the present appeal.
2. Brief facts which are necessary for disposal of this appeal are a suit
for specific performance was filed on the basis of an agreement for sale dated
4.7.1974 under which the first defendant in the suit had through her husband
and power of attorney holder contracted to sell a house property in sum of
Rs.30,000/-. A sum of Rs.5,000/- was given as advance and the remaining
Rs.25,000/- was to be paid before 31.7.1974. The said amount was not paid by
31.7.1974. The owner again sold the suit property to the appellant herein on
5.5.1975 for a sum of Rs.45,000/- and possession in question was handed over to
the appellant herein. Therefore, the plaintiff filed the aforesaid suit for
enforcement of the specific performance of contract. The trial court dismissed
the suit holding that the agreement was genuine but a false story was put up by
the defendant/owner that he signed the agreement under the influence of liquor
and it further held that the defendant who is appellant before us purchased the
suit property for bona fide consideration.
Therefore, no decree for specific performance could be passed in favour of
the plaintiff & learned trial court dismissed the suit. On appeal the
learned Single Judge reversed the judgment and the decree passed by the trial
court and decreed the suit for specific performance.
Aggrieved against the order passed by learned Single Judge, an appeal was
preferred by the second purchaser (the appellant herein) before Division Bench
and that appeal of the second purchaser was dismissed by the Division Bench by
its order dated 19.10.2000 and hence the present appeal on grant of leave.
3. We have heard learned counsel for the parties and perused the record. It
will be relevant to mention here that the second purchase by the appellant was
on 5.5.1975 i.e.
two days after the filing of the suit for specific performance on 3.5.1975.
Though the applicability of Section 52 of the Transfer of
Property Act, 1882 was not considered by the trial court, however, the
first appellate court i.e.
learned Single Judge while granting the decree for specific performance
found that the subsequent purchase made by the appellant- defendant was also
bona fide for value and without notice of the agreement to sell but the said
sale was subordinate to the decree that could be made in the suit for specific
performance which was instituted prior to the sale in favour of the second
purchaser. The main argument which was advanced before learned Single Judge was
that Section 19 of the Specific Relief
Act, 1963 provides that a decree for specific performance against a
subsequent purchaser for bona fide who has paid the money in good faith without
notice of the original contract can be enforced as the same is binding on the
vendor as well as against the whole world. As against this, it was contended by
the respondents that Section 52 of the Transfer of
Property Act which lays down the principle of lis pendens that when a suit
is pending during the pendency of such suit if a sale is made in favour of
other person, then the principle of lis pendens would be attracted. In support
of this proposition a Full Bench decision of the Allahabad High Court in Smt.
Ram Peary and others v. Gauri and others [ AIR 1978 All. 318] as well as a
Division Bench judgment of the Madras High Court was pressed into service.
Therefore, the question before us in this case is what is the effect of the lis
pendens on the subsequent sale of the same property by the owner to the second
purchaser. Section 19 of the Specific Relief Act
clearly says subsequent sale can be enforced for good and sufficient reason but
in the present case, there is no difficulty because the suit was filed on
3.5.1975 for specific performance of the agreement and the second sale took
place on 5.5.1975. Therefore, it is the admitted position that the second sale
was definitely after the filing of the suit in question. Had that not been the
position then we would have evaluated the effect of Section Section 52 of the Transfer of
Property Act. But in the present case it is more than apparent that the
suit was filed before the second sale of the property. Therefore, the principle
of lis pendens will govern the present case and the second sale cannot have the
overriding effect on the first sale. The principle of lis pendens is still
settled principle of law. In this connection, the Full Bench of the Allahabad
High Court in Smt. Ram Peary (supra) has considered the scope of Section 52 of
Act. The Full Bench has referred to a decision in Bellamy v. Sabine[(1857)
44 ER 842 at p.843)wherein it was observed as under:
" It is scarcely correct to speak of lis pendens as affecting a
purchaser through the doctrine of notice, though undoubtedly the language of
the Courts often so describes its operation. It affects him not because it
amounts to notice, but because the law does not allow litigant parties to give
to others, pending the litigation, rights to the property in dispute, so as to
prejudice the opposite party.
Where a litigation is pending between a plaintiff and a defendant as to the
right to a particular estate, the necessities of mankind required that the
decision of the Court in the suit shall be finding, not only on the litigant
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 wsere not so, there could be no certainty that the
litigation would ever come to an end."
Similarly the Privy Council in Faiyaz Husain Khan v. Munshi Prag Narain
[(1907) 34 Ind App 102] where the Court lay stress on the necessity for final
adjudication and observation that otherwise there would be no end to litigation
and justice would be defeated. The Full Bench of Allahabad High Court further
referred to the work of Story on Equity IIIrd Edition,(para 406) which
expounded the doctrine of lis pendens in the terms as follows:
" Ordinarily, it is true that the judgment of a court binds only the
parties and their privies in representations or estate. But he who purchases
during the pendency of an action, is held bound by the judgment that may be
made against the person from whom he derives title. The litigating parties are
exempted from taking any notice of the title so acquired; and such purchaser
need not be made a party to the action. Where there is a real and fair purchase
without any notice, the rule may operate very hardly. But it is a rule founded
upon a great public policy; for otherwise, alienations made during an action
might defeat its whole purpose, and there would be no end to litigation.
And hence arises the maxim pendent elite, nihil innovetur; the effect of
which is not to annul the conveyance but only to refer it subservient to the
rights of the parties in the litigation.
