Lis Pendens: Transfer Pending Litigation Not Void But Subject To Outcome Of The Suit: Says SC

• In the case of G.T. Girish vs. Y. Subba Raju the Hon’ble SC has observed that the effect of section 52 of the Transfer of Property Act which incorporates the doctrine of lis pendens is that the transfer will be subject to the outcome of the suit and that the plea of bonafide purchase or the lack of notice are not available to the purchaser against this doctrine.
• In the instant case, the suit property in question was allotted to the first defendant (deceased), by the Bangalore Development Authority (BDA). The defendant was put in possession of the property, and thereafter he entered into an agreement with the plaintiff promising to execute a sale deed in his favour within three months of getting the sale deed from the BDA.
• The plaintiff, in two separate letters asked the defendant to follow through on the agreement and the defendant responded four months later that the plaintiff was in breach as the agreement itself had lapsed and the advance amount by the plaintiff was forfeited. After a notice to the defendant, the plaintiff instituted a suit for specific performance. After filing the written statement, the defendant passed away and her husband was impleaded as a defendant (defendant 1a).
• The sale deed was executed by the BDA in favour of the son of the first defendant and her husband (defendant 1a). Thereafter, the scheduled property in question was sold to the second defendant by the son. The son was then impleaded as defendant 1b in the suit in question.
• The Trial Court did not decree the suit of specific performance, in consequence of which an appeal was preferred before the HC. The HC observed that the alienation made in favour of the second defendant was hit by the provisions of section 52 of the Transfer of Property Act.
• Disagreeing with the view of the HC, the Hon’ble SC held that the it is a settled principle of law that the transfer of property made lis pendens is not a void document. It creates rights between the parties to the sale. All that section 52 entails is that the transfer made pending litigation (lis pendens) is subject to the outcome of the suit.
• By this, what the Court meant was that the party who finally succeeds in the suit can ask the Court to ignore any other transfer of that property by any party to the proceeding. But this is subject to the fact that the transfer has been made during the pendency of the litigation.
• The Court also observed that the doctrine of lis pendens is not to be confused with the doctrine of bonafides, in that the transferee or the beneficiary cannot set up the plea that he acted in good faith and with no notice of the previous agreement.
• The Court also disagreed with the HC’s approach that the transfer of property made in favour of the second defendant was hit by section 52, at which the HC had arrived by taking into consideration the doctrine of Constructive Notice. The Court said that the fact that the second defendant had no notice of the transfer or the fact that he acted in good faith are not relevant for the purpose of section 52, as they are applicable in section 19(1)(b) of the Specific Performance Act.
• Thus, the appeal was allowed and the judgement of the HC was set aside.

And now, a question for our aspirants-

State the maxim on which the doctrine of lis pendens is based.