DOCTRINE OF ACCELERATION
This doctrine of acceleration is an English doctrine. The rule of acceleration applies to both immovable and movable transfer of property. Section 27 of the Act contemplates a situation in which a second transfer takes effect on failure of prior valid interest. Doctrine of Acceleration basically talks about conditional transfer to at least one person including transfer to a different person with a condition. So as per Sec 27 of Transfer of Property Act, conditional transfer to one person coupled with transfer to another on failure of prior disposition, the ulterior disposition shall become on failure of prior disposition.
In a transfer of property, Rahul may create an interest in favour of one person, and by the same transaction, he may create an ulterior disposition in the same property in favour of another. If in such a case, the first transfer fails, then the ulterior disposition takes effect, even though the failure may not have occurred as contemplated by Rahul.
Thus it is based on the principle that one property should be passed to some other person if the first condition fails as if the property was never vested in him.
Example:A transfers Rs.5, 000 to B on condition that he shall execute a certain lease within 3 months after A’s death, and if he should neglect to do so, to C. B dies in A’s lifetime. The disposition in favour of C takes effect.
A transfers Rs.5, 000 to B on condition that he shall execute a certain lease within 3 months after A’s death, and if he should neglect to do so, to C. B dies in A’s lifetime. The disposition in favour of C takes effect.
- A agreed to transfer his property to B. If B meets certain conditions if he did not do so then the property are going to be transferred to C.
- A disposition favoured to C will be effective where a transfer of Rs 12000 is done by A to B on condition that the lease will be executed by B after A's death after 3 months.
Exceptions - Paragraph (2) of the section 27
1. The first exception comes into play where the prior interest is void and the ulterior interest dependent upon it also fails.
2. Also, doctrine of acceleration is not applicable unless the first transfer fails in a particular specified manner only.
3. Doctrine of Acceleration not applicable if the remainder is not a vested remainder but is contingent on an uncertain event.
In the case of Ajudhia v. Rakhman Kaur [1883] 10 Cal 482 in this case, A wanted to give B (his wife) a property as gift but where it was to be registered as per the local act, the property can’t be transferred to his wife thus ultimately transfer went to his children C, thus here ultimate beneficiary got the interest, the property was accelerated to the children as a gift and in this case the doctrine of acceleration was upheld.
DOCTRINE OF ELECTION (SECTION 35)
The doctrine of election as stated in Sec. 35 of the Transfer of Property Act alongside Section 180 to 190 of the Indian Succession Act.
SECTION 180, CIRCUMSTANCES IN WHICH ELECTION TAKES PLACE.
Where a person, by his will professes to dispose of something which he has no right to dispose of, the person to whom the thing belongs shall elect either to confirm such disposition or to dissent from it, and, in the latter case, he shall give up any benefit which may have been provided for him by the Will.
SECTION 182 IN THE INDIAN SUCCESSION ACT, 1925
Section 182, Testator’s belief as to his ownership immaterial.—The provisions of sections 180 and 181 apply whether the testator does or does not believe that which he professes to dispose of by his Will to be his own.
Illustrations
The farm of Sultanpur was the property of C. A bequeathed it to B, giving a legacy of 1,000 rupees to C. C has elected to retain his farm of Sultanpur, which is worth 800 rupees. C forefeits his legacy of 1,000 rupees, of which 800 rupees goes to B, and the remaining 200 rupees falls into the residuary bequest, or devolves according to the rules of intestate succession, as the case may be.
MEANING OF DOCTRINE OF ELECTION
The principle of the doctrine of election was explained by the House of Lords within the leading case of Cooper vs. Cooper.
In this case Lord Hather explained the principle underlying the doctrine of election in the following words,“ …. there is an obligation on him who takes a benefit under a will or other instrument to offer full effect thereto instrument under which he takes a benefit ; and if it’s found that instrument purports to affect something which it had been beyond the facility of the donor or settlor to eliminate , but to which effect are often given by the concurrence of him who receives a benefit under an equivalent instrument, the law will impose on him who takes the benefit the requirement of carrying the instrument into full and complete force and effect .”
Doctrine of election means “the choosing between two rights where there is a clear intention that both were not intended to be enjoyed”. If an instrument confers two rights on an individual in such a transfer one right is in lieu of the opposite, that person can choose or elect only one of them. A person cannot take under and against an equivalent instrument.
