Chander Bhan (D) Through Lr Sher Singh vs Mukhtiar Singh

2024 INSC 377 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 2991 OF 2024 (ARISING OUT OF SLP (CIVIL) NO. 4134 OF 2020)

CHANDER BHAN (D) THROUGH LR SHER SINGH …APPELLANT

VERSUS MUKHTIAR SINGH & ORS. …RESPONDENTS

JUDGMENT

SUDHANSHU DHULIA, J.

1. The appeal filed by the appellant presently before us

challenges the Judgement and order dated 03.10.2019,

passed in a second appeal by the Punjab and Haryana

High Court. The impugned Judgement of the High

Court has reversed the concurrent findings of the trial

court and the first appellate court and has

consequently dismissed the suit of specific

Signature Not Verified performance filed by the appellant-plaintiff, although a Digitally signed by Nirmala Negi

partial relief was granted to the appellant by return of Date: 2024.05.03 16:47:50 IST Reason:

the earnest money to the appellant, with interest. 2

2. The facts leading to this appeal are that on 10.11.2002

appellant and respondent no. 3 entered an agreement

to sell relating to 16 “Kanals” of land for a total

consideration of Rs. 8 lakhs, where Rs. 2.50 lakhs was

paid at the time of agreement and remaining Rs. 5.50

lakhs was to be paid at the time of execution of sale

deed, which was to be executed on or before

10.11.2004.

3. After the agreement to sell but before the date of the

execution of the sale deed the present appellant having

received the knowledge that respondent no. 3 was

likely to alienate the suit property, files a suit for

permanent injunction on 21.07.2003 against

respondent no. 3 where an order of temporary

injunction was passed in his favour on 28.07.2003. On

the very same day, i.e., 28.07.2003 respondent no. 3

though executes a “release deed” in favour of his son,

Harvinder Singh (respondent no. 4), for which

mutation was also sanctioned.

4. Subsequent to the Release Deed, respondent no. 4, son

of respondent no.3, executed a registered sale deed 3

dated 16.06.2004 in favour of Mukhitar Singh and

Baljeet Singh (respondent nos. 1-2) for the suit land.

5. The appellant then files a suit for specific performance

before the Additional Civil Judge, Senior Division, Jind,

as the defendant i.e. present respondent No.3 did not

come forward even on the last day i.e. 10.11.2004 to

execute the sale deed. In his Written Statement,

respondent no. 3, takes the defence that the agreement

for sale was signed by him, but under a

“misconception”. It is contended that the

appellant/plaintiff had taken the defendant to a shop

for being a witness and had fraudulently obtained his

signatures on the agreement to sell. Respondents 1

and 2, on the other hand, claimed to be bonafide

purchasers for valuable consideration and sought

protection under Section 41 of the Transfer of Property

Act, 1882 (hereafter “Act of 1882”).

6. The Trial Court, nevertheless decreed the suit of the

appellant with costs and directed respondent no. 3 to

accept balance sale consideration and execute the

agreement to sell. It was held that respondent no. 3 4

had admitted about the execution of the agreement to

sell in the earlier suit for injunction filed by the

appellant, and further Vijay Singh (PW-5) had verified

the execution of the agreement. The Trial Court did not

give any credence to the objections of the defendants

(present respondents No. 3 and 4). Both these

defendants, father and son respectively, had refused to

depose in the witness box. An adverse inference was

drawn against them by the Court, on this aspect as

well.

7. An interesting development, meanwhile took place

before the Trial Court. PW-7 who was the lawyer of the

appellant in the injunction suit, had become an

attesting witness of the “sale deed” executed by

respondent no. 4 in favour of respondent nos. 1-2. The

Trial Court, thus observed that from the deposition of

PW-7 during cross-examination, PW-7 had committed

a breach of privileged communication and violated

Section 126 of the Evidence Act, 1872.

