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SUPREME COURT OF INDIA
PANKAJ MITHAL, S.V.N. BHATTI, JJ.
R. Savithri Naidu – Appellant
Versus
M/s The Cotton Corporation Of India Limited And Another – Respondents
Civil Appeal No. 1602 of 2026 [@ Special Leave Petition (Civil) No. 19779 of 2024]
Decided On : 12-02-2026
Civil Procedure Code, 1908 – Order XXI Rule 102 – Arbitration and Conciliation Act, 1996 – Sections 34 and 36 – Execution of arbitral award – A judgment debtor cannot defeat a decree by alienating property after decree is passed but before decree is realised – Steps taken defeat very fruits of money decree – Recovery proceedings under SARFAESI Act are independent and does not give any shield of protection to other claims against Judgment Debtor/Borrower in default – Goal of legal system should not just be to dispose of cases, but to ensure that litigant enjoys reliefs – Provisions in CPC must be employed to secure actual relief, not just a formal decree – We must ensure that legal process results in justice not just appearing to be done, but justice actually being done – Appellant is a purchaser post-arbitral award for recovery of amount – Execution proceeding was pending when sale deed was entered into between Respondent and Appellant – Appellant failed to discharge onus on sale being without notice of existing claim – Arbitral award remains unrealised till date – Claim petition of Appellant rightly dismissed by courts below. (Paras 10, 11, 13.1 and 14)
Facts of the case:
The Executing Court recorded the claimant’s evidence and dismissed the claim petition. A finding relevant to Appellant's claim is that AOP had been pending since 1999 and concluded in 2013. Respondent No. 2 is under obligation to disclose award, as well as pending AOP proceedings to Appellant. Tripartite agreement preceding sale deed has not been exhibited to establish absence of collusion or ignorance of ongoing proceedings.
Findings of Court:
The true difficulties of a litigant begin only after they have obtained a decree. It is generally stated that a suit may take 5 years to conclude, but its execution takes 10 years. Order XXI of CPC was comprehensively amended in 1976 specifically to cure this mischief, operating as a self-contained code that strictly bars separate suits (under Section 47, Rule 92(3), and Rule 101) and imposes rigid limitation periods for raising objections.
Result : Civil Appeal dismissed.
The Supreme Court upheld that a judgment debtor cannot defeat a decree by alienating property after the decree is passed but before it is realized, especially in the context of execution proceedings. In this case, the Court found that the property purchased by the Appellant after the initiation of arbitral proceedings and the passing of the award should be considered as subject to the ongoing execution process, unless the sale was made without notice of the existing claim. The Court emphasized that transfer of property after the institution of proceedings or after the award is not protected, and such transfers can be challenged if they are intended to defeat the decree. The Court also clarified that the execution of arbitral awards is akin to executing a decree and that protections available to bona fide purchasers do not extend to those who acquire property with knowledge of pending litigation or claims. Consequently, the Court dismissed the appeal, affirming that the sale in question was liable to be set aside because it occurred after the proceedings had commenced and the award had been passed, and the Appellant failed to prove that she purchased the property without notice of the claim.
JUDGMENT :
S.V.N. BHATTI, J.
1. Leave granted.
2. M/s Lakshmi Ganesh Textiles Limited, Avinashi Road, Peelamedu, Coimbatore/Respondent No. 2 was a Public Limited Company, and on 30.06.2011, was incorporated as a Private Limited Company. The Cotton Corporation of India Limited, Ramanathapuram, Coimbatore (“CCI”)/Respondent No. 1 primarily engages in the business of sale and purchase of cotton/cotton bales. On 22.01.1998, a sale agreement was entered into between the first and second respondents for the sale of cotton bales. On account of a dispute in recovery of the sale price of cotton bales supplied under the sale agreement dated 22.01.1998, the first respondent raised an arbitral dispute in AP No. 9 of 1999 for recovery of Rs. 37,51,380/- with interest and cost. On 11.06.2001, the learned arbitrator passed an award for a sum of Rs. 26,00,572.90/- with future interest at 18% per annum and cost. On 25.09.2001, Respondent No. 2 filed AOP No. 10 of 2006 before the Court of Principal District Judge, Coimbatore under Section 34 of the Arbitration and Conciliation Act, 1996.