The doctrine of election is predicated on the principle of equity. One cannot approbate and reprobate at an equivalent time. In simple words, where an individual takes some benefit under a deed or instrument, he must also bear its burden.
For Example:-a property is given to you and in the same deed of gift you are asked to transfer something belonging to you to another person. If you want to take the property you should transfer your property to someone else, otherwise you cannot take the property which is transferred to you by someone.
A transfer to you his paddy field and in the same deed of transfer asks you to transfer your house to C. Now, if you want to have the paddy field you must transfer your house to C, because the transferor is transferring to you his paddy field on the condition that you give your house to C.
Thus, either you take the paddy field and part with your house or do not take it at all. This is called the doctrine of election. You must elect either to take under the instrument, in which case you will have to fulfill the condition and bear the burden imposed upon you or you must elect against the instrument, in which case neither the benefit nor the burden will come to you. The foundation of doctrine of election is that a person taking the benefit of an instrument must also bear the burden.
PRINCIPLE BEHIND SECTION 35-
Allegans contraria non est audiendus
e is not to be heard who alleges things contradictory to each other.
SECTION 35 STATES:-
Where a person professes to transfer property which he has no right to transfer, and as part of the same transaction confers any benefit on the owner of the property, such owner must elect either to confirm such transfer or to dissent from it; and in the latter case he shall relinquish benefit so conferred, and the benefit so relinquished shall revert to the transferor or his representative as if it had not been disposed of, subject nevertheless, where the transfer is gratuitous, and the transferor has, before the election, died or otherwise become incapable of making a fresh transfer, and in all cases where the transfer is for consideration, to the charge of making good to the disappointed transferee the amount or value of the property attempted to be transferred to him. The rule in the first paragraph of this section applies whether the transferor does or does not believe that which he professes to transfer to be his own. A person taking no benefit directly under a transaction, but deriving a benefit under it indirectly, need not elect. A person who in his own capacity takes a benefit under the transaction may in another dissent there from.
APPLICATION OF SECTION 35
5. A contract of sale may be absolute or conditional.
5. A contract of sale may be absolute or conditional.
5. A contract of sale may be absolute or
conditional.Codrington v Codrington (1857) 7 HL 854, 861.This doctrine is universal in nature and is applicable to Hindus, Muslims, and Christians. This doctrine consists of the principle of a person exercising a choice out of his own free will to do one thing and is founded on the equitable doctrine that he who accepts the benefit under an instrument or transaction of its choice must adopt the whole of it or renounce everything.
ESSENTIAL CONDITIONS FOR APPLICATION OF THE DOCTRINE OF ELECTION
1. The transferor must not be owner of the property which he transfers,
2. The transferor must transfer the property of other (owner) to a third person,
3. The transferor must at the same time grant some property, by the same instrument, out of his own, to the owner of property,
4. The two transfers i.e. transfer of the property of owner to the transferee and conferment of benefit on the owner of property must be made by the same transaction.
5. Question of election does not arise if the two transfers are made through two separate instruments,
6. The owner must have proprietary interest in the property,
7. The owner taking no benefit under a transaction directly, but diverting a benefit under it directly, need not to elect.
8. Question of election does not arise when benefit is given to a person in a different capacity.
Modes of Election
The election by the owner can either be direct or indirect. Directly election means directly communicated the election. But in indirect election means one just needs to simply communicate about the elected choice or option. Though, in case of an indirect election, the acceptance of the benefit by the owner is subject to two conditions:
1. He has to have knowledge of his responsibility to elect.
2. There must be proof of knowledge of circumstances which would influence the judgment of a prudent man to make an election.The election shall be presumed when the donee acts in such a manner with the property gifted to him that it becomes impossible to return it to the original owner in its original state.
EXCEPTIONS TO THE DOCTRINE OF ELECTION
1. When the owner who is considering the election between retaining the property and accepting a particular benefit, chooses the former, he is not bound to relinquish any extraneous benefit that he gains through the transaction.
For example- A transfers property of C to B worth Rs.800/- but confers a benefit of Rs.1,000/- to C. C elects to retain the land. Hence he cannot claim Rs.1,000/-.If A dies before C makes election, A's representative must pay Rs.800/- to B, as the object of A was to transfer property worth Rs.800/-
2. If the person to elect has got some other benefit separately in the same transaction, he is entitled to it.
3. Acceptance of the benefit conferred amounts to election, if he is aware of the duty to elect as a reasonable man. He may waive enquiry and accept it.
