Vijayalakshmi Leather Industries (P) Ltd. vs K. Narayanan, Lalitha, Venkatanarayanan, Murali, Sumithra and Selvi

S. Jagadeesan, J.—The appeal is against the order dated 16.8.2002 in E.P.78 of 1997 in M.H.C.S.73 of 1981 on the file of Sub Court,

Poonamallee. The first respondent filed the suit C.S. No. 73 of 1981 on the file of this court for partition of the suit property and for allotment of

half of his share. A preliminary decree was passed on 7.11.1985.

Subsequent to the preliminary decree, the first respondent filed an application 5412 of 1988 in C.S.73 of 1981 for passing final decree. An

Advocate-Commissioner was appointed to suggest the mode of division. Subsequently this court passed the final decree on 25.4.1989. On the

basis of the final decree, the first respondent also filed E.P.78 of 1997 on the file of the Sub Court, Poonamallee, praying for delivery of vacant

possession of the disputed item herein.

The appellants got themselves impleaded in the said execution petition as sixth respondent and disputed the claim of the first respondent in the

E.P. Overruling the objections raised by the appellant herein, the executing court ordered delivery. As against which the appeal has been filed.

The learned senior counsel contended that Order 21, Rule 98 and Order 21, Rule 101 C.P.C have no application to the transfers from a

transferee pendente lite. The restrictions imposed therein will be applicable only to the first transferee pendente lite from the party to the proceeding

and it has no application to the subsequent transfers in a chain of events.

After hearing the arguments on this point, we reserved orders. At that time the learned senior counsel for the appellant submitted that he wants

to enlighten the court with some authorities on this issue and being a debatable question the appeal can be admitted. As we are not inclined to

admit the appeal, since so far as this issue is concerned already we reserved order in another O.S.A, we directed the learned senior counsel for the

appellant to submit his written argument. In the written arguments, the learned senior counsel has stated that on 4.9.1984 the respondents 2 to 6

herein who are the defendants in the suit sold Item No. 5 of the plaint schedule in favour of M/s. Eastland Mamufacturing Co. The said item stood

in the name of one Loganathan, the brother of the first respondent. The respondents 2 to 6 are the legal representatives of the said Loganathan.

The final decree was passed on 26.4.1989. The respondents 2 to 6 remained exparte. In the final decree the first respondent and the respondents

2 to 6 were allotted half share each in Item No. 5 of the plaint schedule property. Under five sale deeds dated 20.7.1989, 21.7.1989, 22.7.1989

and 16.5.1990 (two sale deeds), the appellant purchased the property from the transferee Eastland Manufacturing Co who purchased the same

during the pendency of the suit. The pendency of the suit is not mentioned in the sale deeds. The appellants were not party to the proceeding. The

appellant has no knowledge about the pendency of the proceeding. The appellant invested huge amount and constructed 10,000 sq.ft. building for

business. The first respondent and the respondents 2 to 6 being family members they colluded together and defrauded the appellant. The remedy

for the first respondent is to proceed against the respondents 2 to 6, since the second respondent is the Receiver. Rule 97 to 104 C.P.C refers

only the transferee from the judgment debtor and not to any purchaser or any one claiming title or interest under the purchaser of the judgment

debtor. He also relied upon the judgment reported in Jayaram Mudaliar Vs. Ayyaswami and Others, : and Kedar Nath Lal and Another Vs.

Ganesh Ram and Others, :

We carefully considered the above contentions of the learned senior counsel as well as the written argument. There is a fallacy in the argument of

the learned senior counsel. Though Order 21, Rule 98 and 102 refer to the ''transferee from the judgment debtor'', in our considered view, the

term ''transferee from the judgment debtor'' would also include the transferee of a transferee from the judgment debtor''. If the words ''transferee of

the judgment debtor'' mentioned in these Rules are to be given such a narrow interpretation, then the purpose of the restriction of transfer pendente

lite and also the purpose of making certain provisions of C.P.C inapplicable to such transfer will become redundant. It is the duty of the court to

give full effect to the meaning of every word for the purpose for which the statute is enacted. In fact Rule 98 and 102 of Order 21 C.P.C must be

read along with Section 52 of the Transfer of Property Act. Section 52 of the Transfer of Property Act reads as follows:

Transfer of property pending suit relating thereto.

During the pendency in any court having authority within the limits of India excluding the State of Jammu and Kashmir Government or established

beyond such limits by the Central Government of any suit or proceedings which is not collusive and in which any right to immovable property is

directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect

the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the court and on such

terms as it may impose.

From the above provision, it could be seen that during the pendency of the proceedings, in any court, in which any right to immovable property is

in question, the property cannot be transferred or otherwise dealt with by any party to the suit so as to affect the right of any other party thereto

under any decree or order which may be made therein except under the authority of the court.

