Landmark Ruling: Supreme Court Bars Property Buyer from Evading Restitution Despite Appeal Awareness

In a precedent-setting verdict concerning the essence of ‘restitution’ as per Section 144 of the Code of Civil Procedure, the Supreme Court delivered a resounding judgment. The crux of the ruling centered on the predicament where a stranger, devoid of any involvement in the legal proceedings, purchases a property despite being fully cognizant of the impending appeal against the decree. The Court unequivocally pronounced that such a purchaser cannot seek refuge under the guise of being a bona fide buyer and must succumb to the principles of restitution.

The bench, comprising Justices Hrishikesh Roy and Prashant Kumar Mishra, overturned the earlier stance of the High Court, emphasizing that if an individual acquires a property from the decree-holder with clear knowledge of ongoing appellate proceedings, their claim as a bona fide purchaser holds no merit in contesting restitution.

Drawing heavily from the jurisprudence laid down in the case of Chinnamal & Ors. Vs. Arumugham & Anr, AIR 1990 SC 1828, Justice Prashant Kumar Mishra, in authoring the judgment, meticulously differentiated between a decree-holder purchasing property under their decree, subsequently modified or reversed, and an unrelated individual procuring the property.

In Chinnamal, the Court delineated the litmus test to ascertain the entitlement of a stranger purchaser to retain the property amidst restitution claims. It underscored that the pivotal inquiry lies in discerning whether the purchaser was cognizant of the ongoing litigation concerning the decree being executed.

The Court unequivocally stated, “If evidence corroborates the absence of such awareness, the purchaser retains the property’s ownership as a bona fide buyer, shielded from the repercussions of decree reversal. However, if evidence manifests the purchaser’s knowledge of the appeal against the decree at the time of acquisition, deeming them bona fide or innocent would be incongruous. Assumptions contrary to the factual matrix of the case would be unwarranted and erroneous.”

In essence, the ruling signifies a formidable stance by the judiciary to thwart attempts at circumventing the principles of justice and restitution, ensuring equitable outcomes in property disputes.

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