As to the rights of these parties, the conveyance is treated as if it never
had any existence; and it does not vary them."
Normally, as a public policy once a suit has been filed pertaining to any
subject matter of the property, in order to put an end to such kind of
litigation, the principle of lis pendens has been evolved so that the
litigation may finally terminate without intervention of a third party.
This is because of public policy otherwise no litigation will come to an
end. Therefore, in order to discourage that same subject matter of property
being subjected to subsequent sale to a third person, this kind of transaction
is to be checked. Otherwise, litigation will never come to an end.
4. Our attention was invited to a decision of this Court in R.K.Mohammed
Ubaidullah & Ors. v. Hajee C.Abdul Wahab (D) by L.Rs. & Ors. [AIR 2000
SC 1658]. In this case it was observed that a person who purchased the property
should made necessary effort to find out with regard to that property, whether
the title or interest of the person from whom he is making purchase was in actual
possession of such property. In this case, the plaintiff filed the suit for
specific performance of contract and during the pendency of the suit, rest of
the defendants brought subsequent transaction of sale by the defendant in their
favour claiming the title to the suit property on the ground that they were the
bona fide purchasers for value without notice of prior agreements in favour of
plaintiff and they were also aware that the plaintiff was in possession of the
suit property as a tenant for last several years and that they did not make any
inquiry if plaintiff had any further or other interest in the suit property on
the date of execution of sale deed in their favour apart from that he was in
possession of the property as a tenant. In that context their Lordships
observed that subsequent purchaser cannot be said to be bona fide purchaser of
the suit property for value without notice of suit agreement and plaintiff
would be entitled to relief of specific performance. Their Lordships after
considering the effect of Section 19 of the Specific Relief
Act as well as Section 52 of the Transfer of Property Act
held that subsequent purchaser has to be aware before he purchases the suit
property. So far as the present case is concerned, it is apparent that the
appellant who is a subsequent purchaser of the same property, he has purchased
in good faith but the principle of lis pendens will certainly be applicable to
the present case notwithstanding the fact that under section 19(b) of the Specific Relief
Act his rights could be protected.
5. Mr.S.Ganesh, learned senior counsel appearing for the appellant has tried
to persuade us that the plaintiff did not prove and plead that he was ready and
willing to perform his part of the contract it is open to the second purchaser
to raise this issue and in support thereof, he relied on a decision of this
Court in Ram Awadh (Dead) by LRs & Ors. v. Achhaibar Dubey & Anr.
[(2000) 2 SCC 428] wherein their Lordships have observed that there is an obligation
imposed by section 16 on the Court not to grant specific performance to a
plaintiff who has not met the requirements of clauses (a), (b) and (c) thereof.
Their Lordships further observes that the Court is not bound to grant a decree
for specific performance to the plaintiff who has failed to aver and to prove
that he has performed or has always been ready and willing to perform his part
of the agreement the specific performance whereof he seeks.
Therefore, such plea can be raised by subsequent purchaser of the property
or his legal representatives who were defendants in the suit. Similarly, in
Jugraj Singh & Anr. V.
Labh Singh & Ors. [ (1995) 2 SCC 31], it was also emphasized that the
plea that the plaintiff was to prove that he was ready and willing to perform
his part of the contract. It is personal to him. The subsequent purchasers have
got only the right to defend their purchase on the premise that they have no
prior knowledge of the agreement of sale with the plaintiff. They are bona fide
purchasers for valuable consideration, though they were not necessary parties
to the suit. But in the present case, the second purchaser was a defendant in
the suit and this plea was also considered by learned Single Judge and it found
that there was sufficient allegation made in the plaint that the plaintiff was
ready and willing to perform his part of the contract. This aspect was dealt
with by learned Single Judge in its order dated 24.7.1990 and learned Single
Judge in paragraph 8 held as follows:
" On the first of these submissions, I find that as against the
definite plea in paragraph 7 of the Plant that Plaintiff has been and is still
ready and is still ready and willingly specifically to perform the agreement on
her part of which the 1st Defendant has had notice. The only plea in the
written statement of the 1st Respondent is " the allegations in Para 7 of
the Plaint that this Defendant is aware of the contract is denied as
false". Thus, it is found that there is no denial at all t the plea that
the Plaintiff was ready and willing to perform her part of the contract.
Likewise, the 2nd Respondent also has not denied the said plea, in his written
statement. Further, to the specific averment in para 5 of the Plaint "by
the latter part of July, 1974, the Plaintiff informed the Defendants of her
readiness to complete the sale", there is no specific denial at all. There
is only a vague and evasive denial by the 1st Respondent as follows:
" The allegation contained in para 5 of the Plaint are frivolous and
denied." Likewise, the 2nd Respondent also has not specifically denied the
above said averment in the Plaint."
Therefore, from this finding it is more than apparent that the plaintiff
while filed the suit for specific performance of the contract was ready and willing
to perform her part of the contract. This argument was though not specifically
argued before the Division Bench, the only question which was argued was
whether the principle of lis pendens will be applicable or Section 19 of the Specific Relief
Act will have overriding effect to which we have already answered. In the
present case the principle of lis pndens will be applicable as the second sale
has taken place after the filing of the suit. Therefore, the view taken by the
Division Bench of the High Court is correct and we do not find any merit in
this appeal and the same is accordingly dismissed with no order as to costs.