RULE 102 ORDER XXI CPC: SUPREME COURT CLARIFIES PROTECTION FOR BONA FIDE PURCHASERS WITH INDEPENDENT TITLE CHAIN AGAINST TRANSFEREE PENDENTE LITE BAR

Introduction

The Supreme Court of India delivered its Judgment in Tahir V Isani vs. Madan Waman Chodankar (Since Deceased) Now Through His Legal Representatives & Others (SLP(C) No. 15167 of 2022). The Two Judges Bench comprising Justices Sandeep Mehta and Vikram Nath, rendered this significant decision addressing crucial issues concerning execution of decrees and the doctrine of Lis Pendens under the Code of Civil Procedure, 1908.

Factual Background

The dispute originated from a property in Panaji, with a two-floor building owned by Mrs. Maria Eduardo Apolina Gonsalves Misquita. In 1977, a portion of this property was leased to Madan Waman Chodankar (respondent no. 1) through a lease deed in 1977.

Subsequently, Chodankar entered into a partnership with Dyaneshwar Keshav Malik and others (“Maliks”) on March 13, 1977, for operating a hardware business from the leased premises. The original owner, Mrs. Misquita, sold the entire property to M/s. Rizvi Estate and Hotels Pvt. Ltd. on January 16, 1988. An agreement was executed between the purchaser and the Maliks for surrendering possession to facilitate building demolition and reconstruction, with Chodankar serving as a confirming party.

The legal complications began when Chodankar filed an injunction suit against M/s. Rizvi Estate, while simultaneously facing an eviction application from the same entity in 1989. In 1996, Chodankar initiated a civil suit against the Maliks for partnership dissolution, profit recovery, and ejectment. The Trial Court decreed this suit in Chodankar’s favor through an ex parte judgment dated April 24, 2008.

M/s. Rizvi Estate sold the property to appellant Tahir V. Isani on April 24, 2007, and the Maliks executed a surrender deed in favor of Isani on October 5, 2007, accepting Rs. 10 lakhs. When Chodankar sought execution of his 2008 decree through Execution Application No. 22 of 2008 (B), Isani filed objections under Order XXI Rules 97 and 101 of the CPC in February 2009.

Contentions of the Parties

Appellant’s Contentions (Tahir V. Isani):

The Appellant contended that he was a bona fide purchaser who acquired the property from M/s. Rizvi Estate and Hotels Pvt. Ltd., who were not parties to the original suit. He argued that his title did not originate from the Judgment-Debtor (Maliks) and therefore, Rule 102 of Order XXI CPC should not apply to bar his objections. The Appellant maintained his right to object to execution as the property owner, emphasizing that the Maliks had already surrendered their rights through a written agreement dated April 11, 1988, and subsequently through a surrender deed dated October 5, 2007.

Respondent’s Contentions (Legal Representatives of Chodankar):

The Respondent’s legal representatives argued that the Appellant was a transferee pendente lite of the Judgment-Debtor, making his application under Rules 97 and 101 of Order XXI CPC non-maintainable according to Rule 102. They sought to discontinue the enquiry based on the doctrine of lis pendens, contending that the sale deed dated April 24, 2007, was executed during the pendency of the suit, thereby attracting the prohibition under Rule 102.

Decision of the Court

The Supreme Court allowed the appeal and set aside the impugned High Court order dated July 25, 2022. The Court directed the Executing Court to proceed with the enquiry under Order XXI Rules 97 and 101 and conclude it in accordance with law.

Key Legal Findings:

1. Interpretation of Rule 102 of Order XXI CPC:

The Court clarified that Rule 102 applies only when the person obstructing execution traces his title from the Judgment-Debtor. Since the Appellant purchased the property from M/s. Rizvi Estate (who were not parties to the original suit), he was not a transferee pendente lite of the Judgment-Debtor.

2. Protection of Decree-Holders vs. Bona Fide Purchasers:

While emphasizing the importance of protecting Decree-Holders’ interests, the Court recognized that such protection cannot be blanket. The specific circumstances and the source of the transferee’s title should be considered.

3. Conditions for Applying Rule 102:

The Court established four essential ingredients:

• Existence of a decree for possession of immovable property,
• Resistance or obstruction in execution,
• Obstruction by a transferee of the Judgment-Debtor, and
• Transfer occurring after suit institution.

Conclusion

This Judgment represents a significant clarification of the scope and application of Rule 102 of Order XXI CPC and its relationship with the doctrine of Lis Pendens. The Supreme Court’s decision strikes a crucial balance between protecting Decree-Holders from fraudulent transfers by Judgment-Debtors and safeguarding the rights of genuine purchasers who acquire property through independent title chains.

The Court’s emphasis on tracing the source of title demonstrates sophisticated legal reasoning. By distinguishing between transferees who derive title from Judgment-Debtors versus those who acquire property through independent sources, the Judgment prevents the mechanical application of Rule 102 that could prejudice innocent purchasers.

The Judgment also addresses the practical reality of property transactions in India, where legitimate buyers should not be penalized for acquiring property during the pendency of unrelated litigation. The Court’s reference to the historical observation that “difficulties of litigants in India indeed begin when they have obtained a decree” underscores the need for balanced interpretation of execution provisions.

Furthermore, the Court criticized the Respondent’s delayed application (filed after ten years) as “belated and mala fide,” establishing that parties cannot strategically invoke procedural provisions to frustrate legitimate proceedings after significant delay.

YASH HARI DIXIT

Legal Associate

The Indian Lawyer & Allied Services

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