Binding Amendment Requires Consensus on Essential Terms: – For a binding amendment to a development agreement, the parties must reach consensus ad idem on all essential terms, including the plot potential and the sharing of entitlements. The absence of a formally executed agreement is not fatal if the parties have agreed on the essential terms through conduct and correspondence. – In this case, the parties had not agreed on the essential terms, particularly the sharing of the Road Setback Area, and negotiations were ongoing even after the alleged amendment.

Termination Valid in Absence of Binding Amendment:– The termination of the DA and SDA by Madhugiri was prima facie valid, as no binding amendment had been concluded. The parties were still negotiating essential terms, and the termination was not an attempt to extract a better bargain but a legitimate exercise of contractual rights.

Interim Relief Denied:– The Arbitral Tribunal was correct in denying interim relief to Heritage under Section 17 of the Arbitration and Conciliation Act, 1996, as the termination of the DA and SDA was prima facie valid, and no binding amendment had been concluded.

The High Court of Bombay dismissed the appeal, holding that the Arbitral Tribunal was correct in denying interim relief to Heritage. The Court found that the parties had not reached consensus ad idem on the essential terms of the amendment, particularly the sharing of the Road Setback Area. The Revised Proposal and subsequent communications did not constitute a binding amendment, as the actual area and its break-up were only disclosed in the Draft Revised SDA on June 28, 2023, well after the alleged amendment. The Court held that the termination of the DA and SDA by Madhugiri was prima facie valid, and no interference with the Impugned Order was warranted.

Major Acts:

1. Arbitration and Conciliation Act, 1996 – Section 37(2)(b) – Appeal against Arbitral Tribunal’s refusal to grant interim relief under Section 17.

2. Maharashtra Ownership Flats Act, 1963 (MOFA) – Principles of FSI (Floor Space Index) and plot potential in development agreements.

Facts:

1. Nature of the Litigation:
   – The Petitioner, Heritage Lifestyles & Developers Pvt. Ltd. (Heritage), challenged the Impugned Order dated October 14, 2024, passed by the Arbitral Tribunal, which refused to grant interim relief under Section 17 of the Arbitration and Conciliation Act, 1996. The Tribunal held that the termination of the Development Agreement (DA) and Supplemental Development Agreement (SDA) by the Respondent, Madhugiri Co-operative Housing Society Ltd. (Madhugiri), was prima facie valid.
   – The dispute arose from the redevelopment of Madhugiri’s property, where Heritage was the developer. The parties had executed a DA and SDA in 2014, but the project faced delays, leading to multiple negotiations and revised proposals.
   – Heritage contended that a binding amendment to the DA and SDA was concluded through a Revised Proposal dated March 24, 2023, Members’ Approval dated March 26, 2023, Heritage Clarification dated April 12, 2023, and Madhugiri Approval Communication dated May 3, 2023. However, Madhugiri argued that no formal amendment agreement was executed, and negotiations on key terms, such as the sharing of Road Setback Area, were ongoing.

2. Who is Asking the Court and for What Remedy?
   – Heritage sought to set aside the Arbitral Tribunal’s order and restrain Madhugiri from terminating the DA and SDA, claiming that the termination was illegal and that a binding amendment had been concluded.

3. Reason for Filing the Case:
   – Heritage filed the petition under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996, challenging the Tribunal’s refusal to grant interim relief. Heritage argued that the termination of the DA and SDA was wrongful and that the parties had reached a binding amendment through the Revised Proposal and subsequent communications.

4. What Has Already Been Decided Until Now?
   – The Arbitral Tribunal had rejected Heritage’s application for interim relief, holding that the termination of the DA and SDA was prima facie valid. The Tribunal found that no binding amendment had been concluded, and negotiations on essential terms, such as the sharing of the Road Setback Area, were still ongoing.

Issues:

1. Whether the Revised Proposal, Members’ Approval, Heritage Clarification, and Madhugiri Approval Communication collectively constituted a binding amendment to the DA and SDA?

2. Whether the termination of the DA and SDA by Madhugiri was valid in the absence of a formally executed amendment agreement?

3. Whether the Arbitral Tribunal was correct in denying interim relief to Heritage under Section 17 of the Arbitration and Conciliation Act, 1996?

Submissions/Arguments:

1. Heritage’s Contention:
   – Heritage argued that the Revised Proposal, Members’ Approval, Heritage Clarification, and Madhugiri Approval Communication collectively amended the DA and SDA, even in the absence of a formally executed amendment agreement.
   – Heritage contended that Madhugiri had no right to terminate the DA and SDA after approving the Revised Proposal and that the termination was an attempt to extract a better bargain.

2. Madhugiri’s Contention:
   – Madhugiri argued that no binding amendment had been concluded, as the parties were still negotiating essential terms, particularly the sharing of the Road Setback Area.
   – Madhugiri contended that the Draft Revised SDA received on June 28, 2023, was the first time the actual area and its break-up were disclosed, and the parties had not reached consensus on these terms.

Subjects:

– Arbitration and Conciliation Act, 1996 – Section 37(2)(b) – Development Agreement – Supplemental Development Agreement – Revised Proposal – Road Setback Area – Consensus Ad Idem – Interim Relief – Termination – Binding Amendment.