Interim Injunctions Restraining Pendente Lite Transfers Can Be Granted In Appropriate Cases Notwithstanding Rule of Lis Pendens: Supreme Court
The Supreme Court has observed that Rule 1 Order 39 of the CPC demonstrates that, notwithstanding the Rule of lis pendens in Section 52 of the Transfer of Property Act, there can be occasion for the grant of injunction restraining pendente lite transfers.
The Court allowed the appeal filed by the Appellant reversing the Gujarat High Court’s Order that had vacated an injunction on the sale or transfer of a suit property. The Bench reinstated the Trial Court’s decision to maintain the status quo and directed the Respondents not to create any further encumbrances on the property during the pendency of the suit.
The Bench of Justice J.B. Pardiwala and Justice R. Mahadevan observed, “It must be noted that Rule 1 of Order 39 of the Code clearly provides for interim injunction restraining the alienation or sale of the suit property and if the doctrine of lis pendens as enacted in Section 52 of the T. P. Act was regarded to have provided all the panacea against pendente lite transfers, the Legislature would not have provided in Rule 1 for interim! injunction restraining the transfer of suit property. Rule 1 of Order 39, in our view, clearly demonstrates that, notwithstanding the Rule of lis pendens in Section 52 of the T. P. Act, there can be occasion for the grant of injunction restraining pendente lite transfers in a fit and proper case.”
AOR Chirag M. Shroff represented the Appellant, while Advocate Adithya Koshi Roy appeared for the Respondents.
The property in dispute was jointly purchased in 1991 by the parties through registered sale deeds. Subsequently, a jewellery showroom was established on the property with the involvement of all parties. However, the business ceased operations in 2013.
The Appellant discovered in 2019 that one of the Respondents, using a power of attorney granted in 1995 for administrative purposes, had executed a sale deed in favour of his son, another Respondent, without their knowledge or consent. The sale was allegedly for Rs. 1.70 crore, significantly below the property’s market value of over Rs. 20 crore at the time. Aggrieved by this transaction, the Appellant filed a civil suit for declaration, cancellation of the sale deed, and permanent injunction.
The Trial Court granted an interim injunction restraining the Respondent from dealing with the property. However, the Gujarat High Court vacated this order, citing alleged harassment by the Appellant and their use of political influence.
The Supreme Court set aside the High Court order vacating the Trial Court Order granting injunction after noting that it accepted the entire defence as “the gospel of truth.”
The Bench stated that Appellate Courts should not interfere with discretionary orders of Trial Courts unless they are found to be perverse, arbitrary, or contrary to settled principles of law. Referring to the precedent in Wander Ltd. v. Antox India P. Ltd. (1990), the Bench reiterated that appellate scrutiny of interlocutory orders should be limited. “In such appeals, the appellate court will not interfere with the exercise of discretion of the court of the first instance and substitute its own discretion, except where the discretion has been shown to have been exercised arbitrarily or capriciously or perversely, or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions,” it reiterated.
“It is also pertinent to observe that immediately after the High Court set aside the order of the trial court granting interim injunction, the defendant no. 3 entered into a transaction which created a third party right on the suit property. A perusal of the impugned order indicates that although a specific request was made by the plaintiffs before the High Court to stay the operation of the impugned order to enable them to file an appeal before this Court, yet the request was not accepted. It is beyond our comprehension as to why such urgency was exhibited by the High Court in vacating the status quo on the suit property, more so when the suit was still pending before the trial court and the rights of the parties were yet to be crystallized,” the Court noted.
The Court noted that the transfer of the property by the Respondent to a third party during the pendency of the appeal was subject to the doctrine of lis pendens under Section 52 of the Transfer of Property Act.
“High Courts must not lightly set aside the decision arrived at by the trial court in exercise of its discretion unless the order of the trial court fails to satisfy the parameters as delineated by us in the preceding paragraphs. The failure to engage with these crucial aspects renders the High Court's order deficient, detracting from the objective of rendering substantive and reasoned justice,” the Court remarked.
Consequently, the Court held, “In view of the aforesaid, this appeal succeeds and is hereby allowed. The impugned order passed by the High Court is set aside…The respondents herein shall maintain status quo as regards the suit property as on date and shall not create any further encumbrances over the same in any manner.”
Accordingly, the Supreme Court allowed the Appeal.
Cause Title: Ramakant Ambalal Choksi v. Harish Ambalal Choksi & Ors. (Neutral Citation: 2024 INSC 913)
Appearance:
Appellant: AOR Chirag M. Shroff; Advocate Mahima C Shroff,
Respondents: Advocate Adithya Koshi Roy; AOR Nikhil Goel