8. No appeal against this Judgement was filed by

respondents 3 and 4. All the same, an Appeal was filed 5

by respondents 1 and 2 before the Additional District

Judge, Jind which was dismissed on 06.03.2012.

While reiterating the findings of the Trial Court, the

First Appellant Court had observed that since PW-7

was the attesting witness of the sale deed in favour of

respondent 1-2 and also the advocate of the appellant

in the injunction suit, therefore, it can be safely

presumed that respondents 1-2 would have been

aware of the injunction, and consequently their

defence of bonafide purchaser can never be accepted.

While dismissing the appeal, the Appellate Court

observed that the respondents had colluded together to

defeat the just claim of the plaintiff, i.e., the appellant

before this Court.

9. Respondents 1-2 then filed their Second Appeal before

the Punjab and Haryana High Court at Chandigarh,

which was allowed vide order dated 03.10.2019, which

is presently under challenge before us. The High Court

in the impugned order has reversed the judgements of

the trial court and the First Appellate Court, though it

held that the plaintiff, i.e., the present appellant was 6

entitled to the relief of refund of earnest money along

with 8% interest per annum from date of agreement till

date of judgement and 6% interest per annum from

date of the date of judgement till realization of the

amount.

10. Primarily three factors weighed with the High Court.

Firstly, the Release Deed and order of temporary

injunction were executed and passed on the same day

i.e. 28.07.2003 and it was, therefore, not possible to

determine that the Release Deed was in violation of the

injunction order. Secondly, 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. Thirdly, 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.

Although respondents 3 and 4 refused to depose in the

witness box, yet respondents 1-2 had both appeared as

a witness and from their deposition, it cannot be 7

inferred that they were aware of the injunction order.

Thus, the High Court concluded that respondents 1-2

were bonafide purchasers for valuable consideration

and deserved protection under Section 41 of the Act of

1882. The relevant observations of the High Court are

reproduced below:

“In the suit for permanent injunction, land measuring 16 kanals out of khewat No. 322 khata No. 435 total measuring 86 kanal 14 marlas was the subject matter. Neither Harvinder Singh nor the present appellants were party to the said litigation. The interim injunction against alienation was allowed vide order dated 28.7.2003, the date a lawyer appeared on behalf of Iqbal Singh @ Pala Singh and filed memo of appearance. The release deed in favour of defendant No. 2 Harvinder Singh was executed by Iqbal Singh @ Pala Singh defendant No. 1 on 28.7.2003. There is no evidence on record as to the time when injunction order was passed by the trial court and the time when the release deed was executed and registered in favour of Harvinder Singh.

This apart, sale in violation of an injunction order passed by the courts would not render the transaction void ab initio and, at best, proceedings under Order 39 Rule 2A of the Code can be initiated by the aggrieved party. There is nothing on record suggestive of the fact that respondent- plaintiff initiated any such proceedings against Iqbal Singh or Harvinder Singh. Moreover, the injunction order dated 28.7.2003 also lost its life the moment suit for permanent injunction was later 8

dismissed in the year 2004. Counsel for the respondent-plaintiff has failed to cite any provision in law or a precedent that if suit property is transferred in favour of the vendor of a litigant claiming bona fide purchaser during pendency of earlier litigation, he is not entitle to protection under Section 41 of the TP Act irrespective of whether he was aware of pendency of that litigation or otherwise. The release deed in favour of defendant No. 2 and sale deed in favour of the appellants were subject to outcome of suit for injunction that was eventually dismissed by the Court. In this view of the matter, findings of the courts to reject plea of bona fide purchaser of the appellants on account of pendency of suit for permanent injunction are not based upon any legal ground, thus, unjustified.”

11. While allowing the second appeal, the High Court

though has upheld the concurrent findings as to the

execution of the agreement to sell, and that the

appellant had paid Rs. 2.50 lakhs as earnest money to

respondent no. 3. Consequently, the High Court gave

the alternate relief to the appellant, as indicated above.

