I. Introduction

The doctrine of Lis Pendens finds its origin as early as 1857, conceptualised by Lord Justice Turner in Bellamy v. Sabine (1857). Literally translated to “suit pending”, this doctrine serves to ensure that the outcome of an ongoing litigation involving property affects the rights of all relevant parties, including those who obtain an interest during the pendency of the litigation. Eventually, with the inception of the Transfer of Property Act in 1882, the doctrine found its footing in Indian law with Section 52, which states:

This section was worded to restrict the alienation of immovable properties in instances where a dispute regarding the right of said property is pending in a competent court of law. Although the doctrine has found its footing and application in the Indian legal landscape since the inception of the Act, its implementation and usage in India still suffer from gaps, particularly due to a lack of reforms. This piece examines these shortcomings, surveys state amendments, and proposes reforms to strengthen the doctrine’s application.

II. The Conditions for Applying Section 52

Before an examination of the doctrine’s failures, we must look at the functioning of the section, particularly the conditions required for the application of the doctrine. In Dev Raj Dogra and Ors. v. Gyan Chand Jain and Ors, (1981), J. Sen laid down three essential conditions. These are:

1. A suit or proceeding in which any right to immovable property is directly and specifically in question must be pending.
2. The suit or the proceeding shall not be a collusive one.
3. Such property during the pendency of such a suit or proceeding cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the right of any other party thereto under any decree or order which may be passed therein except under the authority of Court.

Therefore, the abovementioned conditions must be fulfilled for the application of Section 52 of TPA. So, during the pendency of a suit, in a court of competent jurisdiction, where the rights of immovable property are directly and substantially involved, such property cannot be transferred without the leave of the court, and if transferred without such leave, the purchaser of such property would be bound by the decree of the court. However, the courts may grant permission to any of the parties to dispose of the property while the suit is pending but subject to the conditions that it may impose. They do so by carefully examining the facts and circumstances of each case. For example, they may require the furnishing of security before disposing of the property.

III. The Bona Fide Purchaser Loophole

The first problem with the section exists as a loophole in the statute. Though the purpose of the statute is to protect property owners by barring the transfer of property during a pending court proceeding, the statute fails to protect bona fide purchasers or those who purchase the property in good faith. Further, the doctrine applies regardless of whether the alienee was aware that the property was disputed. This was even affirmed in Mohd. Ali Abdul Chanimomin v. Bisaheni Kom Abdulla Saheb Momin (1973). This feature of the statute becomes especially problematic when considering the fact that it is common practice among defendants in a suit regarding a property to sell the property to a third party. During or even after selling the property, they would be reluctant to disclose the disputed nature of the property to the purchaser. This can be particularly harmful to the plight of a prospective purchaser. Even today, prospective purchasers have no reliable means of verifying whether a property is subject to pending litigation before they buy.

Beyond being denied compensation for their loss, the buyer also has no right to claim compensation for enhancements made to the property. However, the court still requires the purchaser to discharge any obligations signed by the transferor. The loophole is significant because, apart from leaving the buyers with no remedy, it also results in the harassment of these bona fide purchasers. In T.G. Ashok Kumar v. Govindammal (2010), the court recognised the need for reform and the hardship, loss, anxiety, and mental harm caused to a bona fide purchaser by the implementation of S. 52. They particularly addressed the need for a mechanism that informs prospective purchasers of the status of property and whether it is in dispute. Such a mechanism would greatly alleviate the concerns of prospective buyers.

IV. Specific Performance and the Burden on Buyers

Another pertinent question that arises is whether a bona fide purchaser who purchases a suit property, through a sale agreement or deed, can seek specific performance of such contract. For such performance, the Specific Relief Act, 1963 comes into picture. Section 19 of the Act facilitates the specific performance of a contract. However, according to sub-clause (b) of the section, a transferee for value (market value of property) who has paid his money in good faith and without notice of the original contract is excluded and specific performance cannot be availed against them. A transferee pendent lite is bound by the decree and cannot take the plea that he is a bona fide purchaser for value without notice of the litigation. Again, this section places the onus on the future purchaser of a suit property to exercise caution and ensure that he is aware of the title or interest of the person that is in possession of the property on the date the sale is made. Indian law on lis pendens is thus under-developed and disproportionately harsh on the prospective purchaser.