Such knowledge is presumed if the person has enjoyed the benefit for two years. Such knowledge can also be inferred, if that person who gets the benefit makes himself impossible of getting the benefit.
For example- A transfers C's estate to B and as part of the transfer gives C a coalmine. C exhausts the coalmine. C has elected to have the benefit.
4. Election must be made within one year from the date of transfer otherwise the transferor or his representative may request to make the election within a reasonable time. It he does not elect, he is deemed to have elected to get the benefit.
5. If the person to make the election is under a disability (minority, idiocy or lunacy) he must take the election after the disability ceases. (Limitation Act), within 3 years.In context of a minor, the period of election shall be stalled till the individual attains majority unless he is represented by a guardian.In the landmark case of Ramayyar v. Mahalaxmi, a widow had given a gift in excess of her powers and had then provided a will which stated that “excluding the properties which I have already given away, I will make the following dispositions”. The Court ordered that the plaintiff under the will was not excluded from the election doctrine from contesting the previous gift which wasn’t the issue of the will at all.
ENJOYMENT FOR TWO YEARS OF THE BENEFIT BY THE PERSON ON WHOM IT IS CONFERRED WITH ANY DISSENT
The election shall be presumed when the donee acts in such a manner with the property gifted to him that it becomes impossible to return it to the original owner in its original state.
5. A contract of sale may be absolute or conditional.
5. A contract of sale may be absolute or conditional.
5. A contract of sale may be absolute or conditional.
5. A contract of sale may be absolute or conditional.
RIGHTS OF DISAPPOINTED TRANSFEREE
When the owner of property elects against the transfer, the transferee to whom the property was professed to be transferred, cannot get the property.
He becomes disappointed as he must have entertained some hope of getting the property. He has the following rights :
(i) Where the transfer is gratuitous i.e. without consideration and the transferor dies or becomes incapable of making fresh transfer and,
(ii) Where transfer is with consideration, whether he is alive or dead at the time of election, the transferee is entitled to get a reasonable compensation from the transferor or his representative.
DIFFERENCE BETWEEN ENGLISH LAW AND THE INDIAN LAW PERSPECTIVE:
The English law depends upon the principle of compensation which means that if the original owner does not choose to validate the transfer, he can keep the property and also the benefit accrued, subject to compensation provided to the donee, to the extent of the property he had suffered a loss for. Whereas in case of Indian law, this doctrine is influenced by the principle of forfeiture which states that if the original owner does not choose to validate the transfer, the donee incurs a forfeiture of the conferred benefit which goes back to the transferor.
CONCLUSION
Section 35 of the Transfer of Property Ac, 1882 explains the concept of the Doctrine of Election. This section deals with various landmark judgments. The foundation of the doctrine of election is that the person taking a benefit under an instrument must also bear the burden. In simple words, a person cannot take under and against one and the same instrument.
DOCTRINE OSTENSIBLE OWNER
INTRODUCTION AND MEANING
The law relating to transfer by an ostensible owner is given in section 41. An ostensible owner has all the indications of the ownership without being the real owner and looks like owner. Thus, a person may have possession and enjoyment of the property and may also have entered his name in the official records but even then he may not be the real owner of the property.
The above mentioned rule is exception to the maxim ‘nemo dat quod non habet’ ‘Which means no person can transfer a better title than he himself’
BENAMI TRANSACTIONS (Prohibition of Right to Recover Property) Act 1988
Section 41 of this act is related to Benami Transaction Act, 1988. According to Sec 2(a) benami transaction means any transaction in which property is transferred to one person for a consideration paid or provided by another person. i.e. the property is transferred in the name of the other. In simple words, Where the person purchases the property in another name is called benami transaction and the person in whose name the property is purchased is called as benamidar, the person, in whose name the property is held, shall become the real owner.
Section 4(1) of the Act says that no suit, claim or action to enforce any right in respect of any property which is benami transaction against the person in whose name the property is held or against any other person shall lie by or behalf of a person claiming to be the real owner of such property.This section also has an exception and this act is not applicable to the following cases:
Where the person in whose name the property is held is a coparcener in Hindu Undivided Family and the property is held for the benefit of the co-larceners in the family.Where the persons in whose name the property is held is a trustee or other person standing in a fiduciary capacity, and the property is held for the benefit of another for whom he is a trustee or towards his stand in such capacity.
