Summary
The Supreme Court upheld a High Court decree for specific performance of a 1990 agreement to sell land. The owner sold the land to the appellant during the pendency of the purchaser's suit, so the sale was hit by lis pendens under Section 52 of the Transfer of Property Act, 1882, and the appellant's plea of being a bona fide purchaser was irrelevant. The First Appellate Court also could not reverse the trial court's finding that the agreement was not collusive when the defendants had filed no cross-appeal or cross-objection.
Issues
- Whether a sale deed executed by the vendor in favour of a third party after the suit for specific performance was filed is hit by the doctrine of lis pendens, regardless of the transferee's good faith or lack of notice.
- Whether the First Appellate Court could hold the agreement collusive when the trial court's finding on that issue was not challenged by cross-appeal or cross-objection.
- Whether the High Court in second appeal was justified in setting aside the concurrent refusal of specific performance.
Provisions considered
- Section 52, Transfer of Property Act, 1882The suit was filed on 24.12.1992 and the sale to the appellant was executed on 08.01.1993. Relying on Usha Sinha, Sanjay Verma, Guruswamy Nadar and Chander Bhan, the Court held that the transfer during pendency of the suit is bound by the decree, and that good faith or lack of notice of the transferee is irrelevant under this public policy rule. (¶¶ 11, 12, 13, 14, 15)
- Section 41, Transfer of Property Act, 1882Following Chander Bhan, the Court noted that once a transaction is invalid against the plaintiff because of lis pendens, the transferee's defence that he is a bona fide purchaser for value protected under Section 41 must be rejected. (¶ 14)
- Order XLI Rule 22, Code of Civil Procedure, 1908Applying Banarsi v Ram Phal, the Court held that the defendants, who neither appealed nor filed cross-objections against the partial decree for refund or the finding on issue no. 5, had accepted that finding, so the First Appellate Court could not hold the agreement collusive. (¶¶ 9, 10, 15)
- Section 19(b), Specific Relief Act, 1963Referred to through Guruswamy Nadar, which held that a subsequent purchaser in good faith remains bound by lis pendens where the sale comes after the suit was filed, even though Section 19(b) might otherwise protect him. (¶ 13)
Held
- Where the trial court partly decreed the suit and decided the issue of fraud and collusion against the defendants, and they filed neither a cross-appeal nor cross-objections, they accepted the decree and that finding. The First Appellate Court could not, in the plaintiff's appeal, record a contrary finding that the agreement was collusive. (¶¶ 9, 10)
- The doctrine of lis pendens in Section 52 of the Transfer of Property Act applies to every alienation made during the pendency of the suit, whether or not the alienee had notice of it. Because it rests on public policy, no question of good faith arises, and the transferee pendente lite is bound by the decree as if a party to the suit. (¶¶ 11, 12, 13, 14)
- Since the agreement to sell was proved, the finding that it was not collusive had become final, the plaintiff was found ready and willing, and the sale to the appellant was executed during the pendency of the suit, the plaintiff could not be non-suited on the ground that the appellant was a bona fide purchaser without notice. The High Court was justified in decreeing specific performance. (¶¶ 15, 16)
Result
Appeal dismissed; the High Court's judgment decreeing specific performance of the agreement dated 17.08.1990 was affirmed; no order as to costs.