The Supreme Court has underscored the critical role of interim injunctions in specific performance suits, emphasizing that the doctrine of lis pendens under Section 52 of the Transfer of Property Act, 1882, may not adequately safeguard a plaintiff’s interests.
A bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan explained that while lis pendens addresses property transfers during litigation, it might leave room for situations where equitable relief becomes challenging. The Court highlighted the risk of third parties, unaware of pending disputes, investing significantly in such properties, potentially tilting equity in their favor. In such cases, the plaintiff may be limited to monetary damages rather than the desired specific performance of the sale agreement.
The Court illustrated this concern through an example: If a defendant sells a disputed property to an unsuspecting third party who then spends extensively on improvements, equity may favor the buyer, making it difficult for the plaintiff to enforce the original agreement. This underscores the necessity of seeking an injunction to prevent transfers during litigation.
Order 39 Rule 1 of the Civil Procedure Code (CPC), which allows courts to grant interim injunctions restraining the sale or alienation of property, complements Section 52 of the Transfer of Property Act. The bench observed that if lis pendens alone were sufficient, provisions for injunctions under the CPC would be redundant. Interim orders under Rule 1 aim to strike a balance, ensuring that the plaintiff’s interests are protected without creating undue equities in favor of third parties.
The Court cautioned against relying solely on the doctrine of lis pendens, urging litigants to proactively seek injunctions to prevent complications arising from property transfers during ongoing disputes. This approach, it noted, enhances the likelihood of achieving specific performance of contracts while minimizing the potential for competing equities.
