Execution Of Gift Deed After Arbitral Award Was Passed Indicates Attempt To Frustrate Rights Of Decree Holder, Not Bona Fide Conduct: Delhi HC

Also, the court held that 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.

Brief Facts of the case:

The present dispute arose with respect to an award passed by the sole Arbitrator, whereby the claimant was held entitled to sum of Rs. 34,71,125/-. After this, the respondent filed an Execution Petition of the award and during the pendency of the award the petitioner filed an application under Order XXI Rule 58 read with Section 151 CPC in the Execution Petition and was aggrieved by dismissal of his application on 05.03.2025.

The petitioner contended that the disputed property was mortgaged with the South Indian Bank and after the petitioner cleared all the outstanding dues, the property was released from the attachment by the bank. Thereafter a Gift Deed was also executed by the parents of the objector in favour of their son (petitioner herein) and by virtue of such Gift Deed, the objector has become the owner of the property, in his own independent and substantive right and, therefore, such property could not have been attached.

Observation of the Court:

The court observed that when the arbitration proceedings were invoked, there was no prohibition and embargo on any kind of attachment with respect to the said property. Admittedly, even when the Award was passed, there was no such prohibition or attachment, but the Court cannot be unmindful of attendant facts and the relationship between judgment debtors and objectors. The objector is the son of the judgment debtors and there is an apparent attempt to frustrate the rights of the decree holder.

Then, the court held that 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.

Further, the court noted that the Executing Court also observed that the documents on record clearly indicate that the judgment debtors had transferred their rights with respect to the property after the final arguments were heard in the arbitration proceedings. The way the entire payment has been made by the objector, albeit, from his personal account and the manner in which, eventually, the Gift Deed has been executed by the judgment debtors in favour of their son is not, at all, suggestive of any bona fide conduct on part of the judgment debtors and their son.

Then, the court rejected the application of the petitioner stating that this application was filed after the finality of the award, showing an attempt to frustrate the award's enforcement by the petitioner. Also, the court has limited scope of appreciation and judicial interference, while entertaining any petition under Article 227 of the Constitution of India.

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

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