Madras High Court

M/S.Rajasthani Marble vs Na.K.Kumar on 28 July, 2023

                                                                                 C.M.A.No.497 of 2023

                                  IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                     DATED: 28.07.2023

                                                         CORAM :

                                  THE HONOURABLE MR. JUSTICE SUNDER MOHAN


                                                    C.M.A.No.497 of 2023


                    1.M/s.Rajasthani Marble,
                    2.A.K.A.Jayanthi                                ...Appellants/Claimants
                                                           Versus

                    1.Na.K.Kumar
                      Son of N.Kuppurathinam
                      Managing Partner,
                      M/s. Rajasthani Marble
                      Residing at No.5, Kamarajar Salai Extension
                      Karaikal – 609 602.

                    2.Na.K.Kumar
                      Son of N.Kupparathinam
                      Proprietor,
                      M/s.New Rajathani Marbles
                      No.40 A, Bharathiyar Road,
                      Kottucherry, Karaikal – 609 609.              ...Respondents/Respondents



                    PRAYER           :   Civil   Miscellaneous   Appeal    has   been    filed    under
                    Section 37 (2) (a) of the Arbitration and Conciliation Act, 1996, to set aside
                    the order dated 28.01.2023 passed by the learned Sole Arbitrator in
                    O.P.No.73 of 2021.

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                                                                                     C.M.A.No.497 of 2023

                                    For Appellants          : Mr.Sharath Chandran
                                    For Respondents         : Mr.S.Rajendra Kumar



                                                     JUDGMENT

The above appeal has been filed challenging the order passed by the

learned Sole Arbitrator in O.P.No.73 of 2021 dated 28.01.2023, holding that

the Arbitral Tribunal lacks Jurisdiction to adjudicate the claim of the

appellants/claimants.

2. The brief facts leading to the above appeal are as follows:

(a) The appellants/claimants in their claim petition had inter alia

prayed for the following reliefs:

''...(iii) Pass an order Declaring the Item 1 Petition Schedule properties as the 2nd Petitioner's exclusive property,

(iv) Pass an order Declaring the Item 2 Petition Schedule properties as the 1st Petitioner's Firm's property for due apportionment amongst its partners and consequently thereafter

(v) Direct an amount of Rs.69,92,000/-

be paid to the 2nd petitioner by the https://www.mhc.tn.gov.in/judis

C.M.A.No.497 of 2023

1st respondent as per Arrear details enumerated in the Item 3 of Petition Schedule, together with interest at 24% p.a. until date of discharge...''

(b)The respondents herein filed an objection under Section 16 of the

Arbitration and Conciliation Act, 1996 inter alia stating that the

Arbitral Tribunal cannot decide the title of the properties and that the

declaration of title touching upon the title of property is an adjudication

in rem and therefore, cannot be decided by the learned Sole Arbitrator.

The respondents raised other objections as well.

extracted above are claims made in furtherance of actions in rem and not

qua the respondents alone and hence, it is not arbitrable. The learned Sole

Arbitrator further found that these three prayers cannot severed from the

other claims made by the claimants/appellants as they are inextricably linked

with each other and hence, the claim is liable to be dismissed.

(d) The learned Arbitrator rejected the other objections which may not

be necessary for adjudicating the present appeal.

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3. Mr.Sharath Chandran, the learned counsel for the appellants

submitted that the prayer for declaration of title cannot be said to be an

action in rem. The learned counsel relied upon the Judgment of the Hon’ble

Supreme Court in Deccan Paper Mills Company Limited Vs. Regency

Mahavir Properties and others reported in (2021) 4 SCC 786 and

submitted that the prayer for declaration of title is an action inter parties and

thus, is in personam. The learned counsel relied upon the Judgment of the

Punjab and Haryana High Court in Ashok Kumar Malhotra and others Vs.

