Property Transfer Made to Frustrate Execution Is Fraud on Decree Holders; Purchaser Cannot Claim Bona Fide Status; Consumer Commission Can Attach and Sell Property to Enforce Its Orders; Section 25 Not Limited to Recovery as Land Revenue: Punjab & Haryana High Court

Case Name: Gagan Chopra v. Union Territory of Chandigarh and Others

Date of Judgment: 11 August 2026

Citation: CWP-6677-2025

Bench: Hon’ble Mr. Justice Tribhuvan Dahiya

Held: The Punjab and Haryana High Court held that a subsequent purchaser who acquires immovable property during pending execution proceedings is bound by the outcome of those proceedings where the transfer directly affects the decree holders’ rights, even if the purchaser claims absence of notice. Such a transfer is hit by the doctrine of lis pendens under Section 52 of the Transfer of Property Act, 1882.

The Court rejected the argument that lis pendens could not apply merely because the property was not the subject matter of the original consumer complaint. In the present case, the house had already been attached in execution for satisfaction of the decree and its subsequent transfer directly affected the decree holders’ right to recover their lawful dues.

On the facts, the Court further held that the petitioner could not claim the status of a bona fide purchaser. The material, including the SIT report, demonstrated his knowledge of the attachment and pending proceedings and supported the finding of collusion with the judgment debtor to prevent the property from being sold in execution. The Court described the attempt to frustrate the decree holders’ rights as “nothing short of committing a fraud upon them as well as the Commission.”

The High Court also rejected the challenge to the Consumer Commission’s jurisdiction to attach and sell property. Relying upon the Supreme Court’s interpretation of Section 25 of the Consumer Protection Act, 1986 in Palm Groves Cooperative Housing Society Ltd. v. M/s Magar Girme and Gaikwad Associates, the Court held that the Commission has power to attach and sell property for non-compliance with its order, and its enforcement powers are not confined merely to issuing a certificate for recovery of the decretal amount as arrears of land revenue.

Summary: The judgment arose from a batch of thirteen writ petitions filed by Gagan Chopra concerning properties of a judgment debtor against whom several homebuyers had obtained orders from the State Consumer Disputes Redressal Commission, Chandigarh. The lead petition concerned House No. 317, Sector 21-A, Chandigarh.

The underlying consumer complaint had been instituted in 2016 against a real estate company for failure to deliver possession of a 250-square-yard villa. The Consumer Commission allowed the complaint and directed refund of ₹16 lakh with 12% interest, besides ₹75,000 as compensation and ₹11,000 as litigation expenses. In case of non-payment, penal interest at 15% per annum was stipulated. The directions remained uncomplied with and execution proceedings followed.

During execution, properties belonging to the judgment debtor were attached. House No. 317, Sector 21-A, Chandigarh was attached on 12 June 2019. The Commission subsequently noticed that the property had also been mortgaged with the State Bank of India and expressly referred to the doctrine of lis pendens under Section 52 of the Transfer of Property Act.

Despite these proceedings, the judgment debtor entered into an agreement to sell the house in favour of Gagan Chopra in June 2021. The petitioner subsequently sought impleadment in the pending execution proceedings, claiming to be a bona fide purchaser and seeking release of the property from attachment.

The Consumer Commission rejected the petitioner’s objections. It found that the consumer complaints and execution proceedings pre-dated the transfer and concluded that the sale was hit by lis pendens. It further found that the transaction appeared designed to defeat or delay the decree holders and was voidable against them under Section 53 of the Transfer of Property Act.

The petitioner challenged these orders before the High Court, primarily arguing that he was a bona fide purchaser; that the transaction had not been proved fraudulent; that lis pendens was inapplicable because the house itself was not the subject matter of the original consumer complaint, which merely sought refund of money; and that under Section 25(3) of the Consumer Protection Act, 1986 the Commission could only issue a certificate for recovery of money as arrears of land revenue and could not itself direct attachment and auction of the property.

