Supreme Court Affirms Doctrine of Merger and Lis Pendens in Property Dispute Case

Analysis of INSC 368/2025: Raju Naidu v. Chenmouga Sundra & Ors.

By Abhishek Jat, Advocate

The Supreme Court of India has delivered a significant judgment in Civil Appeal No. 3616/2024, reaffirming foundational principles regarding the doctrine of merger, lis pendens, and the limitations of Section 53A of the Transfer of Property Act in property dispute cases.

Background of the Case

The dispute centered around two properties in Pondicherry referred to as 'A' Schedule property (Door No. 10, Mariamman Kovil Street, Thiruvalluvar Nagar) and 'B' Schedule property (Door No. 49, Chetty Street). The father of respondents 1-8 had purchased and subsequently transferred various interests in these properties through sale deeds and wills.

The controversy arose when the father executed a sale agreement with the appellant for the 'B' Schedule property while litigation regarding the properties was already pending. After the father's death, respondents 1-8 initiated proceedings to declare the wills executed by their father in favor of respondent No. 9 as void and to establish their ownership rights.

Key Judicial Determinations

The Supreme Court, through Justices Sudhanshu Dhulia and Prasanna B. Varale, upheld the Madras High Court's judgment that had dismissed the appellant's revision petition. The Court addressed several critical legal issues:

Doctrine of Merger

The Court emphasized that when an appellate court modifies a trial court's decree, the doctrine of merger applies. Justice Varale cited the precedent established in Chandi Prasad & Others v. Jagdish Prasad & Others (2004), which held that "there cannot be more than one operative decree governing the same subject matter at a given point of time." The appellate court's decree supersedes the trial court's decree regardless of whether it affirms, modifies, or reverses the original decree.

Limitation Period for Execution

The Court rejected the appellant's contention that the execution petition was time-barred, noting that the review petitions were pending before the appellate court for a considerable period and were only finally disposed of on December 13, 2001. The limitation period would commence from the date of the final disposal of all proceedings related to the decree.

Applicability of Section 53A of Transfer of Property Act

Most significantly, the Court addressed the limited protection available under Section 53A of the Transfer of Property Act in cases where the transferee has knowledge of pending litigation. The judgment clarified that:

1. A transferee who enters into an agreement with knowledge of a pending suit cannot claim rights superior to those of the original transferor.
2. The principle of lis pendens restricts the rights of such transferees.
3. These limited rights "cannot be stretched to obstruct and resist the full claim of the decree holders to execute the decree in their favor."

Implications for Property Law

This judgment reinforces several important legal principles with significant implications for property transactions:

1. Awareness of Pending Litigation: Parties entering into property transactions must conduct thorough due diligence to ensure there is no pending litigation concerning the property.
2. Hierarchy of Judicial Orders: A decree of a higher court supersedes that of a lower court through the operation of the doctrine of merger, even when the modification is minimal.
3. Obstruction to Decree Execution: The courts have consistently deprecated attempts to obstruct the execution of valid decrees through claims based on agreements made during the pendency of litigation.

The Supreme Court's decision serves as a crucial reminder that Section 53A of the Transfer of Property Act cannot be invoked as a shield against valid judicial decrees where the transferee was aware of ongoing litigation at the time of entering into the agreement. This judgment strengthens the principle that property transactions conducted with knowledge of pending disputes carry inherent risks that cannot be mitigated through reliance on the doctrine of part performance.