CHANDER BHAN (D) THROUGH LR SHER SINGHversusMUKHTIAR SINGH & ORS.

                 [2024] 5 S.C.R. 1148 : 2024 INSC 377

              Chander Bhan (D) Through LR Sher Singh
                                 v.
                       Mukhtiar Singh & Ors.
                       Civil Appeal No. 2991 of 2024
                                 03 May 2024
           [Sudhanshu Dhulia* and Prasanna B. Varale, JJ.]

                           Issue for Consideration
       (1) Whether respondent-purchasers were unaware of lis-pendens
       and could claim to be bona-fide purchasers and be entitled to
       protection u/s.41 of the Transfer of Property Act, 1882; (2) Whether
       the principle of lis-pendens as enshrined u/s.52 would apply in the
       State of Punjab; and (3) When would the doctrine of lis-pendens
       take effect.

                                  Headnotes†
       Transfer of Property Act, 1882 – ss.52 and 41 – Transaction
       hit by lis pendens – Agreement to sell property between
       Appellant and Respondent No.3-owner – Appellant paid
       earnest money – Later, filed suit for injunction – Injunction
       order in favour of Appellant – Same day, Respondent No.3
       executed release deed in favour of Respondent no.4 who
       executed sale deed in favour of Respondent Nos.1 & 2 –
       Suit for specific performance by Appellant – Erroneously
       dismissed by High Court – Order of temporary injunction
       was operating when transactions qua the suit property were
       executed by respondents – Respondents 1-2 (subsequent
       purchasers) bound by lis pendens and cannot claim to be
       bonafide purchasers, in peculiar facts of the case – Not entitled
       to protection u/s.52.
       Held: 1. Explanation to s.52 clarifies that pendency of a suit
       shall be deemed to have commenced from the date on which the
       plaintiff presents the plaint – Further, that such pendency would
       extend till a final decree is passed and such decree is realised –
       In the present case, the release deed was executed after the suit
       for temporary injunction was filed by the appellant, hence, the



* Author
[2024] 5 S.C.R.                                                                1149

  Chander Bhan (D) Through LR Sher Singh v. Mukhtiar Singh & Ors.


     release made by respondent no.3 in favour of respondent no.4
     would be covered by the doctrine of lis pendens – Respondent
     no. 4 executed the registered sale deed in favour of respondents
     1-2 during the operation of the temporary injunction order – Thus,
     the alienation made by respondents, cannot operate against the
     interests of the appellant considering he had obtained an order
     of temporary injunction in his favour – Subsequent purchasers
     will be bound by doctrine of lis pendens and cannot claim
     they are bonafide purchasers because they were not aware
     of the injunction order, looking at the peculiar facts of the present
     case. [Paras 19, 20, 22]
     2. Release Deed executed by respondent no. 3 in favour of
     respondent no. 4 and the Sale Deed executed by respondent no. 4
     in favour of respondents 1-2 is without any legal sanctity – Alienation
     made by respondents cannot operate to the disadvantage of the
     appellant – Respondent no.3 directed to accept the balance sale
     consideration from the appellant and execute the agreement to
     sell in favour of the appellant. [Paras 24, 25]
     Doctrines/ Principles – Principle of lis pendens as enshrined
     u/s.52 – Applicability – In the State of Punjab – Transfer of
     Property Act, 1882 – ss.52 and 1.
     Held: By virtue of s.1 of the Transfer of Property Act, 1882
     the provisions of the said Act are not applicable in the States
     of Punjab, Delhi or Bombay; subject, of course to certain
     exceptions – However, even if s.52 is not applicable in its strict
     sense in the present case (where subject land situated in Punjab)
     then too the principles of lis-pendens, which are based on justice,
     equity and good conscience, would certainly be applicable. [Para 17]
     Transfer of Property Act, 1882 – s.52, Explanation to –
     Pendency of suit commences from date on which the plaintiff
     presents the suit.
     Held: Explanation to s.52 clarifies that pendency of a suit shall be
     deemed to have commenced from the date on which the plaintiff
     presents the suit i.e. the date of presentation of plaint or institution
     of proceedings in court of competent jurisdiction.– Further, such
     pendency would extend till a final decree is passed and such
     decree is realised. [Para 18]
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                             Case Law Cited

     Shivshankara and Another v. H.P. Vedavyasa Char [2023] 6
     SCR 359 : 2023 SCC OnLine SC 358 – relied on.
     Rajendra Singh v. Santa Singh [1974] 1 SCR 381 : AIR 1973 SC
     2537; Dev Raj Dogra v. Gyan Chand Jain [1981] 3 SCR 174 :
     (1981) 2 SCC 675; Sunita Jugalkishore Gilda v. Ramanlal Udhoji
     Tanna [2013] 8 SCR 215 : (2013) 10 SCC 258; Kanshi Ram v.
     Kesho Ram, AIR 1961 P&H 299; Sardar Kar Bachan Singh v.
     Major S Kar Bhajan Singh, AIR 1975 P&H 205 – referred to.

