The Supreme Court of India has reaffirmed that the protection under Section 53A of the Transfer of Property Act, 1882 (TPA) is not available to a party who knowingly entered into an agreement despite being aware of pending litigation. This ruling was delivered in the case of Raju Naidu versus Chenmouga Sundra & Ors., highlighting crucial aspects of the doctrine of lis pendens.

Background of the Case

The case involved a dispute over two properties, referred to as ‘A’ and ‘B’ Schedule properties. The legal battle stemmed from multiple agreements, a disputed Will, and claims made by the rightful heirs of the deceased property owner.

• The father of respondents (Nos. 1 to 8) had executed a Will in favor of respondent No. 9 regarding the ‘B’ Schedule property.
• The respondents challenged this Will in a civil suit.
• The appellant, Raju Naidu, entered into a sale agreement with the respondents’ father regarding the same property, despite the ongoing litigation.
• The Trial Court ruled in favor of the respondents, and the Appellate Court upheld this decision.
• The Executing Court granted three months to the respondents to return the appellant’s advance payment of ₹40,000 before allowing the execution of the decree.

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The appellant challenged the Executing Court’s decision before the High Court, arguing that:

1. The Executing Court lacked jurisdiction to extend the time for depositing the advance amount.
2. He was protected under Section 53A of the TPA, which grants part-performance protection to a transferee in possession.

However, the Supreme Court upheld the High Court’s decision and made crucial observations:

“The Courts have uniformly held that the limited rights of the transferee pendent lite on the principle of lis pendens. Such limited rights cannot be stretched to obstruct and resist the full claim of the decree holders to execute the decree in their favor.”

The Court emphasized that Section 53A cannot be invoked when the transferee knowingly enters into an agreement despite being aware of existing legal disputes. The ruling aligns with previous judgments, including Chandi Prasad & Others vs. Jagdish Prasad & Others (2004 8 SCC 724), which clarified the doctrine of merger in appellate decisions.

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The bench, comprising Justice Sudhanshu Dhulia and Justice Prasanna B. Varale, ruled that:

Doctrine of Lis Pendens Applies: The property in question was already under litigation when the appellant entered into the agreement, making his claim legally unsound.

Merger of Decrees: The appellate decree supersedes the Trial Court decree, making any delay in execution irrelevant.

Rights of Decree Holders: The transferee cannot override the rights of decree holders who have legally acquired ownership.

Executing Court’s Authority: The extension of time for depositing the refund amount did not alter the decree’s substance, thereby maintaining its legality.

“The High Court also dealt with the submissions raised by the learned counsel for the appellant qua the applicability of Section 53A of the TP Act. It is an admitted fact that the Revision Petitioner had knowledge of the pending suit and still entered into the agreement. Therefore, no better or valid right could be claimed.”

In terms of the aforesaid, the appeal was dismissed as devoid of merit.

Case Title: RAJU NAIDU VERSUS CHENMOUGA SUNDRA & ORS.