The Supreme Court in the case M/s Asian Avenues Pvt Ltd vs Sri Syed Shoukat Hussain observed and has reiterated that an action instituted under Section 31 of the Specific Relief Act, 1963 for the cancellation of an instrument is not an action in rem and the same means that the cancellation of instrument as per the said section will bind only upon the parties to the proceedings and the same will not operate universally against everyone.
The bench comprising of Justice Abhay S Oka and Justice Rajesh Bindal in the case observed and has made the said observations wherein an appeal was filed before the court in which the issue being weather the arbitration clause in a development agreement could have been invoked in a suit which has been filed wherein seeking cancellation of the very same agreement before the court. Therefore, the trial court in the case referred the parties to arbitration, thus, the High Court interfered in revision.
However, in the case the interference of High Court was made on the ground that the adjudication pursuant to invocation of Section 31 of the Specific Relief Act, 1963 is an adjudication in rem and it has also been pointed out by Supreme Court that this view being erroneous, as held in the case Deccan Paper Mills Company Limited v. Regency Mahavir Properties and Ors.
The bench in the case noted that in the case Deccan Paper Mills Company Limited, the said court has categorically held that it is impossible to hold that an action instituted under Section 31 of the Specific Relief Act, 1963 for cancellation of an instrument is an action in rem.
Further, it has also been held by the bench that dispute, whether it cancelled the Development Agreement stands or whether the agreement can lawfully be cancelled as the same being the dispute arising out of or in connection with the Development Agreement in the matter. Thus, as the per the arbitration clause, the issue concerning is not mutually being resolved and the same is to be referred to arbitration.
