Saturday, 26 October 2019

Whether it is necessary to seek cancellation of sale deed if it was executed during pendency of suit?

 In our opinion, when the sale deed had been executed during the pendency of suit the purchaser pendente lite is bound by the outcome of the suit. The provisions of Section 52 prevent multiplicity of the proceedings. It was not at all necessary to file a suit for cancellation of the sale deed as the vendor had no authority to sell land of other co-sharers. He had right to alienate his own share only which he had in the property to the extent of 14/104th. As such the right, title and interest of Bala Mallaiah were subject to the pending suit for partition in which a preliminary decree was passed in the year 1970 which had attained finality in which the vendor of Bala Mallaiah, Defendant 1 was found to be having share only to the extent of 14/104th.  { Para 48}

 Therefore, it is settled legal position that the effect of Section 52 is not to render transfer effect during the pendency of a suit by a party to the suit void; but only to render such transfers subservient to the rights of the parties to such suit and the pendente lite purchaser would be entitled to or suffer the same legal rights and obligations of his vendor as may be eventually determined by the Court. Therefore, in the present suit defendant No. 2 is bound by the decree which may be passed against defendant No. 1. Admittedly, by virtue of compromise decree in R.A. No. 272/2004 defendant No. 1 is aware that the suit property was allotted to the share of plaintiffs and he had no right title and interest so as to transfer the same in favour of defendant No. 2 by executing registered sale deed dated 02.05.1997 as per Ex. D1. In spite of knowing consequences of the same, defendant No. 1 executed the sale deed during the pendency of suit bearing O.S. No. 45/1994. Therefore, the said sale deed is hit by Section 52 of Transfer Property Act. Though, it cannot be held as void ab initio, as held by the Hon'ble Supreme Court in the judgment referred supra, Pendente lite purchaser defendant No. 2 herein is bound by the decree passed in the suit against his vendor.

IN THE HIGH COURT OF KARNATAKA (KALABURAGI BENCH)

RSA No. 1346/2007

Decided On: 24.04.2019

 Gurushantappa  Vs. Shankar and Ors.

Hon'ble Judges/Coram:
P.G.M. Patil, J.

Citation: AIR 2019 Karnat 113


1. The plaintiffs being aggrieved by the judgment dated 17.03.2006 passed in O.S. No. 327/2002 by the III Addl. Civil Judge (Sr. Dn.), Gulbarga confirmed in R.A. No. 56/2006 by the Prl. Sessions Judge, Gulbarga by judgment and decree dated 05.03.2007 have filed this regular second appeal.

2. The parties are referred to with their rank before the trial court.

3. Plaintiff Nos. 1 and 2 filed the suit bearing O.S. No. 327/2002 seeking the relief of declaration of ownership and consequential relief of perpetual injunction against defendant Nos. 1 and 2 in respect of the suit schedule property. It is the case of the plaintiffs that property bearing Sy. No. 52 measuring 9 acres 22 guntas situated at Nandi Sinoor village, Gulbarga Taluka was one of the family property. The plaintiffs, defendant No. 1 along with two other brothers were members of the joint Hindu family of which their father was the manager and the karta till 1982. They have further stated that in the year 1982, there was a partition among the plaintiffs and their brothers in respect of joint family properties and that the suit property was divided into two portions and the said portions were allotted to the plaintiff Nos. 1 and 2 respectively and ever since from the date of partition, they are in actual possession and enjoyment of the suit property as owners. Subsequently, the memorandum of partition was also prepared which was signed by the plaintiffs and their brothers and the father and the same was given to the custody of father. However, the plaintiffs did not take any steps immediately as such the family properties are even now standing jointly in the name of the parties. Taking advantage of his position as karta, the father refused to hand over the memorandum of partition. Thereafter, first defendant filed a suit through the father in O.S. No. 620/1990 before the I Addl. Civil Judge (Jr. Dn.) Gulbarga for declaration of title over the suit land and the said suit came to be decreed. Thereafter, appeal was preferred before the District Court Gulbarga in R.A. No. 32/1997 and the same is pending for consideration. They have alleged that father of the plaintiffs in collusion with other children got illegally mutated his name in respect of the suit land which was challenged before the Assistant Commissioner in appeal and the appeal came to be allowed and the name of plaintiffs was entered in the records of the suit property. It is further alleged that the first defendant filed another suit against the plaintiff in O.S. No. 99/1994 and thereafter sold a portion of the suit land illegally in favour of the second defendant under a registered sale deed dated 2/5-1997 and the said sale deed is illegal and not binding on the plaintiffs and now the defendant No. 2 on the basis of the alleged sale deed is interfering in their possession and enjoyment. Therefore, the plaintiffs were constrained to file the said suit.