A significant feature of this Act is that besides prohibiting benami transactions section 3(3) of the Act provides also that a person who enters into such transaction is punishable with imprisonment, for a term which may extend to three years or with fine or both. However there is no prohibition and no punishment if the property is purchased in the name of wife or unmarried daughter for their benefit Section 3(2).
NATURE AND SCOPE OF THE ACT
The Benami Transaction Act, 1988 is not of retrospective operation. It cannot be made applicable to suits or proceedings which already started before commencement of this Act and in such cases benamidar cannot be treated as real owner. This Act is not declaratory in nature. Rather it is prohibitory in nature and prohibits benami transactions which are entered into after commencement of this Act. Subject to certain exceptions all the benami transactions entered into after commencement of this Act have been made punishable. Section 3(3) now creates a new offence of entering into such transactions. In respect of benami transaction entered into after commencement of this Act, no person is now allowed to take plea under section 41 of the T.P. Act that the property stands only in the name of benamidar and that he is the real owner.
LAW PRIOR TO BENAMI TRANSACTION ACT
The law incorporated in section 41 of the transfer of property Act before the commencement of the Benami Transaction Act 1988 was that a person who purchases the property in the name of another is called as Benami transaction. A person does not become ostensible owner has entrusted him with temporary control over the property only for some specific purposes for example karta of Hindu joint family, a trustee or a manager. But it is difficult to ascertain whether a person is an ostensible owner or real owner because he has all the character of the real owner.In Jayadayal Poddar V/s Bibi Hazar, AIR, 1970, - The Supreme Court observed the following considerations must be taken into account while deciding whether a person is ostensible owner or not:-
1. Source of the purchase money i.e., who paid the price.
2. Nature of possession after the purchase i.e who has in the possession.
3. Motive for giving benami color to the transaction i.e. why the property was purchased in the name of other person.
4. Relationship between the parties i.e whether the real owner and the ostensible owner were related to each other or were strangers.
5. conduct of the parties in dealing with the property
6. Custody of the title deeds.
ESSENTIAL CONDITIONS FOR THE APPLICATION OF SECTION 41:
The following conditions are necessary for the application of this section.
1. The transfer is for consideration
2. The transferor should be the ostensible owner of the property (benamidar) without name.
3. He must be holding the property with the express or implied consent of the real owner.
4. The transferee from the ostensible owner must have acted with reasonable care & in good faith.Transferee has taken reasonable care, good-faith or bona fide intention is not enough. To attract the provisions of this section the transferee must also have exercised reasonable care in ascertaining the title and authority of the transferor. Reasonable care means that care which a man of ordinary prudence should be taken while making inquiries regarding the title of an immovable property.
In such a case the real owner cannot set aside on the ground that the transfer is voidable. The general rule is that no person can pass a title better than what he himself has. Sn.41 dealing with ostensible owner is an exception to this rule provided all the conditions set out above are fulfilled.
Example- A sent money to B and purchased an immovable property in B's name. B was managing the property but sold it to C. Can A recover it from C? A cannot recover, if C has acted in good faith and taken the property for valuable consideration.
CONCLUSION
Hence before the Benami Transaction Act the benami transaction was held valid and accepted and it was dealt by section 41 of Transfer of Property Act 1882 after the separate enactment called as Benami Transaction (Prohibition) Act any such benami transfer is not valid and benami cannot defend in the court and it also punishable in nature, so these type of transaction is not valid in the eyes of laws.
DOCTRINE OF FEEDING THE GRANT BY ESTOPPEL
This doctrine is based on the equitable principle which says that if a person promises more than what he can perform, he must fulfil the promise when he gets the ability to do so. The ‘Doctrine of feeding the grant by estoppel’ is derived from the legal maxim ‘nemo dat quod non habit’ which means that no one can give something which he doesn’t himself possess to another person.
