Doctrine of Lis Pendens

This article is written by Zeerak Jabeen of Dept. of Law, University of Kashmir, an intern under Legal Vidhiya

“A lis pendens is a sword and a shield. It can be used offensively to impair a defendant’s ability to transfer property, and defensively to protect a plaintiff’s interest in the property.”

 – J. Patrick Hickey

INTRODUCTION

Lis Pendens literally translates as “pending suit or cause,” where “Lis” denotes an action or lawsuit and “Pendens” denotes that it is still pending. This idea is based on the Latin proverb “Ut pendent nihil innovetur,” which states that nothing should be altered while a litigation is in progress.^[1] According to the definition of the doctrine of lis pendens, it refers to the authority, power, or control that a court has over the property at issue in a lawsuit, both throughout the pendency of the action and until a final judgement is rendered. It refers to the laws, norms, and principles that define and constrain the application of the common law maxim to the effect that nothing regarding the subject of a lawsuit can be amended while it is still pending. The idea behind the aforementioned approach is that the object of a lawsuit shouldn’t be given to a third party while it is still pending. When such immovable property is transferred, the transferee is obligated by the court’s decision.

The most significant right an owner can have is the ability to transfer or dispose of their property. However, under some conditions, such as when a lawsuit or action involving the property in question is ongoing, he can be prohibited from selling or otherwise disposing of it for a set amount of time. The Doctrine of Lis Pendens, which governs this situation, is included in Section 52 of the Transfer of Property Act of 1882.^[2] According to Section 52 of the Transfer of Property Act of 1882, certain circumstances, such as when the court has granted permission or where the lawsuit itself had a collusive aspect^[3], allows the transfer of property. A lawsuit for debt or damages with a claim confined to monetary compensation, a lawsuit for the recovery of personal property, etc.^[4] are some situations that are exempt from the theory. Over the years, the Courts have established specific situations when the theory is inapplicable, such as when the transferor alone is affected^[5], when the litigation itself is of a collusive or friendly nature^[6], or when a transfer is made by a person who is not a party to such a suit^[7], etc. The courts have also made it apparent that the theory will apply in some cases where immovable property rights are at issue, such as in proceedings for partition, mortgages, easements, etc.^[8]

BACKGROUND

The rule of lis pendens, also known as the doctrine of notice of pending action, is a legal principle that requires a notice to be filed in the public record when a lawsuit is initiated that may affect the title to a piece of property. The purpose of the lis pendens notice is to provide constructive notice to third parties, such as potential buyers or lenders, of the pending litigation and the potential impact it may have on the property. The doctrine of lis pendens has its roots in English common law and was adopted in the United States as a means of protecting the interests of litigants in real property. The rule is based on the idea that a person who acquires an interest in property that is the subject of a pending lawsuit should do so with knowledge of the lawsuit and its potential impact on the property. Lis pendens can be filed in both state and federal courts, and the requirements for filing and the effect of the notice may vary depending on the jurisdiction. In some states, a lis pendens notice may be automatically effective upon filing, while in others, the plaintiff may need to obtain a court order to have the notice recorded. Overall, the rule of lis pendens serves an important role in real estate transactions, providing notice to potential buyers and lenders of the existence of pending litigation that may impact the property.

The Latin proverb “pendente lite nihil innovature” which states that nothing new should be introduced while a dispute over an immovable property is pending, serves as the foundation for the doctrine of Lis Pendens^[9]. According to the Lis Pendens doctrine, which is codified in Section 52 of the Transfer of Property Act, 1882, when a legitimate lawsuit directly involving the rights to an immovable property is pending in a court of competent jurisdiction, that property cannot be transferred during the pendency of that lawsuit without the consent of that court.^[10]

SECTION 52 OF TRANSFER OF PROPERTY ACT, 1882

52. Transfer of property pending suit relating thereto.—During the 1[pendency] in any Court having authority 2[3[within the limits of India excluding the State of Jammu and Kashmir] or established beyond such limits] by 4[the Central Government 5***] of 6[any] suit or proceeding 7[which is not collusive and] in. which any right to immoveable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose.