4. Despite of service of summons, defendant No. 1 remained absent and placed ex-parte before the trial Court. Defendant No. 2 appeared through his natural guardian and filed the written statement. He contended that suit is liable to be dismissed and that the earlier suit filed by the plaintiffs was dismissed on merits on 06.08.1997 and subsequently the plaintiffs had filed another suit in O.S. No. 564/1996 which was also dismissed on 29.02.2000. Therefore, the present suit is barred under Section 11 of C.P.C. The first defendant was owner and in possession of 3 acres 8 guntas of land in Sy. No. 52/2A and the second defendant purchased 1 acre 20 guntas from the first defendant under a registered sale deed for valuable consideration. Therefore, the second defendant is a bonafide purchaser for value and he was in possession and enjoyment of the property. The suit of the plaintiffs is also barred by limitation. Therefore, the suit be dismissed.

5. On the basis of the pleadings, the trial Court framed the following issues.

1) Whether the plaintiffs proves that they got suit property in a family partition in the year 1982 and since then they are the owners in possession and enjoyment of the suit property as alleged in the plaint?

2) Whether the plaintiffs further proves that the sale deed executed by first defendant dated 02.05.1997 in favour of second defendant in respect of the portion of suit land is null and void and not binding on them as alleged in the plaint?

3) Whether the plaintiff further proves the alleged act of interference by the defendants in their possession and enjoyment of the suit property?

4) Whether the suit of the plaintiffs is barred by Sec. 11 of C.P.C. as contended in the written statement?

5) Whether the second defendant proves that he is the bonafide purchaser of one acre twenty guntas of the land out of the suit property for value as contended in his written statement?

6) Whether the suit is barred by limitation?

7) Whether the plaintiffs are entitled for the reliefs as claimed?

8) What order or decree?

6. The plaintiffs in support of their case got examined themselves as PW1 and PW2 and one witness as PW3 and got marked 16 documents as Ex. P1 to Ex. P16 and thereafter second defendant got examined himself as DW1 and two witnesses as DW2 and DW3 and got marked 4 documents as Ex. D1 to Ex. D4. The trial Court after hearing both the parties held issue No. 1 to 4 and 7 in the negative and issue No. 5 and 6 in the affirmative. Consequently dismissed the suit of the plaintiffs.

7. Being aggrieved by the said judgment and decree, the plaintiffs filed R.A. No. 56/2006 on the file of Prl. District Judge, Gulbarga which was also dismissed on 05.03.2007 confirming the judgment and decree passed by the trial Court. Therefore, unsuccessful plaintiffs have approached this Court with this regular second appeal.

8. This Court has admitted the appeal on the following substantial questions of law.

1) Whether the bar of limitation has to be applied if the sale deed which was stated to be challenged in the suit was found to be void ab-initio?

2) The Court below having over-looked the material evidence, namely, that there was a compromise decree of which the respondent No. 1 was bound and would not have sold the property?

9. Heard the learned counsel for the appellants and respondent No. 2.

Substantial Question of Law No. 1.

