The Court allowed the builder to execute sale deeds for already-agreed buyers, but only with trial court permission and subject to the final suit result.
The builder must deposit security money, and the title suit must be decided quickly.
The Court also corrected the list of parties in the earlier appeal order.
Case Background
The dispute arises from Title Suit No. 182 of 2017 pending before the Sub Judge-1, Nalanda at Biharsharif. The opposite parties in the present case, as plaintiffs in that title suit, claim that the suit land is their ancestral property.
According to them, some fictitious person transferred this ancestral land in favour of the present petitioner, a company registered under the Companies Act. They therefore filed the title suit seeking declaration of their title over the land and a decree for recovery of possession.
Along with the suit, the plaintiffs requested a temporary injunction to stop the company from making any construction over the land, transferring it further, or changing its nature. On 09.01.2018, the Sub Judge-1, Nalanda granted a temporary injunction restraining the company from construction or transfer.
The company, as defendant in the suit, stated that it had lawfully purchased the land through several registered sale deeds in 2016 and 2017 from the recorded tenant for valuable consideration. It further claimed that it had already taken up a large residential project, constructing duplex and multi-storied buildings, and that nearly 80 per cent of the work was complete as per a sanctioned plan.
Aggrieved by the injunction, the company filed Miscellaneous Appeal No. 145 of 2018 before the Patna High Court under Order 43 Rule 1(r) of the Code of Civil Procedure. A co-ordinate Bench disposed of that appeal by order dated 06.02.2019.
In that order, after recording the company’s statement that it would not sell any constructed portion till disposal of the suit, the High Court set aside the injunction only to the extent that it stopped construction. It made it clear that any construction on the suit land would remain subject to the result of the suit. However, the restraint against transfer of any constructed portion was kept intact till the suit’s disposal. The trial court was asked to dispose of the suit preferably within one year.
Later, the company felt that some parts of what it believed had been orally observed in court were missing from the written order. That led to the present modification application, registered as Miscellaneous Jurisdiction Case No. 1672 of 2019.
What the Court Examined and Decided
The present application was heard by Hon’ble Mr. Justice Anil Kumar Sinha. The petitioner sought several directions mainly relating to execution of sale deeds and speedy disposal of the title suit, along with correction of the party description in the earlier appellate order.
First, the company requested that the High Court modify the order dated 06.02.2019 in Miscellaneous Appeal No. 145 of 2018. It wanted explicit permission to execute sale deeds in favour of buyers, with permission of the trial court.
The company also requested a direction to the trial court to dispose of Title Suit No. 182 of 2017 within one year, on a day-to-day basis, without adjournments. Further, in view of the order already passed on an interlocutory application for substitution in the appeal, it sought correction of the party position to include legal heirs and delete a deceased respondent whose heirs were already on record.
On facts, the company explained that the title suit had been filed on 04.07.2017. Even before that date, it had already entered into several registered agreements for sale with various buyers for the duplex units being constructed on the suit land. Names and details of these buyers were provided through a supplementary affidavit.
It further submitted that even before the trial court’s injunction order dated 09.01.2018, some registered agreements for sale had been executed. At present, 75 duplex houses were under construction, and more than 50 agreements for sale had been entered into both before and after filing of the suit.
The company drew the Court’s attention to the financial position of these buyers. Many of them had obtained housing loans from different financial institutions and banks. Due to the inability to get sale deeds and possession, some institutions had started converting housing loans into personal loans and were threatening to levy penal interest.
The company argued that if it was not allowed to execute sale deeds in favour of such buyers, even with court permission and subject to the result of the suit, both it and the buyers would suffer severe hardship and irreparable loss. The company had already invested crores of rupees in the project.
To support its prayer, the learned Senior Counsel for the petitioner relied on three Supreme Court decisions dealing with Section 52 of the Transfer of Property Act, 1882, which contains the doctrine of lis pendens.
In T. Ravi and Another v. B. Chinna Narasimha and Others, reported in (2017) 7 SCC 342, the Supreme Court, after referring to Section 52, held that the doctrine of lis pendens does not annul or make void a conveyance made during the pendency of a suit. Instead, any such transfer remains valid but subservient to the rights that may be declared in the suit. It further recognised that courts have the power to exempt property from the full operation of Section 52 by imposing conditions such as security, so that parties can still transfer property despite the pendency of litigation.
The petitioner also cited A. Nawab John v. V.N. Subramaniyam, reported in (2012) 7 SCC 738. There, the Supreme Court reiterated that transfers during pendency of suit are not void, but the transferee remains bound by the outcome of the proceedings and steps into the shoes of the transferor.
Another case relied upon was Mandali Ranganna and Others v. T. Ramachandra and Others, reported in (2008) 11 SCC 1. In that case, the Supreme Court noted that substantial construction had already come up and could not be demolished at that stage. It allowed further construction to continue subject to the result of the suit, directed that any sale deeds record the pendency of the litigation, and required the furnishing of security.
On the other side, counsel for the respondents (plaintiffs in the title suit) opposed the modification application. They argued that the company had not made out any case for altering the previous High Court order of 06.02.2019.
After hearing both sides and examining the record, the Patna High Court noted important undisputed facts. The company had purchased the suit land and carried out extensive construction of buildings and duplex units. It had also entered into registered agreements for sale with numerous buyers and invested a substantial amount of money.
Importantly, these factual assertions about constructions, agreements, and investment were not contradicted by the respondents. It was also admitted that the company was in possession of the suit land.
