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 ...

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

Yash Mittal

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