Action Instituted U/S 31 Of Specific Relief Act, 1963 For Cancellation Of An Instrument Is Not An Action In Rem: SC Reiterates

The Supreme Court has reiterated that an action instituted under Section 31 of the Specific Relief Act, 1963 for cancellation of an instrument is not an action in rem.

The bench of Justice Abhay S Oka and Justice Rajesh Bindal relied upon its decision in the case of Deccan Paper Mills Company Limited v. Regency Mahavir Properties and Ors wherein it was observed that “it is impossible to hold that an action instituted under Section 31 of the Specific Relief for cancellation of an instrument is an action in rem.”

Advocate Ananga Bhattacharyya appeared for the appellant whereas Advocate Prabha Swami appeared for respondent.

The facts of the case was that there was a Development Agreement-cum-General Power of Attorney executed between the appellant and the respondent. By the Development Agreement, the appellant was granted permissive possession for the purposes of carrying out development work on the property subject matter of the Development Agreement.

There was a dispute between the parties, which led to the respondent cancelling the Development Agreement. The respondent issued a legal notice to the appellant calling upon him to execute a deed of cancellation of the Development Agreement. The prayer in the suit is for a decree directing the appellant to execute a deed of cancellation in respect of the Development Agreement.

After the suit summons was served, the appellant filed an application that in view of the arbitration clause in the Development Agreement, the dispute ought to be referred to arbitration. The Trial Court directed the parties to refer their dispute to arbitration. In a revision application preferred by the respondent, the High Court set aside the order of the Trial Court.

The Apex Court noted that the only ground on which the High Court interfered was that the adjudication pursuant to invocation of Section 31 of the Specific Relief Act is an adjudication in rem. However the Court noted that a three-judge bench in the case of Deccan Paper Mills Company Limited v. Regency Mahavir Properties and Ors had held that an action instituted under Section 31 of the Specific Relief Act, 1963 for cancellation of an instrument is not an action in rem.

Thus the Court set aside the High Court order and Trial Court’s order was restored.

Cause Title- M/S. Asian Avenues Pvt Ltd. V. Syed Shoukat Hussain

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