Danesh Singh & Ors. vs. Har Pyari (Dead) Thr. LRs. & Ors.
Background
In 1970, one Duli Chand mortgaged agricultural land to a bank to secure a tractor loan. After he failed to repay, the bank sued and obtained an ex-parte decree in 1984 against his legal heirs (who were also the judgment-debtors) for recovery of the dues by sale of the mortgaged property. In 1985, after this decree, and even after the bank had already moved to execute it, one of the judgment-debtors' relatives sold portions of the very same mortgaged land to a couple (respondent nos. 1 and 2) for a total of Rs. 70,000. The bank subsequently had the entire mortgaged property attached and auctioned in 1988; the appellants (sons of one of the judgment-debtors) were the successful bidders and took possession. The couple who had bought portions of the land then filed a separate civil suit claiming ownership and possession, alleging fraud in the auction, and this suit succeeded before the Trial Court, the first Appellate Court, and the High Court of Punjab and Haryana, prompting the present appeal.
Decision Breakdown
The Supreme Court held that the couple's purchases were "transfers pendente lite", made while the bank's recovery suit and execution were already pending, so they were bound by the doctrine of lis pendens under Section 52 of the Transfer of Property Act, 1882, and could not defeat the decree-holder's rights. It further held that their separate civil suit was barred in law: as representatives/transferees from a judgment-debtor, they were required to raise any grievance through an application under Section 47 CPC or Rule 99 of Order XXI CPC within the executing court itself, not through a fresh independent suit, and having failed to use those remedies in time, their suit was not maintainable. The Court therefore allowed the appeal and set aside the High Court's judgment. However, given that more than 40 years had passed, that the couple had genuinely paid Rs. 70,000 in good faith to the vendor, and that the auction-purchaser appellants were themselves close relatives (nephews) of that vendor, the Court invoked its power to do complete justice and, rather than leaving the couple to start fresh litigation to recover their money, directly directed the appellants to pay them Rs. 75,00,000 within six months (with 12% annual interest on any delay), bringing the four-decade-old dispute to a final close.
Lesson Learnt
A buyer who purchases property while a court case affecting that very property is already pending (or after execution proceedings have begun) takes it subject to the outcome of that case, and cannot later mount a separate lawsuit to protect the purchase. The law channels such objections through specific, time-bound remedies inside the execution proceedings themselves, and missing those deadlines can be fatal even if the buyer acted in good faith.