The Delhi High Court, in a recent judgment, ruled that the execution of a Gift Deed after an arbitral award had been passed suggested an attempt to frustrate the rights of the decree-holder rather than an act of bona fide conduct. The ruling was delivered by Justice Manoj Jain while dismissing the petitioner's application, which sought the release of an attached property.
Case Background
The dispute revolved around an arbitral award that entitled the claimant to recover Rs. 34,71,125/-. Following the award, the decree-holder initiated execution proceedings. During the pendency of the execution, the petitioner filed an application under Order XXI Rule 58 read with Section 151 of the Civil Procedure Code (CPC), challenging the attachment of a property.
The petitioner argued that the disputed property had been mortgaged with South Indian Bank and was released after clearing outstanding dues. Subsequently, the petitioner's parents executed a Gift Deed transferring ownership of the property to him. The petitioner contended that he had acquired the property in his own independent and substantive right, and therefore, it could not be subject to attachment.
The court examined the case in detail and found that:
Lack of Prohibition on Property Transfer During Arbitration: When arbitration proceedings were initiated and even at the time the award was passed, there was no legal prohibition or embargo on the attachment of the property.
Close Relationship Between Judgment Debtors and Objector: The objector (petitioner) was the son of the judgment debtors, and the court noted an apparent attempt to shield the property from being attached.
Suspicious Timing of the Gift Deed Execution:
- The property was transferred through a Gift Deed only after the arbitration proceedings had concluded.
- The timing of the transaction suggested that it was aimed at frustrating the enforcement of the arbitral award.
Read Also: Delhi High Court Upholds Arbitrator's Decision on "Jeeto Har DinZo" Tagline Dispute
The court specifically stated:
"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."
Additionally, the executing court had observed that the judgment debtors transferred their rights in the property only after the final arguments in the arbitration proceedings were heard. The payment made by the objector from his personal account did not, in the court’s view, establish bona fide ownership.
Limited Scope of Judicial Interference:
The Delhi High Court also emphasized the restricted scope of judicial interference under Article 227 of the Constitution of India. Citing precedents like Puri Investments v. Young Friends & Co. and Garment Craft v. Prakash Chand Goel, the court reiterated that supervisory courts should only intervene if the findings are perverse, erroneous due to non-consideration of material evidence, or based on impermissible inferences.
Read Also: Delhi High Court Denies Interim Injunction in Patent Infringement Case Over Drug for Rare Disease
Considering the overall facts and circumstances, the High Court dismissed the petitioner’s application, stating:
"This Court does not find any reason to interfere with the impugned order. The present petition, along with pending applications, stands dismissed in limine."
Case Title: SIDDHARTH SOOD versus MUNISH KUMAR AGGARWAL
Case Number: CM(M) 499/2025 & CM APPL. 15427-15429/2025
Counsel for the Petitioner: Mr. Samrat Nigam, Senior Advocate with Mr. Rishi Sood and Ms. Arpita Rawat, Advocates.
Counsel for the Respondent: None.
Date of Judgment: 17.03.2025
