Lis Pendens Applies To Money Suits Involving Mortgaged Property; Ex Parte Proceedings Also Covered Under S 52 TP Act: Supreme Court

The Supreme Court has held that the doctrine of lis pendens under Section 52 of the Transfer of Property Act, 1882 applies even to a money recovery suit where the debt is secured by a mortgage over immovable property, and that the bar on transfer operates irrespective of whether the proceedings are contested or ex parte.

A Bench comprising Justice J.B. Pardiwala and Justice R Mahadevan ruled that once a suit is instituted by a bank seeking recovery of dues backed by a mortgage, the mortgaged property becomes “directly and specifically in question” for the purposes of Section 52. Any transfer of such property during the pendency of the suit, or till complete satisfaction of the decree, would be hit by the doctrine of lis pendens.

Rejecting the contention that Section 52 would not apply since the original decree was only a simple money decree, the Court clarified that the nature of the decree is not determinative. What is relevant is whether the plaint discloses that the immovable property answers the debt. Where the plaint seeks recovery of money along with a prayer that the mortgaged property be proceeded against in the event of default, the Court said the property is clearly in issue.

Even where the suit is not solely one relating to the same right in the immovable property, if any right, title or interest as regards such immovable property is directly and specifically forming part of the subject-matter of the suit, Section 52 and the doctrine of lis pendens would stand attracted.

Once the decree itself recorded the existence of the mortgage, and the plaint contained a joint prayer for recovery of money alongwith the sale of the mortgage property, the implication would naturally be that if the decretal amount remained unpaid, the amount was to be realized by proceeding against the mortgaged property in execution. In other words, the mortgage created an interest in the property in favour of the bank, and the decree also recognized that the property would answer the debt in the event of default. Therefore, there exists no doubt that the respondent nos. 1 and 2 respectively were pendente lite transferees of the judgment-debtor(s), the Court said.

The Bench emphasised that Section 52 uses the expressions “any suit” and “any right”, reflecting the legislature's intention to widen the scope of the doctrine. Following the 1929 amendment, the doctrine is no longer confined to “contentious” proceedings. Even ex parte proceedings attract the bar, since excluding them would enable a party to deliberately stay away from court, alienate the property during the pendency of the suit, and frustrate the adjudication.

Section 52 casts an embargo on the parties to the suit from transferring the property in question, in order to preserve the subject matter of the lis and to prevent the rights of the parties from being defeated by alienations pendente lite. If the doctrine were made inapplicable to ex-parte proceedings, a party would deliberately abstain from appearing before the court, transfer the property during the pendency of the suit, and thus, render the adjudication of rights in the said suit, infructuous.

“Pendency” of a suit, the Court reiterated, commences from the date of presentation of the plaint and continues until the decree is fully satisfied or becomes inexecutable due to limitation. The doctrine therefore applies not only during trial but also during execution proceedings.

The Court further held that a transferee pendente lite is bound by the outcome of the litigation irrespective of notice. Lack of knowledge of the pending proceedings, or the fact that a no-encumbrance certificate was obtained, cannot be a defence. A purchaser of mortgaged property during pendency of a recovery suit acquires no higher right than what the mortgagor possessed at the time of transfer.

The Court referred extensively to earlier precedents, including:

Celir LLP v. Sumati Prasad Bafna (2024 SCC OnLine SC 3727), where the essentials of Section 52 were summarised and it was reiterated that a pendente lite transferee is bound by the outcome of the litigation “even if he did not have notice of the suit”.

Mahesh Prasad v. Musammat Mundar (1950 SCC OnLine All 16), where the Allahabad High Court held that a right to be maintained out of immovable property constitutes a “right to immovable property” attracting lis pendens, and that want of notice is immaterial.

Siddagangaiah v. Thopamma and Nagubai Ammal v. B. Shama Rao (AIR 1956 SC 593), to reaffirm that lis pendens commences from the date of presentation of the plaint and not from the date of decree.

The Court also relied on Sanjay Verma v. Manik Roy (2006) 13 SCC 608 and Usha Sinha v. Dina Ram (2008) 7 SCC 144 to reiterate that absence of notice or procurement of a no-encumbrance certificate does not protect a pendente lite transferee.

