Order XXI Rule 102 of CPC

Source: Supreme Court  

Why in News? 

Recently, Justices Vikram Nath and Sandeep Mehta held that clarified that the bar under Order XXI Rule 102 Code of Civil Procedure, 1908 (CPC) does not apply to transferees from third parties (not the judgment-debtor), allowing them to object to decree execution under Rules 97-101 CPC. 

• The Supreme Court held this in the matter of Tahir V. Isani v. Madan Waman Chodankar (2025).

What was the Background of Tahir V. Isani v. Madan Waman Chodankar (2025) Case? 

• Mrs. Maria Eduardo Apolina Gonsalves Misquita owned a 477 square meter plot with a two-floor building in Goa, leasing a ground floor portion to Madan Waman Chodankar in February 1977.  
• Chodankar subsequently partnered with Dyaneshwar Keshav Malik and others ('Maliks') in March 1977 to operate a hardware business from the leased premises whilst retaining tenancy in his name. 
• In January 1988, Mrs. Misquita sold the entire property to M/s. Rizvi Estate and Hotels Pvt. Ltd., followed by an April 1988 agreement between Rizvi Estate and the Maliks for possession surrender to enable building reconstruction.  
• Rizvi Estate filed eviction proceedings in 1989 alleging unauthorised sub-letting by Chodankar to the Maliks, whilst Chodankar filed an injunction suit in 1988 to prevent demolition. 
• Chodankar's injunction suit was decreed in his favour in 1999 and upheld on appeal in 2001, restraining demolition activities.  
• In 1996, Chodankar initiated Special Civil Suit No.97/1996/B against the Maliks seeking partnership dissolution, profit recovery, and ejectment, with the Maliks acknowledging in their written statement that all parties had surrendered rights to Rizvi Estate in April 1988. 
• Rizvi Estate sold the property to Tahir v. Isani (the Appellant) through a registered sale deed in April 2007, followed by the Maliks executing a surrender deed in favour of the Appellant for Rs.10 lakhs in October 2007. The partnership dissolution suit was decreed ex-parte in Chodankar's favour in April 2008 as the Maliks ceased contesting the proceedings. 
• Chodankar's legal representatives initiated execution proceedings for the 2008 decree, prompting the Appellant to file objections under Order XXI Rules 97 and 101 CPC in February 2009.  
• After prolonged proceedings spanning over ten years with evidence recording, Chodankar's legal heirs applied in 2019 to discontinue the enquiry based on the doctrine of lis pendens. 
• The Executing Court dismissed the 2019 application to discontinue enquiry in September 2021, leading Chodankar's legal heirs to file a writ petition before the High Court.  
• The High Court allowed the writ petition and discontinued the enquiry, prompting the Appellant to approach the Supreme Court challenging this decision.

What were the Court’s Observations?

• The Supreme Court emphasised that Order XXI Rule 102 intends to preserve the idea of achieving finality of judicial decisions, embodying the principle of "interest reipublicae ut sit finis litium" (it is in the interest of the State that there should be an end to litigation). The provision ensures that decisions bind not only litigating parties but also those who derive title under them through alienations made whilst the suit was pending, irrespective of whether such transferees had notice of the proceedings. 
• The Court observed that Rule 102 protects decree-holders' interests against unscrupulous judgment-debtors and their subsequent transferees who engage in activities to deprive decree-holders from reaping the benefits of decrees granted in their favour. The Rule, being equitable in nature, estops further creation of rights by explicitly stating that nothing in Rules 98 and 100 shall apply to resistance or obstruction by transferees pendente lite of judgment-debtors. 
• The Court delineated four condition precedents for Rule 102 application: 

(1) Existence of a decree for possession of immovable property. 

(2) Resistance or obstruction in executing said decree. 

(3) Such obstruction by a person to whom the judgment-debtor transferred the property. 

(4) Such transfer occurring after institution of the original suit in which the decree was passed. 

• The Court clarified that Rule 102 applies only to persons to whom judgment-debtors have transferred immovable property that was the subject matter of pending suits. If the person resisting execution does not trace title from the judgment-debtor, the bar of Rule 102 does not apply. Such persons are competent to gain benefits under Rules 97 to 101 of Order XXI, even if they acquired the property pendente lite. 
• The Court determined that the Appellant did not trace his title from judgment-debtors (the Maliks) and therefore was not a transferee pendente lite of the judgment-debtor. The Appellant was a bona fide buyer who purchased the suit property from M/s Rizvi Estate and Hotels Pvt. Ltd., who traced their title from the original owner Mrs. Misquita. Since the transferor was not a party to the suit and was a third party having received ownership rights from the original owner in 1988, the bar of Rule 102 did not prohibit the Appellant from raising objections. 
• The Court noted the belated and mala fide nature of the respondent's 2019 application to close the enquiry, filed ten years after the Appellant's original objection in 2009, despite all relevant facts including sale and surrender deeds being disclosed from the beginning.  
• The Court observed that the respondent participated in the enquiry for years without objection, making their subsequent application untenable. 

What Order XXI Rule 102 of CPC? 

• Scope and Application: Order XXI Rule 102 of the Code of Civil Procedure establishes that the protective provisions of Rules 98 and 100 shall not apply to any resistance or obstruction in execution of a decree for possession of immovable property by specific categories of transferees. 
• Primary Restriction: The rule specifically excludes protection for persons to whom the judgment-debtor has transferred the property after the institution of the suit in which the decree was passed, thereby preventing such transferees from claiming benefits under the general execution provisions. 
• Dispossession Protection Exclusion: Rule 102 also denies protection to transferees pendente lite in cases involving their dispossession, ensuring that such persons cannot seek relief under the standard execution procedures available to legitimate parties. 
• Temporal Element: The crucial temporal requirement is that the transfer must have occurred after the institution of the original suit in which the decree was passed, making the timing of transfer the determining factor for applicability of this restriction. 
• Inclusive Definition of Transfer: The Explanation to Rule 102 clarifies that "transfer" includes transfers by operation of law, thereby encompassing both voluntary transfers and those occurring through legal processes or court orders. 
• Underlying Policy: The rule embodies the principle of preventing judgment-debtors from frustrating decree execution by transferring property to third parties during litigation, thereby protecting the interests of decree-holders and ensuring finality of judicial decisions. 
• Exception Limitation: Rule 102 applies exclusively to transferees from judgment-debtors and does not extend to persons who derive title from third parties who were not parties to the original suit, maintaining a balance between preventing abuse and protecting legitimate property rights.