Case Note & Summary
These were two commercial arbitration petitions filed under Section 9 of the Arbitration and Conciliation Act, 1996, by Borivali Shree Ganesh Nateshwar Cooperative Housing Society Ltd and Borivali Madhusudan Cooperative Housing Society Ltd against the Gorai Road MHB Cooperative Housing Society Association and SBM Realtors Pvt. Ltd. The petitioners sought interim protection to prevent the respondents from interfering with their independent redevelopment of their respective buildings. The lead petition, Commercial Arbitration Petition No. 452 of 2024, was treated as determinative of the companion petition by consent. The dispute arose from a redevelopment arrangement for a layout involving multiple cooperative societies that were members of the Gorai federation. On 27 October 2007, Gorai and SBM executed a Memorandum of Understanding, followed by a Deed of Confirmation on 17 February 2010. These bipartite agreements underpinned a tripartite Development Agreement dated 15 April 2011 among Borivali, Gorai and SBM, later supplemented by a Supplemental Development Agreement dated 9 December 2017. The layout development involved only 16 of the 26 member societies. Differences emerged over non-performance, and MHADA issued a show cause notice to SBM on 18 February 2022. Gorai resolved to terminate its relationship with SBM on 31 July 2022; MHADA cancelled the no objection certificate on 1 August 2022; and Gorai communicated termination on 2 August 2022. SBM invoked arbitration against Gorai on 23 August 2022, leading to constitution of an arbitral tribunal on 14 June 2023. Borivali terminated the Development Agreement on 22 January 2023 and withdrew from Gorai membership on 9 February 2023. Five other constituent societies had been allowed by separate High Court orders to redevelop independently, and one had completed redevelopment and obtained an occupancy certificate. The present Section 9 petition was filed on 30 October 2023. The main legal issues were whether the petitioners were entitled to interim protection under Section 9, whether the dispute was arbitrable given Section 91 of the Maharashtra Co-operative Societies Act, 1960, whether the member society was bound by the federation's decisions, and whether the tripartite Development Agreement remained enforceable after termination of the foundational bipartite agreements and cancellation of the layout plan. The petitioners argued that the limited prayer for non-interference should be granted because SBM did not contest, Gorai itself had terminated the bipartite relationship with SBM, MHADA had cancelled the layout NOC, and several societies had already redeveloped independently. The respondent Gorai contended that disputes between a society and its members were not arbitrable under Section 91 of the Societies Act, that Borivali could not walk away from the federation, that the MHADA cancellation was sub judice in a pending writ petition, and that Borivali should be treated as a veritable party to the existing bipartite arbitration. The Court, observing that its findings were prima facie, held that the bipartite MoU and Confirmation Deed were the foundation of the tripartite Development Agreement, and that foundation had been eroded by termination and MHADA's cancellation of the layout plan. It found no contractual instrument survived to restrain Borivali's independent redevelopment. The Court further noted that five societies had redeveloped independently with judicial approval and one had obtained an occupancy certificate, rendering the original layout plan infeasible. The Court concluded that the petition deserved to be allowed and that Borivali must be protected from any interference, intermeddling or obstruction by Gorai or SBM.
Headnote
A) Arbitration - Interim Measures - Prima Facie Case - Arbitration and Conciliation Act, 1996, Section 9 - In a Section 9 petition, the court examined whether any contractual instrument survived that could restrain the petitioner society's independent redevelopment. The court held that termination of the bipartite MoU and Confirmation Deed, which were the foundation of the tripartite Development Agreement, and MHADA's cancellation of the layout development plan destroyed the contractual basis, making out a prima facie case for interim protection against interference, intermeddling and obstruction (Paras 16-19). B) Contract Law - Frustration and Impossibility - Termination and Cancellation of Approvals - Arbitration and Conciliation Act, 1996, Section 9 - The court held that where the foundational bipartite agreements are terminated and the statutory No Objection Certificate for layout redevelopment is cancelled, performance under the tripartite Development Agreement becomes impossible, and no contractual provision survives to restrain the petitioner; the respondent federation could not rely on the terminated arrangement to prevent independent redevelopment (Paras 17-19). C) Cooperative Societies - Federation and Member Society - Independent Redevelopment - Maharashtra Co-operative Societies Act, 1960, Section 91 - The respondent federation contended that disputes with member societies were non-arbitrable and that member societies lost individual identity; the court, without finally deciding arbitrability, noted that five other constituent societies had been permitted to redevelop independently by court orders and one had obtained a full Occupancy Certificate, indicating the original layout plan was no longer feasible and the petitioner could not be compelled to remain within the failed plan (Paras 8, 20).
Issue of Consideration
Whether the petitioners were entitled to interim protection under Section 9 of the Arbitration and Conciliation Act, 1996 against interference by the respondents in their independent redevelopment; whether the dispute between a cooperative housing federation and its member society was arbitrable or ousted by Section 91 of the Maharashtra Co-operative Societies Act, 1960; whether the member society was bound by the federation's decisions and could not seek independent arbitral remedies; whether the tripartite Development Agreement remained enforceable after termination of the foundational bipartite agreements and cancellation of the MHADA layout NOC
Final Decision
The Court held that the petitioners had made out a prima facie case and were entitled to interim protection under Section 9 of the Arbitration and Conciliation Act, 1996. It found that the termination of the MoU and Confirmation Deed and the MHADA cancellation of the layout development plan destroyed the foundation of the tripartite Development Agreement, leaving no surviving contractual instrument to restrain the petitioners' independent redevelopment. The Court concluded that the petition deserved to be allowed and that Borivali must be protected from any interference, intermeddling, or obstruction by Gorai or SBM.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996 provides interim measures
- prima facie findings may support relief where contractual foundation is eroded
- termination of bipartite MoU and Confirmation Deed destroys basis of tripartite Development Agreement
- rendering performance impossible
- MHADA cancellation of layout development NOC leaves no contractual instrument to restrain independent redevelopment
- Section 91 of the Maharashtra Co-operative Societies Act
- 1960 raises arbitrability issues between society and member
- but interim relief can be granted on merits where no surviving contract exists
- member societies may redevelop independently when federation's plan fails and other societies have done so with judicial approval