ESSENTIAL CONDITIONS OF THE RULE OF LIS PENDENS VIS-A-VIS SECTION 52 OF TRANSFER OF PROPERTY ACT, 1882

The section is meant to prevent the parties to a lawsuit from being alienated by their adversary while the case is pending and is founded on equity and good conscience. However, the mere mention of an immovable property in the plaint is not enough to draw the section; what activates the section is the fact that the rights to an immovable property are immediately and expressly in question. Therefore, an immovable property cannot be transferred while the lawsuit is still in progress only in circumstances where the rights in respect of the property are directly and significantly in dispute. Furthermore, the lawsuit must be in good faith and not be the result of collusion or malicious purpose; if this is the case, the doctrine of Lis Pendens will not be applicable. And the lawsuit must be filed in a court with jurisdiction, which means that the court must have the authority to hear the matter, whether it be pecuniary or territorial. If the lawsuit is filed in a court without jurisdiction, Lis Pendens would not be applicable. There are certain requirements that must be met in order for the doctrine of Lis Pendens to be applied; it does not automatically take effect as soon as a lawsuit involving immovable property is filed. In Dev Raj Dogra v. Gyan Chand Jain^[11], the Hon’ble Justice A.N. Sen, as his Lordship then was laid down three essential conditions for application of the doctrine they are:

1. A suit or a proceeding in which any right to immovable property must be 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. In other words, any transfer of such property or any dealing with such property during the pendency of the suit is prohibited except under the authority of Court, if such transfer or otherwise dealing with the property by any party to the suit or proceeding affects the right of any other party to the suit or proceeding under any order or decree which may be passed in the said suit or proceeding.^[12]

What can be further inferred from the above set guideline and from the language of the section itself that the conditions that are required to be fulfilled in order to apply the doctrine are : –

1. There is a pendency of a suit or proceeding.

2. The suit or proceeding must be pending in a Court of competent jurisdiction.

3.  A right to immovable property is directly and specifically involved in the suit.

4.  The suit or proceeding must not be collusive.

5.  The property in dispute must be transferred or otherwise dealt with by any party to suit.

6.  The transfer must affect the rights of the other party to litigation.^[13]

In Balwant Singh v. Buta Ram, it was held by the Court that, when a situation meets all of the aforementioned requirements, the doctrine will be in effect, and during the course of a legitimate lawsuit in a court with appropriate jurisdiction, where the ownership of immovable property is directly and substantially at issue, such property cannot be transferred without the court’s permission; if it is, the buyer of the immovable property will be bound by the court’s ruling.^[14]

In summary, the rule of lis pendens under Section 52 of the Transfer of Property Act applies to transfers of property that are the subject matter of a pending suit or proceeding, made after the institution of the suit or proceeding and before its disposal, by a party to the suit or proceeding, and to a third party. If these essential conditions are not met, the rule of lis pendens will not apply.

EXCEPTIONS TO THE RULE OF LIS PENDENS VIS-A-VIS SECTION 52 OF THE TRANSFER OF PROPERTY ACT, 1882.

While the aforementioned elements must be met in order for the doctrine of Lis Pendens to be in effect, there are some exceptions, such as when the transfer is done with the court’s consent. Section 52 of Transfer of Property Act,1882 provides, “except under the authority of the Court and on such terms as it may impose”. Therefore, any party may be permitted by the court to dispose of the property while the case is still continuing, subject to any conditions the court may impose, in a lawsuit that directly and expressly involves issues relating to the rights of an immovable property. With regard to the Lis Pendens principle, this stands out. The court in certain circumstances, however, carefully examines the facts and circumstances of each case to ensure that the rights of any parties are not jeopardised by such an allowed transfer^[15]. After carefully examining the facts and circumstances of the case in Vinod Seth v. Devinder Bajaj^[16], the court determined that it was appropriate to exempt the case from the Lis Pendens concept in exchange for the provision of security. On providing a Rs. 3,000,000 security, the court let the defendants to sell the property while the case was still pending.

