The Supreme Court ruled that the doctrine of lis pendens, as embodied in Section 52 of the Transfer of Property Act, applies to money recovery suits where the debt is secured by a mortgage over immovable property, and that this bar on transfer remains in force even when the proceedings are ex parte. A bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan determined that when a suit is instituted by a bank or other creditor seeking recovery of dues backed by a mortgage, the mortgaged property becomes “directly and specifically in question” under Section 52. Consequently, any transfer of the property during the pendency of the suit or until the decree is fully satisfied would be hit by the doctrine of lis pendens.
The Court rejected the argument that Section 52 does not apply merely because the decree passed in the suit is a simple money decree. It clarified that the nature of the decree is not the determining factor; instead, what matters is whether the plaint itself discloses that the immovable property is directly linked to the debt. Where the plaint seeks recovery of money along with a prayer that the mortgaged property be proceeded against in the event of default, the Court held that the property is unmistakably in issue. This means that even if a suit is not exclusively based on rights to the immovable property, if any right, title, or interest relating to such property forms an integral part of the suit’s subject matter, Section 52 applies and the doctrine of lis pendens is attracted.
In practical terms, the Supreme Court emphasised that prospective purchasers of the mortgaged property during the pendency of the suit take the property subject to the outcome of the litigation. The doctrine of lis pendens operates irrespective of whether the transferee had notice of the pending proceedings or not. The Court noted that purchasers of such property are deemed to have agreed to abide by the results of the suit by virtue of acquiring property that is directly and specifically in question. This means that defenses such as lack of knowledge of the pending proceedings or acquisition of a no encumbrance certificate cannot prevail against the application of Section 52 when the mortgaged property is involved.
The judgment clarifies that Section 52 attaches to the very institution of the suit and not merely to a later stage of proceedings, thereby ensuring that any dealing with the property that could affect the rights of parties in the suit is restricted from the date the suit is instituted. Under the doctrine of lis pendens, the property cannot be transferred or dealt with in a manner that prejudices the rights of the other party without the authority of the Court and subject to such terms as it may impose. Transfers made pendente lite are not inherently void but are rendered subject to the final outcome of the litigation, and the rights of the parties are determined accordingly.
By extending the doctrine of lis pendens to money suits involving mortgaged property and covering ex parte proceedings, the Supreme Court reinforced the protective scope of Section 52 of the Transfer of Property Act. The ruling ensures that parties cannot defeat the fruits of litigation by transferring property that is inherently tied to the debt in dispute, thereby safeguarding the integrity of judicial proceedings and the orderly enforcement of rights arising out of suits involving mortgaged immovable property.
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