7.It is a clear statutory bar on the parties to the proceedings from transferring any property which is the subject matter of the litigation. In view of

such statutory bar, any transfer made by any of the party to the proceeding pendente lite is nonest in the eye of law because the transferee will be

entitled for the right of his transferor alone and nothing more. The restriction imposed also includes that the transfer should not be made in such a

manner to affect the right of other party. From the words ''under the authority of the court'' it is needless to explain that the party who wants to

transfer the property pendente lite must get the prior permission of the court.

7-A.It may be worthwhile to refer the judgment of the Apex Court in Sarvinder Singh Vs. Dalip Singh and Others, : where the learned Judges held

as follows:

It would, therefore, be clear that the defendants in the suit were prohibited by operation of Section 52 to deal with the property and could not

transfer or otherwise deal with it in any way affecting the rights of the appellant except with the order or authority of the court. Admittedly, the

authority or order of the court had not been obtained for alienation of those properties. Therefore, the alienation obviously would be hit by the

doctrine of lis pendens by operation of Section 52.

When such statutory restriction or prohibition is there and inspite of the same if any party to the litigation transfers any of the property which is the

subject matter of the proceeding, then the purchaser is getting the property subject to the result of the litigation and only the right of his transferor.

We are unable to appreciate the contention of the learned senior counsel for the appellant that the appellant was not a party to the proceeding

and he was not impleaded as a party and consequently the decree is not binding on him. The learned senior counsel for the appellant totally forgot

that the appellant purchased the property from the transferee of the party to the litigation. He, at the best, can step into the shoes of his vendor and

cannot have any independent claim or right. In such circumstance, it is not open to the appellant to claim that he is a bona fide purchaser without

notice of the litigation.

A single Judge of this court in CHENCHULAKSHMI v. JANARDAN SINGH 2000(1) MLJ 349 (para 17) held as follows:

Before I refer to the judgment of the lower court and the argument of the learned counsel for the appellant, I would refer to the fact that u/s 52 of

the Transfer of Property Act where any suit or proceedings is pending with reference to a property, which is directly and specifically in question,

the property cannot be transferred or otherwise dealt with by any party to the suit or proceedings so as to affect the rights of any other party

thereto under any decree or order which may be made therein, except under the authority of the court and on such terms as it may impose.

Therefore, there is no scope for a purchaser of property pendente lite to contend that he is a bona fide purchaser for value without notice or to say

that he was not aware of the proceeding and had no notice of the pendency of the proceeding. It has become necessary to point out this aspect for

the reason that in his evidence, P.W.1 would say that he was not aware of the pendency of the proceeding and had no notice. Even assuming for a

moment that the evidence tendered by him is true, even then that will not save him from the tentacles of Section 52 of the Transfer of Property Act.

Equally, the contention that property was purchased paying valuable consideration, is of no avail since Section 52 of the Transfer of Property Act

does not purport to exclude purchaser of the property for value from its operation. On the other hand, the section is emphatic in its terms that the

property cannot be transferred or otherwise dealt with by any party to the suit except under the authority of the court and on such terms as it may

impose. I have also referred to absence of pleadings on the aspect of fraud and collusion.

We respectfully endorse the view of the learned single Judge. When that be the case, it is also not open to the appellant herein who purchased the

property from the transferee of a party to the litigation to plead that he has made the huge investment in the property and on that basis he should be

allotted the portion which is under his occupation or he is entitled for any equity as of right.

Coming to Rule 102 of Order 21 C.P.C, this Rule envisages that nothing in Rules 98 and 100 shall apply to resistance or obstruction in

execution of a decree for the possession of immovable property by a person to whom the judgment debtor has transferred the property after the

institution of the suit in which the decree was passed.

It is the contention of the learned counsel for the appellant that the objection specified under Rule 98 and 100 may be applicable to the

transferee of the judgment debtor alone and this provision cannot be made applicable for a chain of transactions where transferee of the judgment

debtor had transferred his interest to others like the appellant.

As already stated, the contention of the learned counsel for the appellant cannot be accepted. When Section 52 of the Transfer of Property

Act makes it clear that no party to the proceeding can transfer any property which is the subject matter of litigation, the transferee from the party to

the proceeding or the judgment debtor cannot have any valid independent title than that of the judgment debtor. Hence the transfer made by one of

the parties to the proceeding pendente lite is subject to the result of the litigation and there is no absolute transfer of right or title in favour of the

transferee. Hence by way of subsequent transfers, such subsequent transferee can derive whatever the right their transferor i.e., the transferee from

the judgment debtor or the party to the proceeding had and nothing more. When the transferee from the judgment debtor has no absolute or

perfect title and the rights being subject to the result of the litigation, it is not known as to how the transferee from the transferee of the judgment

debtor can have a better right than his vendor or his vendor''s vendor.

