Background
The case revolves around an agreement between, Deccan Paper Mills Co. Ltd (the appellant) and M/s Ashray Premises Pvt. Ltd. Deccan (respondent No. 2), being the owner of approximately 80,200 sq. meters of land bearing Survey Nos. 96B, 96C, and 96D at village Mundhwa, District Pune, decided to develop a portion of the said land, i.e., 32,659 sq.
The plaintiffs had a material contention about alleged fraud by Defendant No.3. The plaintiff alleged about playing fraud after resigning by Defendant No.3 from the partnership firm of Defendant No.1 and signing the confirmation deed dated 13.07.2006. However, as per the Partnership Act, a remedy is provided. The confirmation deed dated 13.07.2007 was executed by Defendant No.3 as an Authorized Partner of M/s Regency Mahavir Properties and another partner Dilip Jain. The fraud alleged by the plaintiff is in respect of the documents for which the remedy is also provided.
After considering the arbitration clause, the learned Judge found that the application is to be allowed and the disputes have to be referred for arbitration. Hence, the plaintiff was directed to get the alleged dispute resolved through the process of arbitration by referring the plaintiff to invoke the process of arbitration as per the arbitration clause 14 mentioned in the agreement dated 20.05.2006.
Prayer of the Applicant
It can be inferred that the applicant sought the cancellation of the agreement dated 22.07.2004, alleging fraud by Defendant No.3. The applicant also sought to resolve the dispute through the process of arbitration as per the arbitration clause mentioned in the agreement.
Legal Issues Involved
The case primarily revolved around the interpretation and application of Sections 34 and 35 of the Specific Relief Act. The key legal issues involved were:
- The validity and enforceability of the agreement dated 22.07.2004 between the appellant and respondent No. 2, and the subsequent agreement between respondent No. 2 and respondent No.1, which contained an arbitration clause.
- The allegation of fraud by Defendant No.3 and the legal implications of such fraud on the agreements.
- The interpretation of the arbitration clause in the agreement and whether the dispute was arbitrable.
- The distinction between cancellation of a deed by an executant and a non-executant under the Specific Relief Act, and whether such an action is in rem or in personam.
- The question of whether a registered document, which is otherwise a private document inter parties, attains any higher legal status by virtue of its registration.
Important Observations of the Court
The court made several important observations throughout the case.
- Court highlighted that Sections 34 and 35 are interlinked and intended to have a parallel scope in their functioning and gave a contentious legal status will carry legal weight not solely for the immediate litigants but also for individuals deriving claims from them, respectively.
Sections 42 and 43, as indicated above, go together, and are meant to be coextensive in their operation. That being so, a declaratory judgment in respect of a disputed status, will be binding not only upon the parties actually before the court, but also upon persons claiming through them respectively. (Page 41, Para 23)
A judgment in rem settles the destiny of the res itself ‘and binds all persons claiming an interest in the property inconsistent with the judgment even though pronounced in their absence’; a judgment in personam, although it may concern a res, merely determines the rights of the litigants inter se to the res. (Page 37, Para 20)
- The court also discussed the concept of a suit for the recovery of property in the context of the Specific Relief Act.
When sections 34 and 35 are seen, the position becomes even clearer. Unlike section 31, under section 34, any person entitled to any legal character may institute a suit for a declaration that he is so entitled. Considering that it is possible to argue on a reading of this provision that the legal character so declared may be against the entire world, section 35 follows, making it clear that such declaration is binding only on the parties to the suit and persons claiming through them, respectively. This is for the reason that under section 4 of the Specific Relief Act, specific relief is granted only for the purpose of enforcing individual civil rights. The principle contained in section 4 permeates the entire Act, and it would be most incongruous to say that every other provision of the Specific Relief Act refers to in personam actions, section 31 alone being out of step, i.e., referring to in rem actions. (Page 40, Para 32)
- Regarding the case of Razia Begum v. Sahebzadi Anwar Begum, 1959 SCR 1111, the Court highlighted that:
As a matter of fact, this Court in Razia Begum v. Sahebzadi Anwar Begum, 1959 SCR 1111 clarified that the predecessor to section 35 of the 1963 Act, namely, section 43 of the Specific Relief Act, 1877, made it clear that both sections 42 and 43 of the Specific Relief Act, 1877 go together and refer only to an action that is in personam. This was felicitously stated by this Court as follows:
“… Sections 34and 35 as indicated above, go together, and are meant to be coextensive in their operation. That being so, a declaratory judgment in respect of a disputed status, will be binding not only upon the parties actually before the court, but also upon persons claiming through them respectively. The use of the word “only” in Section 43, as rightly contended on behalf of the appellant, was meant to emphasize that a declaration in Chapter VI of the Specific Relief Act, is not a judgment in rem. But even though such a declaration operates only in personam, the section proceeds further to provide that it binds not only the parties to the suit, but also persons claiming through them, respectively. The word “respectively” has been used with a view to showing that the parties arrayed on either side, are really claiming adversely to one another, so far as the declaration is concerned. This is another indication of the sound rule that the court, in a particular case where it has reasons to believe that there is no real conflict, may, in exercise of a judicial discretion, refuse to grant the declaration asked for oblique reasons.” (Page 41, Para 23)
Judgments in Rem and Personam
A judgment in rem
This type of judgment is against a particular piece of property (the “res”) rather than against a person (in personam). The judgment in rem affects the status of the property and binds all persons who claim an interest in the property, regardless of whether they were parties to the lawsuit or not. This is significant in the context of the Specific Relief Act, as it can involve cases where the status or ownership of a property is in dispute. For example, in a suit for the recovery of property, the judgment would be in rem and would bind all persons claiming an interest in the property.
A judgment in personam
This type of judgment is against a specific person and determines the rights and interests of the litigants amongst themselves. It does not bind or affect the rights of individuals who were not parties to the lawsuit, even if it concerns a res (a thing or a property). In the context of the Specific Relief Act, a suit for specific performance of a contract is an example of a judgment in personam, as it determines the rights and obligations of the parties to the contract.
The distinction between Judgments in Rem and in Personam is crucial in the context of the Specific Relief Act, as it determines who is bound by the judgment and the extent to which it affects the property or the rights of the parties involved.
Interpretation of ‘persons claiming through them’
The phrase “persons claiming through them” refers to individuals or entities who derive their rights or claims from the parties involved in the legal action. This could include heirs, assignees, trustees, or beneficiaries, among others.
For instance, if a property dispute is between two parties, and one party has leased out the property to a third party, then this third party is a person claiming through one of the original parties. Similarly, if one of the parties has passed away and their legal heir is now involved in the dispute, the heir is a person claiming through the original party.
In essence, anyone who derives their claim or right from a party to the lawsuit, either directly or indirectly, is considered a person “claiming through” that party.
Conclusion
In the realm of Section 34 and 35 of Specific Relief Act, the distinction lies in the extent of authority: a judgment in rem impacts the property itself and binds all those with conflicting interests, whether present in court or not, whereas a judgment in personam addresses the rights of the parties directly involved in the case and does not affect the rights of those who were not party to the proceedings. Declaratory decree is a provision which focuses on the rights of the Plaintiff and gives immense power to the Plaintiff to deal effectively against the defendant.
