Lis Pendens Bar Waived in Frivolous Specific Performance Suits: Delhi High Court

The Delhi High Court has delivered a stern message to litigants using the judicial process for commercial leverage, ruling that courts possess the authority to exempt properties from the restrictive doctrine of lis pendens in cases where claims of specific performance appear to be "frivolous or vexatious." A division bench comprising Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar dismissed an appeal brought by Earthz Urban Spaces Pvt. Ltd., identifying the company’s lawsuit as an attempt to "create a cloud over the title of the property" to impede its marketability.

The Rs. 26-Crore 'Non-Deal'

The dispute centered on an alleged oral agreement for the sale of a property located in Pamposh Enclave, New Delhi, for a sum of Rs. 26 crores. While the developer argued that a binding oral agreement was reached in April 2021—subsequently supported by electronic exchanges—the respondents presented a Memorandum of Understanding (MoU) dated June 2, 2021, which explicitly stated that it was non-binding and intended only for tax facilitation purposes.

The court observed that the appellant’s reliance on the oral agreement was an inconsistent narrative. Most tellingly, the legal notice issued by the developer before litigation made no mention of an oral promise; instead, it relied entirely on the MoU, which had clearly been drafted to exclude any enforceable rights or claims for damages.

The Weaponisation of Lis Pendens

The core of the legal controversy involved Section 52 of the Transfer of Property Act, 1882 . This section, which embodies the doctrine of lis pendens , prevents a party from alienating a property during the pendency of a suit. While intended to maintain the status quo, the bench noted that it is frequently weaponized by "adventurers in litigation" to render properties commercially untouchable, effectively forcing owners into unfavorable settlements.

Relying on the Supreme Court’s judgment in * Vinod Seth v. Devender Bajaj , the bench solidified the principle that courts are not helpless spectators to such tactics. "The doctrine of lis pendens* ... cannot be allowed to degenerate into a weapon of harassment or a tool for speculative adventurism," the order stated.

Key Observations

The judgment highlighted critical flaws in the appellant's approach to litigation:

• On the nature of the MoU: "A perusal of the clauses of the MoU extracted above, clearly show that by this document the parties did not intend to enter into a binding agreement."
• On evidence suppression: "The transcripts of the WhatsApp messages of 27th April, 2021 have been selectively extracted in the plaint and material parts thereof, have been deliberately omitted so as to mislead the court."
• On speculative intent: "The Appellant, having embarked upon an adventurous and fragile claim, cannot be allowed to reap any advantage from the pendency of such proceedings."
• On judicial authority: "The High Court can certainly innovate, to discipline those whom it considers to be adventurers in litigation, but it has to do so within the four corners of law."

A Price for Frivolity

Concluding that the suit lacked even a prima facie case and noting that no credible evidence of payment had been produced, the High Court upheld the decision of the single judge to exempt the suit property from the operation of Section 52 of the TP Act. This order restores the owner's freedom to deal with their property despite the ongoing dispute.

In a move to deter future frivolous claims, the bench dismissed the appeal with exemplary costs of Rs. 5,00,000, payable to the respondents. The court underscored that while the legal system must remain accessible, it will not tolerate the use of court processes to disrupt the real estate market through groundless litigation.