Supreme Court Upholds Attachment of Property in Arbitral Award Execution, Transferee Pendente Lite Cannot Resist Execution of Arbitral Award, Rules Apex Court
In a significant judgment, the Supreme Court of India has upheld the attachment of property purchased post-arbitral award by a third party, reinforcing the principle of pendente lite under the Arbitration and Conciliation Act, 1996 and the Civil Procedure Code, 1908. The bench, comprising Justices Pankaj Mithal and S.V.N. Bhatti, delivered its verdict in the case of R. Savithri Naidu v. M/s. The Cotton Corporation Of India Ltd, dismissing the appeal of R. Savithri Naidu, who contested the attachment of property she acquired after the arbitral award was issued against M/s Lakshmi Ganesh Textiles Limited, a company linked to her family.
The court clarified that under Section 36 of the Arbitration and Conciliation Act, an arbitral award is enforceable as a decree. The case revolved around the execution of an arbitral award passed in 2001, ordering the recovery of Rs. 26,00,572.90 with interest from Lakshmi Ganesh Textiles Limited by The Cotton Corporation of India Ltd. Despite the sale of the property to Savithri Naidu in 2015, the Supreme Court ruled that she was a pendente lite transferee, thereby barring her from resisting the execution under Order XXI Rule 102 of the CPC.
The judgment highlighted the importance of execution proceedings in ensuring that the relief sought is realized, emphasizing the need for procedural safeguards to prevent frivolous objections or pendente lite transfers from derailing the execution process. The court underscored that allowing such objections would incentivize judgment-debtors to defeat decrees systematically, ultimately rendering legal victories hollow.
The case has drawn attention to the doctrine of lis pendens, which prevents the alienation of property involved in litigation until the decree is fully satisfied or discharged. The Supreme Court cited previous judgments, including Usha Sinha v. Dina Ram and Danesh Singh v. Har Pyari, to support its decision, reiterating that the protection against pendente lite transferees is crucial for the realization of decrees.
With this ruling, the Supreme Court has reinforced the integrity of execution proceedings, ensuring that the legal system not only dispenses justice but also secures actual relief for decree-holders.
Bottom Line:
Execution of arbitral award - Property purchased post-arbitral award by third party - Such purchaser treated as pendente lite transferee - Attachment of property for realization of arbitral award upheld.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Section 36, Code of Civil Procedure, 1908 Order XXI Rule 102, Transfer of Property Act, 1882 Section 52
R. Savithri Naidu v. M/s. The Cotton Corporation Of India Ltd, (SC) : Law Finder Doc id # 2852769
