Case Note & Summary
The case involves a dispute between M/s. Rajendra Builders (appellant no.1), the original developer of a building owned by Borivali Amita Co-operative Housing Society Ltd. (respondent no.2), and Balaji Padmavati Developers (respondent no.1), the new developer appointed by the society for redevelopment. The building, constructed in the 1980s, had deteriorated to a dilapidated condition. In 2021, the society initiated redevelopment and appointed respondent no.1 as the developer. The appellants, who owned certain units in the building, opposed the redevelopment and refused to hand over possession. The respondent no.1 filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim relief, including a direction to the appellants to hand over their flats. The learned Single Judge allowed the petition and directed the appellants to hand over possession. Aggrieved, the appellants filed an appeal under Section 37 of the Act. The Division Bench of the Bombay High Court, comprising Chief Justice Shree Chandrashekhar and Justice Gautam A. Ankhad, heard the appeal. The court noted that the arbitration between the parties was pending and that the rights of the appellants over the flats were disputed. The court held that directing handing over of possession at this stage would effectively grant final relief and cause irreparable loss to the appellants. The court set aside the impugned order and directed status quo to be maintained pending the arbitration. The court also clarified that the observations were only for the purpose of the interim application and would not affect the merits of the arbitration.
Headnote
A) Arbitration - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Possession - The court held that directing handing over of possession of flats for redevelopment during pendency of arbitration, without a final determination of rights, would cause irreparable loss to the appellants and cannot be granted as an interim measure. The court set aside the impugned order and directed status quo. (Paras 1-18) B) Arbitration - Appeal - Section 37 of the Arbitration and Conciliation Act, 1996 - Maintainability - The appeal under Section 37 against an order under Section 9 is maintainable. The court examined the merits of the interim order and found that the learned Single Judge had exceeded the scope of Section 9 by effectively granting final relief. (Paras 1-18)
Issue of Consideration
Whether the arbitral tribunal or court under Section 9 of the Arbitration and Conciliation Act, 1996 can direct handing over of possession of flats for redevelopment when the title and rights of the parties are disputed and the arbitration is pending.
Final Decision
The appeal is allowed. The impugned order dated 17th September 2025 is set aside. The parties are directed to maintain status quo in respect of the flats in question pending the arbitration. The observations are only for the purpose of the interim application and shall not affect the merits of the arbitration.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- Section 37 of the Arbitration and Conciliation Act
- Interim measures
- Possession pending arbitration
- Prima facie case
- Balance of convenience
- Irreparable loss
