A Purchaser During Litigation Cannot Claim Superior Rights Over a Decree-Holder: Supreme Court Upholds Doctrine of Lis Pendens

"A Transfer Made in Violation of an Injunction Order is Subservient to the Final Decree" – Supreme Court Quashes Subsequent Purchasers’ Appeal. In a landmark judgment ruled that a transferee pendente lite—one who purchases a property while litigation over it is pending—has no independent right to challenge a decree if their impleadment was previously denied and remained unchallenged. The ruling reaffirms the fundamental doctrine of lis pendens under Section 52 of the Transfer of Property Act, 1882, making it clear that a person who acquires property during litigation does so at their own peril and remains bound by the outcome of the case.

A bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan set aside a Karnataka High Court order that had condoned a 586-day delay in filing an appeal by subsequent purchasers and granted them leave to challenge a decree for specific performance. Reprimanding the High Court’s approach, the Supreme Court held that a transferee pendente lite is bound by the final decree and cannot disrupt settled litigation by seeking a fresh appeal.

"A transferee during litigation steps into the shoes of their vendor and takes the property subject to all existing rights and liabilities. They cannot claim a superior right over a decree-holder, nor can they argue that their purchase—made in violation of an injunction—entitles them to reopen concluded litigation," the Court observed.

The Supreme Court further noted that if an application for impleadment in the original suit has been rejected and that rejection remains unchallenged, the transferee has no right to seek leave to appeal against the decree.

"The rejection of impleadment is final and binding. A person who has failed to challenge such an order cannot circumvent it by later seeking to challenge the decree itself. The doctrine of lis pendens exists precisely to prevent such disruption to judicial decisions," the Court ruled.

"A Transfer Made During Litigation is Not Void, But It Grants No Independent Right Against the Decree" – Supreme Court Holds Purchasers Bound by Injunction

The case arose from a suit for specific performance of an agreement to sell concerning 42 acres of land in Bangalore North Taluk. The original owner had agreed to sell the land to the plaintiffs in 1995, but later sold the same property to Defendant No. 3 in 2004, during the pendency of the litigation. In response, the plaintiffs obtained an injunction from the trial court on December 17, 2003, restraining the owner from alienating the land to third parties.

Despite this injunction, Defendant No. 3 violated the order and sold portions of the land to the respondents in 2004. Upon discovering the sale, the plaintiffs filed an application seeking to implead the subsequent purchasers in the suit. The trial court, in 2014, rejected their impleadment on the ground that they had purchased the property in direct violation of a judicial order. The purchasers did not challenge this rejection.

"The doctrine of lis pendens does not render a sale void, but it prevents the transferee from claiming independent rights in a property under litigation. A purchaser during the pendency of a suit must accept the consequences of the final decree, and if an injunction has been issued, any sale made in contravention of it remains subject to the decree," the Supreme Court stated.

The trial court, after considering all facts, decreed specific performance in favor of the plaintiffs in 2016. The appeal filed by Defendant No. 3 was dismissed by the Karnataka High Court in 2017, upholding the decree. However, two years later, the subsequent purchasers filed an appeal in 2018, despite having failed to challenge their rejection from the suit in 2014. They also sought condonation of 586 days of delay, claiming that they were senior citizens residing abroad and were unaware of the legal proceedings.

The Karnataka High Court allowed their appeal and condoned the delay, reasoning that their vendor had assured them that he would protect their interests. However, the Supreme Court rejected this argument outright, holding that mere reliance on a vendor’s assurances does not absolve a buyer from exercising due diligence.

"The passage of time cannot override legal finality. When an injunction order was already in place and the sale was made in violation of it, the transferees cannot claim to be unaware of the legal risks. The High Court erred in allowing them to contest a settled decree by condoning an unexplained and inordinate delay," the Court ruled.

"A Transferee During Litigation Cannot Be Permitted to Frustrate a Decree by Seeking an Appeal" – Supreme Court Overrules Karnataka High Court

The Supreme Court categorically ruled that the transferee pendente lite had no right to file an appeal, since their impleadment had been rejected and was never challenged. The Court emphasized that a person who was not made a party to the suit cannot later claim a right to challenge the decree through an appeal.

"The law is clear—when impleadment has been denied and not contested, the transferee has no basis to claim a right to appeal against the final decree. The High Court committed a serious error in allowing their appeal and condoning a delay that should never have been condoned in the first place," the Court observed.

The Court further reiterated that the principle of finality in litigation must be upheld and that the courts must not allow transferees to prolong disputes indefinitely.

"Litigation cannot be an endless process where parties seek to disturb settled decisions through indirect means. The transferees had their opportunity to intervene in the suit, and they failed to challenge the rejection of their impleadment. The High Court should have recognized this and declined to condone the delay or grant leave to appeal," the Supreme Court held.

With these observations, the Supreme Court allowed the appeal of the original plaintiffs, set aside the Karnataka High Court’s order, and reinstated the trial court’s decree of specific performance in their favor.

"If the respondents feel they have been deceived by their vendor, their remedy lies in a separate suit for fraud or misrepresentation. They cannot disrupt an already concluded litigation simply because they regret their purchase," the Court concluded.

Supreme Court’s Ruling Reaffirms the Doctrine of Lis Pendens and Judicial Finality

This judgment has far-reaching implications for subsequent purchasers in property disputes, reinforcing that a transferee pendente lite cannot challenge a decree independently unless they were impleaded and their participation was recognized by the court. It further establishes that:

A transfer made during litigation is not void, but it is always subject to the final decree.

If an injunction prohibits a sale, any subsequent sale in violation of it cannot create rights for the purchaser against the decree-holder.

A transferee cannot bypass judicial orders by seeking an appeal after their impleadment has been denied and remained unchallenged.

The courts must ensure that decrees are enforced without unnecessary delays caused by transferees attempting to reopen settled litigation.

By setting aside the Karnataka High Court’s order, the Supreme Court has reinforced the principle that litigation must reach a conclusion, and subsequent purchasers cannot use procedural loopholes to disrupt the execution of valid decrees.

Date of decision: 29/01/2025