2019 (9) TMI 1741 - HC - Indian Laws

Property transfers violating injunction orders are void regardless of bona fide purchaser claims

Edit II Productions Versus Standard Chartered Bank and Ors.

Bombay HC held that property transfers in breach of injunction or status quo orders are void ab initio, regardless of whether the transferee claims to be ... Ownership and transfer of a property - HELD THAT:- The law seems to be well settled that where the property is transferred in breach of an order of injunction or an order of status quo, regardless whether the transferee is claimed to be a bona fide purchaser for value without notice, such a transfer is void ab initio and is required to be quashed and set aside. It has been expressly held by Supreme Court in Satyabrata Biswas that an act done in the teeth of the order of status quo is clearly illegal. This has also been held by the Supreme Court in Surjit Singh [1995 (9) TMI 382 - SUPREME COURT]. This decision has held that when the Court intends a particular state of affairs to exist while it is in seizin of a lis, that state of affairs is not only required to be maintained, but it is presumed to exist till the Court orders otherwise. The Court has the duty as also right to treat the alienation as having not taken place at all for its purposes, when such alienation is in defiance of a restraint order. The it is clear that the transfer of the immovable property in violation of an order of injunction issued by a Court of law, confers no right, title or interest in the transferee, as it is no transfer at all. The agreement for sale dated 15th September 2015 in respect of the subject flat is held to be illegal, null and void, non-est, bad in law and not binding upon the Plaintiff. The Respondents No. 1 to 3 and Respondents No. 5 to 8 are directed to take all necessary steps to cancel the agreement for sale dated 15th September 2015 within a period of four weeks from the uploading of this judgment and order including by applying before the concerned Sub-Registrar of Assurances for the cancellation of agreement for sale dated 15th September 2015. In the event, the Respondents No. 1 to 3 together with the Respondents No. 5 to 8 fail to comply with these directions, the appointed Court Receiver shall carry out the same under the directions of this Court. Conclusion - Transfers of property in violation of injunction or status quo orders are void ab initio. Notice of motion disposed off. The legal judgment involves a dispute over the ownership and transfer of a property, specifically Flat No. 704, Evershine Woods, Mira Road, Thane. The Applicant, who is the Plaintiff in the suit, challenges the validity of an agreement for sale of the flat, claiming it to be illegal and void due to violations of court orders.1. Issues Presented and Considered:The core legal issues considered in this judgment include:Whether the agreement for sale dated 15th September 2015, transferring the subject flat, is void due to breach of court orders.The validity of the transfer of property in violation of injunction or status quo orders.The applicability of Section 151 of the Code of Civil Procedure, 1908, to restore the status quo ante.The rights of bona fide purchasers for value without notice in the context of breached court orders.The interpretation of statements and undertakings made by parties in the context of creating charges on property.2. Issue-Wise Detailed Analysis:Issue 1: Validity of the Agreement for SaleThe relevant legal framework involves the principles governing injunctions and status quo orders. The Court considered whether the agreement for sale was executed in violation of existing court orders, specifically the injunction and status quo orders issued by previous judges. The Court found that the Respondents No. 2 and 3 had made an express statement in their affidavit that they would not dispose of or create third-party rights over the properties during the pendency of the suit. This statement was accepted by the Court, granting ad-interim relief.The Court's reasoning emphasized that any transfer of property in breach of such orders is void ab initio. The Court relied on precedents such as Satyabrata Biswas v. Kalyan Kumar Kisku and Surjit Singh v. Harbans Singh, which establish that acts done in violation of court orders are illegal and confer no rights to the transferee.Issue 2: Bona Fide Purchasers and Breach of Court OrdersThe Court addressed the argument that Respondents No. 5 to 7 were bona fide purchasers for value without notice. The Court held that the transfer of property in violation of an injunction or status quo order is void, regardless of the transferee's status as a bona fide purchaser. This principle is supported by the Supreme Court's decisions, which emphasize that the Court must treat such transfers as non-existent to maintain the authority of judicial orders.Issue 3: Application of Section 151 of the Code of Civil Procedure, 1908The Court exercised its inherent powers under Section 151 to nullify the transfer and restore the status quo ante. The Court emphasized that it is not necessary for the aggrieved party to file contempt proceedings to address the breach of injunction. The inherent powers of the Court allow it to rectify the situation by canceling the transaction and restoring the original state of affairs.Issue 4: Creation of Charges on PropertyThe Court rejected the argument that the statement by Respondents No. 2 and 3 created a charge on the property. The Court clarified that a charge requires a clear obligation to make payment out of the property, which was not present in this case. The statement was merely a commitment not to deal with the property, not a security for a monetary decree.3. Significant Holdings:The Court held that the agreement for sale dated 15th September 2015 is illegal, null and void, and not binding on the Plaintiff. The Court directed the Respondents to cancel the agreement and take necessary steps to restore the property to the Plaintiff. The Court emphasized that transfers in violation of court orders confer no rights and must be treated as non-existent.Core Principles Established:Transfers of property in violation of injunction or status quo orders are void ab initio.The Court has inherent powers to restore the status quo ante without requiring contempt proceedings.A statement or undertaking not to deal with property does not create a charge for a monetary decree.The rights of bona fide purchasers are subordinate to the enforcement of court orders.The Court's final determination was to make the Notice of Motion absolute, granting the Plaintiff's prayers to declare the sale agreement void and to restore possession of the property to the Plaintiff.