Sale Deeds Executed During Pendency Of Specific Performance Suit Hit By Doctrine Of Lis Pendens: Supreme Court

"Sale deeds executed by the defendants during the pendency of the litigation are certainly hit by doctrine of lis pendens and are non est," Supreme Court, in a significant ruling, held that property transfers made during the pendency of a litigation are entirely subservient to the final decree of the court under the doctrine of lis pendens, rendering such pendente lite sale deeds effectively non est.

A bench comprising Justice Pankaj Mithal and Justice Prasanna B. Varale observed that transfers made under Section 52 of the Transfer of Property Act, 1882, do not confer absolute rights and must abide by the ultimate rights of the parties determined by the court.

The original plaintiff entered into an unregistered agreement in 1988 to purchase agricultural land from the defendant company. When the defendants allegedly failed to execute the sale deed by the extended deadline, the plaintiff filed a suit for specific performance, which was initially dismissed but later decreed by the First Appellate Court and upheld by the High Court. During the pendency of the litigation and the subsequent Supreme Court appeal, the defendants transferred portions of the suit land to third parties without disclosing the same to the courts.

The primary question before the court was whether sale deeds executed in favour of third parties during the pendency of a specific performance suit possess any legal sanctity under Section 52 of the TP Act. The court was also called upon to determine the evidentiary effect of a plaintiff failing to enter the witness box, and whether the passage of time makes a decree for specific performance inequitable.

Transfers Governed By Section 52 Of TP Act

Addressing the clandestine transfer of the suit property, the Supreme Court noted that the defendants had sold 60 percent of the land in 2009 and the remaining 40 percent in 2025 while the appeal was pending. The court emphatically stated that such transfers are strictly governed by the principle of lis pendens as enshrined under Section 52 of the Transfer of Property Act, 1882.

Relying on the precedent of Thomson Press (India) Ltd. v. Nanak Builders & Investors (P) Ltd., the bench noted that a transfer pendente lite is neither illegal nor void ab initio. Instead, the court clarified that such a transfer remains subservient to the rights of the parties eventually determined by the court in the pending litigation.

Pendente Lite Sale Deeds Held Non Est

The court observed that the original plaintiff's heirs had already secured the execution of the sale deed through the due process of the court in 2010, based on the First Appellate Court's decree. Because substantive rights had accrued to the plaintiffs, the court ruled that the intervening sales made by the defendants held no legal weight and were bound by the final outcome of the appeal.

"In such circumstances when the decree has already been executed and substantive rights have accrued in favour of the heirs of the plaintiff, it would be inequitable to dislodge them from the benefit of the sale in exercise of discretionary jurisdiction."

Evidentiary Value Of Manager's Testimony

Moving to the defendants' contention regarding the plaintiff's failure to enter the witness box, the court clarified the law on adverse inferences. The bench explained that while non-appearance generally gives rise to an adverse presumption under settled law, such a presumption is strictly rebuttable in nature.

The court found that the plaintiff's Manager, who had personal knowledge of the transactions since 1988, had successfully corroborated the plaint allegations. Applying the ratio of Rajesh Kumar v. Anand Kumar, the court held that a representative can depose on acts within his personal knowledge, rendering the plaintiff's non-appearance not fatal to the suit.

No Presumption Of Inequity Merely Due To Passage Of Time

The bench also rejected the argument that a 15-year gap between the agreement and the appellate decree made specific performance inequitable due to an alleged escalation in land prices. The court observed that the defendants failed to bring any concrete evidence on record to establish this price escalation. The bench ruled that the discretion to refuse specific performance cannot be exercised in a vacuum without proof of inequity.

Interference Under Section 100 CPC

Finally, upholding the High Court's refusal to interfere with the First Appellate Court's findings, the Supreme Court reiterated the scope of Section 100 of the Code of Civil Procedure, 1908. The bench affirmed that findings of fact regarding readiness and willingness, howsoever erroneous, cannot be reopened in a second appeal absent a substantial question of law.

Dismissing the appeal, the Supreme Court maintained the decree of specific performance passed by the First Appellate Court in favour of the plaintiffs. The court conclusively declared the sale deeds executed by the defendants during the pendency of the litigation on February 12, 2009, and February 27, 2025, to be entirely non est.

Date of Decision: 09 April 2026