India: Overview Of Faiyaz Husain Khan v. Munshi Prag Narain

Lis Pendens

INTRODUCTION

The present matter of Faiyaz Husain Khan v. Munshi Prag Narain emanated as an appeal before the Privy Council from the decree passed by the Court of the Judicial Commissioners of Oudh. The matter was decided on 21st March, 1907 by a four-judge bench comprising of Lord Macnaghten, Lord Davey, Sir Andrew Scoble and Sir Arthur Wilson. The case revolves around a complex legal dispute pertaining to mortgage of the village of Bangawan.

FACTS

Brief facts of the case that led to the present appeal are that two persons Sardar Husain Khan and Hamid Husain Khan executed a mortgage for the village Bangawan in favor of one Munshi Newal Kishore. Subsequently, the two mortgagors defaulted on their payments which resulted in the mortgagee, Munshi Newal Kishore initiating legal action against the mortgagors. The facts of the case are meticulously and chronologically summarized by way of the following table:

WHAT WAS IN DISPUTE?

In a nutshell, the Privy Council was concerned with determining whether a subsequent mortgage that was granted during the pendency of the suit involving the first mortgage but before summons were served, held any legal validity.

RULE

Section 52 of The Transfer of Property Act, 1882

RATIO

The Privy Council unequivocally established the principles of Lis Pendens by holding that the grant of the second mortgage while the suit relating to the first mortgage was pending, did not affect the rights of the first mortgagee, Munshi Newal Kishore.

ANALYSIS

The doctrine of Lis Pendens is a foundational legal concept that forms the crux of the present case. It is imperative to understand the essence of the rule of Lis Pendens before delving further into the analysis. Lis pendens, is a latin term that means pending legal action. It is a legal doctrine that prohibits parties involved in a lawsuit from transferring or encumbering the property subject to the litigation. The primary objective is to maintain the status quo and prevent any prejudicial actions during legal proceedings. The judgment references Section 52 of the Transfer of Property Act, 1882 which in its essence, underlines the principle of Lis Pendens, asserting that any transaction that attempts to affect property under litigation will not affect the rights of the parties involved in the lawsuit. The provision of Section 52 intends to safeguard the rights of property owners during the pendency of any litigation proceedings. The court vehemently rejected the notion that a suit becomes contentious within the meaning of Section 52 of the Transfer of Property Act, 1882 only after a summons is served on the opposing party. This interpretation is pivotal to the Privy Council's decision.

Lis Pendens is an extension of the doctrine of Res Judicata. In simple words, when there is a legal case, the decision rendered typically affects only the people involved in it. However, the concept of Lis Pendens extends this rule to people who weren't initially part of the case. The idea is that a purchase of a piece of property during the pendency of court proceedings involving such property, makes the purchaser bound by the decision of the court. It is pertinent to understand that without the rule of Lis Pendens, there would be a significant loophole in the established principle of Res Judicata.

In the present case, the Privy Council expounded on the doctrine of Lis Pendens, emphasizing that its fundamental purpose is the preservation of the status quo during litigation. The Privy Council refuted the idea that the doctrine of Lis Pendens was based on the peculiar tenets of equity and clarified that it applied to both legal and equitable proceedings. A crucial aspect of the Privy Council's decision lied in its observation that Faiyaz Husain, the subsequent purchaser of the property, had full knowledge of the first mortgage and the ongoing litigation. Despite this knowledge, Faiyaz Husain failed to take prompt action to redeem the property before the sale. The Privy Council highlighted a critical consequence of the subsequent purchaser's inaction. It asserted that when the sale to Munshi Prag Narain was confirmed, the equity of redemption was extinguished. This meant that Munshi Prag Narain, as the subsequent purchaser, stood in a position akin to an outside purchaser unconnected with the property. The judgment meticulously applied Sec. 52 of the Transfer of Property Act, 1882 to emphasize that any transaction attempting to affect property under litigation is void and cannot prejudice the rights of the parties involved in the lawsuit.

In this context, the Privy Council unequivocally ruled in favor of Prag Narain. To bolster its interpretation relating to the doctrine of Lis Pendens and Section 52 of the Transfer of Property Act, the Privy Council cited and placed reliance on relevant legal precedents such as Bellamy v. Sabine.

In view of this, the Privy Council decisively dismissed the appeal brought by Faiyaz Husain, the Appellant. It imposed the costs of the appeal on the Appellant, affirming the decision of the Court of the Judicial Commissioner of Oudh.

CONCLUSION

In summary, the Privy Council upheld the rule of Lis Pendens.

The crux of the doctrine of Lis Pendens lies in preventing parties from transferring property during ongoing litigation, thereby avoiding prejudicial actions.

The Privy Council, was of a view that the subsequent mortgage, granted during the pendency of the suit pertaining to the first mortgage, did not affect the rights of the first mortgagee, and the subsequent sale of the property to a third party was considered void.

References

1. Faiyaz Husain Khan v. Munshi Prag Narain 1907 SCC OnLine PC 6
2. Desarda, R., & Pagariya, S. (2023). Doctrine of lis pendens and its continuing conundrum in India. Russian Law Journal, 11(5).
3. Laurence, R. (1979). Lis Pendens. NDL Rev., 56, 327.
4. PENDENS, L. 4 aIw 1: vh1 Iw.
5. Bellamy v. Sabine, 1 D. Gex. & J. 566 (1857)

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