Kiran Raj

The Supreme Court Division Bench of Justice Pankaj Mithal and Justice S. V. N. Bhatti has dismissed an appeal by a transferee who purchased immovable property from a judgment-debtor after an arbitral award had been made in favour of the judgment-creditor, holding that such a purchaser cannot resist enforcement of the award in execution. The Court found the purchaser to be a post-award transferee pendente lite and not entitled to seek removal of attachment over the property and directed the executing court to conclude the execution proceedings within two months.

The dispute arose out of a sale agreement dated 22.01.1998 between a corporation engaged in the business of cotton and a textile company for supply of cotton bales. On a dispute regarding recovery of sale consideration, arbitral proceedings were initiated in 1999. An award dated 11.06.2001 directed payment of Rs. 26,00,572.90/- with future interest at 18% per annum and costs. A challenge under Section 34 of the Arbitration and Conciliation Act, 1996 was dismissed on 21.01.2013.

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The company had borrowed from a bank, which initiated proceedings under the SARFAESI Act and attached certain properties. A tripartite agreement was entered into between the bank, the company, and the appellant, culminating in a registered sale deed dated 23.04.2015 in favour of the appellant.

In 2019, execution proceedings were initiated for enforcement of the arbitral award and the executing court ordered conditional attachment of the property. The appellant filed objections under Order XXI Rule 58 CPC, asserting absolute ownership, valid consideration, and absence of notice. The decree-holder alleged collusion and relied upon Order XXI Rule 102 CPC, contending that the appellant was a transferee pendente lite and barred from resisting execution.

The Court recorded that “Under Section 36 of the Arbitration and Conciliation Act, 1996, an arbitral award is enforceable in the same manner as if it were a decree of a court, essentially, a deemed decree.” It noted that “Order XXI Rule 102 of the CPC explicitly states that the protections available to bona fide claimants under Rules 98 and 100 do not apply to a transferee pendente lite.”

The Bench observed that “A transferee pendente lite is defined as someone to whom the property is transferred after the institution of the suit in which the decree was passed.” It further recorded that “Since the transfer occurred after the institution of the proceedings and the passing of the award, the Appellant is a transferee pendente lite/post arbitral award purchaser, and is barred by Order XXI Rule 102 from resisting the execution.”

Referring to precedent, the Court reproduced: “Bare reading of the Rule makes it clear that it is based on justice, equity and good conscience. A transferee from a judgment-debtor is presumed to be aware of the proceedings before a court of law. He should be careful before he purchases the property which is the subject-matter of litigation. It recognises the doctrine of lis pendens recognised by Section 52 of the Transfer of Property Act, 1882… If unfair, inequitable or undeserved protection is afforded to a transferee pendente lite, a decree-holder will never be able to realise the fruits of his decree.”

On the question of notice, the Court stated that “the non-production of tripartite agreement, which is the genesis for discharging the claim of ICICI Bank, as has been rightly held by the Executing Court, enables this Court to safely conclude that the sale in favour of Appellant, even if for consideration cannot be without notice of the existing liability of the Company/Respondent No. 2.”

It further recorded that “The recovery proceedings under SARFAESI Act are independent and does not give any shield of protection to other claims against the Judgment Debtor/Borrower in default.” The Court concluded that “The arbitral award remains unrealised till date.”

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The Court recorded: “Therefore, in the circumstances of this case, and by following the ratio in Danesh (supra) we hold that the claim petition of the Appellant is rightly dismissed by the courts below. In the circumstances of the case and for the above reasons, we agree with the order impugned, and the Civil Appeal fails and is dismissed.”

“The executing court disposes of Execution Proceedings within two months from today. No order as to costs. Pending applications, if any, stand disposed of.”

Advocates Representing the Parties:

For the Petitioners: Mr. Gopal Sankarnarayanan, Sr. Adv.(argued by) Mr. Udian Sharma, AOR Mr. Anirudh Sriram, Adv. Mr. Manav Mitra, Adv. Ms. Harsha Sadhwani, Adv. Mr. Sahil Saraswat, Adv.

For the Respondents: Ms. Sunita Singh, Adv. (argued by) Mr. Abhigya Kushwah, AOR Mr. Pradeep Kumar Dubey, Adv. Mr. Siddharth Rajkumar Murarka, Adv. Mr. Rohan Rohatgi, Adv. Ms. Shubhangini Rohatgi, Adv., Mr. Rohan Dewan, Adv. Mr. Rudra Deosthali, Adv. Ms. Garima Jain, AOR

Case Title: R. Savithri Naidu v. M/s The Cotton Corporation of India Limited and Another
Neutral Citation: 2026 INSC 150
Case Number: Civil Appeal No. of 2026 (@ SLP (C) No. 19779 of 2024)
Bench: Justice Pankaj Mithal, Justice S.V.N. Bhatti