HSA | Dispute Resolution & Arbitration Monthly Update | March 2026

R Savithri Naidu Vs. M/s The Cotton Corporation of India Ltd and Anr.

Background facts

• M/s Lakshmi Ganesh Textiles Ltd ("Respondent No. 2"), initially a public company, changed to a private company on 30.06.2011. It signed a sale agreement on 22.01.1998 with the Cotton Corporation of India Ltd, Coimbatore ("CCI"/"Respondent No. 1") to buy cotton bales. A disagreement over the sale price led CCI to start arbitration (AP No. 9 of 1999) to recover Rs. 37,51,380/- along with interest and costs.
• On 11.06.2001, the arbitrator awarded Rs. 26,00,572.90/- with future interest at 18% per year and costs. Respondent No. 2 challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996 in AOP No. 10 of 2006. This challenge was dismissed on 21.01.2013 and could not be appealed.
• Separately, Respondent No. 2, which defaulted on loans from ICICI Bank, faced SARFAESI proceedings starting on 11.11.2013. A tripartite agreement dated 29.12.2014 was made between ICICI Bank, Respondent No. 2, and the Appellant, R. Savithri Naidu. She is the mother of the Managing Director and the wife of a former director of Respondent No. 2. She also served as a non executive director from 2007 to 2012. Following this agreement, a registered sale deed dated 23.04.2015 was executed by Respondent No. 2 in favour of the Appellant concerning certain properties (the "EP Schedule Properties").
• On 16.07.2019, CCI filed an Execution Petition (EP No. 300 of 2019) in the Court of Principal District Judge, Coimbatore, to enforce the 2001 arbitral award. The EP was moved to Tirupur. On 19.08.2021, the executing court ordered conditional attachment of the EP Schedule Property. The Appellant filed EA No. 141 of 2021 under Order XXI Rule 58 of the Civil Procedure Code, 1908 ("CPC"), claiming to be a genuine third-party buyer for valid consideration and without awareness of any existing liability. The court dismissed the claim petition on 03.01.2022, and the revision (CRP No. 469 of 2022) in the Madras High Court was also dismissed on 12.07.2024, leading to the current appeal before the Supreme Court.

Issue(s) at hand

• Whether the Appellant qualifies as a bona fide purchaser for value without notice, entitled to resist attachment in execution of the arbitral award.
• Whether the Appellant is a transferee pendente lite barred by Order XXI Rule 102 CPC from objecting to the attachment.
• Whether the doctrine of lis pendens extends to money decrees and arbitral awards in respect of post-award transfers of immovable property.
• Whether non-production of the tripartite agreement attracts an adverse inference against the Appellant's plea of purchase without notice.

Findings of the Court

• The Supreme Court dismissed the appeal, affirming the courts below on four grounds.
• First, on the question of notice, the Court held that while no definitive finding of fraud was recorded, the non-production of the tripartite agreement, the foundational document for the sale deed, warranted an adverse inference. Given the Appellant's close familial connection with Respondent No. 2's management, the plea of purchase without notice could not be sustained.
• Second, on Rule 102, the Court held the Appellant to be a transferee pendente lite. Since the arbitral award constitutes a deemed decree under Section 36 of the Arbitration and Conciliation Act, 1996, and the proceedings were instituted in 1999, the 2015 transfer fell squarely within the bar. The Court rejected the argument that no litigation was pending after the Section 34 challenge concluded in 2013, clarifying that Rule 102 operates from the institution of the original arbitral proceedings, not from any interlocutory challenge. Relying on Usha Sinha v. Dina Ram¹.
• Third, on lis pendens, the Court followed Danesh Singh v. Har Pyari², affirming that Section 52 of the Transfer of Property Act, 1882 is not limited to suits concerning specific immovable property and equally governs money suits and arbitral awards. A judgment debtor cannot defeat a decree by alienating property after the award is passed but before it is realised.
• Fourth, the Court emphasised the systemic imperative of decree enforcement, invoking Jini Dhanrajgir v. Shibu Mathew³ and cautioning that permitting surrogate objectors to derail execution proceedings would reduce hard-won decrees to mere paper tigers. The executing court was directed to conclude proceedings within two months.

Footnotes

1. (2008) 7 SCC 144

2. (2025 INSC 1434)

3. (2023) 20 SCC 76 

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