Case Note & Summary
The judgment arises from two cross-arbitration appeals under Section 37 of the Arbitration and Conciliation Act, 1996 filed before the Bombay High Court against an order of a learned Single Judge dated 20 June 2025 in Arbitration Petition No.175 of 2025 under Section 9 of the Act. The dispute concerned redevelopment of a co-operative housing society's property at Santacruz, Mumbai. The first appeal was filed by the developer, Pranav Constructions Limited, and the second by Priyadarshini Co-operative Housing Society Limited. The underlying Section 9 petition was filed by the developer seeking interim measures to compel certain society members (Respondent Nos.2 to 6) to execute consent letters for vacation of their premises to facilitate redevelopment, or alternatively for the Court Receiver or Prothonotary to execute such letters on their behalf. The background facts as narrated are that the society owned land and building at Final Plot No.42A, Santacruz, consisting of 16 residential flats, one bank premises and six garages. A Development Agreement dated 12 March 2025 was executed between the society and the developer, granting development rights. The developer obtained Intimation of Disapproval (IOD) dated 27 March 2025 from MCGM and issued a notice to vacate dated 28 March 2025. By letter dated 7 April 2025, the society forwarded 20 consent letters, indicating that Respondent Nos.2 to 6 refused to vacate. The developer then served advocate's notice dated 8 April 2025. When the members did not cooperate, the developer filed Arbitration Petition No.175 of 2025 under Section 9. The learned Single Judge disposed of that petition without granting any relief, prompting both the developer and the society to file the present appeals. The appeals were heard on 14 July 2025 by a Division Bench comprising Chief Justice Alok Aradhe and Justice Sandeep V. Marne. The legal issues raised included whether members of a co-operative housing society who did not sign the development agreement are bound by its terms and arbitration clause, whether a dispute over discrimination in allotment of additional area can be adjudicated in Section 9 proceedings, and the scope of appellate interference under Section 37 against a discretionary refusal of interim relief. The developer and society argued that society members are bound by the development agreement and cannot raise internal disputes in Section 9 proceedings. They relied on Ambit Urbanspace v. Poddar Apartment Co-operative Housing Society Limited, Bengal Secretariat Cooperative Land Mortgage Bank and Housing Society Ltd. v. Alok Kumar, and Calvin Properties and Housing v. Green Fields Co-operative Housing Society Limited. The society emphasized Section 28(3) of the Act and contended that the court cannot sit in appeal over the commercial wisdom of the society. Respondent No.2 (garage owner) argued discrimination—residential owners were offered 39% additional area while garage owner was granted 20% less—and alleged fraud, misrepresentation, and non-invitation of tenders, relying on a Section 79A direction dated 4 July 2019 and Avenues Seasons Properties LLP v. Nissa Hoosain Nensey. Respondent Nos.3 and 4 (bank premises owners) similarly alleged discrimination (19% additional area vs 39% for residential), claimed the premises were gifted to non-impleaded parties, and challenged a society resolution before the Co-operative Court. They also invoked Wander Ltd. v. Antox India P. Ltd. to argue limited appellate jurisdiction. The court noted in its analysis that the brother of Respondent Nos.5 and 6 appeared in person and stated that those respondents had agreed to execute consent letters, thereby restricting the dispute to Respondent No.2 (Garage No.6) and Respondent Nos.3 and 4 (bank premises). The court observed that out of 23 premises, 21 owners/occupiers had executed or agreed to execute consent letters, and only two premises were opposing redevelopment. However, the excerpt of the judgment provided ends before the court records its final reasoning and operative directions. Therefore, the final decision, ratio decidendi, and directions are not available in the text supplied.
Headnote
A) Arbitration - Interim Measures - Section 9, Arbitration and Conciliation Act, 1996 - Whether developer can compel non-signatory society members to execute consent letters for vacation and vacate premises in a Section 9 petition - Developer contended members are bound by Development Agreement and cannot raise area entitlement dispute in Section 9; Society contended members are bound by covenants including arbitration clause; Single Judge refused relief and appeals were filed under Section 37; no final holding recorded in available text (Paras 1-8). B) Cooperative Society - Redevelopment Process - Section 79A, Maharashtra Co-operative Societies Act, 1960 - Alleged fraud and lack of transparency in redevelopment - Respondent No.2 alleged society initially decided self-development but without inviting tenders handed over rights to Developer, and relied on direction dated 4 July 2019 under Section 79A; these allegations formed basis for opposing interim relief; no final finding on fraud recorded (Para 7). C) Arbitration - Appeal under Section 37 - Scope of Appellate Interference - Section 37, Arbitration and Conciliation Act, 1996 - Appellate court cannot interfere with discretionary refusal of interim relief merely because another view is plausible - Respondent Nos.2-4 relied on Wander Ltd v. Antox India P. Ltd and Avenues Seasons Properties LLP v. Nissa Hoosain Nensey; Developer relied on Ambit Urbanspace to argue issue covered; court did not record final decision on scope in provided excerpt (Paras 6-8). D) Contract - Arbitration Agreement - Binding on Non-Signatory Members - Arbitration and Conciliation Act, 1996 - Whether arbitration agreement can be invoked only against a member who signed Development Agreement - Respondent No.2 relied on Avenues Seasons Properties LLP; Society and Developer argued members bound by society's obligations; this issue remained contested with no final resolution (Paras 4-7).
Issue of Consideration
Whether members of a co-operative housing society who did not sign the Development Agreement are bound by its terms including the arbitration clause and can be compelled under Section 9 of the Arbitration and Conciliation Act, 1996 to execute consent letters for vacation; whether a dispute between society members and the society regarding discrimination in allotment of additional area can be adjudicated in Section 9 proceedings filed by the developer; and whether the appellate court under Section 37 can interfere with the Single Judge's discretionary refusal of interim relief.
Final Decision
Not mentioned in provided text
Law Points
- Members of cooperative housing society bound by development agreement and arbitration clause
- Section 28(3) Arbitration and Conciliation Act 1996 requires arbitral tribunal to consider contract terms
- court cannot sit in appeal over commercial wisdom of society
- individual member claims cannot be adjudicated in Section 9 proceedings
- appellate jurisdiction under Section 37 is limited and cannot interfere with discretionary refusal unless arbitrary
- arbitration agreement can be invoked only against signatory member
- discrimination in allotment of additional area between members is internal society dispute
