Source: Supreme Court

Why in News?

Recently, the Supreme Court in the matter of Sushma Shivkumar Daga v. Madhurkumar Ramkrishnaji Bajaj, has held that the cancellation of a deed is an action in personam and hence it is arbitrable.

What was the Background of Sushma Shivkumar Daga v. Madhurkumar Ramkrishnaji Bajaj Case?

• The appellants were the plaintiffs in a civil suit, filed in the year 2021, seeking declaration that the Conveyance Deed dated 17^th December 2019 to be declared null and void, and that the registered Development Agreements dated stand validly terminated.
• The respondents moved an application under Section 8 of the Arbitration & Conciliation Act, 1996 (A&C Act) for referring the matter to arbitration.
• The Trial Court allowed the application of the defendant and referred the matter for arbitration.
• This order was challenged in writ petition by the appellants before the Bombay High Court, which was dismissed.
• Aggrieved by these two orders, the appellant filed an appeal before the Supreme Court which was later dismissed by the Court.

What were the Court’s Observations?

• Justices Aniruddha Bose and Sudhanshu Dhulia observed that the Trial Court and the High Court have rightly held that the broad language of the arbitration clause in the agreements would cover the dispute raised by the appellants before the Civil Court, and hence the case has been rightly referred for arbitration.
• The court held that whether it is a suit for cancellation of a deed or a declaration of rights arising from the deed, it would only be an action in personam and not in rem and it would be arbitrable.

What are the Relevant Legal Provisions Involves in it?

Section 8 of A&C Act

• This section deals with the power to refer parties to arbitration where there is an arbitration agreement. It states that -

(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.

(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued, and an arbitral award made.

Right in Rem

• This right is available to the person against the whole world and so a person is given protection against the whole world.
• These rights are available to all. E.g., Constitutional Rights.

Right in Personam

• This right is available against a particular person only.
• This right is available only to the people who enter into such transaction, which gives them a right against another person. E.g., Contractual Rights