10. The learned counsel for the appellants vehemently submitted that the suit schedule property was given to the share of the plaintiffs in the partition which took place in the year 1982. Accordingly, memorandum of partition or vatni patra Ex. P7, Ex. P8 and Ex. P9 are produced. Further, the declaration was sought in respect of sale deed Ex. P1 dated 02.05.1997 executed by defendant No. 1 in favour of defendant No. 2 which was executed during the pendency of the suit proceedings. The learned counsel further submitted that previously the father of the plaintiffs and defendant No. 1 had filed O.S. No. 692/1990 against all the sons for declaration in respect of the suit property and the said suit was decreed in terms of Ex. P12. The plaintiffs herein preferred R.A. No. 272/2004 against the said judgment and decree in that regular appeal compromise was entered holding that the suit schedule property was allotted to the share of the plaintiffs in the partition of 1982 and the said compromise decree is produced at Ex. P5. It is further submitted that R.A. No. 272/2004 was compromised between the mother or brothers after the death of the father. Thereafter, plaintiffs filed another suit bearing O.S. No. 45/1994 for declaration and permanent injunction in respect of the suit property against defendant No. 1 and the said suit was dismissed on 06.08.1997. The plaintiffs filed R.A. No. 372/2004 against the dismissal of the said suit and the said regular appeal came to be allowed and the suit was decreed. The learned counsel further submitted that during the pendency of O.S. No. 45/1994 defendant No. 1 has executed the sale deed in respect of the suit schedule property as per Ex. P1 in favour of defendant No. 2 on 02.05.1997. Therefore, the plaintiffs were constrained to file the present suit in O.S. No. 327/2002 seeking declaration and permanent injunction. The learned counsel also submitted that defendant No. 1 had filed O.S. No. 99/1994 seeking permanent injunction against the plaintiffs which was dismissed for default. Therefore, the plaintiffs are entitled for declaration and permanent injunction as sought for in the suit. The learned counsel further submitted that the trial Court and the first appellate Court have not considered the case of the plaintiffs properly and that it was erroneously held that the suit is barred by time on the ground that the sale deed was not challenged within three years from the date of execution. The learned counsel further submitted that the sale deed executed by defendant No. 1 in favour of defendant No. 2 during the pendency of the suit proceedings is void ab-initio and as such the question of limitation does not arise.

11. Per contra, the learned counsel for the respondent No. 2 submitted that defendant No. 2 is not a party to the compromise decree and the same is not binding on him. It is further contended that plaintiff No. 2 is also one of the signatory is to Ex. D1 original sale deed and that when the said document was marked no objections were raised. Therefore, the suit was clearly barred by limitation. Therefore, the decree passed by the trial Court and confirmed by the first appellate Court is proper and there is no need to interfere with the same.

12. The trial Court and the first appellate Court proceeded to hold that plaintiff No. 2 PW1 has attested Ex. D1 the original sale deed executed by defendant No. 1 in favour of defendant No. 2 dated 02.05.1997 and that the said document was marked without any objections.

Therefore, the plaintiffs was aware of the sale deed executed on 02.05.1997. However, the suit was filed for declaration of ownership and also to declare the sale deed as null and void on 31.07.2002 which is barred by limitation, but the plaintiff No. 2 has denied that he has attested Ex. D1 sale deed. Defendant No. 2 has not taken any steps for sending the document to the handwriting expert to prove the signature of the plaintiff No. 2 on Ex. D1. The trial Court only on the basis of marking Ex. D1 sale deed without any objections and the signature of plaintiff No. 2 also without any objections proceeded to hold that plaintiff No. 2 has also attested the said sale deed. Therefore, the suit was clearly barred by limitation under Article 58 of the Limitation Act.

13. The trial Court has further held that the judgment and decree passed in O.S. No. 45/1994 had not reached finality and that appeal was pending and the operation of the judgment and decree are stayed by the appellate Court. It is not at all disputed that defendant No. 1 executed the sale deed Ex. D1 on 02.05.1997 during the pendency of O.S. No. 45/1994. Therefore, this Court has to consider whether the said sale deed is void ab-initio as the same is hit by Section 52 of the Transfer of Property Act, therefore, question of limitation does not arise.

