2016 (10) TMI 1385 - HC - Indian Laws

Doctrine of Lis Pendens vis- -vis the temporary injunction - Protection to the parties from transfers pendente - Would plaintiffs' registering notices of their suits under Section 18 of the Indian Registration Act (though such registration may not be compulsory) not secure for plaintiffs more than what an injunction could secure - Availability of adequate protection before an injunction to restrain transfer pendente lite is issued - temporary injunction to restrain transfers pendente lite, to consider imposition of conditions short of granting injunction, which should protect the plaintiff's interest, like, seeking an undertaking that no equities would be claimed on account of sale or development of properties - applicability of judgment in VASANT TATOBA HARGUDE AND ORS. VERSUS DIKKAYA MUTTAYA PUJARI 1979 (9) TMI 202 - BOMBAY HIGH COURT . HELD THAT - The Hon'ble Supreme Court in the case of Sarvinder Singh v. Dalip Singh made this legal position further clear by observing that, the effect of the Doctrine of Lis Pendens is not to annul the transfer, but only to render it subservient to the rights of the parties to the litigation. In other words, the section 52 in fact, does not have the effect of wiping out a transfer pendent lite altogether, but only subordinates it to the rights of parties based on the decree to the suit. As between the parties to the transfer, that is, the transferor and the transferee, transfer of the title is perfectly valid, and operates to vest the title of the transferor in the transferee. The words so as to affect the rights of any other party thereto under any decree or order which may be made therein make it quite clear that the transfer is good except to the extent that it might conflict with rights decreed under the decree or order. The Law Commission, therefore, in its report, after referring to the laws operating in the U.K. and other countries, recommended amendment in Section 18 of the Indian Registration Act, 1908, on the lines of the Bombay Amendment Act. In view thereof, the Rule of Lis Pendens now applies only when a notice of pendency of the suit, in which any right to involve property is directly and specifically in question, is registered under Section 18(ee) of the Registration Act. The Law Commission, accordingly, suggested corresponding amendment in Section 52 of the TP Act, on the lines of Bombay Amendment Act XIV of 1939. By Order XXXIX Rule 6, the Court is empowered to make interlocutory orders and which are not of injunction, but permitting sale of any movable property, being the subject-matter of such suit or attached before Judgment in such suit; if that is subject to speedy and natural decay, or if that is required for any other just and sufficient cause, which makes it desirable to have it sold at once. Order XXXIX Rule 7 permits, detention, preservation, inspection etc. of subject-matter of the suit and interlocutory order can be made in that behalf - The power to grant temporary injunction in a mandatory form also flows from the same provision, namely, Order XXXIX Rule 1 CPC. A temporary injunction in a mandatory form is distinct and separate from a mandatory injunction. The object of such a temporary injunction is to preserve status-quo and to prevent irretrievable injury and grant of the same is not a matter of quest. Once it is held to be so, it automatically follows that even if plaintiff registers the notice of his suit under section 18(ee) of the Registration Act, it will not secure the plaintiff more than what an injunction could secure. Even accepting that transferees pendent lite, in view of such registration, are deemed to have notice of such pendency of the lis and could not claim to be transferees without notices, such transfers do not have the effect of rendering the transaction illegal, which consequence is entailed in case of transaction, if it is in breach of injunction order. Therefore, it has to be held that registration of the suit or proceedings, though preferable and desirable, cannot be a substitute to the order of interim injunction, in terms of extending protection to the parties. The question as to whose decisions are binding, Article 141 of the Constitution, provides that, the law declared by the Supreme Court shall be binding on all courts within the territory of India. - It is also well-settled that though there is no specific provision, like, Article 141 of Constitution making the law declared by the High Court binding on subordinate courts, it is implicit in the power of supervision conferred on a superior Court that the Courts subject to its supervision would confirm to the law laid down by it. Thus it is summarised as below - i). Section 52 of TP Act does not provide adequate protection to the parties from transfers pendent lite. The question does lay down a correct proposition of law that, transferees pendent lite are not required to be or entitled as of right to be impleaded as parties to the suit, and they cannot resist execution proceedings in view of provisions of Order XXI Rule 100 of the Code, as amended by this Court. ii). Mere registration of notices of pending suit cannot secure for plaintiffs more than or even equivalent to what an injunction could secure, as the consequences of alienation in breach of interim injunction render such alienation illegal and expose the party to the consequences provided under Order XXXIX Rule 2A and Rule 11 CPC, in addition to the punishment for contempt of Court. Hence, such registration of notices of pending suit, though desirable as an additional safeguard, cannot be preferable or substituted to clamping an order of injunction on adversary. iii). Though it may not be inappropriate for the Court to expect the plaintiff to show that the provisions of Section 52 of TP Act do not afford adequate protection, it cannot laid down as a blanket proposition of law that in each and every case, plaintiff is expected to show it as a condition precedent for grant of injunction order. iv). Though depending on the facts of the case, the Court can consider imposition of conditions, like, seeking an undertaking that no equities would be claimed on account of sale or development of property; effecting sale only after putting transferees to notice that their rights would be subject to pending suit or requiring the parties to inform the Court promptly of creation of such interest, those conditions can be in addition to or independent of the order of injunction, but cannot be in place of or short of granting injunction. v). In the light of the decisions of the Hon'ble Supreme Court in the case of STATE OF U.P. AND ORS. VERSUS AJAY KUMAR SHARMA AND ORS. 2015 (11) TMI 1795 - SUPREME COURT and NEW INDIA ASSURANCE CO. LTD. VERSUS HILLI MULTIPURPOSE COLD STORAGE PVT. LTD. 2020 (3) TMI 1368 - SUPREME COURT , we answer this question to the effect that, in case of conflict between the decisions of Co-ordinate Benches, it is not the later but the earlier one in point of time, which should be followed and applied by the Subordinate Courts to the facts and circumstances of a case before it, unless, of-course, earlier decision is considered and explained in the later decision. The Registry is directed to place this matter, as per the present assignment, before the learned Single Judge for hearing of the Appeal.

