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Exceptions to Lis Pendens under TPA


Exceptions to Lis Pendens
Exceptions to Lis Pendens

Content:-


Exceptions to the Doctrine


Despite the doctrine of lis pendens, the court retains the discretion to authorise any party involved in the suit to transfer the property, subject to certain conditions. 


In the case of Vinod Seth v Demnder Rajaj (2010) 8 SCC 1, the court allowed the defendants to manage the property during the ongoing suit under Section 52 of the law.


The court elucidated that Section 52 operates on principles of justice and equity, yet it's flexible, allowing the court to exempt the suit property from its application and impose suitable conditions.


Consequently, the court possesses the authority to transfer the property in question without being bound by the rights of any party involved in the suit, setting terms as it deems appropriate. Considering the circumstances, the court decided that the present case warranted an exemption from Section 52, contingent upon the defendants providing reasonable security.


This would grant the defendants the liberty to handle the property as they see fit, despite the ongoing suit.


In this case, the appellant-plaintiff has alleged in the plaint, inter alia, that under the collaboration agreement, he is required to invest Rs. 20 lakhs in all, made up of Rs. 16.3 lakhs for construction and Rs. 3.7 lakhs as cash consideration and that in lieu of it he would be entitled to ground floor of the new building to be constructed by him at his own cost Treating the same as a business venture, a reasonable profit from such a venture can be taken as 15% of the investment proposed, which works out to Rs. 3 lakhs.


Therefore, it would be sufficient to direct the respondent-defendants to furnish security for a sum of Rs. 3 lakhs to the satisfaction of the trial court as a condition for permitting the defendants to deal with the property during the pendency of the suit.







Illustrations/Cases


  • A sues B to recover a house. After the filing of the suit but before the service of summons B transfers the property to C. The suit is decreed against B. The question is: Is C bound by the decree?  The explanation to Sec. 52 lays down in express terms that the lis (litigation) begins from the date of the presentation of the plaint. Thus, a transfer of property which occurs before the service of the summons, will be covered by Sec. 52.


  • A’s suit was dismissed for default on March 15, 1994. On March 27, 1994, A transfers the property in suit to B. On June 28, 1994, the suit is restored to file. Is the transfer in B’s favour subject to lis pendens? If a suit is dismissed for default and then restored, the order of restoration relates back, and a transfer after dismissal and before restoration is subject to lis pendens. 


Case laws for Exception to lis Pendens

In Amarnath v Deputy Dir. of Consolidation (AIR 1985 All 169), it was held that a party is said to be a party to the suit if the decision/judgement is likely to affect the share of such a party and the decision would be binding on him too.


In this case, during a partition suit between A and B, the disputed plot of land (though not originally mentioned in the suit but admitted as a property that should have been the subject matter of partition) was disposed by A by a gift in favour of the grandson, it was held that the gift was subject to the rule of lis pendens


In Paiyaz Husain Khan v Prag Narain (1907) 29 All 339, a mortgagee sued to enforce his mortgage, but before the summons were served, the mortgagor effected a subsequent mortgage.


The prior mortgagee continued his suit and obtained a sale-order from the court, without making the subsequent mortgagee, a party to the suit. Held that the sale extinguished the subsequent mortgagee’s right to redeem the prior mortgage.

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