CELIR LLP vs Sumati Prasad Bafna 2024 INSC 978 - S 52 TP Act - Lis Pendens - Contempt Of Court

Transfer of Property Act 1882 -Section 52- Doctrine of Lis Pendens - Although Section 52 does not render a transfer pendente lite void yet the court while exercising contempt jurisdiction may be justified to pass directions either for reversal of the transactions in question by declaring the said transactions to be void or proceed to pass appropriate directions to the concerned authorities to ensure that the contumacious conduct on the part of the contemnor does not continue to enure to the advantage of the contemnor or anyone claiming under him. (Para 180)

Contempt of Courts Act - Merely because there is no prohibitory order or no specific direction issued the same would not mean that the parties cannot be held guilty of contempt- Any contumacious conduct of the parties to bypass or nullify the decision of the court or render it ineffective, or to frustrate the proceedings of the court, or to enure any undue advantage therefrom would amount to contempt. Attempts to sidestep the court’s jurisdiction or manipulate the course of litigation through dishonest or obstructive conduct or malign or distort the decision of the courts would inevitably tantamount to contempt sans any prohibitory order or direction to such effect. Mere conduct of parties aimed at frustrating the court proceedings or circumventing its decisions, even without an explicit prohibitory order, constitutes contempt. Such actions interfere with the administration of justice, undermine the respect and authority of the judiciary, and threaten the rule of law. (Para 200-201)

Contempt of Courts Act -Court not only has a duty to issue appropriate directions for remedying or rectifying the things done in violation of its orders but also the power to take restitutive measures at any stage of the proceedings- Apart from punishing the contemnor for his contumacious conduct, the majesty of law may demand that appropriate directions be issued by the Court so that any advantage secured as a result of such contumacious conduct is completely nullified. The approach may require the Court to issue directions either for reversal of the transactions in question by declaring said transactions to be void or passing appropriate directions to the concerned authorities to see that the contumacious conduct on the part of the contemnor does not continue to enure to the advantage of the contemnor or anyone claiming under him. (Para 222)

SARFAESI Act - Circumstances when a sale of property by auction or other means under the SARFAESI Act may be set-aside after its confirmation- Any sale by auction or other public procurement methods once already confirmed or concluded ought not to be set-aside or interfered with lightly except on grounds that go to the core of such sale process, such as either being collusive, fraudulent or vitiated by inadequate pricing or underbidding. Mere irregularity or deviation from a rule which does not have any fundamental procedural error does not take away the foundation of authority for such proceeding. In such cases, courts in particular should be mindful to refrain entertaining any ground for challenging an auction which either could have been taken earlier before the sale was conducted and confirmed or where no substantial injury has been caused on account of such irregularity.(Para 218)

Constitution of India - Article 226 ; SARFAESI Act - Section 17 - Where the Borrower is aggrieved by any proceedings initiated under the SARFAESI Act or any action proposed to be taken by a secured creditor, it has to avail the remedy under the SARFAESI Act and no writ petition would lie or be maintainable. (Para 124)

Henderson Principle- All claims and issues that could and ought to have been raised in a previous litigation should not be relitigated in subsequent proceedings- The extended form of res-judicata more popularly known as ‘Constructive Res Judicata’ contained in Section 11, Explanation VII of the CPC originates from this principle-‘Henderson Principle’ is a core component of the broader doctrine of abuse of process, aimed at enthusing in the parties a sense of sanctity towards judicial adjudications and determinations. It ensures that litigants are not subjected to repetitive and vexatious legal challenges. At its core, the principle stipulates that all claims and issues that could and should have been raised in an earlier proceeding are barred from being raised in subsequent litigation, except in exceptional circumstances. This rule not only supports the finality of judgments but also underscores the ideals of judicial propriety and fairness- Piecemeal litigation where issues are deliberately fragmented across separate proceedings to gain an unfair advantage is in itself a facet of abuse of process of law and would also fall foul of this principle. Merely because one proceeding initiated by a party differs in some aspects from another proceeding or happens to be before a different forum, will not make the subsequent proceeding distinct in nature from the former, if the underlying subject matter or the seminal issues involved remains substantially similar to each other or connected to the earlier subject matter by a certain degree, then such proceeding would tantamount to ‘relitigating’ and the Henderson Principle would be applicable- Where a party deliberately withholds certain claims or issues in one proceeding with the intention to raise them in a subsequent litigation disguised as a distinct or separate remedy or proceeding from the initial one, such subsequent litigation will also fall foul of this principle- where a plea or issue was raised in earlier proceedings but later abandoned it is deemed waived and cannot be relitigated in subsequent. Allowing such pleas to be resurrected in later cases would not only undermine the finality of judgments but also incentivize strategic behaviour, where parties could withdraw claims in one case with the intention of reintroducing them later. proceedings. Abandonment signifies acquiescence, barring its reconsideration in subsequent litigation. (Para 135-147)

