Supreme Court Reverses High Court’s Condonation of 586-Day Delay and Grant of Leave to Appeal, Emphasizing the Importance of Timely Legal Action and Bona Fide Purchasers’ Rights in Lis Pendens Cases

Court’s Decision:

The Supreme Court ruled that the High Court’s decision to condone the 586-day delay and grant leave to appeal was legally incorrect. The Court criticized the High Court of Karnataka for allowing the delay without sufficient cause and for permitting the respondents, who were not parties to the original suit, to appeal the decree for specific performance. The Supreme Court found that the respondents had not acted diligently and failed to demonstrate why they could not file the appeal in time. Consequently, the Court set aside the High Court’s order, rejecting the respondents’ application for condonation of delay and leave to appeal.

Facts:

The case centers on the property transaction between the plaintiffs (the appellants) and the original defendant (Smt. Daisy Shanthappa, later deceased), which began with an agreement to sell the property in 1995. The plaintiffs paid a significant sum as earnest money, but the defendant did not complete the sale as agreed. As a result, the plaintiffs filed a suit for specific performance in 2006.

Meanwhile, during the pendency of the suit, the defendant allegedly sold the property to another party (Defendant No. 3), who later transferred the property to the respondents (the subsequent purchasers). The plaintiffs were unaware of this transaction until it was discovered when Defendant No. 3 attempted to change the land records.

In the course of litigation, the defendants (Defendant No. 3, the vendor to the respondents) violated an injunction order by transferring part of the land to the respondents. The respondents then sought to be added as parties in the suit, but their application was initially rejected by the trial court in 2014. This rejection was not appealed, making the order final.

However, after the trial court issued its decree in favor of the plaintiffs in 2016, the respondents (subsequent purchasers) sought to appeal the decree nearly two years later (in 2018), citing an unexplained delay of 586 days. The High Court condoned the delay and allowed the respondents to appeal, which led to the present appeal before the Supreme Court.

Issues:

The main issue that the Supreme Court had to address was whether the High Court had committed an error in condoning the 586-day delay in filing the appeal and granting leave to the respondents to appeal the decree, even though they were not parties to the original suit. Specifically, the Court considered whether the respondents were aggrieved by the trial court’s decree and if the delay could be justified.

Petitioner’s Arguments:

The petitioners, representing the original plaintiffs, argued that:

1. The respondents failed to explain the delay in filing the appeal. The delay of 586 days was not justified.
2. The respondents were aware of the litigation, as they had previously sought to intervene in the case, but their impleadment application was rejected, and they did not challenge this decision, thus accepting its finality.
3. The respondents had purchased the property during the pendency of the suit in violation of the injunction order. This made their purchase questionable, and they should not have been allowed to appeal.
4. Since the respondents’ application to be impleaded in the suit was rejected, they could not challenge the decree for specific performance now, particularly after the vendor (Defendant No. 3) had failed to contest the proceedings adequately.

Respondent’s Arguments:

The respondents, who were subsequent purchasers of the property, argued that:

1. They were bona fide purchasers for value without notice of the ongoing litigation, and their interest in the property was legitimate.
2. They relied on the assurances from Defendant No. 3 that their interests would be protected in the litigation, which led to their delay in filing the appeal.
3. The respondents contended that the High Court’s order allowing them to appeal was justified because they had a substantial interest in the property, and their vendor (Defendant No. 3) had failed to defend their interests during the trial.
4. The respondents also argued that the High Court correctly granted them leave to appeal, noting that the vendor’s failure to participate in the suit did not undermine their right to appeal as subsequent purchasers.

Analysis of the Law:

The Court examined the following key legal principles:

1. Condonation of Delay: The Supreme Court reiterated the settled law on condoning delays under Section 5 of the Limitation Act, 1963. The applicant must provide sufficient cause for the delay. A delay cannot be condoned merely by stating that one party was unaware of the litigation. In this case, the Court found the respondents had not demonstrated adequate grounds for their delay in filing the appeal.
2. Leave to Appeal: The Court explored the law governing leave to appeal, particularly when a party is not initially involved in the suit. Section 96 of the Code of Civil Procedure (CPC) allows appeals from original decrees, and leave to appeal is granted if the person is aggrieved by the judgment or order. The Court examined whether the respondents were “aggrieved persons” under these provisions and found that they had no direct involvement in the case until the dispute over the property arose.
3. Lis Pendens: The Court reviewed the provisions of Section 52 of the Transfer of Property Act, which prevents the transfer of property during the pendency of a suit. However, the Court clarified that a transfer pendente lite (during litigation) is not void; it merely remains subject to the outcome of the case. The respondents’ purchase was subservient to the plaintiffs’ rights, and their appeal could not override the trial court’s decree without satisfying the legal requirements for intervening in the case.

Precedent Analysis:

The Court referred to various precedents, including:

• Vinod Seth v. Devinder Bajaj (2010): Confirmed that while a transfer during litigation does not annul the transaction, it makes the transfer subject to the outcome of the case.
• Thomson Press (India) Ltd. v. Nanak Builders & Investors (2013): Established that a transfer pendente lite remains valid but cannot affect the rights of the parties involved in the pending litigation.
• Nagendra Nath Dey vs. Suresh Chandra Dey (1932): Reaffirmed that a person who is not a party to the suit may file an appeal with leave of the court if they are aggrieved by the judgment or order.

Court’s Reasoning:

The Court’s reasoning was that:

1. The delay in filing the appeal was substantial, and the respondents had not shown sufficient cause for the delay. The fact that they were elderly and living abroad did not constitute a valid legal excuse.
2. The respondents had purchased the property during the pendency of the suit, and their appeal against the decree was not justified. The transfer of property was made in contravention of the injunction order, which barred such transfers.
3. The respondents were not aggrieved parties in the original suit and had not demonstrated how the decree affected their legal rights sufficiently to warrant a leave to appeal.

Conclusion:

The Supreme Court concluded that the High Court’s decision to condone the delay and grant leave to appeal was erroneous. The appeal was allowed, and the High Court’s order was set aside. The respondents were free to seek legal remedies against their vendor (Defendant No. 3) for being misled in the transaction, but they could not override the trial court’s judgment on the specific performance of the agreement.

Implications:

1. Condonation of Delay: This case reinforces the importance of providing a valid and sufficient cause for delays in legal proceedings, emphasizing that delays cannot be condoned without justification.
2. Lis Pendens: It further clarifies that while transfers of property during litigation are not automatically void, they remain subservient to the outcome of the case, and a party must be cautious when purchasing property under such circumstances.
3. Leave to Appeal: The decision highlights the principle that a non-party can only appeal a decision if they are legally aggrieved by the judgment and satisfy the court that they have an interest in the case.

The ruling ultimately ensures that the legal process is respected, and individuals must act promptly and within the boundaries of the law to protect their rights during ongoing litigation.

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