ESSENCE OF THE DOCTRINE
The basic rule that exists is that a person having no authority over a piece of property cannot give it to someone else. This rule has an exception mentioned under Section 43. The principle of law that Section 43 rests on is called ‘feeding the grant by estoppel’. This doctrine simply means that if a person who does not possess title to a certain property but grants it anyway by conveyance, fraudulently, which causes loss to the other, will result in losing any subsequent interest in the said property to the other in case of any subsequent transfer in his favor. An estoppel arises with regards to the transferor and the law requires him to ‘feed’ that estoppel by reason of his subsequent acquisition. Therefore, it can be said that the doctrine in question has its roots partly in the doctrine of estopped and partly in the equitable doctrine which is, ‘a man who had promised more than he can give, ought to give when he acquires what he initially claimed to have’. The doctrine of feeding the grant by estoppel makes it necessary for a man to perform as per his claim when it becomes possible. The option then is with the transferee if he wants to go ahead with the particular transfer after the performance of the transfer becomes possible.
This doctrine not only applies to sale but also applies to a mortgage, lease, charge, and exchange. Where no grant or interest in immovable property is involved, the doctrine would not apply. The doctrine also does not apply in cases where the transferor has acquired interest not in the property which is the subject matter of the transfer, but in some other property.
PROVISIONS OF THIS DOCTRINE
Section 43 has to be read with Section 115 of Indian evidence act 1872 which deals with the concept of estoppels. The legal principle of the doctrine of estoppel is viewed as a substantive rule of law as it has been described as a principle under the Indian Evidence Act, 1872. As per these provisions estopple means when a person said or represented something then other person has acted upon it, basically he is stopped from denying it. Even if that commitment is false he has to fulfil it.
For example-
A, a Hindu, who has separated from his father B, sells to C three fields X Y and Z, representing that A is authorised to transfer the same. Of these fields Z does not belong to A, it having been retained by B on the partition; but on B's dying A as heir obtains Z. C, not having rescinded the contract of sale, may require A to deliver Z to him If we have made a grant for any property, even if we don’t have it right now and in future if we acquire any interest in that house, we have to fulfil that estoppel.
SECTION 43- TRANSFER BY UNAUTHORIZED PERSON WHO SUBSEQUENTLY ACQUIRES THE INTEREST
Section 43 of the Transfer of Property Act lays down “where a person fraudulently or erroneously represents that he is authorized to transfer certain immovable property and professes to transfer such property for consideration, such transfer shall at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists”.
The inference can be drawn clearly that if a person promises something either intentionally or unintentionally, he has to fulfil it at the end. Such transfer of goods or property is discretion to the transferee as he has option to accept or reject the transfer before the duration of contract rescinds.The same section further states “Nothing in this section shall impair the right of transferees in good faith for consideration without notice of the existence of the said option”.
It specifies that if the transferee is innocent, unaware of the estopple, who has not noticed paid consideration then the court would ensure that his rights would not get affected by exercising this doctrine.
ESSENTIAL CONDITIONS OF SECTION 43-
1. A fraudulent or erroneous representation of ownership
The representation made by the transferor that he is authorized to transfer, must be turned out erroneous or made by with malice. Further, it is immaterial whether the transferor acts bona fide or fraudulently in making the representation. What is material is that he did make a representation and the transferee believed and acted on it and hence has been misled is what matters to this doctrine. The doctrine also applies in cases where the transferor has a duty to speak and he does not perform so. The representation can be made either expressly or impliedly.
Narayan Chandra Saha vs. Dipali Mukherjee, 2002Where son of owner of the property made representation and the other party purchased it. It was held that the transferee cannot avail benefit under section 43 because the representation was not made fraudulently.
2. A transfer for consideration
This doctrine is applicable only to the transfers of properties for value. If the transfer is gratuitous such as gifts which are without consideration then section 43 is not applicable. Such transfer would make it a void transaction.
3. At the option of the transferee
The transfer becomes valid when the transferee exercises the option and the title of the transferor becomes perfect.
4. A subsisting contract of transfer
The option of the transfer can only be exercised in respect of an interest acquired by the transferee when the contract of transfer “still subsists”. If the transferee cancelled that transaction, or had recovered his purchase money, then the relation of the transferor and the transferee comes to end and no claim regarding the property can be made by the transferor.
Renu Devi v. Mahendra sign 2003, S.C.
