Introduction:

This Supreme Court decision clarifies the legal relationship between Section 19(b) of the Specific Relief Act, 1963 and Section 52 of the Transfer of Property Act, 1882 (doctrine of lis pendens), particularly in cases where property is transferred during the pendency of a suit for specific performance. The dispute arose between Alka Shrirang Chavan and another (subsequent purchasers / appellants) and Hemchandra Rajaram Bhonsale and others (original agreement holder and decree holder / respondents).

The factual matrix dates back several decades. In 1973, the respondent entered into an agreement for sale with the original owner (vendor). When the vendor failed to honour the contract, the respondent filed a suit for specific performance in 1986 before a Pune court. A notice of lis pendens was also registered shortly thereafter. Despite the pendency of the suit, the vendor sold parts of the same property to third parties between 1987 and 1989, and one such purchaser even constructed a bungalow on the land. In 1990, the trial court decreed the suit for specific performance in favour of the respondent, directing execution of the sale deed and delivery of possession. Since the vendor did not comply, a Court Commissioner executed the sale deed in 1993, and the decree attained finality after multiple rounds of litigation up to the Bombay High Court.

When the decree holder initiated execution proceedings to obtain possession, the subsequent purchasers obstructed the process, claiming independent title and protection as bona fide purchasers under Section 19(b) of the Specific Relief Act. Their objections were rejected by the Executing Court under Order XXI Rules 97–101 CPC, and later by the High Court. The matter eventually reached the Supreme Court, where the principal issue was whether a transferee pendente lite can claim the protection of Section 19(b) or whether such transfer is fully governed by the doctrine of lis pendens under Section 52 of the Transfer of Property Act.

Arguments of the Appellants (Subsequent Purchasers):

The appellants contended that they were bona fide purchasers for value, having acquired the property through registered sale deeds, and that they had made substantial investments, including construction on part of the land. Their principal defence was founded on Section 19(b) of the Specific Relief Act, which protects a transferee who purchases property for value, in good faith, and without notice of the earlier contract. According to them, they had relied on the vendor’s representations and revenue records and therefore should not be compelled to lose possession pursuant to a decree passed in a suit to which they were not original parties.

They further argued that equitable considerations must weigh in their favour because they had altered their position by investing in construction and development of the land. It was urged that compelling them to surrender possession would result in grave injustice and financial loss, especially when they were not responsible for the vendor’s breach of contract.

Another significant submission was that mere pendency of a suit should not automatically nullify the rights of subsequent purchasers, particularly when they were not served with notice and were not impleaded as parties at the initial stage of the suit. The appellants attempted to distinguish between actual knowledge and constructive notice, arguing that unless direct notice of litigation was established, protection under Section 19(b) should still be available.

They also contended that the doctrine of lis pendens under Section 52 of the Transfer of Property Act does not render a transfer void but only makes it subservient to the outcome of litigation, and therefore, the transferee should still be allowed to raise independent claims in execution proceedings. On this basis, they asserted that they were entitled to obstruct the execution and seek adjudication of their rights under Order XXI Rules 97 to 101 CPC.

Arguments of the Respondents (Decree Holder and Original Purchaser):

The respondents countered by emphasizing that the suit for specific performance had been filed in 1986, and all subsequent transfers occurred after institution of the suit, making them classic cases of transfers pendente lite. Therefore, by operation of Section 52 of the Transfer of Property Act, all such transfers were subject to the final outcome of the litigation and could not defeat the rights of the decree holder.

They argued that Section 19(b) of the Specific Relief Act operates only prior to the filing of a suit and cannot be invoked once litigation is pending. The respondents maintained that allowing such a defence after institution of the suit would defeat the very purpose of the doctrine of lis pendens, which is to prevent parties from frustrating judicial proceedings by alienating disputed property.

It was also pointed out that a notice of lis pendens had been registered, and even otherwise, constructive notice must be imputed to purchasers who buy property that is the subject matter of ongoing litigation. The respondents relied on settled law that purchasers are expected to make reasonable enquiries, and failure to do so disentitles them from claiming good faith.

On the procedural aspect, the respondents argued that under Order XXI Rule 102 CPC, a transferee pendente lite has no right to obstruct execution of a decree, and such objections are statutorily barred. Since the appellants derived title only through the judgment debtor after institution of the suit, they were fully bound by the decree.

