Lis Pendens

What is ‘Lis Pendens’?

‘Lis’ means litigation and ‘pendens’ means pending, which literally translates into pending litigation. Lis pendens in common parlance means “a pending legal action”. Lis pendens” is construed to be the jurisdiction, power, or control which courts acquire over property involved in a suit, pending the continuance of the action , and until final judgment

History

In common law, just the fact that a suit is filed for a particular title to a piece of land gave justifiable implication of the existence of the title dispute to every member of the society whether a suit for that was reported in the civil registry or not. Anyone who purchased a real estate that was subject to a suit would only assume that they were taking that property with certain rights no matter how damp these rights may be and to what extent in the future they may be determined. Consequently, this meant that the final ownership of the subject matter of a suit could not be legally altered until that suit was concluded. When a case goes unnoticed, unreported, or unduly promptly sold, innocent purchasers are likely to learn of the controversy far too late.

As a property right incurs some collateral to the parties involved in the mediation, the cruel effect of this rule, along with its implications on innocent buyers, prompted the introduction of lis pendens statutes in various jurisdictions - these are legal statutes that require prior written documentation to be placed in the property land records to enhance the notice provisions aiming in modifying this rule. Usually, the Hubble charge is in an entirely distinct instrument and is kept separately from the premises where the real estate is situated if the case in question involves that real estate.

Official Definitions

The doctrine of lis pendens finds its place in Section 52 of TOPA which provides that if there is any transfer of any immovable property pending litigation, the same shall not affect the rights of the parties in respect to the immovable property. The outcome of the litigation, passed by a court of competent jurisdiction, in the matter during the pendency of which the transfer had taken place would be binding upon such a purchaser, who has purchased the property during the pending litigation.

Section 52 in The Transfer Of Property Act, 1882

52. Transfer of property pending suit relating thereto.—

During the pendency in any Court having authority within the limits of India excluding the State of Jammu and Kashmir or established beyond such limits by the Central Government of any suit or proceedings which is not collusive and in which any right to immoveable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose.

Important components of 'Lis Pendens'

Basic Ingredients of Section 52 of TOPA -

Presence of suit : There must be pending suit in a court of competent jurisdiction.

Actual nature: The case cannot be collusive, meaning that it must reflect an actual dispute and not a manipulated case for the sake of halting the transfer of property.  Direct involvement with rights to immovable property: The case has to specifically and directly relate to a dispute involving rights to immovable property.

Prohibition on transfer: The property cannot be transferred or managed in a manner that impacts the rights of other involved parties while the lawsuit is ongoing.

Court approval: Any transfer or management of the property while the lawsuit is active requires permission from the court and must adhere to the conditions established by the court.

'Lis Pendens' as defined in Case Laws

Essential Conditions for the 'Doctrine of Lis Pendens'

The application of this doctrine is not automatic merely because a legal action involving immovable property is underway; instead, specific essential conditions must be met. Hon'ble Justice A. N. Sen outlined three critical requirements for the enforcement of the doctrine in the case of Dev Raj Dogra and Ors. vs. Gyan Chand Jain and Ors.8:

There must be on-going suit or proceeding wherein any right relating to immovable property is directly and specifically in issue;

The ongoing suit or proceeding must not be of a collusive nature;

During the pendency of such a suit or proceeding, the property shall not be transferred or otherwise dealt with by any party to such suit or proceeding in any manner which may prejudice the rights of any other party to such suit or proceeding under any decree or order that may be made therein, except with the permission of the Court. In summary, any transfers or dealings with the property during the legal action are prohibited unless they are authorized by the Court, particularly if such actions could affect the rights of any other party under the ultimate order or decree issued in the case.

Applicability of 'Doctrine of Lis Pendens'

The Apex court in the case of Amit Kumar Shaw Vs. Farida Khatoon, (2005) 11 SCC 403 stated the required elements for the applicability of rule of lis pendens under section 52.

They are as follows:

• The suit must be in proceeding

• The instituted suit should be filed under court with competent jurisdiction.

• The instituted suit should be filed under court with competent jurisdiction.

• The right of title of an immovable property is directly and specifically in question.

Directly affects the rights of the other party.

Property in dispute is being transferred by

either of the parties.

The suit cannot be collusive in nature.

Court has explained the distinction between collusive and fraudulent proceeding. In the case of Awadesh Pradesh V. Belarani it was held, "the rule of lis pendens does not apply to the collusive suit or a suit in which a decree is obtained by fraud or collusion".

