Doctrine of Lis Pendens & Suggestions to Reduce Property Related Litigation : Supreme Court Explains

Justice Raveendran

The Supreme Court has in T.G. Ashok Kumar vs Govindammal & Anr. examined and explained the Doctrine of Lis Pendens as applicable in India. Speaking for the Bench, Justice R.V. Raveendran has given suggestions to the Law Commission to develop practices which would reduce property related litigation. The Court observed as under:

9. Section 52 dealing with lis pendens is relevant and it is extracted below :

"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 of 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." x x x x x x

In Jayaram Mudaliar v. Ayyaswami (AIR 1973 SC 569) this court held that the purpose of Section 52 of the Act is not to defeat any just and equitable claim, but only to subject them to the authority of the court which is dealing with the property to which claims are put forward. This court in Hardev Singh v. Gurmail Singh (2007) 2 SCC 404 held that Section 52 of the Act does not declare a pendente lite transfer by a party to the suit as void or illegal, but only makes the pendente lite purchaser bound by the decision in the pending litigation.

10. The principle underlying Section 52 is clear. If during the pendency of any suit in a court of competent jurisdiction which is not collusive, in which any right of an immovable property is directly and specifically in question, such property cannot be transferred by any party to the suit so as to affect the rights of any other party to the suit under any decree that may be made in such suit. If ultimately the title of the pendente lite transferor is upheld in regard to the transferred property, the transferee's title will not be affected. On the other hand, if the title of the pendente lite transferor is recognized or accepted only in regard to a part of the transferred property, then the transferee's title will be saved only in regard to that extent and the transfer in regard to the remaining portion of the transferred property to which the transferor is found not entitled, will be invalid and the transferee will not get any right, title or interest in that portion. If the property transferred pendente lite, is allotted in entirely to some other party or parties or if the transferor is held to have no right or title in that property, the transferee will not have any title to the property. Where a co-owner alienates a property or a portion of a property representing to be the absolute owner, equities can no doubt be adjusted while making the division during the final decree proceedings, if feasible and practical (that is without causing loss or hardship or inconvenience to other parties) by allotting the property or portion of the property transferred pendente lite, to the share of the transferor, so that the bonafide transferee's right and title are saved fully or partially.

A related suggestion to the Law makers

13. It is necessary to refer to the hardship, loss, anxiety and unnecessary litigation caused on account of absence of a mechanism for prospective purchasers to verify whether a property is subject to any pending suit or a decree or attachment. At present, a prospective purchaser can easily find out about any existing encumbrance over a property either by inspection of the Registration Registers or by securing a certificate relating to encumbrances (that is copies of entries in the Registration Registers) from the jurisdictional Sub-Registrar under Section 57 of the Registration Act, 1908. But a prospective purchaser has no way of ascertaining whether there is any suit or proceeding pending in respect of the property, if the person offering the property for sale does not disclose it or deliberately suppresses the information. As a result, after parting with the consideration (which is many a time the life time savings), the purchaser gets a shock of his life when he comes to know that the property purchased by him is subject to litigation, and that it may drag on for decades and ultimately deny him title to the property. The pendente lite purchaser will have to wait for the litigation to come to an end or he may have to take over the responsibility of conducting the litigation if the transferor loses interest after the sale. The purchaser may also face objections to his being impleaded as a party to the pending litigation on the ground that being a lis pendens purchaser, he is not a necessary party. All these inconveniences, risks, hardships and misery could be avoided and the property litigations could be reduced to a considerable extent, if there is some satisfactory and reliable method by which a prospective purchaser can ascertain whether any suit is pending (or whether the property is subject to any decree or attachment) before he decides to purchase the property.

14. It is of some interest that a solution has been found to this problem in the States of Maharashtra by an appropriate local amendment to section 52 of the Act, by Bombay Act 4 of 1939. Section 52, as applicable in the Maharashtra and Gujarat, reads thus (the amendment is shown in italics): "52. (1) During the pendency in any court having authority within the limits of India excluding the State of Jammu and Kashmir established beyond such limits by the Central Government, of any suit or proceeding which is not collusive and in which any right to immoveable property is directly and specifically in question, if a notice of the pendency of such suit or proceeding is registered under section 18 of the Indian Registration Act, 1908, the property after the notice is so registered 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.