V. The Bombay Amendment

To address some of these problems, there have been state-based amendments to the section. For example, the province of Bombay (now Gujarat and Maharashtra) in 1939 amended S. 52 of the Transfer of Property Act by enacting the Transfer of Property and the Indian Registration (Bombay Amendment) Act, 1939. The first and most important change made by the amendment was the requirement of notice of the pendency of suit to be registered with the requisite details under S. 18 of the Indian Registration Act, 1908. It is assumed that the aggrieved party in the suit would register the pendency of suit as the fraudulent party normally benefits from selling the property. The prospective purchaser would normally acquire a “non-encumbrance certificate” regarding the property from the registration office. If the notice of pendency of suit has been registered, the registration office will issue the details of such pendency to the prospective purchaser. Thereafter, the buyer is bound by the doctrine, and their fate turns on the outcome of the suit. This amendment is extremely progressive in this matter as it safeguards the interests of the prospective buyers and removes the possibility of mischievous elements cheating the bona fide buyers.

VI. Reforming Section 52

In order to fully realise the purpose of this doctrine, there is a need to go beyond just what the Bombay Amendment envisioned. Firstly, there must be a provision to facilitate the convenient registration of the pendency of a suit. Registration of pendency can be a lengthy, detail-intensive process that may not be completed in time, raising the question of whether a party should be free to sell merely because registration is pending. One solution is that the aggrieved party must be provided with a reasonable time to register the pendency of suit under the Registration Act. This reform was recommended by the Law Commission of India in its comprehensive report on Section 52 of the TPA. This is the best way of filling the gap in the registration of the pendency of suit as the time limit acts as a warning for the prospective purchaser to wait for some time before finalising the transfer of the property.

Apart from the previously mentioned reforms, the Parliament should consider making registration of agreement of sale under Section 54 of the Transfer of Property Act mandatory. This suggestion, made by the Court in T.G. Ashok Kumar v. Govindammal (2010), would greatly discourage circulation of black money, undervaluation of documents for stamp duty, and prevent unnecessary property-related litigation. It would also curb “land mafias”, who extract large sums of earnest money under agreements of sale before reselling the same property to another buyer, harming both parties.

VII. The Third-Party Transferee

Another gap concerns the inclusion of a third party transferee, whose rights are directly affected by the pending suit. The plaintiff is under no obligation to implead such a transferee, so whether he is heard at all rests on the court’s discretion under Order 22 Rule 10 of the Code of Civil Procedure, 1908. Amit Kumar Shaw v. Farida Khatoon (2005) shows how that discretion operates. The appellants bought the suit property while a second appeal was pending, and the High Court refused to substitute them. The Supreme Court reversed, holding that they were necessary to decide the appeal on merits and had a subsisting interest in the property. The court also indicated that a transferee pendente lite should be joined only where his interest is substantial and not merely peripheral. Impleadment can therefore strengthen the transferee’s independent claim, but only if he persuades the court that his stake is real.

VIII. Conclusion

Section 52 remains the doctrinal basis for lis pendens in India, but as it stands, it is limited and works to the detriment of bona fide purchasers. Despite repeated recommendations from the Supreme Court and the Law Commission, a universal amendment is still awaited. The Bombay Amendment Act of 1939 has a wide scope of application and serves as a good starting point for the development of the section. The onus should shift from judicial discretion under Section 52 and Section 19(b) of the Specific Relief Act to the legislature, which is better placed to safeguard third-party transferees, reduce multiplicity of litigation, and balance the interests of all parties. The objective should be to give Section 52 more meaning and a justificatory footing.

Arav Saxena is a law student at Jindal Global Law School, O.P. Jindal Global University.