Held that there are following essentials of section 43 such as
1. The transferor must not have title to make the transfer
2. He must have represented that he has title.
3. The transferee has trusted on the transferor and get transferred the property with consideration.
4. Subsequently transferor acquainted the title.
EXCEPTIONS OF SECTION 43-
The transferee cannot avail benefit under this section if he has true knowledge about the representation of the transferor i.e. defect in the claimed title. Simply, this doctrine does not operate when both the parties are aware of the true transaction.1. Awareness of the true transaction by the transferee
The transferee cannot avail benefit under this section if he has true knowledge about the representation of the transferor i.e. defect in the claimed title. Simply, this doctrine does not operate when both the parties are aware of the true transaction.
2. When the transfer is forbidden by law
The provisions of section 43 do not apply if the transfer is invalid as being forbidden by law or contrary to public policy. Section 43 does not operate on illegal transactions. Transfer by a minor or lunatic also do not qualify for the application of sec. 43.
3. When the second transferee acquires rights
Usually, the deed of transfer is registered, which operates as a notice of the existence of such contract to the entire world. If however, the deed is not registered, the original transferee is in a vulnerable position. This section protects the rights of the second transferee in good faith and for consideration who has notice of the option in favour of the first transferee. Hence subsequent transferee is the only person who can undermine the right of an original transferee.
RELATIONSHIP BETWEEN SECTION 6(A) AND SECTION 43
Under Section 6(a) the spes-successionis or 'chance of an heir apparent to get property in future' is a non-transferable interest and its transfer is void ab initio. Section 43, on the other hand, validates a transfer made without title when such transferee subsequently acquires the title. Thus, where the transferor is an heir- apparent and he transfer spes-successionis, the transferee should not be given the benefit of Section 43 to validate the transfer when such heir-apparent gets the title subsequently. However, there have been cases where an heir-apparent has transferred the property by misrepresenting that he has title and the transferee got the benefit of Section 43 when such heir-apparent got the title after the death of the propositus. Therefore, there appears to be an apparent conflict between Section 6(a) and Section 43 of the Act.
In case of Jumma Masjid Mercara vs. Kodimaniandra Deviah, 1962, -On observation by Supreme Court, a distinction was drawn between Section 43 and Section 6 (a) of TPA. In this case heir apparent sold their joint property to M, and became entitled to the property later. M invoked section 43 and contended that the contract was void ab initio.
It was held that there is no reason for conflict between them and they both relate to different spheres. Section 6 (a) enacts a rule of substantive law whereas Section 43 enacts rule of Estoppel, which is one of evidence. The main difference between the two lies in the fact that the transfer that falls under section 6 (a) is within the knowledge of the transferee as well and there is no misrepresentation Whereas, under Section 43 the absence of knowledge on the part of the transferee is one of the main condition.
Sunderlal V. Ghisa
S, sold the enquity of redemption of the property of his brother B. B was unheard of for some years. S had represented that it was ancestral property & that he was the owner. B died leaving S as the sole heir. The purchaser P sued S. Held, he was entitled under "feeding the estoppels”.
Ram Bhawan Singh v. Jagdish’ [(1990) 4 SCC 309]
In the said case the judiciary observed the following:“When a person having a limited interest in the property transfers a larger interest to the transferee on a representation, and subsequently acquires the larger interest, the larger interest passes to the transferee at the latter’s option. This doctrine not only applies to sale but also applies to a mortgage, lease, charge, and exchange. Where no grant or interest in immovable property is involved, the doctrine would not apply. The doctrine also does not apply in cases where the transferor has acquired interest not in the property which is the subject matter of the transfer, but in some other property.”
COMPARISON BETWEEN INDIAN AND ENGLISH LAW
In India, the doctrine departs from its English roots in broadly two ways:Under the English Law, the transfer does not need any other action on the transferor or transferee’s part but gets automatically valid. In its form as it is in India, for it to become valid the option must be exercised by the transferee for which again three conditions need to fulfilled:
- Availability of property
- Contract should be subsisting
- The transferee should be willing to go ahead with the transfer.
Unlike its English counterpart, there is always a possibility for the transferee to be defeated by a purchase for value with no notice. Under the English law it’s completely opposite as the original transfer is effected the moment the transferor acquires competency to transfer it. The transfer becomes valid instantly.
DOCTRINE OF LIS PENDENCE
MEANING OF LIS PENDENS
The doctrine of lis pendens is a very old doctrine and finds operation in the English Common Law. Under this doctrine, judgments regarding immovable properties were regarded as overriding any transfer made by the parties during pendency of the litigation. Later on this doctrine was also adopted by equity for a better and more regular administration of justice. The word lis means an action or a suit or litigation, while the word pendens denotes pending. Hence, the words lis pendens primarily suggest a pending suit or a pending litigation.
