Thomson Press (India) Ltd. v. Nanak Builders & Investors Pvt. Ltd. (2013)

Introduction

The question of whether a subsequent purchaser can be impleaded in a suit for specific performance becomes particularly important when the property has been transferred during the pendency of the litigation.

Thomson Press (India) Ltd. v. Nanak Builders & Investors Pvt. Ltd., (2013) 5 SCC 397, is a leading Supreme Court decision dealing with Order I Rule 10(2) CPC, Order XXII Rule 10 CPC and the doctrine of lis pendens.

The Supreme Court held that a transferee pendente lite can, in appropriate circumstances, be added as a party to a suit for specific performance. However, the court must examine the conduct of the purchaser. A purchaser who acquired the property despite knowledge of the pending litigation and an order restraining alienation cannot claim the same equitable consideration as an innocent purchaser.

The judgment is important because it explains that a transfer made during litigation does not automatically become void. Instead, the transferee takes the property subject to the rights that may ultimately be declared in the pending litigation.

Case Details

Case Name

Thomson Press (India) Ltd. v. Nanak Builders & Investors Pvt. Ltd. & Others

Year

2013

Citation

(2013) 5 SCC 397; AIR 2013 SC 2389

Court

Supreme Court of India

Bench

T.S. Thakur and M.Y. Eqbal, JJ.

Case Number

Civil Appeal No. 1518 of 2013

Date of Judgment

21 February 2013

Relevant Provisions

• Order I Rule 10(2), Code of Civil Procedure, 1908
• Order XXII Rule 10, Code of Civil Procedure, 1908
• Section 52, Transfer of Property Act, 1882
• Section 19, Specific Relief Act, 1963

Subject Matter

Impleadment of subsequent purchasers, transferee pendente lite, lis pendens, specific performance and the effect of transfer during pending litigation.

Facts of the Case

Lakhbir Sawhney and her son were owners of a property known as Ojha House/Sawhney Mansion situated at F-Block, Connaught Place, New Delhi.

On 29 May 1986, the owners entered into an agreement with Nanak Builders & Investors Pvt. Ltd. for the sale of approximately 4,000 square feet on the first floor of the property for a consideration of ₹50 lakhs. Nanak Builders paid ₹1 lakh towards the consideration and claimed that further payments were made subsequently.

The premises were then occupied by Peerless General Finance Company Limited as a tenant. After the tenancy issues continued for some time, the owners eventually obtained possession of the premises.

Nanak Builders alleged that despite its readiness and willingness to complete the transaction, the owners avoided completing the sale. It therefore filed a suit for specific performance on 1 November 1991.

Before this suit was filed, a group company of Thomson Press, Living Media India Limited, had also entered into negotiations with the owners concerning the property. Litigation followed between Living Media India Limited and the owners, and an order restraining the owners from dealing with the property was passed.

The specific performance suit filed by Nanak Builders was subsequently accompanied by an undertaking that the property would not be transferred or alienated during the pendency of the proceedings.

Despite the pending litigation and the restraint against alienation, the owners executed five sale deeds between 31 January 2001 and 3 April 2001 in favour of Thomson Press (India) Ltd.

Thomson Press then applied under Order I Rule 10 CPC seeking to be impleaded as a defendant in the pending specific performance suit.

The Delhi High Court rejected the application. The matter eventually reached the Supreme Court.

Issues Before the Court

1. Whether a transferee pendente lite can be impleaded as a party to a suit for specific performance?
2. Whether Thomson Press could be added as a defendant under Order I Rule 10 CPC after purchasing the suit property during the pendency of the litigation?
3. Whether the fact that the purchaser had knowledge of the pending suit and the order restraining alienation affected its right to seek impleadment?
4. Whether a transfer made during the pendency of litigation is invalid merely because it violates an injunction or undertaking?
5. Whether Order XXII Rule 10 CPC could be invoked even though the application had originally been filed under Order I Rule 10 CPC?

