Gift Deed Executed After Final Arguments In Arbitration Proceedings To Frustrate Rights Of Decree Holder: Delhi High Court Refuses To Release Attached Property

The Petitioner approached the High Court, challenging the dismissal of his application filed under Order XXI Rule 58 read with section 151 CPC in Execution Petition.

The Single Bench of Justice Manoj Jain said, “The objector is the son of the judgment debtors and there is an apparent attempt to frustrate the rights of decree holder. The manner in which the gift deed has been executed by the parents clearly suggests that the sole objective was to somehow thwart and defeat the decree which has, reportedly, attained finality…Learned Executing Court also observed that the documents on record clearly indicate that the judgment debtors had transferred their rights with respect to the above property, after the final arguments were heard in the arbitration proceedings.”

Senior Advocate Samrat Nigam represented the Petitioner.

Factual Premise

The Respondent had lodged a claim against the parents of the Objector (Petitioner herein). The Sole Arbitrator had been appointed on the basis of an application moved under Section 11 of Arbitration and Conciliation Act, 1996. The Award was passed by the Arbitrator, whereby the claimant was held entitled to a sum of Rs. 34,71,125 (principal amount) along with interest. The above Execution Petition was filed and during its pendency, the Petitioner, i.e. the son of the judgment debtors, filed the above said application, praying therein that the property be released from the attachment.

As per the Petitioner, the said property, which was lying mortgaged with the South Indian Bank, was released from the attachment by said bank after the pending dues of the borrowers, i.e. parents of the Objector, were cleared. Thereafter, a gift deed was also executed by the parents of the objector in favour of their son (petitioner) by virtue of which he became the owner of the above-said property, in his own independent and substantive right.

The Executing Court prohibited judgment debtors and their son (Petitioner) from transferring the aforesaid property. It was noticed that the JDs had executed the Gift Deed at a much-belated stage i.e. after the final arguments in the arbitration proceedings were heard. It was in such circumstances that the said application was moved by the objector under Order XXI Rule 58, seeking the release of property.

Reasoning

On a perusal of the facts of the case, the Bench found that when the arbitration proceedings were invoked by moving application under Section 11 of Arbitration and Conciliation Act, there was no prohibition and embargo on any kind of attachment with respect to the above-said property. “The objector is the son of the judgment debtors and there is an apparent attempt to frustrate the rights of decree holder”, the Bench said.

The High Court also found that the conduct of the judgment debtors and their son was not bonafide and an attempt was made to thwart the decree passed in favour of the decree holder.

Reaffirming the limited scope of appreciation and judicial interference in such type of matters, while entertaining any petition under Article 227 of the Constitution of India, the Bench referred to the judgment in Puri Investments Versus Young Friends and Co. and Others (2022) wherein it has been observed that the duty of the supervisory Court is to interdict if it finds that the findings are perverse i.e. erroneous on account of non-consideration of material evidence, or being conclusions which are contrary to the evidence, or based on inferences that are impermissible in law.

Thus, finding no ground to interfere with the impugned order, the Bench dismissed the Petition.

Cause Title: Siddharth Sood v.Munish Kumar Aggarwal (Neutral Citation: 2025:DHC:1731)

Appearance:

Petitioner: Senior Advocate Samrat Nigam, Rishi Sood, Arpita Rawat

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