Supreme Court Clarifies When a Stranger Can Seek Leave to Appeal in Property Disputes

H. Anjanappa & Ors. v. A. Prabhakar & Ors., Judgment dated January 29, 2025

In a significant ruling, the Supreme Court of India, in H. Anjanappa & Ors. v. A. Prabhakar & Ors., delivered on January 29, 2025, addressed the critical issue of whether a stranger to a suit can seek leave to appeal against a decree, particularly in property disputes. The judgment, authored by Justice J.B. Pardiwala, provides a comprehensive analysis of the legal principles governing the grant of leave to appeal and the rights of lis pendens purchasers.

Facts of the Case

The dispute arose from a suit for specific performance filed by the appellants (original plaintiffs) against the original owner of the property, Late Smt. Daisy Shanthappa, and her power of attorney holder. The plaintiffs had entered into an agreement to purchase the property in 1995 and paid a substantial portion of the sale consideration. However, during the pendency of the suit, the original owner sold a portion of the property to a third party (Respondent No. 7), who, in turn, sold it to Respondents Nos. 1 and 2.

The Trial Court granted specific performance in favor of the plaintiffs, and the High Court later condoned a delay of 586 days in filing an appeal by Respondents Nos. 1 and 2, who were subsequent purchasers. The High Court also granted them leave to appeal, which the appellants challenged before the Supreme Court.

Issues Before the Court

1. Whether the High Court erred in condoning the delay of 586 days in filing the appeal by Respondents Nos. 1 and 2?
2. Whether a stranger to the suit, who was not a party to the original proceedings, can seek leave to appeal against a decree?
3. Whether the rejection of an impleadment application by the Trial Court operates as res judicata in subsequent proceedings?

Arguments of the Parties

Appellants (Plaintiffs):

• The appellants argued that Respondents Nos. 1 and 2, being subsequent purchasers, had no right to appeal as they were not parties to the original suit.
• They contended that the High Court erred in condoning the inordinate delay of 586 days without sufficient cause.
• The appellants also argued that the rejection of the impleadment application by the Trial Court had attained finality and should operate as res judicata.

Respondents (Subsequent Purchasers):

• Respondents Nos. 1 and 2 claimed that they were bona fide purchasers and had a substantial interest in the property.
• They argued that their vendor (Respondent No. 7) had colluded with the plaintiffs, and they should be allowed to defend their rights.
• They relied on Section 17 of the Limitation Act and Section 5 to justify the delay in filing the appeal.

Court’s Reasoning and Analysis

The Supreme Court meticulously analyzed the legal principles governing the grant of leave to appeal, relying on several landmark judgments:

1. Right of a Stranger to Appeal:
   The Court reiterated that a stranger to a suit can seek leave to appeal only if they are aggrieved or prejudicially affected by the decree. The Court cited Sri V.N. Krishna Murthy v. Sri Ravikumar and Adi Pherozshah Gandhi v. H.M. Seervai, emphasizing that leave to appeal should not be granted to every person remotely affected by a decree.
2. Condonation of Delay:
   The Court held that the High Court erred in condoning the delay of 586 days without sufficient cause. The Court noted that Respondents Nos. 1 and 2 were not vigilant in protecting their rights, and the delay was unexplained.
3. Res Judicata and Impleadment:
   The Court observed that the rejection of the impleadment application by the Trial Court had attained finality and could not be revisited. The Court relied on Smt. Sukhrani v. Hari Shanker to hold that an interlocutory order, if not challenged, binds the parties in subsequent proceedings.
4. Lis Pendens and Section 52 of the Transfer of Property Act:
   The Court emphasized that a transfer pendente lite is not void but remains subject to the outcome of the litigation. The Court cited Nagubai Ammal v. B. Shama Rao and Vinod Seth v. Devinder Bajaj to hold that Respondents Nos. 1 and 2, being lis pendens purchasers, were bound by the decree.
5. Order I Rule 10 and Order XXII Rule 10 CPC:
   The Court clarified that a lis pendens transferee could seek leave to appeal under Section 146 of the CPC, but such leave should be granted judiciously. The Court referred to Thomson Press (India) Ltd. v. Nanak Builders & Investors P. Ltd. and Amit Kumar Shaw v. Farida Khatoon to hold that the impleadment of a transferee pendente lite is not a matter of right.

Conclusion

The Supreme Court set aside the High Court’s order, holding that the delay in filing the appeal was not properly condoned and that Respondents Nos. 1 and 2 had no right to seek leave to appeal. The Court clarified that a stranger to a suit can only seek leave to appeal if they are directly affected by the decree and that the rejection of an impleadment application operates as res judicata.

This judgment serves as a crucial precedent on the rights of lis pendens purchasers and the circumstances under which a stranger can seek leave to appeal in property disputes.

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