Doctrine of Lis Pendens - The doctrine bars the transfer of a suit property during the pendency of litigation. The only exception to the principle is when it is transferred under the authority of the court and on terms imposed by it. Where one of the parties to the suit transfers the suit property (or a part of it) to a third-party, the latter is bound by the result of the proceedings even if he did not have notice of the suit or proceeding..The following conditions ought to be fulfilled for the doctrine of lis pendens to apply: - i. There must be a pending suit or proceeding; ii. The suit or proceeding must be pending in a competent court; iii. The suit or proceeding must not be collusive; iv. The right to immovable property must be directly and specifically in question in the suit or proceeding; v. The property must be transferred by a party to the litigation; and vi. The alienation must affect the rights of any other party to the dispute. (Para 158-159) Doctrine of lis pendens kicks in the moment a proceeding is instituted / filed irrespective of whether such filing is still defective or notice is yet to be issued by the court. It further held that any transfer made during the pendency of such proceeding would be subject to the final result of the litigation or in other words would be hit by lis pendens under Section 52 of the TPA. (Para 167)

Transfer of Property Act 1882 -Section 52- (Maharashtra Amendment) The amended Section 52 sub-section (1) of the TPA casts upon a party who is claiming any right to a property which is a subject- matter of any pending suit or proceeding an additional duty to register a notice of pendency in respect of such property so as to caution and put to notice any third-party who might otherwise be unaware of such proceeding or litigation despite the best of due diligence either due to inadvertence or deliberate misleading by one of the parties to the lis and as result might be genuinely considering to purchase or acquire any right in the subject-matter proceeding. The requirement of registration of notice of pendency is to prevent any undue or unwarranted hardship to such third-parties who even after a reasonable due diligence have bona-fidely purchased the property believing it to be free from the encumbrances of any pending proceeding only to later face the adverse consequence of losing their rights by a mechanical application of lis pendens.- diligence. Although, the said provision is for the benefit of the third-party, yet such subsequent purchasers cannot as a matter of absolute right claim any title to such property solely on the ground of want of any notice of pendency being registered. (Para 172) Even in the absence of a registered notice of pendency in terms of the amended Section 52 of TPA the said provision will not be rendered ipso-facto inapplicable, at best it would preclude the party seeking benefit of this doctrine to claim it as a matter of right, but by no stretch would it mean that the third-party conversely would be able to as matter of absolute right claim inapplicability of this doctrine. It would be the discretion of the courts to see keeping in mind the peculiar facts of the case to ascertain whether such doctrine ought to be applied or not. Where the courts are satisfied that the third-party had genuinely purchased the subject-matter property after an exercise of a reasonable degree of care and caution and that it was otherwise unaware of the pendency of proceedings, the courts would be circumspect to displace the rights of such bona-fide third-party by a mechanical application of the doctrine of lis pendens. (Para 174)

Doctrine of Election - Once a party has elected to choose remedy under one forum, again the same cause of action cannot be challenged before another forum:A litigant cannot approbate or reprobate at the same time. Election is the obligation imposed upon a party by Courts of equity to choose between two inconsistent or alternative rights or claims in cases where there is clear intention of the person from whom he derives one that he should not enjoy both.(Para 154)

Expressio Unius Est Exclusio Alterius - The expression of one thing is the exclusion of another. Where a court consciously and specifically grants certain reliefs but does not advert to other reliefs or rights, the relief so expressly provided necessarily leads to the implied exclusion of the other reliefs and rights. (Para 154)