They further highlighted that the decree and subsequent sale deed had already attained finality after repeated challenges by the judgment debtor, and permitting subsequent purchasers to reopen settled issues would lead to endless litigation and undermine the sanctity of judicial decrees.

Court’s Judgment and Legal Reasoning:

The Supreme Court, speaking through Justice Ujjal Bhuyan for the Bench comprising Justice Manoj Misra and Justice Ujjal Bhuyan, dismissed the appeal and upheld the findings of the Executing Court and the High Court. The Court undertook a detailed analysis of the interplay between Section 19(b) of the Specific Relief Act and Section 52 of the Transfer of Property Act, and clarified the distinct stages at which these provisions operate.

Two Distinct Legal Situations Identified by the Court

The Court explained that there are two legally different scenarios:

Transfer before institution of the suit, and

Transfer after institution of the suit.

In the first scenario, where a property is transferred after an agreement to sell but before any suit is filed, Section 19(b) becomes relevant. In such cases, if the subsequent purchaser proves that the purchase was for value, in good faith, and without notice of the prior contract, then the decree for specific performance cannot be enforced against such purchaser.

However, in the second scenario, once a suit or proceeding is instituted, Section 52 of the Transfer of Property Act immediately comes into operation, and any transfer of the suit property becomes subject to the doctrine of lis pendens. In such circumstances, the transferee’s rights are entirely subordinate to the outcome of the litigation, irrespective of whether the transferee claims to be bona fide or not.

The Court categorically held that Section 19(b) must give way to Section 52 once litigation has commenced, and any other interpretation would lead to an anomalous and incongruous situation, where parties could defeat court proceedings by repeatedly transferring property during pendency of suits.

• Meaning and Scope of “Notice” under Section 19(b):

While explaining Section 19(b), the Court reiterated that for claiming protection, a purchaser must establish:

(a) purchase for value,

(b) good faith, and

(c) absence of notice of the prior contract.

Importantly, the Court emphasized that “notice” includes actual, constructive, and imputed notice. Constructive notice arises when circumstances exist that would put a reasonable person on enquiry. In property transactions, purchasers are expected to verify title, pending litigation, and encumbrances. Failure to conduct such enquiries cannot be used as a shield to claim good faith.

However, the Court made it clear that even if absence of notice were assumed, the protection under Section 19(b) is simply not available once Section 52 is attracted. Therefore, the entire debate on bona fides becomes legally irrelevant after institution of the suit.

• Doctrine of Lis Pendens: Automatic and Non-Defeasible:

Relying on recent precedents including Siddamsetty Infra Projects Pvt. Ltd. v. Katta Sujatha Reddy, Danesh Singh v. Har Pyari, Celir LLP, and K.S. Manjunath v. Moorasavirappa, the Court reiterated that the doctrine of lis pendens applies the moment a suit is instituted, regardless of whether notice is issued or whether the filing has procedural defects. The doctrine is based on public policy to ensure that litigation is not rendered infructuous by alienations during pendency.

The Court clarified that Section 52 does not invalidate transfers but makes them subservient to the decree. Thus, while the sale is not void, the transferee cannot claim any rights that would obstruct or defeat the decree holder’s entitlement under the final judgment.

• Effect on Execution Proceedings and Order XXI Rule 102 CPC:

On the issue of obstruction during execution, the Court referred to Order XXI Rule 102 CPC, which expressly bars resistance by transferees pendente lite. Since the appellants derived title from the judgment debtor after the suit was filed, they were statutorily prohibited from resisting execution.

The Court held that the Executing Court was fully justified in rejecting their objections under Order XXI Rules 97 to 101, as their status as pendente lite transferees automatically bound them to the decree. Allowing such objections would encourage misuse of process and frustrate lawful decrees.

Final Holding of the Court:

Applying the settled principles, the Court held that:

The appellants had acquired the property after institution of the suit for specific performance.

Therefore, the doctrine of lis pendens squarely applied.

Once Section 52 of the Transfer of Property Act is attracted, Section 19(b) of the Specific Relief Act becomes inapplicable.

The appellants, being transferees pendente lite, were bound by the decree and had no right to obstruct execution.

Accordingly, the appeal was dismissed, and the decree holder’s right to obtain possession was affirmed.