Post-Award Purchaser Is Transferee Pendente Lite; Attachment Upheld Under Order XXI Rule 102

A bench of Justice Pankaj Mithal and Justice S.V.N. Bhatti heard an appeal by a third‑party purchaser challenging the refusal of lower courts to set aside attachment of immovable property in execution of an arbitral award; the question was whether a sale in 2015 to the appellant, occurring after institution of arbitral proceedings in 1999 and after the 2001 award, could resist execution under Order XXI Rule 102 of the Code of Civil Procedure.

The Court dismissed the appeal and held that the appellant was a post‑award transferee pendente lite who could not defeat execution of the award. The Court noted that an arbitral award is enforceable as a decree under Section 36 of the Arbitration and Conciliation Act and that Rule 102 of Order XXI barred protection to a transferee who took title after institution of the proceedings in which the decree (or award) was passed. The Court further recorded that the appellant failed to discharge the onus of showing that the sale was without notice and relied on the non‑production of the tripartite agreement as a material circumstance. The Court, in its reasoning, observed: “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. Rule 102 of Order 21 of the Code thus takes into account the ground reality and refuses to extend helping hand to purchasers of property in respect of which litigation is pending. 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. Every time the decree‑holder seeks a direction from a court to execute the decree, the judgment‑debtor or his transferee will transfer the property and the new transferee will offer resistance or cause obstruction. To avoid such a situation, the Rule has been enacted.”

Background

The dispute arose from a 1998 sale agreement for cotton bales between The Cotton Corporation of India Limited (Respondent No.1) and Lakshmi Ganesh Textiles Limited (Respondent No.2). Respondent No.1 initiated arbitration in 1999 and an arbitrator awarded Rs. 26,00,572.90 with interest on 11.06.2001. Respondent No.2’s challenge under Section 34 was dismissed by the District Court on 21.01.2013 and became final. Respondent No.1 filed execution proceedings in 2019 to enforce the award; interim attachment of the subject properties followed on 19.08.2021.

Meanwhile, Respondent No.2 had undergone recovery proceedings by ICICI Bank under the SARFAESI Act in 2013; a tripartite compromise with the bank led to a sale deed dated 23.04.2015 by which the appellant (a non‑executive director of Respondent No.2 and mother of its managing director) acquired the EP schedule properties. The executing court found that the tripartite agreement was not produced and recorded that the appellant failed to establish that the purchase was without notice of the existing liability; it dismissed the third‑party claim. The High Court affirmed by order dated 12.07.2024.

On appeal, senior counsel for the appellant argued that the sale deed was a registered transfer for value without notice and that no lis pendens principle could defeat a bona fide post‑award purchaser, particularly after the Section 34 challenge had been disposed in 2013. Respondent No.1 relied on Order XXI Rule 102 and precedent including Danesh Singh (approved by this Court) and Usha Sinha, contending that a transferee pendente lite could not resist execution. The Supreme Court accepted the respondents’ submissions, held that the transfer occurred after institution of arbitration and after the award and that the appellant did not discharge the onus to show absence of notice. The Court observed the dangers of permitting such transfers to defeat decrees, warning that execution could otherwise be reduced to “paper tigers.” The appeal was dismissed, the executing court was directed to dispose of the execution proceedings within two months, and no costs were ordered.

Case Details:
Case No.: 2026 INSC 150; CIVIL APPEAL NO. OF 2026 [@ SPECIAL LEAVE PETITION (CIVIL) NO. 19779 OF 2024]
Case Title: R. Savithri Naidu v. M/s The Cotton Corporation of India Limited & Anr.
Appearances:
For the Petitioner(s): Gopal Sankaranarayanan, Senior Advocate
For the Respondent(s): Sunita Singh, Advocate (for Respondent No.1); (no counsel for Respondent No.2 recorded in judgment)

Source: 2026 CaseBase(SC) 129