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Subsequent Purchasers Will Be Bound By Lis Pendens

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On 03.05.2024, a Division Bench of the Hon'ble Supreme Court of India in Civil Appeal No. 2991 of 2024 titled Chander Bhan (D) Through LR Sher Singh Vs. Mukhtiar Singh & Ors. has decided on a substantial question of law relating to the doctrine of lis pendens and rights of subsequent purchaser, wherein, the Appellant and Respondent No. 3 entered into an agreement to sell a piece of land for a total consideration of Rs. 8 lakhs, where Rs. 2.50 lakhs was paid at the time of agreement and the remaining amount was agreed to be paid at the time of execution of the sale deed, which was to be executed on or before 10.11.2004.


A temporary injunction was granted to the Appellant against Respondent No. 3 on the suit property in a suit for a permanent injunction on the ground that the R3 was likely to alienate the suit property. On the very same day, R3 executed a “release deed” in favour of his son (R4).


Subsequently, R4 executed a sale deed in favour of R1 & R2 for the suit property. Thereafter, the Appellant filed a suit for specific performance as R3 failed to execute the sale deed within the time. R3 contended before the trial court that the agreement for sale was signed by him under a misconception. R1 & R2 sought protection under Section 41 of the TPA, 1882.  


The trial Court directed the R3 to accept the balance sale consideration and execute the agreement to sell. Meanwhile, the lawyer of the Appellant had testified himself as an attesting witness of the sale deed executed by R4 in favour of R1 & R2. The trial Court, thus observed that he had committed a breach of privileged communication and violated Section 126 of the Evidence Act, 1872.


R1 & R2 filed an Appeal before the District Court which was dismissed and the decision of the trial court was upheld. Resultantly, R1 & R2 filed their Second Appeal before the High Court, where, the HC reversed the judgments of the trial court and first appellate court and held that the Appellant was entitled to the relief of refund of earnest money along with an interest 


Three factors that solidified the judgment of the HC

1) The Release Deed and the order of temporary injunction were executed and passed on the same day and it was, therefore, not possible to determine that the Release Deed was in violation of the injunction order.

2) The suit for permanent injunction was ultimately dismissed as withdrawn so the protection afforded by the order of temporary injunction would subsume with the dismissal of the main suit. 

3) In the deposition and cross-examination of PW-7, there was no admission that he had informed respondents 1-2 about the order of temporary injunction in favour of the appellant. 

The HC further observed that although R3 and R4 refused to depose in the witness box, R1 & R2 had both appeared as a witness and from their deposition, it cannot be inferred that they were aware of the injunction order. Thus, the High Court concluded that R1 & R2 were bonafide purchasers for valuable consideration and deserved protection under Section 41 of the TPA. 


The Supreme Court, in the Appeal, held the following:

1) There can be no doubt that even if Section 52 of TPA is not applicable in its strict sense in the present case, then too, the principles of lis-pendens, which are based on justice, equity and good conscience, would certainly be applicable.

2) The explanation to Section 52 clarifies that the pendency of a suit shall be deemed to have commenced from the date on which the plaintiff presents the suit and shall continue till a final decree is passed and such decree is realised.

3) In the present case, the suit for permanent injunction was filed on 21.07.2003 which is prior to the execution of the release deed, i.e., 28.07.2003. Thus, since the release deed is executed after the suit for temporary injunction was filed by the Appellant, the alienation made by R3 in favour of R4 would be covered by the doctrine of lis pendens. Further, the sale deed in favour of R1 & R2 was executed by R4 on 16.06.2004 which was during the operation of the temporary injunction order. Thus, the alienation made by R3 & R4, cannot operate against the interests of the Appellant considering he had obtained an order of temporary injunction in his favour.

4) Since the parties to these proceedings are bound by the doctrine of lis pendens the R1 & R2 cannot take the protection of bonafide purchasers for valuable consideration. 


Consequently, the release deed in favour of R4 and sale deed in favour of R1 & R2 were held by the Supreme Court to be without any legal sanctity and the R3 was directed to accept the balance sale consideration of Rs. 5,50,000/- from the Appellant and execute the agreement to sell dated 10.11.2002 in favour of the Appellant, within 3 months 
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