SC – Purchaser of property after an arbitral award and during its execution being a transferee pendente lite cannot resist execution of award.
On 2.1.1998, there was sale agreement between the respondent nos.1 and 2 for sale of cotton bales.
The appellant is the mother of the Managing Director of respondent no.2 – wife of ex-Director and was also non-executive Director from 2007 to 2012.
In the arbitration disputes, the Award for Rs.26,00,572/- with future interest at 18% per annum with cost was passed.
On 21.1.2013, section 34 petition of the respondent no.1 was dismissed by the Principal District Judge, Coimbatore. No appeal was filed.
On 11.11.2013, ICICI Bank initiated recovery proceedings under SARFAESI Act against the borrower – respondent no.2 and attached properties.
In execution petition, there was tripartite agreement between the respondent no.2, appellant and ICICI Bank resulting in the sale deed dated 23.4.2015.
On 16.7.2019, the respondent no.1 filed petition for execution of arbitral award. The appellant being third party filed objection to the conditional attachment of the property.
HELD that the appellant third party has taken the risk of the execution petition and the objection is hit by Rule 102 of Order XXI of CPC.
The non-production of the tripartite agreement is crucial, and the courts below have correctly inferred that it was not produced, while refusing to remove the attachment on the EP Schedule property. The subject matter of the arbitral award, though not concerning the immovable property, still is the immovable property of the judgment debtor, which is available for realising the arbitral award. The Appellant cannot defeat the right of the first respondent, being a post-arbitral award purchaser.
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.
It is a well-worn proverb in litigation, echoing the Privy Council’s century-old observation, that the true difficulties of a litigant begin only after they have obtained a decree.
To sum up, we note that the Appellant is a purchaser post-arbitral award for recovery of the amount. The execution proceeding was pending when the sale deed was entered into between Respondent No. 2 and the Appellant. Moreover, the Appellant failed to discharge the onus on the sale being without notice of the existing claim. The arbitral award remains unrealised till date.
Judgment dated 12.2.2026 of the Supreme Court in SLP (Civil) No.19779 of 2024 of R. Savithri Naidu Vs. M/s. The Cotton Corporation of India Limited and another
