There is a principle in Indian property law that operates entirely independently of whether the buyer has heard about it.
Lis pendens.
Under Section 52 of the Transfer of Property Act, 1882, a transfer of property made during the pendency of a suit or proceeding relating to that property is subject to the rights of the parties under the eventual decree or order. The buyer takes the property subject to whatever the court ultimately decides, regardless of whether the buyer knew about the litigation.
Dr. Sravan Kumar, author of The Indian Law of Property Due Diligence and Title Examination, addresses the lis pendens doctrine as a mandatory search requirement in every property due diligence exercise because it operates through constructive notice rather than actual notice. The buyer’s lack of knowledge about pending litigation affecting the property provides no legal protection.
What lis pendens means in practice:
A seller is in a dispute with a co-owner about their respective shares in a property. The suit has been filed. Both parties are before the court. The seller, without disclosing the litigation, sells the property to a buyer. The buyer pays full consideration, receives a registered sale deed, and takes possession.
The court subsequently decides the dispute in favor of the co-owner. The co-owner’s decree affects the property. The buyer who purchased during the pendency of that suit takes the property subject to the co-owner’s decree.
The buyer’s recourse is against the seller for breach of the representations made in the sale deed. That recourse requires litigation. The property right itself is affected by the decree.
Why court records search is a mandatory due diligence step:
The only reliable way to identify pending litigation affecting a property is to search the court records for the relevant jurisdictions. This means examining the records of the civil court having jurisdiction over property disputes in the location where the property is situated, across the period relevant to the title examination.
A seller who does not disclose pending litigation has either committed misrepresentation or fraud depending on their state of knowledge. But the disclosure obligation under Section 55 of the Transfer of Property Act, 1882 does not replace the buyer’s independent verification obligation. The buyer who relies on the seller’s representation that there is no litigation and does not independently verify it through court records has not completed the due diligence that the law expects of a careful buyer.
The Indian Law of Property Due Diligence and Title Examination by Dr. Sravan Kumar is available on Amazon, Flipkart, Kindle, and Google Books. Buy now and understand why searching court records is as important as examining title documents in every safe property purchase.
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