Action instituted under section 31 of the Specific Relief Act, 1963 not an action in rem: SC

Supreme Court: Refusing to hold an action instituted under section 31 of the Specific Relief Act, 1963 as an action in rem, the 3-judge bench of RF Nariman, Navin Sinha and Indira Banerjee, JJ has held that the proceeding under section 31 is with reference to specific persons and not with reference to all who may be concerned with the property underlying the instrument, or “all the world”.

“, the cancellation of the instrument under section 31 is as between the parties to the action and their privies and not against all persons generally, as the instrument that is cancelled is to be delivered to the plaintiff in the cancellation suit. A judgment delivered under section 31 does not bind all persons claiming an interest in the property inconsistent with the judgment, even though pronounced in their absence.”

Explaining the meaning of the expression “any person against whom a written instrument is void or voidable…” under Section 31(1), the Court said that the expression “any person” does not include a third party, but is restricted to a party to the written instrument or any person who can bind such party. Importantly, relief under section 39 of the Specific Relief Act, 1877 would be granted only in respect of an instrument likely to affect the title of the plaintiff, and not of an instrument executed by a stranger to that title. The expression “any person” in this section includes a person seeking derivative title from his seller.

“The principle behind the section is to protect a party or a person having a derivative title to property from such party from a prospective misuse of an instrument against him.”

Further, when a written instrument is adjudged void or voidable, the Court may then order it to be delivered up to the plaintiff and cancelled. Hence, the action under section 31(1) is strictly an action inter parties or by persons who obtained derivative title from the parties, and is thus in personam.

An action that is started under section 31(1) cannot be said to be in personam when an unregistered instrument is cancelled and in rem when a registered instrument is cancelled. The suit that is filed for cancellation cannot be in personam only for unregistered instruments by virtue of the fact that the decree for cancellation does not involve its being sent to the registration office – a ministerial action which is subsequent to the decree being passed.

“Thus, the factum of registration of what is otherwise a private document inter parties does not clothe the document with any higher legal status by virtue of its registration.”

It further explained that when it comes to cancellation of a deed by an executant to the document, such person can approach the Court under section 31, but when it comes to cancellation of a deed by a non-executant, the non-executant must approach the Court under section 34 of the Specific Relief Act, 1963. Cancellation of the very same deed, therefore, by a non-executant would be an action in personam since a suit has to be filed under section 34. However, cancellation of the same deed by an executant of the deed, being under section 31, would somehow convert the suit into a suit being in rem. All these anomalies only highlight the impossibility of holding that an action instituted under section 31 of the Specific Relief Act, 1963 is an action in rem.

[Deccan Paper Mills Co. Ltd. v. Regency Mahavir Properties, 2020 SCC OnLine SC 655, decided on 19.08.2020]

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