                               List of Acts
     Transfer of Property Act, 1882; Evidence Act, 1872.

                            List of Keywords
     Doctrine of Lis pendens; Bona-fide purchaser; Equity; Injunction;
     Agreement for Sale; Release Deed.

                           Case Arising From
     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2991 of 2024
     From the Judgment and Order dated 03.10.2019 of the High Court of
     Punjab & Haryana at Chandigarh in RSA No. 2746 of 2012
                        Appearances for Parties
     Rameshwar Singh Malik, Sr. Adv., Jitesh Malik, Abhay Singh, Mrs.
     Leelawati Suman, B C Bhatt, Satish Kumar, Advs. for the Appellant.
     Narender Hooda, Sr. Adv., Rahul Rathore, Shaurya Lamba,
     Ms. Sukhmani Bajwa, Dr. Surender Singh Hooda, Advs. for the
     Respondents.

               Judgment / Order of the Supreme Court

                               Judgment
     Sudhanshu Dhulia, J.
1.   The appeal filed by the appellant presently before us challenges the
     Judgement and order dated 03.10.2019, passed in a second appeal
     by the Punjab and Haryana High Court. The impugned Judgement of
     the High Court has reversed the concurrent findings of the trial court
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     Chander Bhan (D) Through LR Sher Singh v. Mukhtiar Singh & Ors.