This doctrine of lis pendens is best expressed in the maxim- “pendente lite nihil innovature”, which says that nothing new should be introduced during the pendency of litigation.
In the case of Supreme General Films Exchange Ltd. v. Sri Nath Singhji Deo A.I.R. 1975 SC 1810- a theatre was attached in execution of a decree against its owner. During attachment, the owner leased the theatre to M/s. Supreme General Films Exchange Ltd. It was held by the Supreme Court that the lease was hit by the doctrine of lis pendens.
This doctrine is based on Section 52 of Transfer of property Act 1882. This section prohibits transfer of immovable property during dispute of the same in the court. This section would apply in cases where transfer is made by private negotiations and during when the suit is pending.
PURPOSE OF DOCTRINE OF LIS PENDENS:-
1) The Doctrine of Lis pendens is founded in public policy. The main purpose of Section 52 is to subordinate all interests derived from the parties to a suit by way of transfer of pendent lite to the rights declared by the decree in the suit and to declare that they shall not be capable of being enforced against the rights acquired by the decree holder;
2) To protect either party to the suit against the act of another;
3) To avoid misuse of legal process;
4) To restrict endless litigation.
In Jayaram Mudaliar v. Ayyaswami AIR 1973 SC 569
The Supreme Court held that the purpose of Section 52 of the Act is not to defeat any just and equitable claim, but only to subject them to the authority of the Court which is dealing with the property to which claims are put forward. The Supreme Court went on to further explain the scope of lis pendens as, ‘It is evident that the doctrine, as stated in section 52, applies not merely to actual transfers of rights which are subject-matter of litigation but to other dealings with it by any party to the suit or proceeding, so as to affect the right of any other party thereto. Hence it could be urged that where it is not a party to the litigation but an outside agency such as the tax collecting authorities of the Government, which proceeds against the subject-matter of litigation, without anything done by a litigating party, the resulting transaction will not be hit by Section 52. Again, where all the parties which could be affected by a pending litigation are themselves parties to a transfer or dealings with property in such a way that they cannot resile from or disown the transaction impugned before the Court dealing with the litigation the Court may bind them to their own acts. All these are matters which the Court could have properly considered. The purpose of Section 52 of the Transfer of Property Act is not to defeat any just and equitable claim but only to subject them to the authority of the Court which is dealing with the property to which claims are put forward.
CONDITIONS TO BE SATISFIED UNDER SECTION 52 IF THE ACT:-
1. A suit or a proceeding in which any right to immovable property is directly and specifically in question must be pending;
2. The suit or proceeding should be pending in a Court of competent jurisdiction;
3. The suit or the proceeding should not be a collusive one;
4. Litigation must be one in which right to immovable property is directly and specifically in question;
5. Any transfer of such immovable property or any dealing with such property during the pendency of the suit is prohibited except under the authority of Court, if such transfer or otherwise dealing with the property by any party to the suit or proceeding affects the right of any other party to the suit or proceeding under any order or decree which may be passed in the said suit or proceeding.
Example:-
A dispute regarding the title of the property X arose between A and B. A was then in the possession of X. The matter was brought before the District court. The District Court passed the decree in favour of A. While the decree was appealable A sold the property X. The transfer would be considered via Section 52 or the Doctrine of Lis Pendens.
Now in the above-mentioned case the HC passed the decree in favour of A but the Apex court passed the decree in favour of B. When the Apex Court passes a judgement, even then the suit does not come to an end. If the Apex Court passed the decree ordering A to transfer the possession of X to B within 30 days, then during this period of 30 days, the suit would be deemed to be pending.
NON APPLICABILITY OF THIS DOCTRINE:-
There are certain cases where in spite of fulfilling all the conditions mentioned above, remain out from the purview of Section 52 i.e. the Doctrine of Lis Pendens will not applicable in certain situations, that are:
1. In the matter of review;
2. In cases of friendly proceedings;
3. In case where the sale is made by the mortgagee as conferred by the mortgage deed;
4. Where transferor is the only party affected;
5. Where suits are collusive;
6. Cases where proceedings involving pending transfers by a person who is not a party to the suit.
7. Personal property other than the chattel interests in land,
8. Cases where the parties to the transfer are ranged on the same side,
9. Cases in which the transfer affected by the order of the court in which suit or proceeding is pending,
10. Cases in which there is no proper description of the property in the plaint.
PRINCIPLES OF SECTION 52
The principles mentioned in section 52 of Transfer of Property Act are according to the principles of justice, equity and good conscience:-
1. They depend upon an equitable and just principle that it will be impossible to bring upon an action against successful termination if transfer is permitted to prevail.