This doctrine applies only to immovable property cases and not to cases in which subject matter is movable property.

• The case must be directly or indirectly related to the question of the right to immovable property such as a dispute over title, right of alienation, etc. and is not applicable to suits related to debt, taxes, rents, etc.

• The doctrine of lis pendens is not applicable where the suit is collusive i.e. instituted with mala fide intention. This means that there is no actual dispute but the suit is filed for some evil motive, for example, defrauding a third party.

Relevance of 'Lis Pendens' in RERA ACTA, 2016

The doctrine of Lis Pendens plays a crucial role in the Real Estate (Regulation and Development) Act, 2016 ensuring that property disputes are resolved fairly and that homebuyers are protected from fraudulent activities.

In the case of Pinnacle Queensgate Pvt. Ltd. vs. State of Maharashtra (2020), the Bombay High Court has held that the principle of Lis Pendens is applicable to matters under the RERA Act. As observed in M/s. Ansal API vs. NK Mohan (2019), the Delhi High Court held that the Authority is entitled to exercise its powers under the RERA Act, including attachment of property, even when a suit is pending.

Slight differences and nuances in the concept

Difference between Lis Pendens and Injunction

Injunction is a court order which restrains a party from doing a particular thing or compels to do an act.

Differences -

1. Purpose: Lis Pendens serves to preserve the status quo of the property, whereas an Injunction serves to prevent harm or injury.

2. Scope: Lis Pendens is effective on all parties, whereas an Injunction is generally granted against a particular party or parties.

3. Effect: Lis Pendens makes the sale of any immovable property void as well as Injunction, though injunction can be preliminary or perpetual as well as a limited effect.

4. Court Order: Doctrine of Lis Pendens is used by the Court whereas injunction is a particular court order.

Difference between Lis Pendens and Attachment

Attachment is the procedure in a court of law to order the seizure or freezing of a defendant's property to secure a potential judgment.

Differences-

1. Purpose: The purpose of Lis Pendens is to keep things the way they are concerning the property while attachment aims to secure a potential judgment.

2. Effect: Lis Pendens automatically affects the property while attachment requires an order from the court.

3. Duration: Lis Pendens remains in force until the litigation is disposed of, whereas attachment usually remains in force until and unless the court orders otherwise.

Technological Transformation

Digital Land Records System

UP Bhulekh is a digital land records system launched by the Government of Uttar Pradesh, India. It digitizes land records, which makes it easy to access and verify information. The citizen can search the land records online by owner name, account number or plot number. Land records are provided with certified copies so that people do not have to rush to government offices.

In case a lawsuit is filed in respect of a plot of land, the court notifies the concerned authorities, and they update the records in the UP Bhulekh. It notifies the potential buyer, seller, or any other stakeholder involved in such transaction that there is a pending lawsuit against the property, thus making them alert. The Lis Pendens notification freezes property transfers pending the outcome of the lawsuit.

International Perspectives on 'Lis Pendens'

a. United States

Most states have lis pendens-specific legislation and require a formal filing of notices.

Notice of Pendency: This is what is referred to by this doctrine in the U.S. It differs by state widely as to its requirements and effects.

For example, in California, a lis pendens must be filed with the county recorder's office and served to all the parties present in the action.

b. United Kingdom

In the UK, the concept is termed as "pending land action", and it is governed by the Land Registration Act 2002.

Registration: Notified of pending land actions, these are registered with HM Land Registry as a caution to any potential buyer or lender that there are ongoing legal actions against the property.

c. Civil Law Countries

Many civil law countries also have similar concepts, often included in their property registration systems.

France: Known as "publication d'assignation," this is registered on the land registry.

Germany: The "Vormerkung" serves the same purpose, by protecting the priority of a claim to immovable property.  

d. UNCITRAL Model Law

UNCITRAL has dealt with the issue of lis pendens within the international commercial arbitration domain.

Guidance: UNCITRAL Model Law on International Commercial Arbitration makes recommendations regarding dealing with cases in which the parties are engaged simultaneously in different procedures.

e. European Union  

The Brussels I Regulation deals with lis pendens in cross-border litigation within the EU.  

Regulation Purpose: This regulation aims to prevent parallel proceedings in different member states by requiring courts to stay proceedings if an action based on the same cause between the same parties is pending in another member state.