       and the first appellate court and has consequently dismissed the
       suit of specific performance filed by the appellant-plaintiff, although
       a partial relief was granted to the appellant by return of the earnest
       money to the appellant, with interest.
2.     The facts leading to this appeal are that on 10.11.2002 appellant
       and respondent no. 3 entered an agreement to sell relating to 16
       “Kanals” of land for a total consideration of Rs. 8 lakhs, where Rs.
       2.50 lakhs was paid at the time of agreement and remaining Rs. 5.50
       lakhs was to be paid at the time of execution of sale deed, which
       was to be executed on or before 10.11.2004.
3.     After the agreement to sell but before the date of the execution of
       the sale deed the present appellant having received the knowledge
       that respondent no. 3 was likely to alienate the suit property, files a
       suit for permanent injunction on 21.07.2003 against respondent no. 3
       where an order of temporary injunction was passed in his favour on
       28.07.2003. On the very same day, i.e., 28.07.2003 respondent no.
       3 though executes a “release deed” in favour of his son, Harvinder
       Singh (respondent no. 4), for which mutation was also sanctioned.
4.     Subsequent to the Release Deed, respondent no. 4, son of respondent
       no.3, executed a registered sale deed dated 16.06.2004 in favour
       of Mukhitar Singh and Baljeet Singh (respondent nos. 1-2) for the
       suit land.
5.     The appellant then files a suit for specific performance before the
       Additional Civil Judge, Senior Division, Jind, as the defendant i.e.
       present respondent No.3 did not come forward even on the last day
       i.e. 10.11.2004 to execute the sale deed. In his Written Statement,
       respondent no. 3, takes the defence that the agreement for sale
       was signed by him, but under a “misconception”. It is contended
       that the appellant/plaintiff had taken the defendant to a shop for
       being a witness and had fraudulently obtained his signatures on
       the agreement to sell. Respondents 1 and 2, on the other hand,
       claimed to be bonafide purchasers for valuable consideration and
       sought protection under Section 41 of the Transfer of Property Act,
       1882 (hereafter “Act of 1882”).
6.     The Trial Court, nevertheless decreed the suit of the appellant
       with costs and directed respondent no. 3 to accept balance sale
       consideration and execute the agreement to sell. It was held that
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     respondent no. 3 had admitted about the execution of the agreement
     to sell in the earlier suit for injunction filed by the appellant, and further
     Vijay Singh (PW-5) had verified the execution of the agreement.
     The Trial Court did not give any credence to the objections of the
     defendants (present respondents No. 3 and 4). Both these defendants,
     father and son respectively, had refused to depose in the witness
     box. An adverse inference was drawn against them by the Court,
     on this aspect as well.
7.   An interesting development, meanwhile took place before the Trial
     Court. PW-7 who was the lawyer of the appellant in the injunction
     suit, had become an attesting witness of the “sale deed” executed by
     respondent no. 4 in favour of respondent nos. 1-2. The Trial Court, thus
     observed that from the deposition of PW-7 during cross-examination,
     PW-7 had committed a breach of privileged communication and
     violated Section 126 of the Evidence Act, 1872.
8.   No appeal against this Judgement was filed by respondents 3 and 4.
     All the same, an Appeal was filed by respondents 1 and 2 before the
     Additional District Judge, Jind which was dismissed on 06.03.2012.
     While reiterating the findings of the Trial Court, the First Appellant
     Court had observed that since PW-7 was the attesting witness of the
     sale deed in favour of respondent 1-2 and also the advocate of the
     appellant in the injunction suit, therefore, it can be safely presumed
     that respondents 1-2 would have been aware of the injunction, and
     consequently their defence of bonafide purchaser can never be
     accepted. While dismissing the appeal, the Appellate Court observed
     that the respondents had colluded together to defeat the just claim
     of the plaintiff, i.e., the appellant before this Court.
9.   Respondents 1-2 then filed their Second Appeal before the Punjab
     and Haryana High Court at Chandigarh, which was allowed vide order
     dated 03.10.2019, which is presently under challenge before us. The
     High Court in the impugned order has reversed the judgements of
     the trial court and the First Appellate Court, though it held that the
     plaintiff, i.e., the present appellant was entitled to the relief of refund
     of earnest money along with 8% interest per annum from date of
     agreement till date of judgement and 6% interest per annum from
     date of the date of judgement till realization of the amount.
10. Primarily three factors weighed with the High Court. Firstly, the
    Release Deed and order of temporary injunction were executed
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     and passed on the same day i.e. 28.07.2003 and it was, therefore,
     not possible to determine that the Release Deed was in violation
     of the injunction order. Secondly, the suit for permanent injunction
     was ultimately dismissed as withdrawn so the protection afforded by
     the order of temporary injunction would subsume with the dismissal
     of the main suit. Thirdly, in the deposition and cross-examination of
     PW-7, there was no admission that he had informed respondents
     1-2 about the order of temporary injunction in favour of the appellant.
     Although respondents 3 and 4 refused to depose in the witness
     box, yet respondents 1-2 had both appeared as a witness and from
     their deposition, it cannot be inferred that they were aware of the
     injunction order. Thus, the High Court concluded that respondents
     1-2 were bonafide purchasers for valuable consideration and
     deserved protection under Section 41 of the Act of 1882. The relevant
     observations of the High Court are reproduced below:
          “In the suit for permanent injunction, land measuring
           16 kanals out of khewat No. 322 khata No. 435 total
           measuring 86 kanal 14 marlas was the subject matter.
           Neither Harvinder Singh nor the present appellants were
           party to the said litigation. The interim injunction against
           alienation was allowed vide order dated 28.7.2003, the
           date a lawyer appeared on behalf of Iqbal Singh @
           Pala Singh and filed memo of appearance. The release
           deed in favour of defendant No. 2 Harvinder Singh was
           executed by Iqbal Singh @ Pala Singh defendant No. 1
           on 28.7.2003. There is no evidence on record as to the
           time when injunction order was passed by the trial court
           and the time when the release deed was executed and
           registered in favour of Harvinder Singh. This apart, sale
           in violation of an injunction order passed by the courts
           would not render the transaction void ab initio and, at
           best, proceedings under Order 39 Rule 2A of the Code
           can be initiated by the aggrieved party. There is nothing
           on record suggestive of the fact that respondent-plaintiff
           initiated any such proceedings against Iqbal Singh or
           Harvinder Singh. Moreover, the injunction order dated
           28.7.2003 also lost its life the moment suit for permanent
           injunction was later dismissed in the year 2004. Counsel
           for the respondent-plaintiff has failed to cite any provision
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          in law or a precedent that if suit property is transferred
          in favour of the vendor of a litigant claiming bona fide
          purchaser during pendency of earlier litigation, he is
          not entitle to protection under Section 41 of the TP Act
          irrespective of whether he was aware of pendency of
          that litigation or otherwise. The release deed in favour of
          defendant No. 2 and sale deed in favour of the appellants
          were subject to outcome of suit for injunction that was
          eventually dismissed by the Court. In this view of the
          matter, findings of the courts to reject plea of bona fide
          purchaser of the appellants on account of pendency of
          suit for permanent injunction are not based upon any
          legal ground, thus, unjustified.”
11. While allowing the second appeal, the High Court though has upheld
    the concurrent findings as to the execution of the agreement to sell,
    and that the appellant had paid Rs. 2.50 lakhs as earnest money to
    respondent no. 3. Consequently, the High Court gave the alternate
    relief to the appellant, as indicated above.
12. On behalf of the appellant, we have heard learned counsel Mr.
    Rameshwar Singh Malik, Sr. Advocate and Mr. Narender Hooda,
    Sr. Advocate on behalf of respondents 1-2. Though service by way
    of publication was done for respondents 3 and 4, they have not
    entered appearance.
13. Mr. Narender Hooda, Sr. Adv for the respondents/defendants has
    relied on the findings of the High Court to submit that respondents
    1-2 made due enquiries about the suit property, however, the
    revenue records did not indicate that another agreement to sell
    was executed in favour of the appellant. Further, it is argued that
    PW-7 had never informed them about the injunction order passed
    in favour of the appellant. Thus, they are the bonafide purchasers
    for valuable consideration and possession has been taken over by
    the respondents 1-2 since 2004 subsequent to which, they have
    renovated the land and installed a pump there as well.
14. Mr. Rameshwar Singh Malik, Sr. Adv on behalf of the appellant/plaintiff
    would on the other hand submit that the High Court committed a grave
    error in reversing the concurrent findings of the Courts below. The
    transaction qua the suit property was executed by the respondents
[2024] 5 S.C.R.                                                             1155