2. A transferee during a case is bound by the decree is the same manner as he was bound when he was a party to the suit.
3. According to section 52, mere pendency of a suit does not restrict any of the parties from dealing with the property which includes the subject matter of the suit.
4. The section also says that the transfer in no manner will affect the rights of the other party under any decree which may be passed in the suit unless the property was transferred with the permission of the court.
STATUS OF THE TRANSFER
Section 52 is prohibitive in nature. It uses the phrase ‘the property cannot be transferred or otherwise dealt with’. At the same time, the transfer during the pendency of the suit is not void. It is only subject to the outcome of the litigation. Hence, the transfer is voidable at the instance of the affected party, except to the extent that it may conflict with the rights conferred under the decree held to be valid.
Law simply postulates a condition that the alienation will in no manner affect the rights of the other party under any decree which may be passed in the suit unless the property was alienated with the permission of the court. The transferee cannot deprive the the successful plaintiff of the fruits of the decree if he purchased the property during the pendency of the suit and he is bound by the decree as much as the parties to the suit.
IMPORTANT CASE LAWS
In Hardev Singh v. Gurmail Singh (2007) 2 SCC 404
The Supreme Court observed that Section 52 of the Act does not declare a pendente lite transfer by a party to the suit as void or illegal, but only makes the pendente lite purchaser bound by the decision of the pending litigation. Thus, if during the pendency of any suit in a court of competent jurisdiction which is not collusive, in which any right of an immovable property is directly and specifically in question, such immovable property cannot be transferred by any party to the suit so as to affect the rights of any other party to the suit under any decree that may be made in such suit.
In T.G. Ashok Kumar v. Govindammal & Anr. (2010) 14 SCC 370
The Supreme Court observed that if the title of the pendente lite transferor is upheld in regard to the transferred property, the transferee’s title will not be affected. On the other hand, if the title of the pendente lite transferor is recognized or accepted only in regard to a part of the transferred property, then the transferee’s title will be saved only in regard to that extent and the transfer in regard to the remaining portion of the transferred property will be invalid and the transferee will not get any right, title or interest in that portion. If the property transferred pendente lite, is entirely allotted to some other party or parties or if the transferor is held to have no right or title in that property, the transferee will not have any title to the property.
In Rajender Singh and Ors. v. Santa Singh and Ors. AIR 1973 SC 2537-
it was observed by the Supreme Court that the doctrine of lis pendens was intended to strike at attempts by parties to a litigation to circumvent the jurisdiction of a Court, in which a dispute on rights or interests in immovable property is pending, by private dealings which may remove the subject matter of litigation from the ambit of the court's power to decide a pending dispute or frustrate its decree. Alienees acquiring any immovable property during pending litigation, are held to be bound by an application of the doctrine, by the decree passed in the suit even though they may not have been impleaded in it. The whole object of the doctrine of lis pendens is to subject parties to the litigation as well as others, who seek to acquire rights in immovable property, which are the subject matter of litigation, to the power and jurisdiction of the Court so as to prevent the object of a pending action from being defeated.
In Ramjidas v. Laxmi Kumar and Ors. AIR 1987 MP 78
-Madhya Pradesh Court observed that the purpose of Section 52 is not to defeat any just and equitable claim but only to subject them to the authority of Court which is dealing with the property to which the claims are put forward.
CONCLUSION
It can be concluded that the doctrine of lis pendens and its principles of public policy as enshrined under Section 52 of The Transfer of Property Act, 1882 are in compliance with Justice, Equity and Good Conscience as they rest upon a foundation which is equitable and just, i.e., alienations of properties having pending litigation or suit cannot be allowed to prevail as it will be impossible to bring that suit to a successful termination. It only postulates a condition that the alienation will in no manner affect the rights of the other party under any decree which may be passed in the suit unless the property was alienated with the permission of the Court.