The Delhi High Court dismissed an Execution First Appeal challenging the auction sale of an undivided share in a property, holding that a transfer made by a judgment debtor after service of execution notice but before attachment cannot defeat execution proceedings. The Court affirmed that such transfers remain subject to rights enforceable in the execution proceedings under Section 52 of the Transfer of Property Act, 1882, and are voidable if made with intent to defeat creditors under Section 53 TPA.
Background & Facts
The Dispute
The appeal arose from execution proceedings initiated by Respondent No.1/INTEC Capital Limited ('Decree Holder') to enforce an arbitral award dated 06.11.2021 for ₹50,34,888/- plus interest and costs against Judgment Debtors including Smt. Manju Sharma (Judgment Debtor No.5). The Decree Holder sought attachment and sale of House No.161, Gali No.4, Durgapuri Extension, Shahdara, Delhi, identified as Judgment Debtor No.5's immovable property in the Execution Petition.
Key Facts
- The arbitral award was passed on 06.11.2021 in favour of the Decree Holder against M/s SPA Engineering Services and other judgment debtors for ₹50,34,888/-, together with interest and costs.
- Execution Petition No.37/2022 was instituted on 13.05.2022 for execution of the award.
- In the Execution Petition, the Decree Holder identified House No.161, Gali No.4, Durgapuri Extension, Shahdara, Delhi as an immovable property of Judgment Debtor No.5 and sought attachment and sale towards satisfaction of the award.
- Notice of the Execution Petition was served upon Judgment Debtor No.5 on 30.07.2022.
- After service of notice, Judgment Debtor No.5 conveyed her undivided share in the property to the Appellant (Smt. Nisha Sharma, her sister-in-law) via Sale Deed recording a consideration of ₹32,50,000/-.
- The conveyance occurred after service of notice (30.07.2022) and preceded the formal attachment.
- On 14.11.2022, the Decree Holder filed an application under Order XXI Rule 54 CPC seeking attachment of the property.
- Attachment was ordered on 24.11.2022 and effected on 17.12.2022. The order dated 24.11.2022 noted from title documents that Judgment Debtor No.5 and the Appellant were co-owners of the property.
- On 20.02.2023, the Appellant filed objections under Order XXI Rule 58 CPC, claiming Judgment Debtor No.5 had transferred her share before attachment, leaving no interest available for execution.
- The objections were heard and dismissed on 24.04.2023. The Executing Court recorded that Judgment Debtor No.5 had transferred the share to her sister-in-law during pendency of execution proceedings and both resided at the same address.
- On 18.10.2023, the Executing Court directed sale of the undivided share of Judgment Debtor No.5.
- Judgment Debtor No.5 moved applications on 09.11.2023 seeking stay of sale; notice was issued but immediate stay was declined.
- The auction was conducted on 11.12.2023. The successful bidder was Respondent No.9/Rahul Sharma (son-in-law of the Appellant), who deposited the auction amount of ₹84,50,000/-. Only the one-half undivided share attributed to Judgment Debtor No.5 was brought to auction.
- The Appellant filed another application under Order XXI Rule 58 CPC on 03.09.2024, raising objections extending beyond her claim of title.
- By the Impugned Order dated 03.06.2026, the Executing Court dismissed the applications filed by Judgment Debtor No.5 and the Appellant's objections, and confirmed the auction sale under Order XXI Rule 92 CPC.
Procedural History
- 06.11.2021: Arbitral award passed in favour of Decree Holder.
- 13.05.2022: Execution Petition No.37/2022 filed.
- 30.07.2022: Notice of Execution Petition served on Judgment Debtor No.5.
- 14.11.2022: Application under Order XXI Rule 54 CPC filed for attachment.
- 24.11.2022: Attachment ordered.
- 17.12.2022: Attachment effected.
- 20.02.2023: Appellant's first objections under Order XXI Rule 58 CPC filed.
- 24.04.2023: First objections dismissed.
- 18.10.2023: Executing Court directed sale of undivided share.
- 09.11.2023: Judgment Debtor No.5 filed stay applications.
- 11.12.2023: Auction conducted; successful bidder deposited ₹84,50,000/-.
- 03.09.2024: Appellant's second application under Order XXI Rule 58 CPC filed.
- 03.06.2026: Impugned Order passed dismissing objections and confirming auction sale.
- 06.10.2026: Present judgment pronounced.
Relief Sought
The Appellant sought to set aside the Impugned Order dated 03.06.2026, restore the property to her possession, and obtain directions releasing the share from execution, contending the transfer preceded attachment and removed the share from execution's reach.
The Legal Issue
The central question was whether a transfer of property made by a judgment debtor after service of execution notice but before attachment of that property could defeat execution proceedings under Section 52 of the Transfer of Property Act, 1882, particularly when the property had already been identified in the Execution Petition prior to the transfer.
Arguments Presented
For the Appellant
The Appellant contended that the Sale Deed executed before attachment removed Judgment Debtor No.5's share from the reach of execution, relying on the temporal sequence of events. She invoked Section 60(1)(ccc) CPC, claiming exemption as a transferee of a residential house belonging to and occupied by Judgment Debtor No.5. She further challenged the enforceability of the arbitral award by questioning the constitution of the Arbitral Tribunal and alleging non-delivery of a signed copy of the Award to Judgment Debtor No.5 under Section 31(5) of the Arbitration and Conciliation Act, 1996. The Appellant also referenced an alleged Agreement to Sell dated 03.10.2020, asserting it supported her proprietary claim, though she admitted it was not relied upon in her first objection under Order XXI Rule 58 CPC.
