Case Briefs
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Deccan Paper Mills Co. Ltd. vs Regency Mahavir Properties


Author: Niyush Kumar, 4th year student at Amity Law School, Delhi.

CITATION: 2020 SCC OnLine SC 655

DATE OF DECISION: August 19, 2020

BENCH: Rohinton Fali Nariman, Navin Sinha, Ms. Banerjee

ORIGINAL COPY: VIEW

Issue in Question   

  • Proceeding under section 31 of Specific Relief Act, 1963 is an actual trial or subsequently falls under any particular trial?
  • Is the dispute about fraud allegations?

Background of the case

  • On July 22, 2004, Deccan Paper Mills Co. Ltd. and M/s Ashray Premises Pvt. Ltd. entered into a contract in which Deccan, which owns approximately 82,200 square feet of land, decided to develop 32,659 square feet. Its clauses stipulate that “The owner must object if the developer at any time during the term of the contract assigns, delegates, the rights under this contract or the powers of attorney / writings drawn up for this purpose to another person, signature or party, without the conditions to violate or change this agreement.”
  • In 2006, Ashray and Regency Mahavir Properties signed a new agreement giving the rights to fulfill the 2004 agreement to regency. The 2004 agreement did not include an arbitration clause but the 2006 agreement stipulated that if the parties could not agree during the agreement, they could appoint a common arbitrator or two separate arbitrators to resolve the dispute under arbitration law and arbitration, 1996.
  • On July 13, 2006, after the certificate of confirmation stating that it must be treated as part of the agreement. Deccan alleged that Mr. Atul Chordia, one of the defendants, had committed fraud. He had assured Deccan that he would be a key partner in M/s Regency Mahavir Properties and that the property would develop as soon as possible. He also signed the Treaty of Expropriation and Delegation of Executive Powers.
  • The directors of the complaining company reached out to one of Regency’s partners and asked him the reason for the delay and stated that they would hold Mr Chordia responsible. They were informed then that Mr Chordia is no longer responsible for this role as he decided to retire in 2006. The commercial register manager further confirmed this.
  • The plaintiff was of the opinion that Mr. Chordia had cooperated with the Regency, withholding material facts and committed fraud. “The directors of the plaintiff’s company therefore say that the assignment agreement and the fraudulent certification deed are null and void from the outset and are entitled to claim Society not binding “. They stressed collusion after learning that Regency had no intention of developing their property. Since Plaintiff argues that the agreement itself is void from the outset, its arbitration clause is essentially unenforceable.

 

Judgment

  • The Supreme Court ruled in this case that “a person” referred to in Section 31 of the Specific Assistance Act 1963 does not include a third party but is limited to part of the written statement or other instrument that possibly binds a third party.
  • Cancellation of the very equal deed, therefore, with the aid of using a non-executant could be an motion in personam considering that a suit must be filed under section 34. However, cancellation of the equal deed with the aid of using an executant of the deed, being beneath Section 31, could by some means convert the suit into a suit being in rem. All those anomalies most effectively highlights  the impossibility of keeping that a motion instituted under section 31 of the Specific Relief Act, 1963 is a motion in rem.
  • An action initiated in accordance with Section 31 (1) cannot be described as personal when deleting an unregistered instrument and as real when deleting a registered instrument. Since the revocation order does not include the transmission to the registry office and the ministerial measures after approval of the ordinance.
  • The above section determines when a written statement can be postponed as void or voidable. The court found that one section clearly states that a lawsuit is solely a lawsuit between the parties or a person who has obtained title from the parties and is therefore in person. The Supreme Court referred to Avital Post Studioz Limited v. Trust, because a case has criminal connotations does not make it indefinable.

Critical Analysis

  • The focus of the case was the arbitrability to settle disputes with written allegations of fraud in the performance of the contract. As a result of this ruling, the Apex Court has ended most of the controversies about the arbitrability of disputes related to a particular performance. It has been clearly stated that special facilities are only granted for the purpose of enforcing individual civil rights under Section 4 of the Act, and therefore all measures under the Special Assistance Act of 1963 are personal measures. 
  • The Tribunal adheres to the principle set out in the laws of Halsbury in England that civil matters are arbitrable by courts and is a fair test of whether the dispute can be legally compromised through settlement and satisfaction. Citing Avitel Post Studioz Limited VS HSBC, the court ruled that the mere fact that a particular transaction has immutable connotations does not mean that its subject matter is not arbitral.

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