Courts Can Exempt Property From Doctrine Of Lis Pendens To Protect Genuine Owners From Vexatious Suits: Delhi High Court
The Delhi High Court has held that courts can exempt a property from the doctrine of lis pendens, to shield genuine owners from vexatious suits.
The doctrine stems from Section 52 of the Transfer of Property Act 1882. It stipulates that any transfer of property during a pending lawsuit affecting that property is subject to the outcome of the lawsuit.
A division bench of Justices Anil Kshetarpal and Harish Vaidyanathan Shankar ruled,
“While the doctrine of lis pendens is rooted in equity and justice, it cannot be allowed to degenerate into a weapon of harassment or a tool for speculative adventurism. The law recognizes that the Courts are vested with the power, in appropriate cases, to exempt properties from the rigours of Section 52 of the TP Act.”
It explained that the rationale behind such an exemption is to “insulate genuine property owners from being trapped in vexatious, frivolous, or mala fide litigations, and to deter land-grabbers, speculators, and false claimants from misusing judicial processes to create artificial obstacles in the real estate market.”
The observations were made while dealing with an appeal against a single judge's refusal to restrain the defendant in the suit (Respondent here) from alienating the property.
Appellant relied on alleged oral agreement entered into between the properties and WhatsApp communications to assert that Respondent had agreed to sell the property to Appellant.
It was contended that based on such agreement, Appellant had mobilized funds and even made part-payment.
The Respondent on the other hand cited a Memorandum of Understanding executed between the parties, which explicitly provided that parties never intended to create any enforceable rights and they are precluded from claiming damages or seeking execution of a Sale Deed.
Single Judge had noted suppression of material facts by the Appellant, and consequently held that the doctrine of lis pendens under Section 52 of the TP Act, would not apply, thereby permitting the Respondents to freely deal with the property notwithstanding the pendency of the suit.
Upholding this decision, the High Court held, “The suit, in our view, rests on an inherently fragile foundation, being premised upon an alleged oral agreement which, as rightly observed by the learned Single Judge, stands contradicted by the Plaintiff's own pleadings. The Plaint itself admits that the MoU dated 02.06.2021 superseded all prior communications and arrangements, thereby making it abundantly clear that any relief could only have been founded upon the MoU and not upon any purported oral understanding.”
The Court further observed that Appellant's reliance on electronic communications was wholly misplaced inasmuch as those transcripts did not evince any concluded contract but, only ongoing negotiations.
As such, the Court dismissed the appeal and imposed costs of ₹5 lakh.
Appearance: Dr. Manish Singhvi, Sr. Adv. with Ms. Himaani Prabhakar, Adv. and Mr. Saroj Rai, AR for the Appellant; Mr. Rajashekhar Rao Sr. Adv., with Ms. Sanam Tripathi, Ms. Meherunisa Anand Jetley, Ms. Anjali Kaushik and Mr. Dheeresh Kumar Dwivedi, Advs. for R-1. Mr. Ashish Dholakia, Sr. Adv. with Ms. Sanam Tripathi, Mr. Subhoday Banerjee, Ms. Anjali Kaushik and Mr. Dheeresh Kumar Dwivedi, Advs. for R-2. Mr. Jeevesh Nagrath, Sr. Adv. with Ms. Sanam Tripathi, Ms. Nitya Maheshwari, Ms. Anjali Kaushik and Mr. Dheeresh Kumar Dwivedi, Advs. for R-3.
Case title: Earthz Urban Spaces Pvt. Ltd. v. Ravinder Munshi & Ors.
Case no.: FAO(OS) 79/2022