Section 19(b) Specific Relief Act Cannot Override Doctrine Of Lis Pendens Once Suit Is Filed: Supreme Court

The Supreme Court ruled that where a property is transferred during the pendency of a suit, the protection under Section 19(b) of the Specific Relief Act is no longer available, since such a transaction is governed by the doctrine of lis pendens under Section 52 of the Transfer of Property Act. The Court clarified that Section 19(b) of the Specific Relief Act protects only a bona fide purchaser who buys the property in good faith and without notice of any prior contract between the vendor and the original purchaser. However, where a party acquires the property during the pendency of a suit for specific performance, with knowledge of such proceedings, the benefit of Section 19(b) is no longer available. In such circumstances, the transaction becomes subject to the doctrine of lis pendens under Section 52 of the Transfer of Property Act. “Section 19(b) of the Specific Relief Act would be available to a party to a contract who suffers a subsequent transfer of property…the moment a suit or proceeding is instituted by a party to the contract where after there is transfer of the suit property, Section 19(b) of the Specific Relief Act would have to give way to Section 52 of the Transfer of Property Act in which event the doctrine of lis pendens would come into force.”, observed a bench of Justices Manoj Misra and Ujjal Bhuyan while dismissing the appeal filed by the subsequent purchaser, who sought resistance to specific performance decree under Section 19(b) of the Specific Relief Act, claiming her to be a bonafide purchaser.Background of the disputeThe respondent (decree holder) had entered into an agreement for sale in 1973. When the vendor failed to perform his obligations, a suit for specific performance was filed in 1986 before a Pune court. A notice of lis pendens was registered shortly thereafter.During the pendency of the suit, the judgment debtor sold portions of the suit property to several third parties between 1987 and 1987. One of the transferees even constructed a bungalow on part of the land in 1989. Despite these transfers, the trial court decreed the suit for specific performance in 1990, directing execution of the sale deed and delivery of possession.As the judgment debtor failed to comply, a Court Commissioner executed the sale deed in favour of the decree holder in 1993. The decree and the sale deed thereafter attained finality, with repeated challenges by the judgment debtor failing before appellate courts and the Bombay High Court.Obstruction during executionWhen the decree holder finally sought possession through execution proceedings, the appellants, who were subsequent purchasers, obstructed execution and claimed independent title. Their objections were rejected by the Executing Court under Order XXI Rules 97 to 101 of the Code of Civil Procedure, holding that they were transferees pendente lite bound by the decree.The High Court had rejected her plea, noting that she had purchased the property with constructive knowledge of a subsisting contract between the vendor and the original purchaser, and was aware of the pendency of the suit for specific performance filed by the original purchaser against the vendor. The appellants then approached the Supreme Court.Supreme Court's viewAffirming the High Court's decision, the judgment authored by Justice Bhuyan explained two scenarios, i.e., transfer made before the institution of the suit and transfer made once the suit is filed.What Section 19(b) of the Specific Relief Act providesSection 19 of the Specific Relief Act deals with against whom a decree for specific performance can be enforced. Clause (b) permits enforcement of specific performance against a person claiming under the original vendor by a subsequent title except: a transferee for value who has paid his money in good faith and without notice of the original contract.In simple terms, Section 19(b) protects a bona fide purchaser who buys property for value, in good faith, and without notice of the earlier agreement for sale. Such a purchaser cannot be compelled to specifically perform the earlier contract.The Court said that Section 19(b) governs the field before the institution of a suit. For example, if a property is transferred after an agreement to sell but before any legal proceedings are initiated, then the subsequent buyer can claim the defence of a bona fide purchaser under Section 19(b).However, once a suit is filed, Section 52 of the TPA comes into operation, rendering any transfer subject to the doctrine of lis pendens. The question of whether the transferee is a bona fide purchaser without notice becomes redundant. The Court said that for the purchaser to claim protection under Section 19(b), he must show three things: (a) purchase for value, (b) payment in good faith, and (c) absence of notice of the earlier contract.“'Notice', it has been emphasized, includes not merely actual knowledge but also constructive and imputed knowledge.” the court added.Reference was made to ...

Section 19(b) Specific Relief Act Cannot Override Doctrine Of Lis Pendens Once Suit Is Filed: Supreme Court

Yash Mittal

Section 19(b) Specific Relief Act operates before the filing of the suit, the Court stated.

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