3. The Appellant is the mother of the Managing Director of Respondent No. 2, wife of ex-director, and was also a non-executive director of the Respondent No. 2/Company from 2007 to 2012.
4. On 21.01.2013, AOP 10 of 2006 was dismissed, and has become final, since no appeal was filed by Respondent No. 2.
5. Respondent No. 2 is a borrower of ICICI Bank. For default of payment of the sums borrowed, ICICI Bank initiated recovery proceedings on 11.11.2013 under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) and attached the properties of Respondent No. 2. The Execution Petition (“EP”) Schedule Properties are among the properties brought for sale by ICICI Bank. A tripartite agreement was entered into between ICICI Bank, Respondent No. 2 and the Appellant, resulting in a Sale Deed dated 23.04.2015, executed by Respondent No. 2 in favour of the Appellant. OA No. 120 of 2013, filed by ICICI Bank, was closed pursuant to a compromise evidenced by the tripartite agreement dated 29.12.2014.
6. On 16.07.2019, Respondent No. 1 filed EP before the Court of Principal District Judge, Coimbatore, for executing the award dated 11.06.2001. EP was transferred to the Court of Principal District Judge, Tirupur. On 19.08.2021, in EP No. 300 of 2019, the executing court ordered the conditional attachment of EP Schedule Property. The Appellant, claiming to be a third party, filed EA No. 141 of 2021 under Order XXI Rule 58 of the Code of Civil Procedure, 1908, praying for the removal of the attachment ordered in EP No. 300 of 2019 of the EP Schedule Property. The Appellant states that on 23.04.2015, through a registered sale deed executed by Respondent No. 2 to the Appellant, she has become the absolute owner of the EP Schedule Property. The sale in favour of Appellant is for valid consideration and without notice, namely, the existing liability arising out of the arbitral award. The EP was filed in 2019, and attachment was effected on 19.08.2021.
6.1 On the date of attachment, the judgment-debtor is not the owner of the property. Therefore, the attachment of the EP Schedule and the consequent realisation steps for the sum due under the arbitral award dated 11.06.2001 are unsustainable and illegal. The EP schedule is, therefore, not available for either attachment or sale by the executing court in EP No. 300 of 2019 for realisation of the arbitral award. The EP was filed in 2019 and is therefore not maintainable against the property purchased by the Appellant under the sale deed dated 23.04.2015. To sum up, it is alleged that the Appellant is the absolute owner of the EP Schedule, paid consideration, and is without knowledge of the ongoing dispute between Respondent No. 1 and Respondent No. 2.
6.2 Respondent No. 1 alleges collusion between the Appellant and Respondent No. 2 and brought into existence the sale deed dated 23.
Execution of arbitral award – A judgment debtor cannot defeat a decree by alienating property after decree is passed but before decree is realised.
A transferee from a judgment debtor during pending execution proceedings has no right to enforce claims against a valid auction purchaser, as the transfer is void under sections of the CPC.
Execution of an arbitral award requires compliance with the 90-day limitation under Section 34; execution petitions filed before this period are impermissible.
A pendente lite purchaser cannot assert independent title in execution proceedings, as the doctrine of lis pendens prevails over claims of bona fide purchasers under the Specific Relief Act.
A purchaser of property during the pendency of a suit has no right to resist or obstruct the execution of a decree, as per Order XXI Rule 102 and the doctrine of lis pendens.
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During pendency in any court having authority within limits of India of any suit or proceeding which is not collusive and in which any right to immovable property is directly and specifically in ques....
Adjudication of claims to, or objections to attachment of, property - Where any claim is preferred to, or any objection is made to the attachment of, any property attached in execution of a decree on....
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