Arguments of the Parties

Appellant

Thomson Press argued that it had purchased the entire property forming the subject matter of the suit and therefore had a substantial interest in the litigation.

It contended that its presence was necessary for the complete and effective adjudication of the dispute because any decree for specific performance would directly affect the property that it had purchased.

The appellant also argued that Section 52 of the Transfer of Property Act does not make a transfer during litigation void. The transfer remains effective between the parties, although it remains subject to the outcome of the pending litigation.

It was further argued that the appellant should be permitted to participate in the suit so that its rights could be properly protected.

Respondent

Nanak Builders opposed the impleadment.

It argued that Thomson Press had knowledge of the pending litigation and the restraint against alienation before purchasing the property.

According to Nanak Builders, the purchase was therefore not an innocent transaction. The appellant had deliberately purchased the property despite the existing litigation and could not use its own conduct as a basis for seeking equitable relief.

It was also argued that the suit had already progressed substantially and that allowing impleadment at such a late stage would cause further delay.

Judgment of the Supreme Court

The Supreme Court allowed the appeal and directed that Thomson Press be added as a defendant in the suit.

However, the Court did not treat Thomson Press as an innocent purchaser.

The Court held that the transfer in favour of Thomson Press was effective in transferring title, but the title acquired by the appellant remained subservient to the rights of the plaintiff in the pending suit.

The Court also made it clear that the appellant could raise only those defences which were available to and had been taken by the original defendants. It could not introduce completely independent defences merely because it had subsequently acquired the property.

Doctrine of Lis Pendens

The doctrine of lis pendens is central to the judgment.

Section 52 of the Transfer of Property Act, 1882 provides that during the pendency of a suit in which rights to immovable property are directly and specifically in question, the property cannot be transferred or otherwise dealt with so as to affect the rights of the other parties under the decree that may ultimately be passed.

The purpose of the doctrine is not to declare every transfer during litigation void.

Instead, its purpose is to ensure that parties cannot defeat the jurisdiction of the court by transferring the subject matter of the litigation to someone else.

Therefore, a purchaser who acquires property during pending litigation takes the property subject to the result of that litigation.

Effect of a Transfer During Litigation

The Supreme Court made an important distinction between the validity of a transfer and its effect on pending litigation.

A transfer pendente lite is not necessarily void merely because it takes place during the pendency of a suit.

The transferee may acquire title from the transferor, but that title remains subject to the decree that may ultimately be passed in the pending proceedings.

Thus:

Transfer pendente lite ≠ Automatically void transfer

But:

Transfer pendente lite = Transfer subject to the result of the pending litigation

This principle prevents a defendant from defeating a decree simply by transferring the disputed property to a third party.

Impleadment Under Order I Rule 10(2) CPC

Order I Rule 10(2) CPC permits the court to add a person whose presence is necessary for the effective and complete adjudication of the questions involved in the suit.

The Supreme Court recognised that a subsequent purchaser may have a sufficient interest to justify impleadment.

A purchaser who acquires the entire property involved in the litigation may be directly affected by the outcome of the suit. It can therefore be appropriate to bring such purchaser before the court.

However, impleadment remains a matter of judicial discretion.

The court must examine the nature of the transfer, the conduct of the purchaser and the stage of the proceedings.

Order XXII Rule 10 CPC

The judgment also explains the relevance of Order XXII Rule 10 CPC.

Where an interest in the subject matter of a suit is assigned, created or devolves during the pendency of the proceedings, the suit may, with the leave of the court, be continued by or against the person to whom the interest has passed.

The Supreme Court observed that although Thomson Press had specifically filed its application under Order I Rule 10 CPC, the court could consider the enabling provision contained in Order XXII Rule 10 CPC where the facts required it.

Therefore, a technical reference to the wrong procedural provision should not prevent the court from applying the appropriate provision where the circumstances justify it.

Conduct of the Subsequent Purchaser

One of the most significant aspects of the judgment is the importance given to the conduct of the transferee.

