S.53A Transfer Of Property Act Protection Not Available If Person Entered Into Agreement Knowing About Pending Litigation : Supreme Court

The Supreme Court recently reaffirmed that protection under Section 53A of the Transfer of Property Act, 1882 (“TPA”), for a person possessing a property under part performance of a contract, is not available to a party who knowingly entered into the agreement despite being aware of pending litigation.The Court approved the view of the High Court that Section 53A of the Transfer of Property Act will not be applicable to the facts and circumstances of this case as the appellant had knowledge about the pendency of the suit when he had entered into an agreement with the father of the respondent Nos. 1 to 8.The Court held that Section 53A TPA cannot be invoked by a transferee to obstruct or resist the claims of decree holders who have legally acquired rights over the suit property. It emphasized that a transferee who enters into a sale agreement during pending litigation, despite lacking a valid claim, cannot use this provision to override the decree holders' rights. “the Courts have uniformly held that the limited rights of the transferee pendent lite on the principle of lis pendens. Such limited rights cannot be stretched to obstruct and resist the full claim of the decree holders to execute the decree in their favour. In fact, the Courts have deprecated such obstruction.”, the court observed. The bench comprising Justice Sudhanshu Dhulia and Justice Prasanna B. Varale heard the case which revolved around a property dispute involving two schedules of property ('A' and 'B'). The respondent's father executed a Will in favor of respondent No. 9 for 'B' Schedule property, which the respondents contested in a civil suit. Meanwhile, the appellant claimed rights over the property based on a sale agreement with the respondent's father. The Trial Court ruled in favor of the respondents, and the Appellate Court upheld the decision. The Executing Court then granted the respondents three months to deposit the appellant's advance payment of ₹40,000, after which the Execution Petition was allowed, directing the appellant to deliver possession of the property. Challenging the Executing Court's decision, the Appellant appealed to the High Court arguing that Executing Court had no jurisdiction to extend the time for depositing the advance amount, and also claimed protection under Section 53A of the TPA. Upholding the High Court's decision, the judgment authored by Justice Varale relying on the case of Chandi Prasad & others versus Jagdish Prasad & others 2004 (8) SCC 724 ruled that the Executing Court's extension for depositing the advance payment cannot be interfered with. Since the Appellate Court's ruling, which lacked a time limit, superseded the Trial Court's decision under the doctrine of merger, the Executing Court was not bound by the Trial Court's timeline. Further, the Court rejected the Appellant's invocation of Section 53A to frustrate the Respondent's claim over the suit property. The Court said that Section 53A cannot come to aid the Appellant when he knowingly entered into a sale agreement with the Respondent's father during the pendency of the litigation filed by the Respondent's challenging transfer of property via Will. “The High Court also dealt with the submissions raised by the learned counsel for the appellant qua the applicability of Section 53A of the TP Act. It is the admitted fact that the Revision Petitioner having the knowledge of the pendency of the suit, had entered into agreement with the father of the respondent Nos.1 to 8 and he could not have better and valid right over the rights of the original transferer and in that situation, no recourse could have been taken.”, the court observed. In terms of the aforesaid, the appeal was dismissed as devoid of merit. Case Title: RAJU NAIDU VERSUS CHENMOUGA SUNDRA & ORS.Citation : 2025 LiveLaw (SC) 331Click here to read/download the judgmentAppearance:For Appellant(s) Mr. R. Ayyam Perumal, AOR Ms. Manisha Chava, Adv. Mr. A. Renganath, Adv. For Respondent(s) Mr. K. Radhakrishnan, Sr. Adv. Mr. G. N. Reddy, AOR Mr. Jonnala Veera Raghava, Adv.

S.53A Transfer Of Property Act Protection Not Available If Person Entered Into Agreement Knowing About Pending Litigation : Supreme Court

Yash Mittal

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