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     after the appellant obtained an order of temporary injunction from the
     Trial Court, hence the entire transactions would be hit by lis pendens
     given under Section 52 of the Act of 1882. Even otherwise, the High
     Court has upheld the findings of the Courts below that the agreement
     to sell in favour of the appellant as well as the acceptance of earnest
     money was duly proved. Lastly, the respondent nos. 3 and 4 never
     preferred any appeal against the judgements passed by the lower
     courts so they have attained finality qua them, which is indicative
     of the collusion between the respondents.
15. In order to appreciate the rival contentions of the parties, it will be
    appropriate to reproduce the relevant provisions of the Transfer of
    Property Act, 1882, the benefit of which is being claimed by both
    parties. Section 41 of the Act of 1882 which governs the principle of
    bonafide purchaser for valuable consideration is reproduced below:
           “41. Transfer by ostensible owner.— Where, with the
           consent, express or implied, of the persons interested in
           immovable property, a person is the ostensible owner of
           such property and transfers the same for consideration,
           the transfer shall not be voidable on the ground that the
           transferor was not authorised to make it:
           Provided that the transferee, after taking reasonable care
           to ascertain that the transferor had power to make the
           transfer, has acted in good faith.”
     Similarly, Section 52 of the Act of 1882 governs the principle of lis
     pendens and is reproduced below:
           “52. Transfer of property pending suit relating
           thereto.—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.
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          [Explanation.—For the purpose 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.]”
16. The object underlying the doctrine of lis pendens is for maintaining
    status quo that cannot be affected by an act of any party in a pending
    litigation. The objective is also to prevent multiple proceedings by
    parties in different forums. The principle is based on equity and good
    conscience. This Court has clarified this position in a catena of cases.
    Reference may be made here of some, such as: Rajendra Singh v.
    Santa Singh, AIR 1973 SC 2537; Dev Raj Dogra v. Gyan Chand
    Jain (1981) 2 SCC 675; Sunita Jugalkishore Gilda v. Ramanlal
    Udhoji Tanna (2013) 10 SCC 258.
17. It must be stated here though that by virtue of Section 1 of the
    Transfer of Property Act, 1882 the provisions of the said Act are
    not applicable in the States of Punjab, Delhi or Bombay; subject,
    of course to certain exceptions. Yet, in the case of Kanshi Ram v.
    Kesho Ram, AIR 1961 P&H 299 the Punjab and Haryana High Court
    has held that since the explanation to Section 52 is based on equity
    and good conscience this principle can be applicable. Recently, this
    Court in Shivshankara and Another v. H.P. Vedavyasa Char, 2023
    SCC OnLine SC 358 held as follows:
          “….Even if it is taken for granted that the provisions under
          Section 52 of the Transfer of Property Act are not applicable
          as such in the case on hand it cannot be disputed that
          the principle contained in the provision is applicable in
          the case on hand. It is a well-nigh settled position that
          wherever TP Act is not applicable, such principle in the
          said provision of the said Act, which is based on justice,
          equity and good conscience is applicable in a given similar
          circumstance, like Court sale etc…..”
[2024] 5 S.C.R.                                                      1157