The Court recognised that a purchaser who acts properly and approaches the court promptly may, in an appropriate case, be impleaded.

However, the situation is different where the purchaser:

• knowingly enters into a transaction during pending litigation;
• purchases property despite an injunction or restraint order;
• participates in a clandestine transaction; or
• deliberately delays seeking impleadment.

Such conduct can justify refusal of impleadment.

The Court relied on the broader principle that impleadment should not become a reward for a person who deliberately attempts to defeat the pending litigation.

Why Was Thomson Press Impleaded Despite Its Conduct?

This is one of the most interesting aspects of the judgment.

The Court found that Thomson Press had acquired the entire estate that formed the subject matter of the suit. Therefore, its legal interest in the property was substantial and directly connected with the outcome of the proceedings.

Although its conduct in purchasing the property despite the pending litigation was relevant, the Court considered that it should nevertheless be brought before the court so that the final decree could effectively bind the person who had acquired the property.

The Court therefore allowed impleadment but restricted the defences available to Thomson Press.

The appellant could participate in the proceedings but could not use its position as a subsequent purchaser to enlarge the scope of the litigation or introduce defences that were unavailable to the original defendants.

Subsequent Purchaser and Specific Performance

The case is particularly important in suits for specific performance.

A purchaser who acquires the property after the original agreement for sale may be affected by the decree for specific performance.

The Supreme Court recognised that the presence of such a purchaser can sometimes be necessary to ensure that the eventual decree is effective.

The Court therefore moved beyond a rigid rule that only the original contracting parties can ever be parties to a specific performance suit.

At the same time, it did not give every subsequent purchaser an automatic right to impleadment.

The court must consider the circumstances and the purchaser’s conduct.

Difference Between Kasturi and Thomson Press

The case is important when read together with Kasturi v. Iyyamperumal, (2005) 6 SCC 733.

In Kasturi, a person claiming an independent title adverse to the vendor was not treated as a necessary or proper party because adding such a person would transform the specific performance suit into a title dispute.

Thomson Press concerns a different situation.

Here, the applicant had actually purchased the property that was the subject matter of the pending litigation from the original owners during the pendency of the suit.

Therefore, the purchaser’s interest was directly connected with the subject matter of the litigation.

The distinction is important:

Independent stranger claiming adverse title → ordinarily not impleaded.

Subsequent purchaser deriving title from the original owner → may be impleaded, depending on the circumstances.

Legal Principles Established

1. Transferee Pendente Lite Can Be Impleaded

A person who acquires the suit property during pending litigation can, in an appropriate case, be added as a party.

2. Impleadment Is Not Automatic

A subsequent purchaser does not have an absolute right to be impleaded merely because they purchased the property.

The court must exercise judicial discretion.

3. Lis Pendens Does Not Make the Transfer Automatically Void

A transfer during litigation may remain effective between the transferor and transferee, but the transferee takes the property subject to the result of the pending suit.

4. Conduct of the Purchaser Matters

A purchaser who acts with knowledge of the pending litigation or in violation of a restraint order may receive less favourable treatment.

5. Order XXII Rule 10 CPC Can Apply

Where an interest in the subject matter of the suit is transferred during litigation, Order XXII Rule 10 may provide an additional procedural basis for bringing the transferee before the court.

6. Transferee Is Bound by the Result

A transferee pendente lite cannot acquire a better position than the transferor in relation to the pending litigation.

7. Defences Can Be Restricted

A subsequent purchaser who is impleaded may be limited to the defences available to the original defendants and cannot necessarily introduce an entirely new case.

8. Final Decree Should Bind Interested Parties

Impleadment can ensure that the person who ultimately holds the property is before the court and bound by the final adjudication.

Ratio Decidendi

The ratio of Thomson Press (India) Ltd. v. Nanak Builders & Investors Pvt. Ltd. is that a transferee pendente lite who acquires the property forming the subject matter of a pending suit for specific performance may be impleaded where their presence is necessary for effective and complete adjudication, although such impleadment remains a matter of judicial discretion and the transferee takes the property subject to the result of the pending litigation.

