Report No. 70
Transfer Pending Litigation
Certain provisions of the Act are aimed not at giving effect to any specific doctrines of equity, but at effectively carrying out certain requirements of public policy. In the field of the law of procedure, we are familiar with the principle that there should be an end to litigation. The policy of the law to avoid unnecessary litigation and to avoid the same matter being litigated again is well known. A similar policy finds manifestation in the principle that litigation conducted with out collusion and in a competent court, must be effective and the energy and money spent thereon must not be rendered futile by one party transferring the property in issue in the litigation.
Section 52 is an expression of the principle under lying the maxim pendente lite nihit innovetur (pending a litigation nothing new should be introduced). The section is intended to protect the parties, but there is a deeper consideration of public policy, namely, the act of Court must not be thwarted by private act.
47.3. Section 52.- This is how the section reads-
"52. During the pendency in any court having authority within the limits of India excluding the State of Jammu and Kashmir or 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, 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, except under the authority of the court and on such terms as it may impose.
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 proceeding 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."
Lis pendens is a doctrine known to English law at least since the 17th century.1 There was, however, some obscurity as to its rationale, since some persons thought that the doctrine rested on notice. In the leading case on the subject-Bellamy v. Sabine, (1857) 44 ER 842,-decided in the latter half of the 19th century, the Lord Chancellor (Lord Cranworth), observed:
"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 require that the decision of the court in the suit shall be binding, 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 were not so, there would be no certainty that the litigation would ever come to an end."
Basis-After referring to certain cases which were to the effect that lis pendens was "implied notice" to all the world, Lord Cranworth continued:
"The language of the court in these cases, as well as in Worsely v. The Earl of Scarborough, (1746) 26 Er 1025 (1026), certainly is to the effect that lis pendens is implied notice to all the world. I confess, I think that is not a perfectly correct mode of stating the doctrine. What ought to be said is that pendente lite, neither party to the litigation can alienate the property in dispute so as to affect his opponent. The doctrine is not peculiar to courts of Equity."
Turner, L.J. in the same case observed that the doctrine rested not on any peculiar tenets as to implied or constructive notice, out upon this foundation that it would be plainly impossible that any action or suit could be brought to a successful termination if alienations pendente lite were permitted to prevail.
1. (a) Self v. Madox, (1687) 23 ER 585;
(b) Sorrell v. Carpenter, (1788) 24 ER 325.
47.5. Analysis.- The section was analysed by R.B. Pal, J., of the Calcutta High Court as follows1:
"The requirements of the section are: (1) the pendency of a suit, (2) non-collusive character of the suit, (3) any right to immovable property being in question in that suit, being in question directly and specifically, (4) the other party (other than the party making the transfer pendente lite) having some right under the decree in, that suit. The consequence of the doctrine is that the transaction pendente lite shall not be allowed to affect the right under the decree."
The first and the third ingredients have been the most fruitful source of controversy. Some of the important points will be dealt with in due course.
1. Haranya Bhushan v. Goura Dull, AIR 1943 Cal 227 (230).
We have already stated1 that the section intended to ensure that a private party does not defeat the authority of the court. The status quo is maintained unaffected by the act of a party to the litigation. In other words, the section takes away the subject of transfer of property pending litigation from the realm of volition of the parties, and places it in the domain of the court, so that successive alienations of property in dispute may not render nugatory judicial verdict on that dispute.
It is for this reason that the emphasis is not on notice of pendency, but on pendency itself. It is sometimes stated that the law of lis pendens is an extension of the law of res judicata. This is true, if it is understood in the sense that res judicata is on the basis of parties whose names appear on record of the proceedings, and lis pendens binds all persons who purport to be transferees of the property in the suit. If he was a party, then he would be bound by reason of res judicata. If he was not a party, he would be bound by lis pendens. In this sense, lis pendens supplements res judicata.