Summary

Issues Involved:
1. Adequacy of protection under Section 52 of the Transfer of Property Act (TP Act) against transfers pendente lite.
2. Efficacy of registering notices of suits under Section 18 of the Indian Registration Act compared to obtaining an injunction.
3. Requirement for plaintiffs to prove inadequacy of Section 52 TP Act before obtaining an injunction.
4. Appropriateness of imposing conditions short of granting injunctions to protect plaintiffs' interests.
5. Binding effect of conflicting decisions of co-ordinate Benches.

Detailed Analysis:

Issue 1: Adequacy of Protection under Section 52 TP Act
The court examined whether Section 52 of the TP Act provides adequate protection to parties from transfers pendente lite. It was held that Section 52 does not restrain parties from alienating property but only makes such alienations subservient to the court's decision. The court concluded that Section 52 does not provide adequate protection as it does not render transfers illegal or void but merely subordinates them to the rights of the parties under any decree or order passed in the suit. The court emphasized that the Doctrine of Lis Pendens under Section 52 does not entail the same deterrent effect or consequences as an injunction order, which can include attachment of property and civil detention for breach.

Issue 2: Efficacy of Registering Notices of Suits
The court found that mere registration of notices of pending suits under Section 18 of the Indian Registration Act does not secure more protection than an injunction. While registration may provide notice to transferees, it does not render the transaction illegal or void, unlike a breach of an injunction order which can lead to severe consequences, including attachment of property and punishment for contempt of court.

Issue 3: Requirement to Prove Inadequacy of Section 52 TP Act
The court held that it is not appropriate to require plaintiffs to show that the provisions of Section 52 TP Act do not afford adequate protection before issuing an injunction. The court reiterated that the power to grant relief of temporary injunction under Order XXXIX Rule 1 and 2 CPC is discretionary and should be based on the principles of prima facie case, irreparable loss, and balance of convenience. The court emphasized that adding an additional requirement to show the inadequacy of Section 52 TP Act would be against the settled principles for granting injunctions.

Issue 4: Imposing Conditions Short of Granting Injunctions
The court acknowledged that in certain cases, it may be appropriate to impose conditions short of granting an injunction, such as seeking an undertaking that no equities would be claimed on account of sale or development of properties. However, it was held that such conditions cannot substitute the effective protection afforded by an injunction order. The court emphasized that while such conditions can be supplementary, they cannot replace the need for an injunction to prevent multiplicity of proceedings and protect the plaintiff's interests effectively.

Issue 5: Binding Effect of Conflicting Decisions of Co-ordinate Benches
The court addressed the issue of conflicting decisions of co-ordinate Benches and held that in case of conflict, it is not the later decision but the earlier one in point of time that should be followed and applied by subordinate courts, unless the earlier decision is considered and explained in the later decision. This principle ensures judicial discipline and certainty in the law.

Conclusion:
The court resolved the conflicting legal issues by emphasizing that Section 52 of the TP Act does not provide adequate protection against transfers pendente lite compared to an injunction. It held that registration of notices of suits cannot substitute for an injunction, and plaintiffs should not be required to prove the inadequacy of Section 52 TP Act before obtaining an injunction. The court also clarified that conditions short of granting an injunction cannot replace the need for an injunction. Finally, it established that in case of conflicting decisions of co-ordinate Benches, the earlier decision should be followed.