Case Note & Summary
The dispute arose from the redevelopment of a cooperative society's building in Mumbai. The applicant, a developer, entered into a Development Agreement (DA) dated 2 July 2021 with the first respondent society, which contained an arbitration clause. The second respondent, a member of the society occupying Flat No. 10, opposed the redevelopment and refused to vacate despite other members complying. The applicant obtained an order under Section 9 of the Arbitration and Conciliation Act, 1996 directing the second respondent to vacate, and possession was secured through Court Receiver. The second respondent later executed a Permanent Alternate Accommodation Agreement (PAAA) on 14 November 2024, which also contained an arbitration clause, under which he was allotted an alternate flat. The applicant alleged substantial monetary losses due to delays caused by the second respondent and invoked arbitration under the DA, nominating an arbitrator. The second respondent denied the existence of an arbitration agreement. The applicant then filed the present application under Section 11(6) of the Arbitration Act seeking appointment of an arbitrator for all disputes under the DA, contending that the second respondent, as a beneficiary, is bound by the DA's arbitration clause and that the PAAA and DA are inextricably linked warranting a composite reference. The court observed that while interim measures against a non-signatory member are permissible under Section 9, the question of arbitrability of disputes with such a member under Section 11 raised an issue of seminal importance. It noted that no direct precedent exists on this point and invited counsel to assist. Extensive submissions were heard from both sides. The applicant argued that the second respondent is a 'veritable party' and a third-party beneficiary bound by the DA, and that failure to invoke the PAAA clause is not fatal. The second respondent resisted the application, denying any arbitration agreement. The judgment was reserved on 3 February 2026 and pronounced on 6 March 2026, but the full decision is not included in the provided extract, leaving the core question unanswered in this text.
Issue of Consideration
Whether a developer can seek appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 against a dissenting member of a cooperative society who is not a signatory to the development agreement containing the arbitration clause, and whether subsequent execution of a Permanent Alternate Accommodation Agreement with an arbitration clause by such member enables arbitration of disputes arising from the development agreement.
Law Points
- Arbitration and Conciliation Act
- 1996
- Section 11
- Section 9
- Section 35
- permissibility of arbitration with non-signatory
- veritable party concept
- composite reference
- binding effect of arbitration agreement on beneficial members
- third-party beneficiary
- interim measures against non-signatory
Case Details
2026 LawText (BOM) (03) 43
Arbitration Application (L) No. 35545 of 2025
Mayur Khandeparkar, Vikramjit Garewal, Vishwanath Patil, Nidhi Chauhan, Akshay Naidu, Karl Tamboly, Ryan D’souza, Meezan Patel, Harshada Kamble, Dhruvin J. Modi
M/s. Space Master Realtors
Mulund Sandhyaprakash CHS Ltd. & Anr.
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Nature of Litigation
Arbitration application under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of arbitrator for disputes arising out of a development agreement with a dissenting member of a cooperative society.
Remedy Sought
Applicant (developer) seeks appointment of an arbitrator to adjudicate disputes with Respondent No.2 (dissenting member) and Respondent No.1 (society) under the Development Agreement dated 2 July 2021.
Filing Reason
Applicant alleges Respondent No.2 caused substantial monetary losses by obstructing the redevelopment process, leading to invocation of arbitration and refusal by Respondent No.2 to submit to arbitration.
Previous Decisions
This Court passed order dated 19 August 2024 under Section 9 directing Respondent No.2 to vacate possession; appeal against that order disposed of on 24 October 2024 granting liberty to Respondent No.2; Respondent No.2 filed Long Cause Suit No.19354 of 2024 in City Civil Court; interim injunction denied on 11 November 2024; possession taken via Court Receiver on 15 November 2024.
Issues
Whether a developer can invoke arbitration against a dissenting member of a cooperative society who has not signed the development agreement containing the arbitration clause.
Whether subsequent execution of a Permanent Alternate Accommodation Agreement containing an arbitration clause enables arbitration of disputes arising from the development agreement.
Submissions/Arguments
Applicant contended that there is an arbitration agreement in the DA and PAAA, and these are intertwined, thus warranting a composite reference to arbitration.
Applicant argued that Respondent No.2, as a member of the society, is a beneficiary under the DA and thus bound by its obligations, including the arbitration clause.
Reliance placed on Section 35 of the Arbitration Act and M.C. Chacko v. State Bank of Travancore to assert that third-party beneficiaries are bound.
Applicant invoked the 'veritable party' doctrine from Cox and Kings Limited v. SAP India Private Limited and another to bind Respondent No.2.
Respondent No.2 opposed the application, denying existence of arbitration agreement.
Judgment Excerpts
This Application, filed under Section 11 of the Arbitration and Conciliation Act, 1996, raises an issue of seminal importance about permissibility to arbitrate the disputes between developer and a dissenting member of cooperative society, who has not signed the development agreement.
Developer’s right to seek interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 against a non-signatory member is well settled.
The Court is also tasked upon to decide whether subsequent participation by the dissenting member in redevelopment process by execution of Permanent Alternate Accommodation Agreement with the developer, containing arbitration clause, can enable the developer to arbitrate the disputes arising out of the development agreement, not signed by such member.
Procedural History
Applicant filed Arbitration Petition No.491 of 2024 under Section 9 and obtained order dated 19 August 2024 directing Respondent No.2 to vacate; Respondent No.2 filed appeal which was disposed of on 24 October 2024 with liberty to agitate; Respondent No.2 filed Long Cause Suit No.19354 of 2024 in City Civil Court; interim injunction denied on 11 November 2024; possession secured by Applicant through Court Receiver on 15 November 2024; PAAA executed on 14 November 2024; notice invoking arbitration dated 28 July 2025; present Section 11 application filed.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 9, Section 11, Section 21, Section 35
- Maharashtra Co-operative Societies Act, 1960:
