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2020 (8) TMI 533 - SC - Indian LawsCancellation of assignment deed - section 31 of the Specific Relief Act - suit for specific performance - rectification of the instrument - arbitral proceeding - HELD THAT:- A perusal of section 26(1) of the Specific Relief Act, 1963 would show that when, through fraud or mutual mistake of parties, a contract or other instrument in writing does not express the real intent of the parties, then either party or his representative in interest may either institute a suit to have the instrument rectified or as defendant, may, in addition to any defence open to him, ask for rectification of the instrument. Importantly, under section 26(3), a party may pray in a rectification suit for specific performance – and if the Court thinks fit, may after rectifying the contract, grant specific performance of the contract. Thus, what is made clear by this section is that the rectification of a contract can be the subject matter of a suit for specific performance, which have been already seen, can be the subject matter of an arbitral proceeding. Under section 27(1) of the Specific Relief Act, 1963, “any party interested” in a contract may sue to have it rescinded and such rescission may be adjudged by the Court in the cases mentioned in clauses (a) and (b) of sub-section (1). Sub-section (2) of section 27 refers to four exceptions to this rule - Third parties to the contract are not persons who can be said to be “any person interested”, particularly when section 27(2)(c), which refers to third parties, is seen and contrasted with the expression “any person interested” in section 27(1) – under section 27(2)(c), third parties come in as an exception to the rule only when they have acquired rights in good faith, without notice and for value, during the subsistence of the contract between the parties to that contract. 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. 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. Appeal dismissed.
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