12. On behalf of the appellant, we have heard learned

counsel Mr. Rameshwar Singh Malik, Sr. Advocate and

Mr. Narender Hooda, Sr. Advocate on behalf of

respondents 1-2. Though service by way of publication 9

was done for respondents 3 and 4, they have not

entered appearance.

13. Mr. Narender Hooda, Sr. Adv for the respondents/

defendants has relied on the findings of the High Court

to submit that respondents 1-2 made due enquiries

about the suit property, however, the revenue records

did not indicate that another agreement to sell was

executed in favour of the appellant. Further, it is

argued that PW-7 had never informed them about the

injunction order passed in favour of the appellant.

Thus, they are the bonafide purchasers for valuable

consideration and possession has been taken over by

the respondents 1-2 since 2004 subsequent to which,

they have renovated the land and installed a pump

there as well.

14. Mr. Rameshwar Singh Malik, Sr. Adv on behalf of the

appellant/plaintiff would on the other hand submit

that the High Court committed a grave error in

reversing the concurrent findings of the Courts below.

The transaction qua the suit property was executed by

the respondents after the appellant obtained an order 10

of temporary injunction from the Trial Court, hence the

entire transactions would be hit by lis pendens given

under Section 52 of the Act of 1882. Even otherwise,

the High Court has upheld the findings of the Courts

below that the agreement to sell in favour of the

appellant as well as the acceptance of earnest money

was duly proved. Lastly, the respondent nos. 3 and 4

never preferred any appeal against the judgements

passed by the lower courts so they have attained

finality qua them, which is indicative of the collusion

between the respondents.

15. In order to appreciate the rival contentions of the

parties, it will be appropriate to reproduce the relevant

provisions of the Transfer of Property Act, 1882, the

benefit of which is being claimed by both parties.

Section 41 of the Act of 1882 which governs the

principle of bonafide purchaser for valuable

consideration is reproduced below:

“41. Transfer by ostensible owner.— Where, with the consent, express or implied, of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the 11

transfer shall not be voidable on the ground that the transferor was not authorised to make it:

Provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith.”

Similarly, Section 52 of the Act of 1882 governs the

principle of lis pendens and is reproduced below:

“52. Transfer of property pending suit relating thereto.—During the [pendency] in any Court having authority [within the limits of India excluding the State of Jammu and Kashmir] or established beyond such limits] by [the Central Government, of [any] suit or proceeding [which is not collusive and] in which any right to immovable 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.

[Explanation.—For the purpose of this section, the pendency of a suit or proceeding shall be deemed to commence from the date of the presentation of the plaint or the institution of the proceeding in a court of competent jurisdiction, and to continue until the suit or proceeding has been 12

disposed of by a final decree or order, and complete satisfaction or discharge of such decree or order has been obtained, or has become unobtainable by reason of the expiration of any period of limitation prescribed for the execution thereof by any law for the time being in force.]”

16. The object underlying the doctrine of lis pendens is for

maintaining status quo that cannot be affected by an

act of any party in a pending litigation. The objective is

also to prevent multiple proceedings by parties in

different forums. The principle is based on equity and

good conscience. This Court has clarified this position

in a catena of cases. Reference may be made here of

some, such as: Rajendra Singh v. Santa Singh, AIR

1973 SC 2537; Dev Raj Dogra v. Gyan Chand Jain,

(1981) 2 SCC 675; Sunita Jugalkishore Gilda v.

Ramanlal Udhoji Tanna, (2013) 10 SCC 258.

