Supreme Court rules on doctrine of lis pendens and registration of documents - International Law Office

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Litigation - India

Supreme Court rules on doctrine of lis pendens and registration of documents

December 07 2010

Facts
Decision
Comment


In Har Narain v Mam Chand,(1) the Supreme Court discussed and reviewed the law relating to the doctrine of lis pendens with regard to Section 47(2) of the 1908 Registration Act. The doctrine of lis pendens provides that no fixed property can be transferred while an action relating to it is pending before a court of law.(3) Under Section 47, a registered sale deed of a fixed property, on registration, is deemed to operate from the date of execution. The court clarified that the legal fiction created by virtue of Section 47 does not circumvent the operation of lis pendens. In effect, the court held that if a sale deed was not registered at the time the civil suit commenced and is registered subsequently, the property sale will still be subject to the principle of lis pendens.

Facts

The first respondent, owner of certain land, mortgaged the property in favour of its predecessor in interest of the appellant, which had been in possession of the land since 1970. The respondent and the appellant had also entered into an agreement to sell the property. Subsequently, the respondent executed a sale deed purporting to transfer the property to a third party on August 2 1971.The sale deed was registered on September 3 1971.

In the period between execution of the sale deed and its registration on August 10 1971, the appellant filed suit against the respondent seeking specific performance of the agreement to sell. The suit was resisted by the respondent on the grounds that the sale deed (dated August 2) related back to the date of execution under Section 47, and accordingly the property was classed as sold prior to initiation of the lawsuit. The appellant argued that since registration took place after filing of the suit, the sale was affected by lis pendens.

The trial court and the High Court both took the view that the doctrine of lis pendens did not apply to the facts of this case. The lower courts had proceeded on the presumption that although the documents had been registered after the suit was filed, they related back to the date of execution. Therefore, the sale of the property was deemed to have been effected on the date of the execution of the sale deed itself.

Decision

The appellant appealed to the Supreme Court, which upheld the appeal. It held that:

"in spite of the fact that the registration would relate back to the date of execution, the sale cannot be termed as complete until its registration and it becomes effective only once it stands registered. Thus, the fiction created by Section 47 does not come into play before the actual registration of the document."

The Supreme Court observed that a similar issue, though involving a right of pre-emption, was considered by the Constitution Bench in Ram Saran Lall v Mst Domini Kuer,(4) wherein the Supreme Court concluded that:

"in spite of the fact that the Act, 1908, could relate back to the date of execution in view of provisions of Section 47 of the Registration Act, 1908, the sale could not be given effect to prior to registration and thus the sale was not complete until the registration of instrument of sale."

The court in Ram Saran also clarified that Section 47 of the Registration Act does not specify when a sale is deemed to be complete. It observed that:

"a sale which is admittedly not completed until the registration of the instrument of sale is completed, cannot be said to have been completed earlier because by virtue of Section 47 the instrument by which it is effected, after it has been registered, commences to operate from an earlier date."(5)

The Supreme Court took the view that the lower courts failed to appreciate that the fiction created by Section 47 of the act itself is a consequence of registration of the document. Accordingly, it was held that the doctrine of lis pendens applied in the present case, as the registration of the sale deed occurred after the suit was filed.

Comment

The Supreme Court has clarified its position with regard to the operation of Section 47 of the Registration Act. It appears that, in its reasoning, the court has equated the words "shall operate from" to "be effective from". On that reading, the position taken by the Supreme Court is not in tune with the literal meaning of the words used in Section 47. This is one of the many instances in which the courts have chosen to eschew a literal meaning in favour of a purposive one in order to serve the ends of justice.

For further information on this topic please contact Jasleen K Oberoi or Bahaar Dhawan at Amarchand & Mangaldas & Suresh A Shroff & Co by telephone (+91 11 4159 0700), fax (+91 11 2692 4900) or email (jasleen.oberoi@amarchand.com or bahaar.dhawan@amarchand.com).

Endnotes

(1) Civil Appeal 995-996/2003, October 8 2010.

(2) Section 47 of the 1908 act:

"Time from which registered document operates :A registered document shall operate from the time which it would have commenced to operate if no registration thereof had been required or made, and not from the time of its registration."

(3) The doctrine of lis pendens, embodied in Section 52 of the 1882 Transfer of Property Act, effectively provides that during the pendency of a suit in which any right to immovable property in is question, the property cannot be transferred by any party to the suit so as to affect the rights of other parties.

(4) AIR 1961 SC 1747, by a three-to-two majority.

(5) This position has been followed in a plethora of cases: Hiralal Agrawal v Rampadarath Singh AIR 1969 SC 244; SK Mohammad Rafiq v Khalilul Rehmad AIR 1972 SC 2162; Thakur Kishan Singh v Arvind Kumar AIR 1995 SC 73; and Chandrika Singh v Arvind Kumar Singh AIR 2006 SC 2199.


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