In a suit involving Lis Pendens, The Supreme Court Ordered Impleadment of Party.

The Supreme Court of India considered the issue of impleadment of a transferee pendente lite, focusing on whether a transferee with knowledge of ongoing litigation could be included as a party in the suit. The Appellant, Yogesh Goyanka, purchased disputed land from Respondent No. 21 during the pendency of a suit (the 'Underlying Suit') concerning the land's ownership. The Appellant was aware of the litigation at the time of purchase, as explicitly stated in the sale deed. When the Plaintiffs in the Underlying Suit obtained a temporary injunction, the Appellant, along with other buyers, sought impleadment under Order 1 Rule 10 of the Code of Civil Procedure, 1908.

The Case's Background: The Appellant, Yogesh Goyanka, purchased land (the 'Subject Land') amidst existing litigation concerning its ownership. The Plaintiffs (original owners) filed a suit against the Defendants (who they had initially transferred the land to) and Respondent No. 21 (an intermediary seller). The Appellant, having purchased the Subject Land from Respondent No. 21 during this lawsuit, became a transferee pendente lite.

Impleadment Denied, Then Granted..

Lower Court Decisions: The Additional District Judge (ADJ) dismissed the Appellant's impleadment application, reasoning that (1) the Appellant purchased the land without seeking court permission and (2) was not a bona fide purchaser due to his prior knowledge of the suit. The ADJ relied on the Supreme Court's decision in Bibi Zubaida Khatoon vs. Nabi Hassan Saheb & Anr (2004) 1 SCC 191.
The High Court upheld the ADJ's decision, determining that the sale deed was void under the doctrine of lis pendens as per Section 52 of the Transfer of Property Act, 1882.

What is "Lis Pendens": This doctrine, enshrined in Section 52 of the Transfer of Property Act, 1882, essentially states that any transfer of property that is the subject of ongoing litigation is subject to the rights of the parties in that suit. While it doesn’t automatically void the transfer, it makes those rights subservient to the suit's outcome.

Question of Law: Can a transferee pendente lite with knowledge of pending litigation be impleaded in the suit?

Protection of Potential Interests: The court recognized that a transferee pendente lite, even one aware of the litigation, may have a legal right to protect their interest in the property, particularly if there's a risk the original parties won't adequately defend the title.

Possibility of Collusion: The court found merit in the Appellant's argument that there might be collusion between the original parties due to their familial ties, the long delay in filing the suit, and the late emergence of the non-payment claim.

Discretionary Impleadment: The court clarified that while transferees pendente lite don't have an automatic right to impleadment, courts have the discretion to allow it based on factors like potential prejudice, collusion risks, and fairness.

Lis Pendens Doesn't Equal Nullity: The court emphasized that the doctrine of lis pendens doesn't render a transfer void from the start. Instead, it makes the transferee's rights contingent on the litigation's outcome, highlighting the importance of impleadment as a safeguard.

Court's Analysis: The Court clarified that the doctrine of lis pendens doesn't automatically void transfers made during litigation but merely renders the transferee's rights subservient to the outcome of the suit. Therefore, the High Court erred in nullifying the sale deed based solely on Section 52 of the Act.

The Court has held that the Impugned Order is fundamentally flawed for using Section 52 of the Act to invalidate the RSD (Registered Sale Deed), thereby incorrectly concluding that the impleadment application is untenable placing reliance on Amit Kumar Shaw vs. Farida Khatoon, (2005) 11 SCC 403, **, and also on **A. Nawab John vs. V.N. Subramaniyam, (2012) 7 SCC 738 stating that the law on impleadment of subsequent transferees, as established by this Court, liberally permits them to protect their interests, recognizing the risk that the transferor pendente lite may not defend the title or may collude with the plaintiff.

The Court has also reflected on the faulty reliance placed by the ADJ in the matter of stating that “We find fault with the ADJ's order and its misplaced reliance on Bibi Zubaida.” While Bibi Zubaida establishes that transferees pendente lite cannot seek impleadment as a matter of right, it does not bar impleadment of those who purchase property and further held

"..mere fact that the RSD was executed during the pendency of the Underlying Suit does not automatically render it null and void."

The decision in Bibi Zubaida was fact-specific, rejecting the joinder due to the long pendency of the suit since 1983 and the subsequent purchaser's lack of bona fides. Thus, the judgment in Bibi Zubaida is distinguishable and does not support the respondents' case.

The Court has held that “Permitting the impleadment of a transferee pendente lite is, in each case, a discretionary exercise undertaken to enable a purchaser with a legally enforceable right to protect their interests especially when the transferor fails to defend the suit or where there is a possibility of collusion”.

Though the Appellant's initial application for impleadment (joining the lawsuit) was denied, the Apex Court, given the totality of circumstances, has held that the Appellant having a registered sale deed and potential interest in the land deserves the opportunity to protect his interests through impleadment, thus allowing the appeal, and setting aside the High Court and ADJ's orders, and directed the Appellant's impleadment in the Underlying Suit.

CORAM: VIKRAM NATH & SATISH CHANDRA SHARMA
CASE DETAILS: CIVIL APPEAL NO(S). 7305 OF 2024
BETWEEN: YOGESH GOYANKA v. GOVIND & ORS.
DOJ: 10/07/2024