The Supreme Court of India emphasized that the doctrine of lis pendens, while a critical safeguard against property alienation during litigation, is not a substitute for interim injunctions in appropriate cases. The observation came in a ruling on Civil Appeal No. 13001 of 2024 (Ramakant Ambalal Choksi vs. Harish Ambalal Choksi & Others), where the Court reinstated an injunction on a disputed property in Vadodara, Gujarat, overturning a Gujarat High Court order.
Background of the Case
The case involved a family property dispute over a commercial plot in Alkapuri, Vadodara, jointly owned by brothers and their spouses. The plaintiffs alleged misuse of a 1995 power of attorney by one brother (the defendant) to transfer the property to his son at a grossly undervalued price of Rs. 1.70 crore, compared to its market value of over Rs. 20 crore.
The trial court granted an interim injunction to protect the property from further alienation during litigation. However, the Gujarat High Court vacated the injunction, citing the doctrine of lis pendens under Section 52 of the Transfer of Property Act, which binds any transfers made during pending litigation to the outcome of the suit.
Legal Issues
1. Scope of the Doctrine of Lis Pendens: Whether the statutory protection under Section 52 of the Transfer of Property Act adequately addresses the risks of alienation during litigation.
2. Applicability of Injunctions: Whether the trial court was justified in granting an injunction to prevent further alienation of the property.
3. Appellate Review Standards: Whether the High Court overstepped its jurisdiction in reversing the trial court’s discretionary order.
Supreme Court’s Key Observations
The Supreme Court, led by a bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan, restored the injunction, holding that while the doctrine of lis pendens is a valuable statutory safeguard, it cannot replace the relief offered by temporary injunctions in fit cases.
“Rule 1 of Order 39 of the Code of Civil Procedure clearly provides for interim injunction restraining the alienation or sale of the suit property. The Legislature would not have provided for such injunctions if the doctrine of lis pendens was considered a complete safeguard,” the Court noted.
Supreme Court’s Reasoning
The Court criticized the High Court for exceeding its appellate jurisdiction and substituting its discretion for that of the trial court. It reiterated the principle that appellate courts must refrain from interfering with discretionary orders unless they are “arbitrary, capricious, or perverse.”
The bench stated:
“The appellate court should not usurp the jurisdiction of the trial court to decide whether the tests of prima facie case, balance of convenience, and irreparable injury are satisfied.”
Further, the Court underscored the importance of injunctions in cases where third-party rights might arise. It warned that uncontrolled alienation of properties during litigation could complicate future equitable remedies.
Final Order
– The Supreme Court reinstated the trial court’s injunction, directing all parties to maintain the status quo regarding the property.
– Any transfers of the property during litigation were declared subject to lis pendens and would abide by the trial court’s final adjudication.