If such contention of the learned senior counsel for the appellant is to be accepted, then we are closing our eyes regarding the intention of the

statute. It is obvious while interpreting the provisions of the statute, the court must give due weight to the intention of the statute in order to give

effect to the provisions. If any narrow interpretation is given and thereby the purpose of the statute is being defeated, the courts must be careful to

avoid such interpretations. If we look at Section 52 of the Transfer of Property Act and Rule 102 of Order 21 C.P.C, it is very clear that the

intention of the Parliament with which the statute had been enacted is that the rights of one of the parties to the proceeding pending before the court

cannot be prejudiced or taken away or adversely affected by the action of the other party to the same proceeding. In the absence of such

restriction one party to the proceeding, just to prejudice the other party, may dispose of the properties which is the subject matter of the litigation

or put any third party in possession and keep away from the court. By such actions of the party to the litigation the other party will be put to more

hardship and only to avoid such prejudicial acts by a party to the litigation these provisions are in existence. When inspite of such statutory

restrictions, for the transfer of the properties, which are the subject matter of litigation by a party to the proceeding, the courts are duty bound to

give effect to the provisions of the statute.

If the contention of the learned senior counsel, giving a narrow interpretation to both the provisions are to be accepted, then it will open the

flood gates of the transfers pending the litigation; when especially the intention of the legislature is to avoid such transfers.

When the words ''transferred the property'' in Rule 102 of Order 21 C.P.C as well as Section 52 of the Transfer of Property Act to be

understood in a wide sense as to include both the transfer of title as well as transfer of possession and also include both voluntary and involuntary

transfers to give full effect to the provisions of the Act as held in the case of MANAGASABHAI PATHAR v. POORNATHAMMAL 1947 II

MLJ 97 we are unable to agree with the submissions made by the learned senior counsel.

Apart from this, the learned senior counsel for the appellant in his written argument has submitted that there is collusion by respondents 2 to 6

in transferring the property. The appellant being a purchaser subsequent to the final decree, they are transferees from the earlier transferee

pendente lite. The encumbrance certificate may not reveal the pending litigation. When that be the case, it is not open to the counsel or the party to

contend that the appellant relied upon the encumbrance certificate to find out the encumbrance over the property and in the absence of any

encumbrance in the certificate, it is open to the appellant as well as his counsel to come to the conclusion that the property is free of encumbrance.

It is a well known fact that the encumbrance certificate would reveal only the registered mortgages, transfers through registered documents. When

that be the case, we are unable to appreciate the contentions of the learned senior counsel for the appellant raised in the written submissions made

in the written argument that the appellant is a bonafide purchaser, having himself satisfied the title of his vendor and encumbrances through the

certificate. When the appellant purchased the property after the final decree, it is not clear as to how the senior counsel contended that the decree

is not binding on the appellant as he was not a party to the proceedings.

Merely because the respondents 2 to 6 remained exparte, it cannot be said that there is collusion or fraud. It is not the case of the appellant

herein that the first respondent is not entitled for the half share in the suit property. When the first respondent is entitled for half share in the suit

property, how can there be collusion or fraud. Perhaps the respondents 2 to 6 having parted with the properties to the transferor of the appellant

herein, they might have remained exparte. On that basis, it cannot be said that there is any collusion or fraud on their part. As already stated, being

a purchaser pendente lite the appellant can step into the shoes of the respondents 2 to 6 and have the properties allotted to them.

The Apex Court in the case of Dhanna Singh and Others Vs. Baljinder Kaur and Others, : held as follows:

Apart from the doctrine of lis pendens u/s 52 of the T.P. Act, the subsequent purchaser does not get any right to lead to any evidence, as he

stepped into the shoes of the first defendant, who had given up the right to lead evidence.

But in this case, the purchaser pendente lite from the first defendant sought permission to let in evidence. Since the first defendant had given up his

right to lead evidence, the court held that it is not open to the transferee pendente lite to claim independent right to lead evidence. Hence it is very

clear that the purchaser pendente lite can succeed to the interest of his vendor who is the party to the proceeding.

In the case of Ram Harakh (Dead) by Lrs. Vs. Hamid Ahmed Khan (Dead) by Lrs. and Others, :the Apex Court had an occasion to deal with

the entries made by the Revenue Authorities pending the litigation, where the Apex Court held as follows:

Still the nature of the entry effected by them will have to be decided on the touchstone of common sense and on the broad probabilities of the

case. The plaintiffs had already filed suits as early as on 14.10.1947 against the appellants and when the said suits were pending it would be doing

violence to common sense to presume that they would not contest such entry being made in favour of the appellants pending litigation concerning

their right to the very same land. Therefore, the said Entry 1356 Fasli made in favour of the appellants during the pending litigation must necessarily

be treated to have been surreptitiously made behind the back of the respondents. If it was made after hearing them they would have certainly

resisted by challenging the same before higher authorities when they had already filed civil litigation which was already pending and which went

ultimately up to the High Court. For all these reasons, the finding of the revisional authority that the entry is illegal and incompetent implies that the

same was effected surreptitiously and fraudulently. Once that conclusion is reached the entry would cease to have any legal efficacy for buttressing

the case of the appellants.

If the facts by way of the contentions of the learned senior counsel are considered with the aid of the principles laid down by the Apex Court

and the discussion made by us above, this court is of the view that the appeal is devoid of any merits and consequently the same is dismissed in

limine.

Consequently stay C.M.P.513 of 2003 is closed.