Considering these circumstances and the legal principles on lis pendens, the Court observed that a decision in a suit should bind not only the litigating parties but also those who acquire interest in the property during the suit. Any right acquired by a purchaser pendente lite would be subordinate to the rights of the successful party in the suit.
On this basis, the Court decided to partly modify the earlier order dated 06.02.2019. It allowed the company to execute sale deeds in favour of those buyers with whom it had already entered into registered agreements for sale. However, this was not an unrestricted permission.
Firstly, every sale deed would require prior permission of the trial court. Secondly, each sale deed must clearly record that Title Suit No. 182 of 2017 is pending and that all such sales are subject to the final decision of the suit. Therefore, buyers would purchase with full knowledge that their rights depend upon the eventual judgment in the title suit.
To protect the interests of the plaintiffs, the High Court also looked at the valuation of the suit. The respondents had valued the suit at Rs. 20,00,000 (twenty lakhs). Keeping their interest in mind, the Court directed the company to deposit Rs. 75,00,000 (seventy five lakhs) by way of bank draft before the trial court within four weeks.
The trial court was directed to keep this amount in an interest-bearing instrument in any nationalised bank. The Court made it clear that this sum would abide by the final outcome of the title suit.
Further, the High Court reiterated the need for speedy disposal of the main case. It requested the trial court to decide Title Suit No. 182 of 2017 preferably within one year from the date of the modification order, on a day-to-day basis, and without unnecessary adjournments. Both sides were directed to cooperate in the trial.
On the question of correcting party names, the Court noted that respondent nos. 2 and 13 in Miscellaneous Appeal No. 145 of 2018 had died during the pendency of that appeal. Interlocutory Application No. 7682 of 2018 seeking substitution of the legal heirs of respondent no. 2 and deletion of respondent no. 13 (whose legal heirs were already on record as respondent nos. 14 and 15) had been allowed on 06.02.2019. However, the party position in the cause title of that appellate order had not been updated.
To remove this discrepancy, the Court modified the order dated 06.02.2019 to clarify that it shall be read as passed with the corrected party position as now set out in the present judgment. The Registry was directed to correct the party description on the Court’s website accordingly.
With these directions, the modification application was disposed of.
Why This Judgment Matters
This judgment is important for homebuyers, landowners, and builders involved in property disputes where construction has already advanced during litigation.
The Patna High Court has shown that even when a title suit is pending, the Court can allow sale of constructed units, but only in a controlled way. Permission of the trial court, clear mention of the pending suit in each sale deed, and a substantial security deposit together protect the original owners’ claims while reducing hardship to buyers and developers.
The decision also reinforces that courts will push for speedy trials in such cases and try to balance interests instead of simply stopping ongoing housing projects. It underlines that anyone purchasing property during a dispute does so at their own risk and will be bound by the final judgment.
Legal Issues and Answers
Issue: Can the builder be allowed to execute sale deeds for duplex houses on disputed land during pendency of a title suit, despite an existing restraint on transfer?
Answer: Yes. The Patna High Court modified its earlier order to allow execution of sale deeds in favour of buyers with pre-existing registered agreements, but only with permission of the trial court, with a clear recital that the matter is sub judice, and subject to the final decision in Title Suit No. 182 of 2017. The builder must also deposit Rs. 75,00,000 as security.
Issue: How should the Court safeguard the plaintiffs’ interests while permitting such transfers?
Answer: By directing deposit of Rs. 75,00,000 in an interest-bearing account subject to the suit outcome, ensuring all sale deeds record that the suit is pending and that rights are subject to the final judgment, and by ordering expeditious disposal of the title suit on a day-to-day basis.
Issue: How to correct an earlier appellate order where substitution of legal heirs had been allowed but the cause title remained uncorrected?
Answer: The Court modified the earlier order to state that it shall be read as passed with the corrected party position and directed the Registry to update the party details on the website accordingly.
Cases Cited by the Court
- T. Ravi and Another v. B. Chinna Narasimha and Others, (2017) 7 SCC 342
- Vinod Seth v. Devinder Bajaj, (2010) 8 SCC 1 : (2010) 3 SCC (Civ) 212 (quoted within T. Ravi)
- A. Nawab John v. V.N. Subramaniyam, (2012) 7 SCC 738 : (2012) 4 SCC (Civ) 324
- Sanjay Verma v. Manik Roy, (2006) 13 SCC 608 (quoted within A. Nawab John)
- Mandali Ranganna and Others v. T. Ramachandra and Others, (2008) 11 SCC 1
Case Details
Case Number: Miscellaneous Jurisdiction Case No. 1672 of 2019 in Miscellaneous Appeal No. 145 of 2018; arising out of Title Suit No. 182 of 2017
Case Title: The Managing Director, Vastu Bihar through Vinay Kumar Tiwary v. Jitendra Mohan Sahay & Others
Coram: Hon’ble Mr. Justice Anil Kumar Sinha
Citation: 2022 (2) PLJR 365
Advocates: For the petitioner: Mr. Rajendra Narain, Senior Advocate; Mr. Surendra Kishore Thakur; Mr. Ravi Shankar Kumar. For the opposite parties: Mr. Anil Chandra.
Nature of the Case: Miscellaneous jurisdiction application seeking modification of an order passed in a miscellaneous appeal under Order 43 Rule 1(r) CPC against a temporary injunction in a title suit.
Date of Judgment: 13.04.2022
Link to Judgment: View full judgment on Patna High Court website
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