R. Savithri Naidu vs M/S. The Cotton Corporation Of India Ltd

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2026 [@ SPECIAL LEAVE PETITION (CIVIL) NO. 19779 OF 2024]

R. SAVITHRI NAIDU … APPELLANT(S) VERSUS

M/S THE COTTON CORPORATION OF INDIA LIMITED AND ANOTHER … RESPONDENT(S)

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 Signature Not Verified

for a sum of Rs. 26,00,572.90/- with future interest at 18% per annum and Digitally signed by GEETA AHUJA Date: 2026.02.13 10:22:43 IST Reason:

cost. On 25.09.2001, Respondent No. 2 filed AOP No. 10 of 2006 before the

1 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

2 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 23.04.2015.

The completion of the sale under the SARFAESI Act will not affect the right of

the decree holder in AOP No. 10 of 2006. The Appellant is a purchaser

subsequent to the arbitral award in favour of the first respondent. The

executing court recorded the claimant’s evidence and dismissed the claim

petition. A finding relevant to the Appellant's claim is that the AOP had been

pending since 1999 and concluded in 2013. Respondent No. 2 is under an

obligation to disclose the award, as well as the pending AOP proceedings to

the Appellant. The tripartite agreement preceding the sale deed has not been

3 exhibited to establish the absence of collusion or ignorance of ongoing

proceedings. The third-party claimant has taken the risk of the execution

petition, and the objection is hit by Rule 102 of Order XXI of the Code of Civil

Procedure Code, 1908 (“CPC”). The claim petition was thus dismissed by order

dated 03.01.2022. The Appellant carried the order in revision before the High

Court in CRP No. 469 of 2022. By the impugned order dated 12.07.2024, the

said revision was dismissed.

7. Hence, the appeal at the instance of the purported third-party claimant.

8. Mr. Gopal Sankaranarayanan, Senior Advocate, contends that in the

execution of the arbitral award, the property of the Judgment Debtor can be

attached and brought for sale. The Appellant is the absolute owner under the

registered document sale deed dated 23.04.2015. The Appellant cannot be

treated as a pendente lite purchaser, inasmuch as, on the date of the

purchase, neither a suit nor a legal proceeding was pending. The arbitral

award is for the recovery of money. In other words, the subject matter of the

arbitration does not concern the EP property. From the admitted

circumstances, the Appellant is treated as an independent purchaser for

consideration without notice. Therefore, the attachment of the Appellant’s

property purchased through a sale deed dated 23.04.2015 is ex facie illegal

and liable to be set aside. The arguments have been substantially made based

on the chronology of events, as admitted by the parties.

9. Advocate Sunita Singh appearing for Respondent No. 1 argues that the

basis of the claim petition is that the purchase of Appellant is for valid

consideration and without notice. In the peculiar facts, the plea is too broad

inasmuch as the Appellant is the mother of the Managing Director of

Respondent No. 2/Company. At the time of sale, Respondent No. 2 was a

4 private limited company. The claim for realisation of unpaid sale

consideration for the purchase of cotton bales from CCI has been pending

since 2001, and the property available with Respondent No. 2 is available for

realisation of the arbitral award amount, subject to the claims of other

secured creditors. 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 first respondent relies

on the judgment of Madras High Court in CMSA No. 13 of 2019 dated

26.04.2021, which has been referred to and approved by this Court in Danesh

Singh and others v. Har Pyari (Dead) Thr. LRs.1 for the proposition that the

principle of lis pendens cannot, in terms, be excluded for money decrees.

10. In the facts and circumstances of the present case, the arbitral

proceeding was instituted in 1999, and the award is dated 11.06.2001. 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, essentially,

a deemed decree. 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. 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. The suit, i.e., the arbitration proceeding, was

1 2025 INSC 1434.

5 instituted in 1999, and the Appellant purchased the property on account of 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 Appellant, per contra, argues that the

Section 34 challenge was dismissed in 2013, and the sale was in 2015,

implying no litigation was pending. However, the argument 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 (decree) came into existence in 2001. A judgment

debtor cannot defeat a decree by alienating the property after the decree is

passed but before the decree is realised. In other words, the steps taken defeat

the very fruits of the money decree. The ratio of this Court in Usha Sinha v.