14. So far as the suit filed by father of plaintiffs and defendant No. 1 in O.S. No. 692/1990 and that the said suit was decreed as per Ex. P12 is not disputed by defendant No. 2. It is also not disputed that the plaintiffs herein filed R.A. No. 272/2004 against the judgment and decree passed in O.S. No. 692/1990 and in the said appeal, the parties namely mother after the death of father and the plaintiffs and defendant No. 1 entered into the compromise and accordingly compromise decree was passed as per Ex. P5. It is not disputed by the defendant No. 1 under the said compromise decree, the suit schedule property was allotted to the share of plaintiffs herein and it is further agreed between the parties that the suit schedule property was allotted to the share of the plaintiffs as per the partition effected in 1982. The defendant No. 1 being the party to the compromise decree cannot deny the same. Therefore, defendant No. 1 was aware that he had no saleable interest in the suit schedule property, so as to execute sale deed Ex. D1 in favour of defendant No. 2 in respect of the suit schedule property. Further it is clearly admitted that when the said sale deed was executed O.S. No. 45/1994 filed by the present plaintiffs against defendant No. 1 for declaration and permanent injunction in respect of the suit schedule property was pending. Therefore, Section 52 of the Transfer Property Act has to be invoked in the present suit.

15. The learned counsel for the appellants relied on the judgment in the case of T. Ravi and another V/s. B. Chinna Narasimha and others, reported in MANU/SC/0279/2017 : (2017) 7 Supreme Court Cases 342. The Hon'ble Supreme Court in para 42, 43, 48 and 49 has held as follows:

42. Reliance has also been placed on A. Nawab John v. N.V. Subramaniyam in which this Court has laid down thus: (SCC p. 746, para 18)

"18. It is settled legal position that the effect of Section 52 is not to render transfers effected during the pendency of a suit by a party to the suit void; but only to render such transfers subservient to the rights of the parties to such suit, as may be, eventually, determined in the suit. In other words, the transfer remains valid subject, of course, to the result of the suit. The pendente lite purchaser would be entitled to or suffer the same legal rights and obligations of his vendor as may be eventually determined by the Court.

'12. . The mere pendency of a suit does not prevent one of the parties from dealing with the property constituting the subject matter of the suit. The section only postulates a condition that the alienation will in no manner affect the rights of the other party under any decree which may be passed in the suit unless the property was alienated with the permission of the Court.' (Sanjay Verma v. Manik Roy, SCC p. 612, para 12)"

43. In Thomson Press (India) Ltd. v. Nanak Builders & Investors (P) Ltd, this Court has laid down thus: (SCC p. 424, para 53)

'53. There is, therefore, little room for any doubt that the transfer of the suit property pendente lite is not void ab initio and that the purchaser of any such property takes the bargain subject to the rights of the plaintiff in the pending suit. Although the above decisions do not deal with a fact situation where the sale deed is executed in breach of an injunction issued by a competent Court, we do not see any reason why the breach of any such injunction should render the transfer whether by way of an absolute sale or otherwise ineffective. The party committing the breach may doubtless incur the liability to be punished for the breach committed by it but the sale by itself may remain valid as between the parties to the transaction subject only to any directions which the competent Court may issue in the suit against the vendor."

