Bombay High Court Holds That Disputes Involving Declaratory Reliefs in Rem Under the Maharashtra Apartment Ownership Act, 1970 Are Non-Arbitrable, Orders Remand to Civil Court. Court Relies on Booz Allen Hamilton v. SBI Home Finance to Hold That Actions in Rem Relating to Immovable Property Must Be Adjudicated by Civil Courts, Not by Arbitral Tribunals.

Suit for declaration that respondent-defendant made excess construction beyond permissible limits and had no right to transfer excess construction; also sought correction of the Deed of Declaration and subsequent sale deeds, along with ancillary reliefs. The defendant filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, which the trial court allowed, referring the disputes to arbitration.

Plaintiffs sought declaration and correction of documents, while in the writ petition they sought setting aside of the trial court's order referring the suit to arbitration.

Plaintiffs discovered excess construction by defendant not conforming to sanctioned plan, and defendant avoided correcting revenue records.

Trial court allowed the defendant's application under Section 8 on 20-01-2015, directing parties to refer disputes to an arbitrator.

Whether the dispute in the suit is arbitrable given that the reliefs sought concerning immovable property are in rem.

Petitioners argued that the reliefs sought in the suit were in rem and thus non-arbitrable; the arbitration clause was dehors the Maharashtra Apartment Ownership Act, 1970, and the civil court alone had jurisdiction; relied on Booz Allen and other cases. Respondent argued that the parties were bound by the arbitration clause in the Deed of Declaration, and any challenge to jurisdiction could be raised before the arbitrator under Section 16; relied on Groupe Chimique Tunisien and Hema Khattar.

Disputes involving rights in rem, such as those affecting title to immovable property and operating against the world at large, are not arbitrable and must be adjudicated by civil courts; the presence of an arbitration clause in a statutory deed of declaration under the Maharashtra Apartment Ownership Act, 1970, does not render such disputes arbitrable.

the reliefs sought in the suit were in the nature of reliefs in rem and not reliefs in personam. It was held that where the cause/dispute is inarbitrable the Court where a suit is pending would refuse to refer the parties to arbitration under Section 8 of the Act of 1996 even if the parties might have agreed upon arbitration as the forum for settlement of such dispute. a right in rem was a right exercisable against the world at large as contrasted from a right in personam which is an interest protected solely against specific individuals. Actions in rem referred to actions determining title to property and the rights of parties not merely amongst themselves but also against all persons at any time claiming an interest in that property. normally all disputes relating to rights in rem were required to be adjudicated by Courts and Tribunals and were not suitable for private arbitration. the nature of reliefs sought in the suit being a declaration with regard to rights in immoveable property, those rights were rights in rem. The presence of an arbitration clause with regard to a dispute which is found to be nonarbitrable cannot deprive the plaintiffs of their right to approach the Civil Court.

Plaintiffs filed suit for declaration and correction of deed of declaration and sale deeds; defendant filed application under Section 8 of Arbitration and Conciliation Act, 1996; trial court allowed application on 20-01-2015 referring disputes to arbitration; plaintiffs filed writ petition challenging that order.

• Arbitration and Conciliation Act, 1996: 8, 16
• Maharashtra Apartment Ownership Act, 1970: 2, 3(r), 4, 7, 11, 11(j), 12, 13, 16