The fact that the transfer was made during the pendency of the suit does not by itself make the transfer void. However, the transferee cannot use the transfer to defeat the rights of the plaintiff in the pending litigation.

Where the transferee has acted with knowledge of the litigation or in breach of an injunction, the court may take that conduct into account while deciding the application for impleadment and the extent of the defences available to the transferee.

Why This Case Is Important

Thomson Press v. Nanak Builders is one of the important cases for understanding the relationship between Order I Rule 10 CPC and the doctrine of lis pendens.

It demonstrates that procedural law cannot be separated from substantive property law. A purchaser who enters into a transaction during litigation may acquire an interest in the property, but that interest remains subject to the rights being litigated before the court.

The case is also important because it avoids two extreme positions.

First, it does not say that every pendente lite transfer is void.

Second, it does not say that every subsequent purchaser has an unrestricted right to enter the litigation and defend the case as if they were an original contracting party.

Instead, the court must balance the purchaser’s legal interest, the need for effective adjudication and the purchaser’s conduct.

Practical Application

Suppose A enters into an agreement with B to purchase a property.

A files a suit for specific performance against B after B refuses to complete the sale.

During the pendency of the suit, B sells the property to C.

C cannot simply argue that because C has purchased the property, the suit between A and B has become irrelevant.

Under the doctrine of lis pendens, C’s rights remain subject to the outcome of the litigation.

C may apply to be impleaded. The court will consider whether C’s presence is necessary or proper and will also examine C’s conduct.

If C purchased the property openly and without knowledge of the litigation, the court may take a more favourable view.

If C knowingly purchased the property despite an injunction restraining alienation, the court may take that conduct into account and restrict the relief or defences available to C.

Law Student and Judiciary Relevance

For examinations, remember this sequence:

Specific Performance Suit → Transfer During Pendency → Transferee Pendente Lite → Section 52 TPA → Order I Rule 10 / Order XXII Rule 10 CPC → Judicial Discretion.

A very important distinction is:

Transfer is not automatically void.

Instead:

Transfer remains subject to the decree in the pending litigation.

Another examination point is:

Subsequent purchaser + direct interest in suit property + appropriate circumstances = possible impleadment.

But:

Knowledge of litigation + violation of injunction + clandestine transaction = strong ground against favourable discretionary treatment.

ALSO READ: Razia Begum v. Sahebzadi Anwar Begum

Key Takeaways

Concept	Principle
Transferee Pendente Lite	A person acquiring the suit property during litigation may be impleaded in appropriate circumstances.
Section 52 TPA	The transferee remains bound by the result of the pending litigation.
Transfer During Suit	The transfer is not automatically void merely because litigation is pending.
Order I Rule 10(2) CPC	Allows addition of a person necessary for effective and complete adjudication.
Order XXII Rule 10 CPC	Can apply where an interest in the subject matter is transferred during litigation.
Purchaser’s Conduct	Knowledge of litigation or breach of injunction can affect the court’s discretion.
Defences	An impleaded transferee may be restricted to the defences available to the original defendants.
Lis Pendens	Prevents parties from defeating pending litigation through private transfers.
Specific Performance	A subsequent purchaser may be brought before the court where their interest is directly affected.
Judicial Discretion	Impleadment is not an automatic right of every subsequent purchaser.

Conclusion

Thomson Press (India) Ltd. v. Nanak Builders & Investors Pvt. Ltd. establishes an important principle concerning subsequent purchasers in pending specific performance suits.

A person who purchases the property during litigation does acquire an interest in the property, but that interest remains subject to the rights of the parties in the pending suit. The purchaser may be impleaded where necessary for effective adjudication, but the court will examine the circumstances and conduct of the purchaser.

The central lesson is simple: a person cannot defeat pending litigation by purchasing the disputed property, but neither does a pendente lite transfer automatically become void. The transferee takes the property subject to the result of the litigation and remains within the court’s control where impleadment is necessary.