New Delhi: The Supreme Court has held that a transferee who purchases property from a judgment-debtor after an arbitral award has been passed cannot resist execution proceedings, and that the doctrine of lis pendens under Section 52 of the Transfer of Property Act, 1882, applies equally to money decrees, not just to suits concerning specific immovable property.
A Bench comprising Justice Pankaj Mithal and Justice S.V.N. Bhatti dismissed an appeal filed by R. Savithri Naidu, who had purchased property from a judgment-debtor during the pendency of execution proceedings and sought to resist the attachment of that property for satisfaction of an arbitral award.
The case arose from a sale agreement dated January 22, 1998, between the Cotton Corporation of India Limited (CCI) and M/s Lakshmi Ganesh Textiles Limited for the sale of cotton bales. Following a dispute over recovery of the sale price, CCI initiated arbitration proceedings in AP No. 9 of 1999. On June 11, 2001, the learned arbitrator passed an award directing payment of ₹26,00,572.90 with future interest at 18% per annum and costs.
The judgment-debtor company filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the award, but the same was dismissed on January 21, 2013, and the order attained finality as no appeal was filed.
Meanwhile, the judgment-debtor company faced SARFAESI proceedings initiated by ICICI Bank for loan defaults. A tripartite agreement was entered into between ICICI Bank, the judgment-debtor company, and the appellant, R. Savithri Naidu, resulting in a sale deed dated April 23, 2015, executed by the judgment-debtor in favour of the appellant.
Significantly, the appellant was not a stranger to the judgment-debtor company. She was the mother of the Managing Director, the wife of an ex-director, and had herself served as a non-executive director of the company from 2007 to 2012.
On July 16, 2019, CCI filed an execution petition to enforce the arbitral award dated June 11, 2001. On August 19, 2021, the executing court ordered conditional attachment of the property that had been sold to the appellant.
The appellant then filed an application under Order XXI Rule 58 of the Code of Civil Procedure, 1908 (CPC), claiming to be a third party who had purchased the property through a registered sale deed for valid consideration and without notice of the existing liability arising from the arbitral award. She argued that since the execution petition was filed only in 2019 and attachment was effected in 2021, while she had purchased the property in 2015, the property was not available for attachment or sale.
The executing court recorded the claimant’s evidence and dismissed the claim petition on January 3, 2022, holding that the appellant had failed to discharge the onus of proving that the purchase was without notice of the existing claim. The High Court dismissed the revision petition on July 12, 2024.
The Supreme Court held that the arbitral proceedings were instituted in 1999 and the award was passed on June 11, 2001. 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, i.e., a deemed decree.
The Court examined Order XXI Rule 102 of the CPC, which explicitly states that the protections available to bona fide claimants under Rules 98 and 100 do not apply to a transferee pendente lite. A transferee pendente lite is one to whom property is transferred after the institution of the suit in which the decree was passed.
The Court held:
“The suit, i.e., the arbitration proceeding, was instituted in 1999, and the Appellant purchased the property under a sale deed dated 23.04.2015. 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.”
The Court rejected the appellant’s argument that since the Section 34 challenge was dismissed in 2013 and the sale took place in 2015, no litigation was pending. The Court clarified that the bar under Order XXI Rule 102 does not depend on the pendency of the Section 34 challenge but on the fact that the transfer occurred after the institution of the suit in 1999 and after the arbitral award (deemed decree) came into existence in 2001.
Addressing whether the doctrine of lis pendens could apply where the arbitral award was for recovery of money, the Court relied on its recent judgment in Danesh Singh and Others v. Har Pyari (Dead) Through LRs [2025 INSC 1434], affirming the Madras High Court’s reasoning.
Quoting Annakkili v. Murugan & Anr. [2021 SCC OnLine Mad 1673], the Court observed:
“Section 52 does not state that it is not applicable to suits for recovery of money… parties must not create new rights in the property till the execution proceedings are discharged.”
The Court cautioned that excluding money decrees from Section 52 would render decrees illusory, as judgment-debtors could freely alienate properties and frustrate execution.
The Court further held that the appellant had failed to discharge the onus of proving lack of notice. It noted that arbitration proceedings were pending from 1999 to 2013 and execution proceedings thereafter. The non-production of the tripartite agreement with ICICI Bank also weighed against the appellant.
The Court observed:
“The recovery proceedings under the SARFAESI Act are independent and do not give any shield of protection to other claims against the judgment-debtor/borrower in default.”
Relying on Usha Sinha v. Dina Ram [AIR 2008 SC 1997], the Court reiterated that a judgment-debtor cannot defeat a decree by alienating property after the decree but before its realisation.
Highlighting systemic concerns, the Court noted that execution is often more time-consuming than adjudication and warned that allowing pendente lite purchasers to resist execution would reduce decrees to mere “paper tigers.”
Citing Jini Dhanrajgir v. Shibu Mathew [(2023) 20 SCC 76], the Court stressed that justice must culminate in actual relief and not merely formal decrees.
Summing up, the Court held:
“The Appellant is a purchaser post-arbitral award for recovery of the amount. The execution proceedings were pending when the sale deed was executed. Moreover, the Appellant failed to discharge the onus of proving absence of notice. The arbitral award remains unrealised till date.”
The Court dismissed the civil appeal and directed the executing court to dispose of the execution proceedings within two months.
Appearances:
For Appellant: For Petitioner(s) 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 Respondent(s): 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 vs. M/s The Cotton Corporation of India Limited & Anr. (Civil Appeal arising out of Special Leave Petition (Civil) No. 19779 of 2024; 2026 INSC 150)