Dina Ram,2 is kept in perspective while appreciating the claim which falls

under Rule 102 of Order XXI of the CPC. The excerpt is noted here:

“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,

2 AIR 2008 SC 1997; (2008) 7 SCC 144.

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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.”

11. We have taken note of the rival submissions. At first glance, it appeared

to us that to realise the amount due under an arbitral award, a third party’s

property is attached. We have to arrive at an available finding examining the

record and the foremost circumstances we preface are from 1999 till 2013,

when the arbitration proceedings are pending against Respondent No. 2. From

2014 till date, the proceedings in execution are pending against Respondent

No. 2. The EP has been filed before the Court of Principal District Judge,

Coimbatore, and was transferred to Tirupur. The transferee court, within

whose jurisdiction the properties are situated ordered attachment for

realisation of the arbitral award dated 11.06.2001. The Appellant presents the

case as a third-party stranger. We may not hasten to conclude that there is

fraud between the Appellant and Respondent No. 2 in the transfer of the EP

Schedule Properties by sale deed dated 23.04.2015. But 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. 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. In the circumstances of the case, we reject the

argument that the sale in favour of the Appellant is without notice.

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12. The next question for consideration is whether the sale in favour of the

Appellant can be brought within the purview of pendente lite, given that the

arbitral award is for the recovery of money. The question need not be treated

as res integra; the valid reasoning of the Madras High Court, affirmed by this

court in Danesh (supra), is a complete answer. The operative portions of the

judgment:

“63. To substantiate our reasoning, we may also look into the

decision of the High Court of Madras in Annakkili v. Murugan

& Anr., reported in 2021 SCC OnLine Mad 1673, wherein the

plaintiff had filed a suit for the recovery of money, and also

sought for a direction to be given to the judgment-debtor to

furnish security for the suit claim, failing which the court must

direct that the properties mentioned in the plaint, be attached.

Before any direction could be passed, the appellant therein

purchased one of the properties mentioned in the plaint. It was

then argued that Section 52 of the 1882 Act cannot be invoked

in case of a simple money suit. The Court held that Section 52

does not state that it is not applicable to suits for recovery of

money, and the provision would not say so, because the

Explanation to the provision states that the pendency of any

suit continues until the suit or proceeding has been disposed

of by a final decree or order and complete satisfaction or

discharge of such decree or order has been obtained. It was

further held that the parties must not create new rights in the

property till the execution proceedings are discharged. The

Court underscored that if Section 52 was read as always

excluding money suits, despite a specific prayer in the plaint

as regards the attachment of the property, a decree passed

therein would be rendered meaningless, since the party would

8 be free to alienate the property and there would be no property

available to execute the money decree.”

13. 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.3 It is generally stated that a suit may take 5

years to conclude, but its execution takes 10 years. Order XXI of the 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. If the argument of the appellant is accepted allowing pendente lite

purchasers or third parties to bypass these strict procedural safeguards and

institute separate suits or raise belated objections long after the execution

processes (like attachment and sale) have advanced, it would completely

derail the statutory machinery. Judgment-debtors would be incentivized to

systematically defeat decrees by transferring properties or planting surrogate

objectors to initiate endless collateral litigation. Consequently, execution

proceedings would not merely take 10 years, but would get trapped in an

infinite loop and practically never get completed, reducing the hard-won

decrees of competent courts to mere “paper tigers.”

13.1 This Court emphasized in Jini Dhanrajgir v. Shibu Mathew,4 that

winning a case is meaningless unless the winner actually gets the relief they

sought. We need a shift in mindset: the goal of the legal system should not

just be to dispose of cases, but to ensure that the litigant enjoys the reliefs.

The provisions in the CPC must be employed to secure actual relief, not just

3 General Manager of the Raj Durbhunga v. Coomar Ramaput Singh, (1871-72) 14 MIA 605;

1872 SCC OnLine PC 16.

4 (2023) 20 SCC 76.

9 a formal decree. We must ensure that the legal process results in justice not

just appearing to be done, but justice actually being done.

14. 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. 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.

15. 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.

16. No order as to costs. Pending applications, if any, stand disposed of.

………..……….…………………J. [PANKAJ MITHAL]

………..…………………………J. [S.V.N. BHATTI]

New Delhi;

February 12, 2026.

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