Registered Sale Deed Is Not Null & Void Merely Because It Is Executed Pendente Lite: Supreme Court
July 16, 2024
In the Matters of: -
YOGESH GOYANKA VS. GOVIND & ORS., CIVIL APPEAL NO(S). 7305 OF 2024
[Arising out of SLP (C) No(s). 10005 of 2022]
Background of the Case:
The appellant, along with other co-purchasers, acquired 2.38 hectares of agricultural land, specifically Khasra Nos. 5936, 5895-5898, from Respondent No. 21 (Smt. Rajani Upadhaya) for a total consideration of Rs. 1,51,65,360/- on September 28, 2018. Admittedly, the sale deed expressly acknowledged the existence of pending litigation concerning the subject land.
The subject land was originally owned by the plaintiffs (Respondent Nos. 1-17) and had been subsequently transferred to the defendants (Respondent Nos. 18-20) via release deeds dated August 11, 2006, and January 31, 2007.
On January 3, 2018, the plaintiffs instituted Suit No. 1 of 2018 (underlying suit) before the court of Add. District Judge (ADJ) against the Defendants and Respondent No. 21, seeking permanent injunction and declaration that the release deeds and the sale deed dated April 26, 2007, were null and void. Following service of notice in the underlying suit, Respondent No. 21 entered appearance before the ADJ on January 01, 2018 and executed the sale deed in favour of the Appellant pendente lite.
On January 25, 2019, a temporary injunction was granted in favour of the plaintiffs by the ADJ.
In light of the issuance of the temporary injunction, the appellant filed an application for impleadment on February 13, 2019. This application was subsequently dismissed by the ADJ on October 10, 2019, on the grounds that the appellant was not a bona fide purchaser, having been fully aware of the ongoing litigation, permission of court was not sought prior to the sale, after placing the reliance on the landmark judgement Bibi Zubaida Khatoon vs. Nabi Hassan Saheb & Anr. (2004) 1 SCC 191.
Thereafter, the Appellant then pursued writ petition before the High Court under Article 227 of the Constitution of India challenging the order of the ADJ, which affirmed the ADJ's ruling, declaring the sale deed to be invalid under the doctrine of lis pendens, as articulated in Section 52 of the Transfer of Property Act, 1882.
Parties involved:
Yogesh Goyanka - Appellant(s)
Govind & Ors. - Respondent(s)
Supreme Court Observations:
The Supreme Court observed that a registered sale deed executed during the pendency of the underlying suit does not automatically render it null and void. The Court said that the law on impleadment of subsequent transferees has evolved in a manner that liberally enables subsequent transferees to protect their interests in recognition of the possibility that the transferor pendente lite may not defend the title or may collude with the plaintiff.
According to the Court, the doctrine of lis pendens as provided under Section 52 of the Act does not render all transfers pendente lite to be void ab initio, it merely renders rights arising from such transfers as subservient to the rights of the parties to the pending litigation and subject to any direction that the Court may pass.
The Court observed, “Permitting the impleadment of a transferee pendente lite is, in each case, a discretionary exercise undertaken to enable a purchaser with a legally enforceable right to protect their interests especially when the transferor fails to defend the suit or where there is a possibility of collusion.” In the present case, the Court said that the appellant has been able to satisfy this Court on the possibility of collusion between the Respondents.
The bench of Justice Vikram Nath and Justice Satish Chandra Sharma observed, “Therefore, the mere fact that the Registered Sale Deed (RSD) was executed during the pendency of the Underlying Suit does not automatically render it null and void. On this ground alone, we find the Impugned Order to be wholly erroneous as it employs Section 52 of the Act to nullify the RSD and on that basis, concludes that the impleadment application is untenable.”
Relevant extract of Section of 52 of Transfer of property Act:
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 proceedings which is not collusive and in which any right to immoveable 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.
Source
https://webapi.sci.gov.in/supremecourt/2022/14930/14930_2022_14_1501_53561_Judgement_10-Jul-2024.pdf