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     In short, there can be no doubt that even if Section 52 of T.P Act
     is not applicable in its strict sense in the present case then too the
     principles of lis-pendens, which are based on justice, equity and
     good conscience, would certainly be applicable.
18. Keeping this in mind, the explanation to Section 52 which was
    inserted by the Act No. XX of 1929, clarifies that pendency of a suit
    shall be deemed to have commenced from the date on which the
    plaintiff presents the suit. Further, that such pendency would extend
    till a final decree is passed and such decree is realised.
19. In the facts of the present case, the suit for permanent injunction
    was filed on 21.07.2003 which is prior to the execution of release
    deed, i.e., 28.07.2003. Thus, since the release deed is executed
    after the suit for temporary injunction was filed by the appellant, the
    alienation made by respondent no. 3 in favour of respondent no. 4
    would be covered by the doctrine of lis pendens.
20. In other words, the appellant filed a suit for permanent injunction
    on 21.07.2003 and obtained an order of temporary injunction on
    28.07.2003. As on 21.07.2003 the doctrine of lis pendens would take
    its effect. The release deed executed by respondent no. 3 in favour
    of respondent no. 4 was of 28.07.2003, which is subsequent to the
    filing of the suit. Respondent no. 4 executed the registered sale
    deed in favour of respondents 1-2 on 16.06.2004 which is during the
    operation of the temporary injunction order. Thus, the alienation made
    by respondents, cannot operate against the interests of the appellant
    considering he had obtained an order of temporary injunction in his
    favour. The same position has been held by this Court in a recent
    decision of Shivshankara and Another v. H.P. Vedavyasa Char
    (Supra), which has similar facts in the context of an injunction order.
21. Once it has been held that the transactions executed by the
    respondents are illegal due to the doctrine of lis pendens the defence
    of the respondents 1-2 that they are bonafide purchasers for valuable
    consideration and thus, entitled to protection under Section 41 of
    the Act of 1882 is liable to be rejected.
22. We are presently not getting into the deposition of PW-7 though it
    is unusual and also whether respondents 1-2 had knowledge of the
    injunction, even though we find no substantial reasons for the High
    Court to base its entire decision on the deposition of this witness
    (PW-7). We are going by the settled position that subsequent
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     purchasers will be bound by lis pendens and cannot claim they are
     bonafide purchasers because they were not aware of the injunction
     order, looking at the peculiar facts of the present case.
23. Respondents 1-2 have also claimed they have made substantial
    alterations to the property by investing money and they have also
    installed a submersible pump. However, this cannot be the basis
    for the respondents to claim any sort of compensation or stake any
    sort of claim against the property. (See: Sardar Kar Bachan Singh
    v. Major S Kar Bhajan Singh, AIR 1975 P&H 205)
24. Consequently, the Release Deed dated 28.07.2003 executed
    by respondent no. 3 in favour of respondent no. 4 and the Sale
    Deed dated 16.06.2004 executed by respondent no. 4 in favour of
    respondents 1-2 is held to be without any legal sanctity. There was
    an order of temporary injunction operating at the time when these
    transactions were made and the alienation made by the respondents
    cannot operate to the disadvantage of the appellant. Since the parties
    to these proceedings are bound by the doctrine of lis pendens the
    respondents 1-2 cannot take the protection of bonafide purchasers
    for valuable consideration.
25. Consequently, this appeal is allowed, the Judgement dated
    03.10.2019 passed by the Punjab and Haryana High Court in RSA
    No. 2746 of 2012 is set aside. The decree in favour of the appellant
    is upheld. The respondent no. 3 is directed to accept the balance
    sale consideration of Rs.5,50,000 from the appellant and execute
    the agreement to sell dated 10.11.2002 in favour of the appellant,
    within 3 months from today.

     Result of the case: Appeal allowed.



     †
         Headnotes prepared by: Harshit Anand, Hony. Associate Editor
                                 (Verified by: Kanu Agrawal, Adv.)