For the Respondent
The Respondent argued that the transfer occurred pendente lite (after institution of execution proceedings and service of notice) and thus remained subject to the rights enforceable in those proceedings under Section 52 TPA, as the property had been specifically identified in the Execution Petition before the conveyance. It contended the transfer was made with intent to defeat or delay enforcement of the Decree Holder's rights under Section 53 TPA, citing payment of substantially the entire consideration only after service of notice and continued family possession indicating a sham transaction. The Respondent emphasized that the Appellant's claim had been adjudicated and dismissed on 24.04.2023 under Order XXI Rule 58 CPC, which she did not challenge, barring reopening of the same controversy. It further asserted that objections to the arbitral award were beyond the Executing Court's limited jurisdiction in execution proceedings.
The Court's Analysis
The Court held that Section 64 CPC does not invalidate the transfer, as a subsequent attachment cannot render an earlier transfer void. However, it found Section 52 TPA applicable because, during the pendency of execution proceedings, a right to the identified immovable property was directly and specifically in question - the property had been identified in the Execution Petition and attachment sought before the conveyance. Citing Danesh Singh & Ors. v. Har Pyari (Dead) through LRs. and Ors. and Annakkili v. Murugan & Anr., the Court affirmed that Section 52 TPA applies even when the principal relief is recovery of money, as identified properties are brought within proceedings through prayer for security and attachment.
The Court further held that the transfer did not take Judgment Debtor No.5's share outside the pending execution, as it occurred after service of execution notice and after the Award had been made. Relying on R. Savithri Naidu v. Cotton Corporation of India Ltd. and Anr., it stated that a post-Award transferee pendente lite cannot resist execution and is subject to the bar under Order XXI Rule 102 CPC. The Appellant acquired only whatever interest Judgment Debtor No.5 could transfer, subject to rights enforceable in the proceedings.
Regarding Section 53(1) TPA, the Court found the transfer made with intent to defeat or delay creditors, noting: (1) an Award had already been passed and execution instituted; (2) Judgment Debtor No.5 was served with notice on 30.07.2022; (3) substantially the entire consideration under the asserted family transaction was paid between 20.09.2022 and 22.09.2022, after service of notice; and (4) possession and enjoyment continued within the family, indicating no material change. These circumstances established, on a preponderance of probabilities, that the transfer was made to defeat or delay enforcement of the Decree Holder's rights, voiding the Appellant's claim to protection as a transferee in good faith.
The Court also held that the Appellant could not invoke Section 60(1)(ccc) CPC, as the protection is personal to the judgment debtor and confined to the residential house belonging to and occupied by such debtor - it does not extend to legal representatives or transferees claiming in their own right. Furthermore, the earlier adjudication under Order XXI Rule 58 CPC on 24.04.2023, which the Appellant did not challenge, had the same force as a decree and barred reopening of the same proprietary claim. The Agreement to Sell dated 03.10.2020, available but not relied upon in the first objection, could not be used to reopen the controversy.
Finally, the Court rejected objections to the arbitral award, holding that an Executing Court may interfere only where the decree is a nullity for inherent want of jurisdiction apparent on the face of the record; it cannot reopen disputed questions requiring evidence examination. The Appellant, as a post-Award transferee pendente lite, could not invoke non-delivery of the Award to Judgment Debtor No.5 as an independent ground to resist execution.
The Verdict
The Appeal was dismissed. The Impugned Order dated 03.06.2026 dismissing the Appellant's objections and confirming the auction sale under Order XXI Rule 92 CPC was upheld. The auction purchaser (Respondent No.9/Rahul Sharma, son-in-law of the Appellant) had deposited the auction amount of ₹84,50,000/- for the one-half undivided share of Judgment Debtor No.5. Pending applications stood disposed of.
What This Means For Similar Cases
Transfer Pendente Lite Remains Subject to Execution
Practitioners must note that any transfer of identified property made after service of execution notice but before attachment remains vulnerable to execution proceedings. The transferee acquires only the judgment debtor's interest, subject to rights enforceable in those proceedings. Verification of whether the property was specifically identified in the execution petition prior to transfer is critical to assess vulnerability.
Intent to Defeat Creditors Voids Transfer Under Section 53 TPA
Transfers made with the predominant purpose of delaying or defeating creditor claims are voidable at the creditor's option, even if supported by consideration. Courts will examine the temporal relationship between creditor notice, payment of consideration, and continuity of possession or use to infer fraudulent intent. Family arrangements preserving pre-transfer possession status undermine claims of good faith transferee status.
Earlier Adjudication Bars Reopening of Same Claim
A party who fails to challenge an adverse order under Order XXI Rule 58 CPC cannot subsequently reopen the same proprietary ground in a fresh application. The doctrine of res judicata applies to such adjudications, which possess the same force and are subject to the same appeal conditions as a decree. Ancillary documents unavailable or unused in the initial objection cannot revive the controversy.
Objections to Award Beyond Executing Court's Jurisdiction
In execution proceedings, challenges to the underlying decree's validity are limited to patent nullities apparent on the record (e.g., lack of jurisdiction). Disputed questions of fact concerning the award's constitution, delivery, or merits cannot be entertained, as they exceed the Executing Court's limited jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996.