CASE LAWS

Here are a few case laws related to the doctrine of lis pendens as per Section 52 of the Transfer of Property Act:

1. R. Viswanatha Pillai v. S. Sankaranarayana Pillai (AIR 1965 SC 1559)^[17]: In this case, the Supreme Court held that the doctrine of lis pendens applies only to immovable property and not to movable property. Therefore, the doctrine cannot be invoked to protect the rights of a purchaser of movable property during the pendency of a suit.
2. K. Lakshmanan v. T.V. Chokkappa (AIR 1970 SC 1677)^[18]: In this case, the Supreme Court held that the doctrine of lis pendens applies only to a suit or proceeding in which any right to immovable property is directly and specifically in question. The Court also held that the doctrine applies only to a subsequent transferee who acquires the property during the pendency of the suit.
3. Sardar Govindrao Mahadik v. Devi Sahai (AIR 1972 SC 66)^[19]: In this case, the Supreme Court held that the doctrine of lis pendens applies only to a suit or proceeding in which the relief sought is with respect to the property itself and not merely with respect to some personal rights or obligations.
4. A. Ramaiya v. S. Venkataraman (AIR 1977 SC 917)^[20]: In this case, the Supreme Court held that the doctrine of lis pendens applies only to a suit or proceeding in which the title to immovable property is directly and specifically in question and not to a suit or proceeding in which the question of title arises only incidentally.
5. Palaniappa Chettiar v. Annamalai Chettiar (AIR 1987 SC 2112)^[21]: In this case, the Supreme Court held that the doctrine of lis pendens applies only to a suit or proceeding in which the property is specifically and directly in issue, and not to a suit or proceeding in which the property is only incidentally involved.

CONCLUSION

The rule of Lis Pendens is a legal principle that requires a notice to be filed in the public record when a lawsuit is initiated that may affect the title to a piece of property. The notice provides constructive notice to third parties, such as potential buyers or lenders, of the pending litigation and the potential impact it may have on the property. The doctrine of Lis Pendens serves an important role in real estate transactions by preventing the parties to a lawsuit from being alienated by their adversary while the case is pending, and is founded on equity and good conscience. The rule is based on the Latin proverb “pendente lite nihil innovature,” which means that nothing new should be introduced while a dispute over an immovable property is pending. The section is meant to prevent the transfer of immovable property while the lawsuit is still in progress only in circumstances where the rights in respect of the property are directly and significantly in dispute. The lawsuit must be in good faith and not be the result of collusion or malicious purpose, and it must be filed in a court with jurisdiction.

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^[1] Black’s Law Dictionary. Also see, Jayaram Mudaliar versus Ayyaswami [AIR 1973 SC 569 para 47]

^[2] S.52, Transfer of Property Act, 1882

^[3] Gouri Dutta v. Jijibai, (1912) 36 Bom. 189 (India)

^[4] Dr. R.K. Sinha, Transfer of Property Act, 199, 21st Ed. 2021

^[5]Shib Chandra v. Lachmi Narain, (1929) 33 CWN 1091 PC

^[6] Kathir v. Mremadiss, (1915) 38 Mad 450; Ram Narain V. Sajid Ali Khan, AIR 1946 Oudh 99

^[7] Pethu Ayyar v. Sankaranarayana, (1917) 40 Mad 955

^[8] Pethu Ayyar v. Sankaranarayana, (1917) 40 Mad 955; Jogendra Nath v. Debendra Nath, (1898) 26 Cal. 127; Faiyaz Hussain Khan v. Prag Narain, (1907) 29 All. 339

^[9]  Dr. R.K. Sinha, Transfer of Property Act, 192, 21st Ed. 2021

^[10]  Dr. R.K. Sinha, Transfer of Property Act, 203, 21st Ed. 2021

^[11] Dev Raj Dogra v. Gyan Chand Jain, AIR 1981 SC 981

^[12] Ibid.

^{[13] [13]}  Dr. R.K. Sinha, Transfer of Property Act, 194, 21st Ed. 2021

^[14] Balwant Singh v. Buta Ram, 2009 (4) 156 PLR 52

^[15] Darashaw J. Vakil, Commentaries on Transfer of Property Act, 596 (5th Ed., 2017)

^[16] Vinod Seth v. Devinder Bajaj, (2010) 8 SCC 1

^[17] R. Viswanatha Pillai v. S. Sankaranarayana Pillai, AIR 1965 SC 1559

^[18] K. Lakshmanan v. T.V. Chokkappa, AIR 1970 SC 1677

^[19] Sardar Govindrao Mahadik v. Devi Sahai, AIR 1972 SC 66

^[20] A. Ramaiya v. S. Venkataraman, AIR 1977 SC 917

^[21] Palaniappa Chettiar v. Annamalai Chettiar, AIR 1987 SC 2112