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REAL ESTATE UPDATE 24th March 2025 Issue No. 27/24-25 |
SC RULES AGAINST BUYER WHO PURCHASED PROPERTY DURING PENDING LITIGATION
BACKGROUND
The Supreme Court of India recently ruled that a transferee cannot claim protection under Section 53A of the Transfer of Property Act, 1882 (TPA), if they entered into an agreement while being aware of pending litigation over the property. The case, Raju Naidu v. Chenmouga Sundra & Ors., involved a dispute over two properties, referred to as ‘A’ and ‘B’ schedule properties, in Pondicherry.
The appellant, Raju Naidu, had entered into a sale agreement for the ‘B’ schedule property with the father of the respondents, despite an ongoing legal dispute over the property. The respondents had challenged the validity of Wills executed in favor of respondent No. 9, while the appellant claimed rights based on his sale agreement. The Trial Court ruled in favor of the respondents, declaring the Wills either void or unenforceable and ordering the appellant to vacate the property once ₹40,000, which he had paid as an advance, was refunded to him. The Appellate Court upheld this decision, and the Executing Court later allowed the respondents to deposit the amount and take possession.
Challenging the Executing Court’s decision, the appellant approached the High Court, arguing that the Court had no jurisdiction to extend the time for deposit and that he was entitled to protection under Section 53A of the Transfer of Property Act. The Madras High Court rejected his claims, leading to the present appeal before the Supreme Court.
JUDGMENT
The Supreme Court upheld the High Court’s ruling, holding that the doctrine of merger applied, making the Appellate Court’s decree final and binding. Since the Appellate Court had not prescribed a time limit for depositing ₹40,000, the Executing Court was within its jurisdiction to grant an extension under Section 148 of the CPC. The Court rejected the appellant’s reliance on Section 53A of the Transfer of Property Act, emphasizing that protection under this provision is unavailable to a party who knowingly entered into a transaction during pending litigation. Applying the principle of lis pendens, the Court ruled that the appellant’s claim could not override the decree holders’ rights. It also referred to Chandi Prasad & Ors. v. Jagdish Prasad & Ors. (2004 (8) SCC 724), reaffirming that transferees pendent lite cannot obstruct execution proceedings.
CONCLUSION
The Supreme Court dismissed the appeal, holding that the appellant had no valid claim over the property and could not use Section 53A of the Transfer of Property Act to resist execution. The ruling reinforces that protection under Section 53A is unavailable to those who knowingly enter into transactions during pending litigation.
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