The Calcutta High Court, in a significant judgment, clarified that although disputes over the cancellation of written instruments under Section 31 of the Specific Relief Act, 1963 are indeed arbitrable, the arbitral awards resulting from such disputes are only binding on the parties involved, and not on third parties who were not part of the arbitration process.
The verdict was delivered by Justice Gaurang Kanth while hearing a writ petition filed by Jagat Singh Manot, challenging the decision of the Kolkata Municipal Corporation (KMC) that refused to allow de-amalgamation of his property based on the arbitral awards.
The issue began when Jagat Singh Manot sought to challenge a letter issued by KMC on April 22, 2024, in which the municipal body declined to de-amalgamate premises No. 202/4, Harish Mukherjee Road, Kolkata. The refusal was primarily based on the Arbitral Tribunal’s awards, which had not been accepted by the KMC, and the corporation had advised the petitioner to cancel the registered Deed of Exchange before any de-amalgamation could be processed.
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Initially, the property had been amalgamated after a registered Deed of Exchange was executed between the petitioner, his wife, and other parties on March 26, 2012. Later, a Development Agreement was signed on November 18, 2013, involving respondent Nos. 12 and 13, and the Kolkata Municipal Corporation sanctioned the building plan accordingly.
However, disputes arose among the parties, and as the Development Agreement contained an arbitration clause, the matter was referred to an Arbitral Tribunal. The Sole Arbitrator issued an award on February 16, 2018, cancelling the Deed of Exchange, and later passed an amended award on December 5, 2018, after both sides jointly approached the arbitrator under Section 33(1) of the Arbitration and Conciliation Act, 1996.
Following these awards, the petitioner and his wife approached KMC on February 19, 2024, seeking de-amalgamation of the property. But the municipal body rejected the request, stating in its April 22, 2024 letter that the Deed of Exchange was still valid in the eyes of law and that proper legal cancellation was required before any action could be taken.
The petitioner argued that disputes regarding cancellation of instruments are arbitrable under the Specific Relief Act and that the arbitral awards, including the amended one, were valid and legally binding. It was also submitted that the dispute was personal (in personam) and not general (in rem), making the arbitrator's decision legally sound.
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On the other hand, the respondents contended that the arbitration clause was only present in the Development Agreement and not in the Deed of Exchange. Therefore, they argued the Sole Arbitrator had no jurisdiction to cancel the deed, especially since the deed was a separate, registered document executed prior to the Development Agreement.
The respondents further submitted that unless the Deed of Exchange was cancelled through another registered instrument under Section 17(b) of the Registration Act, the petitioner could not demand de-amalgamation of the properties.
The High Court, while examining the case, began by explaining the legal nature of a Deed of Exchange. The court observed that the transfer of property through such a deed is valid once executed by a registered instrument, and the cancellation of such a deed can only occur in accordance with Section 31 of the Specific Relief Act.
"A deed of exchange is a legally valid document that creates ownership rights for all parties involved. Its cancellation must meet the conditions prescribed under Section 31 of the Specific Relief Act," the Court stated.
The Court also noted the difference between judgments in rem and judgments in personam. A judgment in rem applies to the entire world and determines the status of a person or property, while a judgment in personam binds only the parties directly involved in the dispute.
The Court highlighted the Supreme Court’s decision in State of Bihar v. Radha Krishna Singh (1983), where it was held that judgments relating to status—like those from probate, insolvency, or matrimonial courts—are binding universally, whereas judgments in contract, tort, or similar private matters are binding only on the specific parties.
Similarly, the Court referred to Deccan Paper Mills Company Ltd. v. Regency Mahavir Properties & Ors. (2021), where the Supreme Court clarified that disputes under Section 31 of the Specific Relief Act are not judgments in rem but are binding only on the involved parties.
In the present case, the High Court concluded that the arbitral awards dated February 16, 2018, and December 5, 2018, were judgments in personam. Since the Kolkata Municipal Corporation was not part of the arbitral proceedings, the awards were not binding on the Corporation.
With this reasoning, the Calcutta High Court found no illegality in the action taken by KMC and dismissed the petition.
Case Title: Jagat Singh Manot Versus The Municipal Commissioner, Kolkata Municipal Corporation And Ors.
Case Number: W.P.O. 503 OF 2024
Judgment Date: 10/04/2025
Mr. Anujit Mookherjee, Adv. Mr. Harsh Tiwari, Adv. Mr. Aurin Chakraborty, Adv. Mr. Bhupendra Gupta, Adv. Mr. Anwar Hossain- For the Petitioner
Adv. Mr. Arif Ali, Adv. Mr. Sarban Bhattacharjee, Adv.-For the Respondent nos. 6&7
Mr. Gurudas Mitra, Adv. Ms. Piyali Sengupta, Adv. Gaurang Kanth, J. 1.-For the KMC.