Kasturi Lal Malhotra reported in 2012 SCC Online P & H 2002 in support

of his submission that all disputes relating to rights in personam are

amenable to arbitration. The learned counsel further submitted that this

Court in K.Kasinathan and another Vs. N. Umasankar reported in 2019

SCC Online Madras 36244 held that a Decree for declaration of title is not

one in rem. The learned counsel also pointed out Section 35 of the Specific

Relief Act, 1963. The learned counsel therefore submitted that the prayers

(iii) and (iv) which seek declaration of title is an action in personam and

therefore, arbitrable.

4. Mr.S.Rajendra Kumar, the learned counsel for the respondents, https://www.mhc.tn.gov.in/judis

C.M.A.No.497 of 2023

per contra submitted that the Hon’ble Supreme Court in Vidya Drolia Vs.

Durga Trading Corporation reported in (2021) 2 SCC 1 had laid fourfold

test to determine whether a dispute is arbitrable; that the Hon'ble Supreme

Court held where cause of action relates to the action in rem or cause of

action affects third party rights mutual adjudication would not be

appropriate and hence, the same is not arbitrable. The learned counsel

submitted that the declaration sought for by the claimants would affect the

easementary rights of pathway to the other property owners. The learned

counsel further submitted that if a declaration of title is made then, the

properties of other land owners would be landlocked and their rights would

be adversely affected and therefore, a centralized adjudication is required.

The learned counsel also pointed out to a Suit filed in O.S.No.25 of 2013, for

partition by the respondents herein, against the second appellant herein and

another and therefore, submitted that for all the above said reasons, the order

passed by the learned Arbitrator does not call for any interference.

5. The only question to be decided in the instant appeal is whether the

learned Arbitrator is right in holding that the prayers - (iii) (iv) and (v)

extracted above are arbitrable. The prayers - (iii) and (iv) relate to

declaration of title to a property. This Court finds that the Hon’ble Supreme https://www.mhc.tn.gov.in/judis

C.M.A.No.497 of 2023

Court in Deccan Paper Mills Company Limited Vs. Regency Mahavir

Properties and others (cited supra) held that the relief under Section 34 of

the Specific Relief Act, 1963 is binding only on the parties to the Suit as per

Section 35 of the said Act. Therefore, the actions for declaration of title are

actions in personam. The relevant portions of the Judgment are extracted

hereunder for better understanding:

''29. 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

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C.M.A.No.497 of 2023

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.''

Further, it is seen that the actions in personam are arbitrable as can be seen

from Paragraph 16 of this Judgment. The relevant portions are extracted

hereunder for better understanding:

''16. Sections 29 and 30 are also important, in that a plaintiff instituting a suit for specific performance may pray in the alternative that if the contract cannot be specifically enforced, it may be rescinded and be delivered up to be cancelled. In addition, on adjudging the rescission of the contract, the court may require the party to whom such relief is granted to restore, so far as may be, any benefit which he may have received from the other party and to make any compensation to him which justice may require. These two sections would also show that following rescission of a

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contract, it has to be delivered up to the plaintiff to be cancelled and all of this can be done in a suit for specific performance.

Thus far, therefore, it is clear that an action for recission of a contract and delivering up of that contract to be cancelled is an action in personam which can be the subect matter of a suit for specific performance, making such rescission and delivering up the contract to be cancelled, the subject – the matter of arbitration.''

It is well settled that the declaration of title is an action in personam which

has been reiterated by this Court in K.Sasinathan and Another Vs.

N. Umasankar (cited supra). The Punjab and High Court in Ashok Kumar

Malhotra and others Vs. Kasturi Lal Malhotra (cited supra) had held that

all disputes relating to rights in personam are amenable to Arbitration.

6. The learned counsel for the respondents' submission that

easementary rights of third parties are involved and hence, the dispute is not

arbitrable cannot be countenanced. A declaration of title would not affect or

enhance any third parties' right; that has to be independently established.

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Therefore, it cannot be said that merely because easemenatary rights are

involved, the claim for declaration of title would become an action in rem.

Further, it is also seen that the Suit referred to by the learned counsel for the

respondents relates to some other property which is not related to the claim

made by the appellants. Therefore, the prayers (iii) and (iv) cannot be said to

be non arbitrable. It is also seen that the prayer (v) is pursuant to the dispute