48. In our opinion, when the sale deed had been executed during the pendency of suit the purchaser pendente lite is bound by the outcome of the suit. The provisions of Section 52 prevent multiplicity of the proceedings. It was not at all necessary to file a suit for cancellation of the sale deed as the vendor had no authority to sell land of other co-sharers. He had right to alienate his own share only which he had in the property to the extent of 14/104th. As such the right, title and interest of Bala Mallaiah were subject to the pending suit for partition in which a preliminary decree was passed in the year 1970 which had attained finality in which the vendor of Bala Mallaiah, Defendant 1 was found to be having share only to the extent of 14/104th. The preliminary decree was not based upon fraud or collusion. the sale deed was not under the authority of the Court and the pendency of the suit under Section 52 commenced from the date of presentation of the plaint and continued until the suit or proceedings were disposed of by a final decree, and on a complete satisfaction of the discharge of such decree, an order had been obtained. The lis pendens operates during execution also. Bala Mallaiah, his LRs and purchasers from them are bound by the decision of the case. They cannot circumvent the jurisdiction of the Court and wriggle out of the decree. The transfer remained valid subject to the result of the suit and pendente lite purchaser is subject to the legal rights and obligations of his vendor as decided by the Court.

49. Our conclusion is buttressed by the decision in K.N. Aswathnarayana Setty v. State of Karnataka, question has been discussed by this Court: (SCC p. 400, para 11)

"11. The doctrine of lis pendens is based on legal maxim ut lite 'pendente nihil innovetur (during a litigation nothing new should be introduced). This doctrine stood embodied in Section 52 of the Transfer of Property Act, 1882. The principle of "lis pendens" is in accordance with the equity, good conscience or justice because they rest upon an equitable and just foundation that it will be impossible to bring an action or suit to a successful termination if alienations are permitted to prevail. A transferee pendente lite is bound by the decree just as much as he was a party to the suit. A litigating party is exempted from taking notice of a title acquired during the pendency of the litigation. However, it must be clear that mere pendency of a suit does not prevent one of the parties from dealing with the property constituting the subject-matter of the suit. The law simply postulates a condition that the alienation will, in no manner, affect the rights of the other party under any decree which may be passed in the suit unless the property was alienated with the permission of the Court. The transferee cannot deprive the successful plaintiff of the fruits of the decree if he purchased the property pendente lite. (Vide K. Adivi Naidu v. E. Duruvasulu Naidu, Venkatrao Anantdeo Joshi v. Malatibai, Raj Kumar v. Sardari Lal and Sanjay Verma v. Manik Roy.)"

16. Therefore, it is settled legal position that the effect of Section 52 is not to render transfer effect during the pendency of a suit by a party to the suit void; but only to render such transfers subservient to the rights of the parties to such suit and the pendente lite purchaser would be entitled to or suffer the same legal rights and obligations of his vendor as may be eventually determined by the Court. Therefore, in the present suit defendant No. 2 is bound by the decree which may be passed against defendant No. 1. Admittedly, by virtue of compromise decree in R.A. No. 272/2004 defendant No. 1 is aware that the suit property was allotted to the share of plaintiffs and he had no right title and interest so as to transfer the same in favour of defendant No. 2 by executing registered sale deed dated 02.05.1997 as per Ex. D1. In spite of knowing consequences of the same, defendant No. 1 executed the sale deed during the pendency of suit bearing O.S. No. 45/1994. Therefore, the said sale deed is hit by Section 52 of Transfer Property Act. Though, it cannot be held as void ab initio, as held by the Hon'ble Supreme Court in the judgment referred supra, Pendente lite purchaser defendant No. 2 herein is bound by the decree passed in the suit against his vendor.

17. The learned counsel for the appellants has also relied on the judgment in the case of Prem Singh and others V/s Birbal and others, reported in MANU/SC/8139/2006 : (2006) 5 Supreme Court Cases 353. In this case, the Hon'ble Supreme Court in para 14, 15, 16 has held as follows:

"14. A suit for cancellation of instrument is based on the provisions of Section 31 of the Specific Relief Act, which reads as under:

"31. When cancellation may be ordered -

(1) Any person against whom apprehension that such instrument, if left outstanding may cause him serious injury, may sue to have it adjudged void or voidable; and the Court may, in its discretion, so adjudge it and order it to be delivered up and cancelled.

(2) If the instrument has been registered under the Indian Registration Act, 1908 (16 of 1908), the Court shall also send a copy of its decree to the officer in whose office the instrument has been so registered; and such officer shall note on the copy of the instrument contained in his books the fact of its cancellation."

