DECCAN PAPER MILLS CO. LTD. versus REGENCY MAHAVIR PROPERTIES & ORS.

DECCAN PAPER MILLS CO. LTD. versus REGENCY MAHAVIR PROPERTIES & ORS.

The appeal is dismissed: the agreements containing the arbitration clause were admitted to have been executed and therefore prima facie a valid arbitration agreement existed under section 8 as amended; the fraud exception does not apply where the agreement was executed and fraud concerns performance rather than non‑existence; proceedings under section 31 Specific Relief Act are in personam and do not render such disputes non‑arbitrable; the referral to arbitration by the lower courts was correct; the High Court decision in Aliens Developers to the extent it held section 31 to create in rem proceedings is overruled.

Parties
Appellant: Deccan Paper Mills Co. Ltd.; Respondent No.1: Regency Mahavir Properties; Respondent No.2: M/s Ashray Premises Pvt. Ltd.; Respondent No.3: Atul Chordia
Jurisdiction
India
Judgment Date
19 August 2020
Procedural Posture
Civil Appeal / On Appeal
Outcome
Appeal dismissed
Legal Topics
Arbitrability, Fraud Exception to Arbitration, Section 8 (post 2015 Amendment), Cancellation of Written Instruments, In Personam Vs in Rem Proceedings, Specific Performance, Rectification and Rescission
Arbitration & Conciliation Act, 1996 Specific Relief Act, 1963 Contract Law Arbitrability Fraud Exception to Arbitration Section 8 (post 2015 Amendment) Cancellation of Written Instruments In Personam Vs in Rem Proceedings +2 more

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Parties

Deccan Paper Mills Co. Ltd.

Appellant

Regency Mahavir Properties

Respondent No.1

M/s Ashray Premises Pvt. Ltd.

Respondent No.2

Atul Chordia

Respondent No.3

Procedural Posture

Civil Appeal / On Appeal

Legal Issues

  1. 1 Whether disputes alleging fraud and seeking cancellation of written instruments under section 31 Specific Relief Act are arbitrable
  2. 2 Whether the ‘fraud exception’ ousts arbitrator jurisdiction where fraud is alleged
  3. 3 Whether proceedings under section 31 of the Specific Relief Act are in rem or in personam

Ratio Decidendi

The appeal is dismissed: the agreements containing the arbitration clause were admitted to have been executed and therefore prima facie a valid arbitration agreement existed under section 8 as amended; the fraud exception does not apply where the agreement was executed and fraud concerns performance rather than non‑existence; proceedings under section 31 Specific Relief Act are in personam and do not render such disputes non‑arbitrable; the referral to arbitration by the lower courts was correct; the High Court decision in Aliens Developers to the extent it held section 31 to create in rem proceedings is overruled.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed
  • Order referring the parties to arbitration is upheld