Section 52 Transfer Of Property Act Does Not Automatically Render Transfers During Pending Litigation Void: Supreme Court

In a significant judgment, the Supreme Court of India has allowed the impleadment of a pendente lite purchaser in an ongoing property dispute, overturning the decisions of both the Rajasthan High Court and the Additional District Judge (ADJ) of Hindaun City. The ruling, delivered by a bench comprising Justice Vikram Nath and Justice Satish Chandra Sharma, emphasizes the court’s discretionary power to implead subsequent purchasers to protect their interests, even when they have knowledge of pending litigation.

Case Background

The case, titled “Yogesh Goyanka vs. Govind & Ors.” (Civil Appeal No. 7305 of 2024), arose from a property dispute in Hindaun City, Rajasthan. The appellant, Yogesh Goyanka, along with others, purchased farming land (Khasra No. 5896, 5897, 5898, 5936, and 5895) measuring 2.38 hectares from Respondent No. 21 through a registered sale deed dated September 28, 2018. The sale deed explicitly mentioned pending cases related to the land in local courts.

The land was originally owned by Respondent Nos. 1-17 (the Plaintiffs) and was released to Respondent Nos. 18-20 (the Defendants) through release deeds in 2006 and 2007. Subsequently, the Defendants sold the land to Respondent No. 21 in April 2007.

In January 2018, the Plaintiffs filed a suit (Suit No. 1 of 2018) seeking a permanent injunction and declaration that the release deeds and the 2007 sale deed were null and void. Despite knowledge of this pending suit, Respondent No. 21 executed the sale deed in favor of the appellant in September 2018.

Legal Issues and Court’s Decision

The primary issue before the Supreme Court was whether a transferee pendente lite (purchaser during pending litigation) with prior knowledge of the suit could be impleaded as a party to the ongoing case.

1. Validity of Sale During Pendency of Suit: The Court clarified that Section 52 of the Transfer of Property Act, 1882 (doctrine of lis pendens) does not automatically render transfers during pending litigation void. It merely makes such transfers subservient to the rights of the parties in the pending suit.

2. Impleadment of Pendente Lite Purchasers: The Court held that there is no absolute bar on impleading transferees pendente lite, even those with prior notice of the pending litigation. Justice Sharma observed:

   “Permitting the impleadment of a transferee pendente lite is, in each case, a discretionary exercise undertaken to enable a purchaser with a legally enforceable right to protect their interests especially when the transferor fails to defend the suit or where there is a possibility of collusion.”

3. Consideration of Collusion: The Court found merit in the appellant’s argument regarding possible collusion between the plaintiffs and defendants, noting their familial relationship and the significant delay in filing the original suit.

4. Bona Fide Purchaser Status: While acknowledging that the appellant had knowledge of the pending litigation, the Court emphasized that this alone does not bar impleadment.

Key Observations

Justice Satish Chandra Sharma, writing for the bench, made several important observations:

“The mere fact that the RSD was executed during the pendency of the Underlying Suit does not automatically render it null and void.”

“The law on impleadment of subsequent transferees, as established by this Court has evolved in a manner that liberally enables subsequent transferees to protect their interests in recognition of the possibility that the transferor pendente lite may not defend the title or may collude with the plaintiff therein.”

The Supreme Court allowed the appeal, set aside the orders of the High Court and ADJ, and directed that the appellant be added as a party-defendant in the underlying suit. This judgment underscores the court’s approach to protect the interests of subsequent purchasers and ensure a fair trial, even in complex property disputes involving multiple transfers.

The case was argued by Senior Advocate C.A. Sundaram for the appellant, Senior Advocate V.K. Shukla for the plaintiffs, and Senior Advocate Huzefa Ahmadi for Respondent No. 21. 

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