(2) Every notice of pendency of a suit or proceeding referred to in sub-section (1) shall contain the following particulars, namely:-

(a) the name and address of the owner of immoveable property or other person whose right to the immoveable property in question;

(b) the description of the immoveable property the right to which is in question;

(c) the court in which the suit or proceeding is pending; 

(d) the nature and title of the suit or proceeding; and

(e) the date on which the suit or proceeding was instituted. xxxx xxxx xxxx

We hope that the Law Commission and the Parliament considers such amendment or other suitable amendment to cover the existing void in title verification or due diligence procedures. Provision can also be made for compulsory registration of such notices in respect of decrees and in regard to attachments of immoveable properties.

15. We may also refer to another related area where registration should be made compulsory to reduce property litigation. At present in most of the states, agreements to sell are not compulsorily registrable as they do not involve transfer of any right, title or interest in an immoveable property. Unscrupulous property owners enter into agreements of sale and take huge earnest money deposits/advances, and then sell the property to others thereby plunging the original agreement holder and the subsequent purchaser into litigation. Registration of agreements of sale will reduce such litigation. It will also assist in putting an end to the prevalent practice of entering into agreements of sale showing the real consideration and then registering the sale deed for only a part of the real consideration. If all agreements of sale are compulsorily registered, that will go a long way to discourage generation and circulation of black money in real estate matters, as also undervaluation of documents for purposes of stamp duty. It will also discourage the growth of land mafia and muscleman who dominate the real estate scene in various parts of the country. Prevention of a malaise, is always better than allowing a malaise to develop and then trying to cure it.

Ex-SC Judge to Probe 2G Licences

Justice Patil

Source : The Times of India

One day after the Supreme Court directed the CBI to widen the probe of the 2G spectrum scam, the government on Thursday announced that a retired Supreme Court judge would look into spectrum allocation procedures and policies during 2001-2009, a period that includes the NDA regime. 

IT and communications minister Kapil Sibal said the one-man committee of retired Supreme Court Justice Shivraj V Patil would "examine appropriateness of procedures (adopted) by DoT in the issuances of licences and allocation of spectrum during the period 2001-2009". 

Patil has been tasked with completing within four weeks, the exercise of uncovering the entire gamut of procedures not just on the 122 2G licences/spectrum awarded in 2008 at 2001 prices, but also award of spectrum between 4.4 MHz to 6.2 MHz and beyond. 

''All spectrum given between 2001 and 2009 has been free,'' Sibal said, explaining why the entire period was being investigated. 

Once the government has the inquiry findings with it, a decision would be taken on how to move forward. "(The) objective is to tell people of this country how the spectrum was given and we will put this in the public domain,'' Sibal said. 

Sibal also said show-cause notices would be issued within a week to companies which had got licences despite being ineligible to apply or had not met rollout obligations. 

According to Sibal, the terms of reference for the committee include looking at internal department procedures adopted by the Department of Telecom during 2001 and 2009, including award of Unified Access Service licences/ spectrum, examination of consistencies or deviations in policies including matters of fairness, transparency, and keeping with the principles of justice. ''It will even probe violation of policies enunciated by the DoT itself,'' Sibal said. 

Asked about the objective of such a committee when the CAG has already given its report, Sibal said, "They (CAG) have given the report and the same is being examined by the Parliamentary panel. Broadly speaking, we are looking at the internal departmental procedures adopted by DoT during 2001-09."

Everyone Knows which Judge is Corrupt: SC

Source : Times of India

Maintaining its 'there is something rotten in Allahabad HC' remark, the Supreme Court has virtually declined any relief to Allahabad High Court. The HC had asked for clarification for this comment of the Supreme Court. 

At the same time, a bench of justices Markandey Katju and Gyan Sudha Mishra, while dismissing the Allahabad High Court's application for expunging the remarks, clarified that there were "excellent and good judges too" in the court. 

Rejecting the arguments of senior counsel P P Rao that even a clarification that some are excellent and good judges would still cause suspicion on the integrity of the judges, the bench remarked, "It is not just time to react but also to introspect." 

Reacting to the persistent plea of Rao that the clarification would not be sufficient, Justice Katju angrily retorted, "Do not tell all those things. I and my family have more than 100 years of association with the Allahabad High Court. People know who is corrupt and who is honest. So do not tell me all this." 

Justice Katju further observed, "Tomorrow, if Markandey Katju starts taking bribe, then the entire country will know about it. So do not tell me as to who is honest and who is corrupt." 

Rao submitted that the earlier observations had tarnished the image of the entire High Court judiciary and the rustic would not be able to distinguish between a honest and a corrupt judge. 

"Do not tell me all those things about the rustic. They are much more enlightened. Do not think people of India are fools," the bench observed while dismissing the application. 

The Allahabad High Court had taken strong exception to the apex court's remarks that "something was rotten" and there was "rampant uncle judge syndrome" in the higher court. 