1. Para. 47.4, supra.
47.7. Decretal charge.-
A pretty large number of judicial decisions on section 52 relate to the question of charge. Controversy used to arise in the past on the question whether the doctrine of lis pendens applies to claims for maintenance resulting in a charge. The correct position as now settled seems to be that if the claimant for maintenance has made a prayer for charge and the charge is ultimately incorporated in the decree, then the doctrine applies, so that, as the section says, "the property cannot be transferred or otherwise dealt with by any party to the suit so as to affect the rights of any other party to the suit under any decree which may be made therein".1
Of course, there should be a prayer for a charge on a specific immovable property mentioned in the plaint and the decree must have been passed creating a charge on such property. We shall deal late2 with a right which is created by the decree though not prayed for in the pleadings.
1. Bose Chinamma Dhutta v. Krishna, 1906 ILR 29 Mad 508.
2. Para. 47.9, infra.
The emergence of matrimonial legislation and the increasing number of suits in that jurisdiction has lent new importance to the question of application of the doctrine of lis pendens to prayers for alimony and for a charge on specific immovable property. In one of the very early American cases,1 the following observations were made:-
"In many cases where, in divorce proceedings the application is for alimony proper, that is, an allowance to be paid at regular periods for the wife's support, it was held that the rule of lis pendens does not apply where the suit is in personam, and did not relate to any specific part of the personal or real estate of the husband. If, however, the wife in her complaint specifically describes property which she asks the court to decree to lher for her support, there seems to be no well founded reason why the rule of lis pendens should not apply.
In such a case, a purchaser pendente lite, with notice of the suit and its objects, knows that the property described may be decreed to the wife, and that one of the objects of the suit is to obtain decree awarding such property to her; see section 284 of Hukam Chand's Law of Res Judicata, pp. 722 and 724, and Benndt on Lis Pendens, p. 267, section 219".
This position is substantially true in India and elsewhere, today also.
1. Powell v. Campell, 19 Am St Rep 350; cited in Seetharamanuja Charyulu v. Venkatsubbamma, AIR 1930 Mad 824 (832).
47.9. Charge created by decree but not prayed for in the pleading.-
One situation arising out of the charges does not appear to have been dealt with in section 52. What happens if the charge is not prayed for in the plaint, but is granted by the decree and the transfer (now sought to be challenged) is made after the decree but before the decree is completely satisfied? Taking literally the language of the section, the matter is not covered in the main part, because when the suit was instituted, there was no right to immovable property directly and specifically 'in question'.
In such a case, is it not just and fair that the doctrine of lis pendens should be extended? We are not, this time, concerned with the case where there is in the plaint itself a prayer for a charge. In such a case the lis involving immovable property commences from the date of the plaint. We are concerned with the question whether there could be a case where the lis, though not commencing from the date of the plaint, commences from the date of the decree. If the decree directs the sale of a certain property, and then, after the decree and before the sale, a private transfer is effected, should it be allowed to defeat the rights under the decree?
As the law now stands, until the actual order is passed for the sale of the property, no priority is created, in such a situation.1 Take another situation. An injunction is not prayed for in the plaint, but is ultimately granted by the decree-a rare but no an inconceivable case. After the injunction is granted, but before it is executed, property is transferred. Should the injunction not be executable against the transferee?
We are of the view that the section should be amplified in this regard, and we recommend accordingly.
1. Bepin Krishna v. Byamdesh Deb, AIR 1925 Cal 395 (2).
47.10. Charge created by decree.-
It would appear that when a charge is created by a decree, the doctrine of lis pendens still applies-unless the decree is merely declaratory.1 If a person purchases property from a party after an order creating a charge is passed in an inter-pleader suit, the transfer is governed by lis pendens, according to some cases.2 The Explanation to section 52, however, where it relates to the starting point, may give a different impression.
This should be remedied. As to the point of substance, it is to be noted that while a charge, as such, can be enforced only against a person who purchases with notice or for value, the doctrine of lis pendens makes no exception in favour of a bona fide transferee for value without notice.
1. Mahesh Prasad v. Mt. Mundar, AIR 1951 All 141 (151, 153) (FB).
2. Kulanadaivelu v. Sowbagyammal, AIR 1945 Mad 350 (351).