During the proceedings before the High Court, serious questions arose regarding the circumstances in which the property had been transferred. An investigation was ultimately conducted by a Special Investigation Team of Chandigarh Police. The SIT examined the petitioner’s conduct and the financial transactions surrounding the purchase.

The SIT found several circumstances inconsistent with the petitioner’s plea of an innocent purchase. Significantly, the petitioner himself had approached the Consumer Commission on 27 October 2021 seeking impleadment in the pending proceedings, claiming rights as a bona fide purchaser. The investigation considered his conduct inconsistent with an assertion that he had no knowledge of the litigation affecting the property.

The investigation further found that substantial red flags surrounded the transaction. The petitioner, himself a property dealer, had allegedly failed to make ordinary enquiries regarding the legal status of a high-value property despite pending cases and execution proceedings being discoverable. The SIT concluded that although it could not establish that the petitioner knew the judgment debtor before the proposed purchase, the circumstances were sufficient to conclude that he should have refrained from proceeding with the purchase and that collusion after entering into the agreement to sell could not be ruled out.

The High Court accepted the material findings against the petitioner. It held that he was not a bona fide purchaser and that the evidence indicated collusion with the judgment debtor after commencement of the transaction with the object of preventing the property from being attached and sold for satisfaction of the decree. The Court regarded the attempt to frustrate the decree holders’ lawful recovery as fraudulent.

Doctrine of Lis Pendens: The Court then addressed the petitioner’s important legal argument that Section 52 of the Transfer of Property Act could not apply because House No. 317 was not itself the subject matter of the original consumer complaint.

The High Court rejected this contention.

Referring to the Supreme Court’s decision in Celir LLP v. Sumati Prasad Bafna, the Court reiterated that lis pendens prevents changes in the subject matter affecting rights under adjudication during pending proceedings. A transferee pendente lite remains bound by the result of the litigation even where he had no notice of the pending proceedings.

The Court emphasised that Section 52 does not cease operating merely upon passing of the original decree. The pendency contemplated by the provision continues until complete satisfaction or discharge of the final decree or order, subject to the statutory terms.

Applying that principle, the Court found that the house had been transferred to the petitioner during execution proceedings and was required for satisfaction of the decree. The transfer therefore directly concerned and adversely affected the rights of the decree holders. Since the transaction was not effected under the authority of the Court, it was squarely hit by lis pendens.

Thus, the purchaser could not avoid the consequences of the pending proceedings merely by claiming that he had no notice of them. A third-party transferee of property pendente lite remains bound by the ultimate outcome.

Consumer Commission’s Power to Attach and Sell Property: The Court separately rejected the contention that the Consumer Commission lacked jurisdiction to attach and sell the house because Section 25(3) of the Consumer Protection Act, 1986 allegedly permitted only recovery of money as arrears of land revenue through the Collector.

The petitioner relied upon Palm Groves Cooperative Housing Society Ltd. v. M/s Magar Girme and Gaikwad Associates. The High Court found that the precedent actually operated against, rather than in favour of, the petitioner’s case.

The Supreme Court’s interpretation of Section 25 recognised the Commission’s authority to enforce its orders in the manner of a decree and permitted attachment and sale of property for non-compliance. Consequently, the High Court found no jurisdictional defect in the directions concerning attachment and sale of the petitioner’s house.

Decision: The Punjab and Haryana High Court rejected the petitioner’s challenge to the attachment and proposed sale of the property.

It upheld the findings that the petitioner was not entitled to protection as a bona fide purchaser and that the transaction was affected by the doctrine of lis pendens because the property had been transferred during pending execution proceedings in a manner directly affecting the decree holders’ right to satisfaction of their decree.

The Court also upheld the Consumer Commission’s authority to attach and sell the property for enforcement of its orders and rejected the argument that its powers were confined to issuing a recovery certificate under Section 25(3) of the Consumer Protection Act, 1986.