The bench heard the case originated from a 1970 mortgage by one Duli Chand in favour of New Bank of India (now Respondent No. 6) for a tractor loan. Upon default, the bank obtained an ex parte decree in 1984. During the pendency of the suit and after the decree, two purchasers (Respondents 1 & 2) bought parcels of the mortgaged land from one of the judgment debtors in 1985.

In execution proceedings, the entire mortgaged property was auctioned in 1988. The appellants, sons of a judgment debtor, were declared the highest bidders for a sum of ₹35,000. The sale was confirmed in August 1988, and possession was delivered in June 1989.

Subsequently, in July 1989, the respondents filed a separate civil suit seeking a declaration that the auction sale concerning their purchased portion was void, alleging irregularities and fraud in the auction process. The Trial Court, Appellate Court, and the Punjab & Haryana High Court ruled in their favour, declaring them owners and granting joint possession, prompting the defendant-Appellants to move to the Supreme Court.

Setting aside the concurrent findings of the Courts below, the judgment authored by Justice Pardiwala held that the Respondent Nos. 1 and 2 were bound by the outcome of the pending litigation related to the suit property. Since the auction sale in favour of the Appellants was confirmed, the Respondents were bound by the auction sale as per Section 52 TPA.

“When the respondent nos. 1 and 2 respectively purchased the suit property, it was a property which was “directly and specifically in question” in the pending proceedings and hence, stood squarely covered by Section 52 of the 1882 Act and the principle of lis pendens. By purchasing a mortgaged property during the pendency of the suit instituted by the respondent no.6-bank, the respondent nos. 1 and 2 respectively could be said to have agreed to be bound by the outcome of such proceedings. Their contentions regarding the lack of knowledge of the proceedings and the procurement of a No Encumbrance Certificate respectively, to say that they were bona fide purchasers, cannot be countenanced as the doctrine of lis pendens applies to an alienation during the pendency of the suit irrespective of whether the transferee had notice of the pending proceedings or not.”, the Court observed.

The Court summarised its conclusion as follows :

"Section 52 of the 1882 Act embodying the doctrine of lis pendens would apply to suits where any right to the property in question is directly and specifically in issue. Whether any right in the property was directly and specifically in question in the suit would depend on the facts and circumstances of each case. The doctrine cannot blindly be made inapplicable to suits in which the plaint contains a specific averment that the mortgaged property be attached and sold in lieu of the decree or a charge be created on the property. If interpreted so, any judgment-debtor can render the decree incapable of execution by transferring his interest in the property during the pendency of such a suit."

The appeal was allowed.

Also from the judgment - CPC | Separate Suit Against Confirmed Auction Sale Barred Under Order XXI Rule 92(3), Remedy Lies Under Section 47 : Supreme Court

Cause Title: DANESH SINGH & ORS. VERSUS HAR PYARI (DEAD) THR. LRS. & ORS.

Citation : 2025 LiveLaw (SC) 1211

Click here to download judgment

Appearance:

For Petitioner(s) :Mr. Vikas Singh, Sr. Adv. Mr. Lakshmi Raman Singh, AOR Ms. Deepeika Kalia, Adv. Ms. Udita Singh, Adv. Mr. Sudeep Chandra, Adv. Ms. Vasudha Singh, Adv. Mrs. Divya Sharma, Adv. Mr. Punit Budhiraja, Adv.

For Respondent(s) :Mr. Gp. Capt. Karan Singh Bhati, AOR Mr. Yogeshwar Krishna Purohit, Adv. Mr. Vishvajeet Singh Panwar, Adv. Mrs. Nisha Thakur, Adv. Ms. Saumya Singh Bhati, Adv. Mr. Mayank Chaplot, Adv. Mr. Utkarsh Singh Kachhawaha, Adv. Mr. Prince Goyal, Adv. Mr. Dashrath Singh, Adv. Mr. Mayank Chauhan, Adv. Mr. Vipin Kumar Jai, AOR Mrs. Gurinder Jai, Adv. Ms. Sanjna Dua, Adv.