17. It must be stated here though that by virtue of Section

1 of the Transfer of Property Act, 1882 the provisions

of the said Act are not applicable in the States of

Punjab, Delhi or Bombay; subject, of course to certain

exceptions. Yet, in the case of Kanshi Ram v. Kesho

Ram, AIR 1961 P&H 299 the Punjab and Haryana 13

High Court has held that since the explanation to

Section 52 is based on equity and good conscience this

principle can be applicable. Recently, this Court in

Shivshankara and Another v. H.P. Vedavyasa

Char, 2023 SCC OnLine SC 358 held as follows:

“….Even if it is taken for granted that the provisions under Section 52 of the Transfer of Property Act are not applicable as such in the case on hand it cannot be disputed that the principle contained in the provision is applicable in the case on hand. It is a well- nigh settled position that wherever TP Act is not applicable, such principle in the said provision of the said Act, which is based on justice, equity and good conscience is applicable in a given similar circumstance, like Court sale etc…..”

In short, there can be no doubt that even if Section 52

of T.P Act 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.

18. Keeping this in mind, the explanation to Section 52

which was inserted by the Act No. XX of 1929, clarifies

that pendency of a suit shall be deemed to have

commenced from the date on which the plaintiff

presents the suit. Further, that such pendency would 14

extend till a final decree is passed and such decree is

realised.

19. In the facts of the present case, the suit for permanent

injunction was filed on 21.07.2003 which is prior to

the execution of 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 respondent no. 3 in favour of

respondent no. 4 would be covered by the doctrine of

lis pendens.

20. In other words, the appellant filed a suit for permanent

injunction on 21.07.2003 and obtained an order of

temporary injunction on 28.07.2003. As on 21.07.2003

the doctrine of lis pendens would take its effect. The

release deed executed by respondent no. 3 in favour of

respondent no. 4 was of 28.07.2003, which is

subsequent to the filing of the suit. Respondent no. 4

executed the registered sale deed in favour of

respondents 1-2 on 16.06.2004 which is during the

operation of the temporary injunction order. Thus, the

alienation made by respondents, cannot operate 15

against the interests of the appellant considering he

had obtained an order of temporary injunction in his

favour. The same position has been held by this Court

in a recent decision of Shivshankara and Another v.

H.P. Vedavyasa Char (Supra), which has similar facts

in the context of an injunction order.

21. Once it has been held that the transactions executed

by the respondents are illegal due to the doctrine of lis

pendens the defence of the respondents 1-2 that they

are bonafide purchasers for valuable consideration and

thus, entitled to protection under Section 41 of the Act

of 1882 is liable to be rejected.

22. We are presently not getting into the deposition of

PW-7 though it is unusual and also whether

respondents 1-2 had knowledge of the injunction, even

though we find no substantial reasons for the High

Court to base its entire decision on the deposition of

this witness (PW-7). We are going by the settled

position that subsequent purchasers will be bound by

lis pendens and cannot claim they are bonafide

purchasers because they were not aware of the 16

injunction order, looking at the peculiar facts of the

present case.

23. Respondents 1-2 have also claimed they have made

substantial alterations to the property by investing

money and they have also installed a submersible

pump. However, this cannot be the basis for the

respondents to claim any sort of compensation or stake

any sort of claim against the property. (See: Sardar

Kar Bachan Singh v. Major S Kar Bhajan Singh,

AIR 1975 P&H 205)

24. Consequently, the Release Deed dated 28.07.2003

executed by respondent no. 3 in favour of respondent

no. 4 and the Sale Deed dated 16.06.2004 executed by

respondent no. 4 in favour of respondents 1-2 is held

to be without any legal sanctity. There was an order of

temporary injunction operating at the time when these

transactions were made and the alienation made by

the respondents cannot operate to the disadvantage of

the appellant. Since the parties to these proceedings

are bound by the doctrine of lis pendens the 17

respondents 1-2 cannot take the protection of bonafide

purchasers for valuable consideration.

25. Consequently, this appeal is allowed, the Judgement

dated 03.10.2019 passed by the Punjab and Haryana

High Court in RSA No. 2746 of 2012 is set aside. The

decree in favour of the appellant is upheld. The

respondent no. 3 is 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 from today.

…...……………………………J. (SUDHANSHU DHULIA)

…....……………………………J. (PRASANNA B. VARALE)

New Delhi May 03, 2024