When Does Lis Pendens Cease To Operate? Bombay High Court Re-Examines S.52 Of Transfer Of Property Act Post-Alienation

The Bombay High Court while re-visiting Section 52 of the Transfer of Property Act has clarified the circumstances under which the Lis Pendens ceases to operate.

The Bench of Justice Sharmila U. Deshmukh observed that “Post alienation by way of sale or surrender, the immovable properties are no longer available for distribution and what remains is money claim based on accounts and valuation of properties. Post alienation, the complexion of the suit changed into a suit for accounts or at the best a money claim to which the doctrine of lis pendens has no applicability.”

Section 52 of the Transfer of Property Act impacts property transactions by restricting the transfer of disputed properties during litigation. This ensures that the final court decree is respected and enforced, preventing fraudulent or unfair transactions.

In this case, the Suit was filed seeking inter alia division of the properties between the parties in equal half shares and necessary directions to effectuate the same i.e. rendering and taking accounts and valuation of properties.

The Plaintiffs/Appellant's case was that the distribution of the assets of the four firms between the Plaintiffs group and Defendants/Respondents group under an Interim Award of 27th April, 1975 is null and void and of no effect in absence of Final Award being passed upon the finalisation of accounts and determination of amounts due and payable.

The suit came to be resisted by the Defendants contending that there was just and fair distribution of the assets on the basis of valuation and the interim award was fully implemented and acted upon.

The suit of the year 1981 was initially filed in the High Court and upon enhancement of the pecuniary jurisdiction of City Civil Court, the suit came to be transferred to City Civil Court. Vide impugned judgment dated 15th June, 2019, the suit has been dismissed. During pendency of the suit, there were no interim reliefs in favor of the Plaintiff.

On 7th January, 1995, the plaintiffs registered lis pendens notice in the office of Sub-Registrar of Assurance in respect of two properties allotted to Defendants under the Interim Award-one at Mumbai and other at Delhi.

The Application has been filed seeking lifting of operation of lis pendens pleads that despite dismissal of the suit, notice of lis pendens registered by the Plaintiffs/Appellants continues placing restrictions on right of Defendants/Respondents to deal with their Mumbai property.

The Plaintiffs/Appellants submitted that Appeal is continuation of suit and therefore, notice of lis pendens of pending suit would continue. It was submitted that even if the properties are alienated, the relief of equalization after accounts are drawn up and properties valued remains and therefore, there is money claim.

The issue before the bench was whether consequent to the alienation of the properties by the parties, any right to immovable property was directly and specifically in issue in the suit to attract doctrine of lis pendens?

The bench looked into Section 52 of Transfer of Property Act, 1882 to understand the genesis of doctrine of lis pendens, and observed that the sine qua non is thus filing of the suit qua the immovable property. The purpose of validly registered lis pendens is to protect the Plaintiffs interest in the suit property so that even if it is alienated in the course of proceedings, the alienation does not bind the Plaintiff and he is not bound to seek any relief against such third parties.

“The intent behind providing additional safeguard by registration of notice of lis pendens under the Maharashtra Amendment is to ensure that upon registration of the notice, the Transferee who purchases the property would be deemed to have notice of pendency of lis and cannot claim to be bona fide purchaser without notice. Section 52 of TOPA freezes the proprietary right as they stood at the inception of the suit making it evident that it is right to the immovable property which should be directly and specifically in issue for doctrine of lis pendens to be applicable,” stated the bench.

The bench observed that the registration of notice of lis pendens has indirectly operated as a restriction on freedom of the Defendants in getting fair market price for the property as prospective buyers tread with caution in case of sub judice property.

Since the year 1995, the Defendant's right to deal with their property has been affected without the Court prima facie inquiring into the validity of the Plaintiff's claim. In 2019, when the suit has been dismissed, the notice of lis pendens continues to affect the Defendant's right, added the bench.

In view of the above, the bench allowed the appeal.

Case Title: Arjan Motiram Khiani v. Metharam Rijhumal Khiani

Citation: 2025 LiveLaw (Bom) 188

Case Number: FIRST APPEAL NO. 128 OF 2020

Counsel for Appellants: Aspi Chinoy, Senior Advocate a/w Ramesh Soni, Archit Jayakar, Bhoomi Upadhyay i/b Jayakar and Partners for Respondents/Original Appellants.

Counsel for Respondent: Pravin Samdani, Senior Advocate a/w Kausar Banatwala, N. Thakkar i/b Tushar A. Goradia for Respondent No. 8.

Farhan Dubash, Harshal Manik, Gobinda C. Mohanty i/b Mohanty and Associates for Applicant and Respondent Nos. 5 to 7.

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