Rights of The Innocent Buyer vis-a-vis The Doctrine Of Lis Pendens

Author: Neeraj Kumar Paswan

3rd year, B.A.L.L.B.

The West Bengal National University of Juridical Sciences

A person's right to property is governed by the Transfer of Property Act, 1882. The same refers to the transfer of property by selling, loan, mortgage, or contract. In the case of Riachand v. Dattartya[1], the court said that in its most detailed context, the term ownership contains all the legal rights. In general terms, the lis pendens theory applies to the pending legal action. This doctrine is defined in section 52 of The Transfer of Property Act. The initial idea which lies behind the section 52 is that the suit which is pending in terms of its determination, the status quo of the outfit should be maintained. It should also remain unaffected by the act of any of the parties of the suit.

In cases where the matter is subjected to the encumbrance, the question arises that whether the issue lies within the property or it goes with the person who caused such hindrance. These cases become very important in the realm of business transactions. Therefore, the rights of the innocent buyer become a significant factor in this kind of situation, and the power of buyer in respect to the doctrine of lis pendens comes into the light. In context to the rights of an innocent buyer, The Transfer of Property Act is the prevalent legislature, and in some instances, the property will take encumbrance with it.[2]

This paper aims to analyze, more specifically, the development of the said doctrine in India. It is a study of the innocent buyer's rights to the doctrine of lis pendens. It is mainly a reply to the balance between the rights of the honest buyer and the rights of the party claiming the property in the suit.

The paper has been broken down into two halves. The first chapter is an overview of the history of the jurisprudence concerning Indian jurisprudence on how the lis pendens doctrine is incorporated into the courts. The second chapter summarizes the issues discussed in the criteria and measures in the first chapter and lays out a theoretical method for mending the problems highlighted.

1. THE DEVELOPMENT OF DOCTRINE OF LIS PENDENS IN INDIA

The basic idea of this doctrine is to protect the rights of the petitioners. In the absence of this doctrine, the petitioners could have to go to different places and file different suits for claiming possession. The logic which is highlighted in this doctrine is that no change in a claim can be brought while the lawsuit is still under consideration.[3] This logic has come from "ut lite pedente nihil innovetur." This doctrine doesn't cover and immediately stop all the transactions with respect to the parties in the suit; this doctrine is generally based on two considerations;

Firstly, the litigation becomes a notice in rem, in cases where the property is under the matter of dispute. In this case of dispute, a presumption can be drawn that who so ever is entering into such kind of transaction; their lousy faith can be identified.[4] So, in this kind of cases, any encumbrance of the property, which would be based on the decision of the court, will have to be accepted by the said person. Even though he is not one of the said parties in the mentioned suit, he is subordinated to the decision in this matter.[5]

Secondly, the role of the public policy comes into the picture for the plaintiff claiming the title of the property. There is a restriction because if such alienation is allowed, the defendant will quickly shift the ownership of the property to the third person, especially during the pendency of the suit. This will go on; the third person may change the title again to someone else.[6] This process could harm the concept of res judicata[7], as this process is going to make the plaintiff file the suit again and again. As the plaintiff had to present the same suit in a different name. The whole concept of lis Pendens is based on the idea of res judicata. Hence, it protects the rights of the plaintiff, and it doesn't let the settled matter be rise again.

Therefore, it becomes very much important to analyze the two projected points, to lay down the foundation of the said doctrine, lis Pendens. Also, to analyze the situation and the arguments which are presented before the court.

Thirdly, when we break down the section 52 and look into the definition of pendency of the suit, following with the conditions which were let down in Dev Raj Dogra and others v. Gyan Chand Jain case, we get the following points[8]:

• First of all, the court must have the competency to hear out the matter.

• The suit must not be in any kind of conspiracy, both the parties involved should be clear. In short, it must a real one.

• The main question should be related to the specific right of the property.

• The transaction should have been completed within the pendency of the said suit.

The requirement of the said section has explained the whole idea of pendency, which is very much central to the concept of entire doctrine. It specifically mentions that the pendency must start from the date of filing of the suit and should last till the final decree of the lawsuit comes out or order.[9]

2. ANALYSIS OF THE DEBATE AND RECOMMENDATIONS

This analysis is drawn on the subsequent case laws of the respective sides. The initial report will be on the rights provided to the plaintiff about the doctrine of lis pendens.

Firstly, the idea of the notice comes in. It stems from the assumption that a case inevitably creates an in rem note. That is such a case which is the subject of the property in question meets all the conditions of a legal notice. The categorization of said note as a positive notice supports this. This is assumed that everyone ought to know the said situation.[10]

Therefore, justifying that anyone who should know a case on the property to which he or she transacts must be held subordinate to the court's decision in that manner.

In the second case, the situation is also seen as the violation of the principle of res judicata, which means that once the matter has been settled, then it should not be reopened with different parties. The theory is that if the alienation of an encumbered property is allowed, then the defendants in the suit will simply continue to shift the property's ownership to new third parties whenever they see themselves losing. It seriously prejudices the plaintiff as he or she has to appeal and launch another piece of the action, even after winning the title of the suit, just to demand repossession of their property.

