In a significant ruling on execution of arbitral awards, the Supreme Court on Wednesday dismissed an appeal filed by R. Savithri Naidu, holding that a purchaser cannot block the attachment of property when the transfer takes place after an arbitral award is passed.
The Bench of Justices Pankaj Mithal and S.V.N. Bhatti upheld the attachment of property in execution proceedings initiated by The Cotton Corporation of India Limited (CCI), observing that courts must ensure that decree-holders are able to realise the “fruits” of their judgments.
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Background of the Case
The dispute traces back to 1998, when CCI entered into a sale agreement with Lakshmi Ganesh Textiles Limited for the supply of cotton bales.
A payment dispute led CCI to initiate arbitration in 1999. In June 2001, the arbitrator awarded over ₹26 lakh with 18% future interest in favour of CCI .
The award was challenged under Section 34 of the Arbitration and Conciliation Act before the Principal District Judge, Coimbatore. The challenge was dismissed in January 2013 and no further appeal was filed .
Meanwhile, the textile company defaulted on loans taken from ICICI Bank, which initiated proceedings under the SARFAESI Act (a law that allows banks to recover loans by selling secured assets). In 2015, a sale deed was executed in favour of Savithri Naidu - the mother of the company’s Managing Director and a former non-executive director - pursuant to a tripartite agreement with the bank.
In 2019, CCI filed an execution petition to recover the arbitral award amount. The executing court ordered attachment of the property in 2021. Naidu then filed a claim petition, asserting that she was the absolute owner and had purchased the property for valid consideration without knowledge of any pending dispute .
Her objection was rejected by the executing court and later by the High Court. She then approached the Supreme Court.
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Arguments Before the Court
Senior Advocate Gopal Sankaranarayanan, appearing for Naidu, argued that she was not a “pendente lite” purchaser - meaning a buyer during the pendency of litigation - because the arbitral challenge had already been dismissed by 2013 and the sale occurred in 2015.
He contended that the arbitration concerned only recovery of money, not the immovable property itself. Therefore, attachment of her property was illegal.
On the other hand, counsel for CCI argued that the arbitration began in 1999 and the award was passed in 2001. Under law, an arbitral award is enforceable like a court decree. Any transfer after the institution of proceedings would attract the doctrine of lis pendens — a principle that prevents parties from transferring property during litigation to defeat claims.
CCI also pointed out that Naidu was closely related to the company’s management and had not produced the tripartite agreement before the court.
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Court’s Observations
The Bench noted that from 1999 to 2013, arbitration-related proceedings were pending against the company, and execution proceedings were initiated thereafter .
At first glance, the court remarked, it appeared as if a third party’s property was being attached. However, upon examining the record, the judges found that the transfer took place after the arbitral award had already come into existence.
The court observed that non-production of the tripartite agreement was significant. “The sale in favour of the appellant, even if for consideration, cannot be without notice of the existing liability,” the Bench said .
The judges emphasised that recovery proceedings under the SARFAESI Act do not shield a borrower’s property from other legitimate claims.
Referring to Order XXI Rule 102 of the Code of Civil Procedure (which bars certain objections by purchasers during litigation), the court held that a transferee after the institution of proceedings cannot resist execution.
In a striking observation, the Bench said litigation difficulties often begin after a decree is obtained. If pendente lite purchasers are allowed to raise objections repeatedly, “execution proceedings would not merely take 10 years, but would get trapped in an infinite loop… reducing hard-won decrees to mere ‘paper tigers’”.
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Decision
The court concluded that Savithri Naidu was a post-arbitral award purchaser and had failed to prove that the sale was without notice of the existing claim.
Following its earlier precedent, the Supreme Court held that her claim petition was rightly dismissed by the lower courts .
The Civil Appeal was dismissed. The executing court has been directed to dispose of the execution proceedings within two months. No order as to costs was passed .
Case Title: R. Savithri Naidu v. M/s The Cotton Corporation of India Ltd. & Anr.
Case No.: Civil Appeal arising out of SLP (C) No. 19779 of 2024
Decision Date: February 12, 2026