"15. Section 31 of the Specific Relief Act, 1963 thus, refers to both void and voidable documents. It provides for a discretionary relief.

"16. When a document is valid, no question arises of its cancellation. When a document is void ab initio, a decree for setting aside the same would not be necessary as the same is non est in the eye of the law, as it would be a nullity.

18. Therefore, it is crystal clear that as per Section 31 of the Specific Relief Act, the sale deed executed during the pendency of the suit is void ab initio document. Therefore, the decree for setting aside the same would not be necessary as the same is non est in the eye of the law, as it would be a nullity. It is further held in para 17 as follows:

"17. Once, however, a suit is filed by a plaintiff for cancellation of a transaction, it would be governed by Article 59. Even if Article 59 is not attracted, the residuary article would be.

19. Therefore, Article 59 of the Limitation Act is not attracted in the present case as the sale deed was executed by defendant No. 1 in favour of defendant No. 2 during the pendency of the proceedings in O.S. No. 45/1994. Under these circumstances, the finding of the trial Court confirmed by the first appellate Court that the suit of the plaintiffs is barred by limitation under Article 59 of the Limitation Act is not sustainable in law and the same is liable to be set aside. The question of limitation does not arise since the sale deed was executed during the pendency of the suit proceedings and the purchaser is bound by the decree being passed in the said suit against his vendor. Accordingly, this substantial question of law is answered in the negative.

Substantial Question of Law No. 2.

20. In view of the answer to substantial question of law No. 1, it is crystal clear that the courts below having over looked the material evidence, namely that there was a compromise decree of which respondent No. 1-defendant No. 1 was bound and he would not have sold the suit schedule property, executed the sale deed in favour of defendant No. 2 during the pendency of the suit proceedings. Therefore, the findings recorded by the both the courts below is perverse. Therefore, the said findings are liable to be set aside.

21. In view of the above discussed reasons, the trial Court ought to have decreed the suit of the plaintiffs and declared that the plaintiffs are the absolute owners in possession of the suit property and that the sale deed executed by the first defendant in favour of second defendant dated 02.05.1997 during the pendency of O.S. No. 45/1994 is not binding on the plaintiffs and consequently the defendants ought to have been restrained by way of permanent injunction from interfering with the plaintiffs peaceful possession and enjoyment of the suit property in any manner. The first appellate Court also erred in confirming findings recorded by the trial Court. Both the trial Court and first appellate Court proceeded to record findings against the plaintiffs erroneously that the suit schedule property had not fallen to the share of the plaintiffs in the family partition of 1982 and that the suit is barred by limitation. The compromise decree passed in R.A. No. 272/2004 is binding on defendant No. 1 and as such the Courts below ought to have held that the suit schedule property was allotted to the share of the plaintiffs by virtue of said compromise decree which states that the suit schedule property was allotted to the share of the plaintiffs in the family partition of the year 1982. Therefore, this question of law is answered in the affirmative. Therefore, the appeal succeeds. Accordingly I proceed to pass the following..

ORDER

The Regular Second Appeal filed under Section 100 of CPC is allowed with costs.

The judgment and decree dated 17.03.2006 passed in O.S. No. 327/2002 by the III Addl. Civil Judge (Sr. Dn.) Gulbarga, confirmed in R.A. No. 56/2006 by judgment dated 05.03.2007 by the Prl. Sessions Judge, Gulbarga is hereby set aside.

The suit of the plaintiffs is decreed with costs throughout.

It is hereby declared that the plaintiffs are the absolute owners in possession of the suit property and further declared that the sale deed dated 02.05.1997 executed by defendant No. 1 in favour of defendant No. 2 in respect of the suit schedule property is null and void and not binding on the plaintiffs. Further the defendants or anybody on their behalf are restrained by way of permanent injunction from interfering with the peaceful possession and enjoyment of the suit schedule property by the plaintiffs in any manner.




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