Therefore, as a simple policy measure, allowing for the same is against the public interest. It can be seen from the very fact that the value of the doctrine of lis pendens is real even when it is not pointed out. The beginning of the same can be seen from Bellamy v. Sabine[11], where Turner L.J held that the lis pendens doctrine could also be used in equity courts of the law. At last, Ultimately, it leads to the expediency with which punishment is delivered to the pleaders. In bringing the parties together, the court removes subsequent execution claims that will arrive if such a multiplicity of suits is allowed.

On the contrary, these measures cause the innocent third-party buyer to suffer some form of prejudice. Whatever transaction involves immovable property. To impose a blanket standard upon the buyer for due diligence will prove to be harsh and unfair.[12] Such a standard of care is unjustified in our world, where documents are barely kept. Third, consider the situation where, in such a case, the claimant lost interest in the lawsuit or lost the action itself, and undue pressure is placed on the plaintiff to fight the same suit. The principle of keeping such high stakes exclusively to the customer liable in such a contract. Added to these problems is the multitude of pending property-related cases and also due to poor management of court records, especially in the district and revenue courts.[13]

Then in the same situation in which the Turner L.J. Harped on the idea that the theory of lis pendens can be enforced solely based on justice. Lord Cranworth spoke of how the doctrine is not tied to the plaintiff's rights. But instead, it is in the greater public interest of expediency to reduce the number of trials and reduce the overall burden of the courts themselves.

Thus the calculation in this whole scheme is skewed against the interests of the innocent consumer.

RECOMMENDATIONS:

A legal framework can be used in which there would be the registration of the property's title that appears on the record when there is a lawsuit being sought on that property is being created. To improve this, we can render the registration of a property a condition for alleging lis pendens on the property. This is a common practice in the United States and Britain[14]. The United States has an agency known as the register of deeds, where a lawsuit is brought, and if the complainant wants to claim the right to lis pendens over a house, he or she must file an application before the same.14 The application entangles the property with this action until it is settled through a decision. Therefore, even in India, such a clause has been included by State reforms in the case of states of Gujrat and Maharashtra.[15] However, a requirement of this amendment consists of the recorded case to include the name and address of the applicant, the definition of the immovable property, the court in which the suit is pending, the form of the suit, and the date of registration of the proceeding.[16]

Hence, the outcomes and benefits have already been recognised, and it should soon be implemented by some jurisdictions.

3. CONCLUSION

Through this paper, we have tried to address the problems associated with the processes that govern lis pendens doctrine in India. The value of immovable real estate transactions has been illustrated. The current application norm excludes prospective purchasers, in particular, in the sense of industrial or industrial operations. This process of due diligence becomes the part of the inquiry to be conducted by the buyer before the particular property is transacted.[17] That is not in itself inequitable. Nevertheless, if we find that there is no precise control system for which ownership is in question, the same quality would harm the preferences of any prospective buyer who may be interested in investing in the same. To counter this problem, the U.S. and U.K. governments both have something known as the recording of deeds. This deed recorder is a person who has the ability to defile a particular property with litigation, making it easier for the purchaser to check that something is burdened with the capital they so want. Therefore, the person claiming the same must file an application for the initiation of lis pendens. That is, the plaintiff. It implies which lis pendens is not pre-computed. This leads to a fairer and more equitable distribution of liability among the parties involved in the interests.

[1]Riachand v. Dattartya,AIR 1964 Bom 344. [2]Rajender Singh vs Santa Singh, AIR 1973 SC 2537. [3]Prem Chand J Panchal v. ShahjahabanuLiyakat Khan Pathan, AIR 2011 (NOC) 251 (Guj). [4]Poonam Pradhan Saxena, Property Law, 225 (LexisNexis Butterworths, 2nd ed., 2011). [5]NagubaiAmmal vs. B. Shama Rao, 1956 SCR 451. [6]Supra note 4. [7]Civil Procedure Code, 1908, § 11. [8]Alba Law Offices, Doctrine of lis pendens, September 2016, available at https://www.legallyindia.com/views/entry/doctrine-of-lis-pendens (last accessed on 15/03/2020). [9]Transfer of Property Act, 1882, Explanation to § 52. [10]Jones vs Smith, 1841 1 Hare 43. [11]Bellamy v. Sabine, 1 De G. & J. 585 (1857). [12]157th Law Commission of India Report, Section 52: The Transfer of Property Act, 1882 and its Amendment 97 (1998), available at http://lawcommissionofindia.nic.in/old_reports/Report%20No.%20157.pdf, (last accessed 13/2/2020). [13]Ibid.at 56 [14]Lis Pendens, Glossary https://uk.practicallaw.thomsonreuters.com/6-556- 9885?transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=1 [15]See, Bombay Act 4 of 1939 [16]Transfer of Property Act, 1882, S.52(2). [17]California Limited Partnership v. The Hongkong and Shanghai Banking Corporation Limited, OrangeCounty, California Airport Hotel Associates,52 F.3d 821 (9th Cir. 1995).