The Supreme Court ruled that buyers who purchase property during pending litigation cannot file a separate suit to challenge a court auction sale. Such disputes must be raised only before the Executing Court under Section 47 CPC, and buyers remain bound by the decree under Section 52 of the Transfer of Property Act.
New Delhi: The Supreme Court of India has set aside the judgment passed by the Punjab and Haryana High Court and has clearly ruled that people who purchase property during the pendency of a court case cannot file a separate civil suit to challenge an auction sale conducted by an Executing Court.
The top court held that such a suit is not legally maintainable and is barred under Section 47 of the Code of Civil Procedure (CPC).
A Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan explained that when a dispute arises in relation to the execution of a decree, it must be decided only by the Executing Court. The law does not allow parties or their representatives to file a separate civil suit for such issues.
The case before the Supreme Court was titled Danesh Singh & Ors. v. Har Pyari (Dead) Through LRs & Ors. The Court also applied the Doctrine of Lis Pendens under Section 52 of the Transfer of Property Act, 1882.
The Bench held that people who buy property during the pendency of litigation do so at their own risk and are fully bound by the final outcome of that litigation.
The Supreme Court held that when the respondent purchasers bought the property, it was already involved in pending legal proceedings and therefore they were bound by the decree passed against their seller.
“When the respondent nos. 1 and 2 respectively purchased the suit property, it was a property which was ‘directly and specifically in question’ in the pending proceedings and hence, stood squarely covered by Section 52 of the 1882 Act… By purchasing a mortgaged property during the pendency of the suit instituted by the respondent no.6-bank, the respondent nos. 1 and 2 respectively could be said to have agreed to be bound by the outcome of such proceedings.”
The dispute relates back to the year 1970, when one Duli Chand mortgaged his agricultural land measuring 116 Kanals and 13 Marlas to the New Bank of India to secure a loan. Due to non-payment, the bank filed a recovery suit in 1982. This suit was decreed ex-parte in favour of the bank in 1984.
After the decree was passed but before the execution proceedings were completed, two purchasers bought a portion of the mortgaged land measuring 24 Kanals and 11 Marlas in May and June 1985.
These purchases were made from the son of the original borrower. This transaction took place while the recovery proceedings were still legally active.
In October 1985, the Executing Court attached the property. Later, in 1988, the property was auctioned by the court. The appellants, who were nephews of the judgment-debtor, became the highest bidders. The auction sale was confirmed, and possession of the land was handed over to them in 1989.
However, the purchasers who had bought the land during the pendency of litigation filed a separate civil suit. They claimed that the auction sale was illegal, fraudulent, and void. The Trial Court accepted their plea and declared the auction sale invalid.
This decision was later upheld by the Punjab and Haryana High Court, which held that the separate suit was maintainable on the ground that fraud had been committed in the auction process.
Before the Supreme Court, the auction purchasers argued that the respondents were not third parties but were representatives of the judgment-debtor.
They submitted that Section 47 CPC clearly bars a separate suit in matters connected to execution of a decree. According to them, the only remedy available to the respondents was to raise objections before the Executing Court itself.
On the other hand, the respondents argued that they were third parties under Order XXI Rule 92(4) CPC and therefore had the right to file a separate civil suit. They also alleged that the auction was conducted fraudulently and without giving them proper notice.
The Supreme Court rejected the respondents’ arguments and held that the doctrine of lis pendens fully applied to the case.
The Court made it clear that even though the original suit was for recovery of money, the decree specifically mentioned the mortgage, making the property directly involved in the litigation.
The Bench further held that the purchasers could not be treated as independent third parties. Since they purchased the property during the pendency of the litigation, they stepped into the shoes of the judgment-debtor and became his legal representatives for the purpose of execution proceedings.
“The respondent nos. 1 and 2 respectively, have been identified as being ‘representatives’ of the judgment-debtors by the impugned decision owing to them being pendente lite transferees of the judgment-debtor… In view of the above finding of the High Court, it is difficult to reject the contention… that the separate suit would be hit by the bar envisaged under Section 47 as well.”
The Supreme Court also clarified that the benefit of Order XXI Rule 92(4) CPC is available only to genuine third parties who are completely outside the scope of Section 47 CPC. Since the respondents were representatives of the judgment-debtor, they could not claim this protection.
“From the above exposition of law, it is limpid that the respondent nos. 1 and 2 respectively were not ‘third parties’ under Rule 92(4). This is because they were representatives of the judgment-debtor as envisaged under Section 47 CPC having purchased the suit property during the pendency of the proceedings.”
The Court also examined the remedies available under Order XXI Rules 89, 90, and 99 CPC. It noted that the respondents did not file any application within the prescribed limitation period to set aside the auction sale on grounds of irregularity or fraud.
The Court held that a separate suit cannot be used as a shortcut to bypass statutory limitation.
Regarding dispossession, the Court noted that Rule 102 CPC clearly bars pendente lite transferees from claiming protection under Rules 98 and 100. Therefore, even this route was not available to the respondents.
After considering all legal provisions, the Supreme Court concluded that the separate suit filed by the respondents was completely barred under law.
“The separate suit instituted by the respondent nos. 1 and 2 respectively would be non-maintainable because they are representatives of the judgment-debtor and the bar envisaged under Section 47 CPC would squarely apply to their case.”
Accordingly, the Supreme Court allowed the appeal and set aside the judgment passed by the Punjab and Haryana High Court.
However, keeping in mind the peculiar facts of the case, the close family relationship between the parties, and the fact that the litigation had continued for nearly 40 years, the Court exercised its extraordinary powers to do complete justice.
“In the peculiar facts and circumstances of the present case and with a view to do substantial justice, we direct that the appellants pay a sum of Rs. 75,00,000/- to the respondent nos. 1 and 2 respectively, within a period of 6 months from the date of this judgment.”
Case Title:
Danesh Singh & Ors. v. Har Pyari (Dead) Through LRs & Ors.,
Civil Appeal No. 14761 of 2025 arising out of SLP (C) No. 14461 of 2019.
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