In an application moved through its registry, the High Court had sought expunction of the remarks on the ground that they "have made difficult" for the judges to function and tarnished the reputation of the entire judiciary in Uttar Pradesh. 

"The remarks are unfortunate and uncalled for and has brought down the image of the Allahabad High Court judges in the eyes of the general public. The observations have made it difficult for the judges to function," the application had stated. 

It had submitted that judges of the High Court are appointed only after clearance from the Supreme Court collegium and as such, there was no scope to question their integrity. 

On November 26, in a strong indictment of Allahabad High Court, the apex court had said, "There is something rotten" there and raised serious questions about integrity of several of its judges. 

"Something is rotten in the State of Denmark, said Shakespeare in Hamlet, and it can similarly be said that something is rotten in the Allahabad High Court," a bench of justices Markandey Katju and Gyan Sudha Mishra had said, adding the high court "really needs some house cleaning". 

The apex court bench had also asked the chief justice of the high court to take some strong measures, including recommending "transfers of the incorrigibles". 

It had made the remarks in a 12-page order while making the insinuation that several judges of the high court suffer from 'uncle judge' syndrome, which refers to judges passing favourable orders for parties represented by lawyers known to them. 

The bench's remarks came while scrapping a single- judge bench order of the Allahabad High Court which had asked a Bahraich-based Waqf Board to temporarily allot a portion of its land in May-June this year to the proprietors of a circus for its show during an annual fair. 

Referring to the rampant 'uncle judge' syndrome allegedly plaguing the high court, the apex court bench had said, "Some judges have their kith and kin practising in the same court."

Find the copy of the Order here.

Bombay HC stays Kings XI Termination from IPL

Source: NDTV

The Bombay High Court has granted Kings XI Punjab an interim stay on its expulsion from the IPL but said the franchise will have to satisfy certain conditions, including retaining its shareholding pattern, fulfilling pending player payments and paying the BCCI guarantee money in case the final judgement goes against them. The court also rejected Punjab's request to defer the date for submission of the list of players they would like to retain for the fourth edition of the league, the deadline for which expires today. Punjab have until midnight to finalise their list.

After listening to both parties over the last two days, Judge SJ Vajifdar said that "prima facie" Punjab had a strong case against the explusion and the "interim injunction" was only just. But his verdict carried many riders, the most important being that the franchise cannot change its shareholding pattern and the control should rest in the hands of the four main owners: Ness Wadia, Preity Zinta, Mohit Burman and Karan Paul. The court said that these four needed to hold not less than 51% of the shares in KPH Dream Cricket Pvt. Ltd - the rights-holding company of the franchise - until the final judgement. Punjab's owners refrained from commenting on the issue before they received the court order in hand tomorrow.

In the interim, Punjab will have to submit various guarantees to the court and the BCCI. The first is clearing the pending payments to its players over the last two years, an amount running upto Rs.35 crore ($7.77 million). And now, since the franchise is free to re-enter the IPL arena, the court has asked it to commit an amount of $18 million for the next two years (at the rate of $9 million per year) as guarantee money for player payments in case the franchise participates in the league.

The other important condition the court asked Punjab to fulfill was to pay the BCCI $3.5 million per year for a period of two years, as security towards any damage incurred by the board in case the final verdict went against Punjab later on.

Wednesday's news will be seen as another blow to the IPL, whose 2011 tournament has been put increasingly at risk by a succession of court cases. While the Rajasthan and Punjab franchises were embroiled in courtroom battles, a third (Kochi) barely made it over the line. As a result of the controversies, the player auction for the season has been delayed by several months.

In October the BCCI had terminated Punjab, holding the franchise guilty for violating the franchise agreement on three counts, the biggest offence being that the ownership had changed twice in the first three years of the league, something that went unreported to the Indian board.

The franchise moved court last month seeking redressal for the cancellation of its IPL contract. Its petition contended that the termination was a "deliberate and calculated" move to ensure a new and more lucrative re-bidding process. Both parties then decided to opt for the arbitration process, but that too got embroiled in controversy when the arbitrator, Justice BN Srikrishna, recused himself after admitting to the BCCI that he had been legal counsel for the Wadia Group, part owners of Punjab, for many years.

At that point the issue seemed to be snowballing into another protracted battle, just like the one Rajasthan Royals had got involved in with the BCCI. But Punjab rushed to the High Court for help and have now found new crutches to lean on before building their case in front of the arbitrator.

The confusion over the eventual number of teams that will be involved next season affects every component of the world's most lucrative domestic league: its teams/ franchises, its players and its very structure.