Property Law

Supreme General Films Exchange Ltd. v. Maharaja Sir Brijnath Singhji Deo

(1975) 2 SCC 530; AIR 1975 SC 1810

Facts

The dispute concerned a cinema theatre known as Plaza Talkies.
The respondents possessed mortgage rights over the theatre and sought recovery of their dues through its sale.
The appellant company had originally taken the theatre on lease in 1940.
That lease expired in 1946, though the company continued in occupation as a tenant holding over.
In 1954, the company sued the owners for specific performance of an alleged agreement to grant a further lease.
A compromise was entered into and a fresh lease deed was executed in favour of the company on 30 March 1956.
Meanwhile:
mortgage and execution proceedings concerning the theatre were pending; and
the theatre had been attached in execution in May 1955.
The mortgagee challenged the 1956 lease because it would reduce the property’s value at an auction.

Whether the fresh lease created during pending litigation was affected by Section 52 TPA.
Whether a lease executed after attachment was enforceable against the mortgagee and auction purchaser.

Section 52 embodies the doctrine of lis pendens.
During a suit directly concerning rights in immovable property, a party cannot transfer or otherwise deal with that property so as to prejudice the rights ultimately declared by the court.
A pendente lite transfer is subject to the final result of the litigation.
Section 64 CPC similarly prevents private transfers of attached property from defeating claims enforceable under the attachment.

The 1956 lease did not merely continue the old tenancy.
The earlier fixed-term lease had expired in 1946.
The impugned document purported to create entirely new and substantial leasehold rights.
Those rights were created while proceedings relating to the mortgage and sale of the same theatre were pending.
A long-term lessee in possession would significantly reduce:
the price bidders would offer at the auction; and
the mortgagee’s ability to recover the secured debt.
Section 52 exists precisely to prevent a litigating party from changing the legal condition of property while the court is determining rights in it.
The appellant’s specific-performance suit and compromise could not be used as a method of avoiding the pending mortgage proceedings.
The lease was also executed while the theatre remained under attachment and was therefore affected by Section 64 CPC.
The mortgagor’s power to grant leases under Section 65A could not displace the special protection created by lis pendens.

The 1956 lease was ineffective against the mortgagee from its inception.
It was hit by Section 52 TPA and Section 64 CPC.
The appellant could not rely on that lease to obstruct possession by an auction purchaser.
The appeal was dismissed.