Published on: December 20, 2023 at 12:38 IST
The Supreme Court upheld the arbitrability of a property dispute involving the cancellation of a deed. The court rejected the argument that the nature of the dispute, which sought the cancellation of a deed, made it non-arbitrable as it was considered an action in rem. Instead, the court clarified that the cancellation of a deed falls under the category of an action in personam and is, therefore, arbitrable.
The dispute arose from the cancellation sought for both the Conveyance Deed and registered Development Agreements. Although these specific agreements lacked an arbitration clause, the court noted that they derived from two Tripartite Agreements, which did include a broad arbitration clause. The court emphasized the pivotal role of the Tripartite Agreements as the foundation for subsequent agreements between the parties.
Justices Aniruddha Bose and Sudhanshu Dhulia concurred with the lower courts’ decisions that the arbitration clause in the Tripartite Agreements covered the dispute brought before the Civil Court. The appellants, acting as plaintiffs in a civil suit, sought a declaration nullifying the Conveyance Deed and confirming the valid termination of the registered Development Agreements.
The defendants (respondents), invoking Section 8 of the Arbitration & Conciliation Act, 1996, applied for arbitration based on the arbitral clause within the Tripartite Agreements. The trial court, affirming the broad language of the arbitration clause, referred the matter to arbitration, a decision upheld by the Bombay High Court.
The Supreme Court, while analyzing the 2015 amendments to the Arbitration & Conciliation Act, stressed the limited role of the court in arbitration matters. It underscored that the court’s function is primarily to determine the existence of a valid arbitration agreement. The court also dismissed the appellant’s argument that the dispute was non-arbitrable, citing precedents such as Booz Allen and Hamilton Inc. v. SBI Home Finance Limited and Others.
Addressing the objection that the dispute constituted an action in rem, the court referred to Deccan Paper Mills v. Regency Mahavir Properties and held that whether the suit pertained to the cancellation of a deed or a declaration of rights arising from the deed, it was an action in personam.
Regarding the fraud objection, the court found it unsubstantiated, emphasizing the need for serious allegations to oust the arbitrator’s jurisdiction.
In conclusion, the Supreme Court declined to interfere with the lower courts’ findings, dismissing the appeal in the case titled “SUSHMA SHIVKUMAR DAGA vs. MADHURKUMAR RAMKRISHNAJI BAJAJ,” Diary No.- 1164 – 2022.
