Bombay High Court
Pranav Constructions Limited vs Priyadarshini Co Operative Housing … on 14 July, 2025
2025:BHC-OS:10901-DB
Neeta Sawant 13-ARAPPL-20093-2025.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION APPEAL (L) NO. 20093 OF 2025
IN
ARBITRATION PETITION NO. 175 OF 2025
WITH
INTERIM APPLICATION (L) NO. 20111 OF 2025
Pranav Constructions Limited ....Petitioner
: Versus :
Priyadarshini Co-operative Housing
Society Limited and others ....Respondents
ALONGWITH
ARBITRATION APPEAL (L) NO. 20373 OF 2025
IN
ARBITRATION PETITION NO. 175 OF 2025
WITH
INTERIM APPLICATION (L) NO. 20461 OF 2025
Priyadarshini Co-operative Housing
Society Limited ....Petitioner
: Versus :
Pranav Constructions Limited and Others ....Respondents
Mr. V. R. Dhond, Senior Advocate with Mr. Prathamesh Kamath,
Mr. Harsh Behany, Ms. Prachi Sanghavi and Ms. Saloni Manjrekar i/b HN
Legal, for Appellant in Arbitration Appeal (L) No. 20093/2025 and for
Respondent No. 1 in Arbitration Appeal (L) No. 20373/2025.
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Mr. Mayur Khandeparkar with Mr. Mohit Khanna i/b Mr. Yash A. Dhakad,
for the Appellant in Arbitration Appeal (L) No. 20373/2025 and for
Respondent No.1 in Arbitration Appeal (L) No. 20093/2025.
Mr. Rajiv Narula i/b Jhanagiani Narula & Associates, for Respondent No.2.
Mr. Karl Tamboly i/b Mr. Jamshed Ansari, for Respondent Nos. 3 and 4.
CORAM : ALOK ARADHE, CJ. &
SANDEEP V. MARNE, J.
DATED : 14 JULY 2025.
JUDGMENT (Per : Sandeep V. Marne, J.) :
1) These Appeals are filed under the provisions of Section 37
of the Arbitration and Conciliation Act, 1996 (the Act) challenging the
order dated 20 June 2025 passed by the learned Single Judge disposing
of Arbitration Petition No. 175/2025 filed under the provisions of
Section 9 of the Act without grant of any relief in favour of the
Petitioner therein.
2) Priyadarshini Co-operative Housing Society Limited
(Society) is the owner of land and building situated at Final Plot
No.42A of Town Planning Scheme No. II of Santacruz corresponding to
CTS No. G/112, G/113 and G/114 admeasuring 1006.40 sq.mtrs
(1254.19 sq.mtrs. as per Property Card), Bandra Taluka, Mumbai
Suburban District at 112 Swami Vivekanand Road, Mumbai – 400 054
consisting of ground plus three upper floors comprising of 16
residential flats, one bank premises on ground floor and six garages.
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executed between the Society and Pranav Constructions Limited
(Developer), under which development rights for redevelopment of
Society’s building were granted in favour of the Developer. The
Developer obtained Intimation of Disapproval (IOD) dated 27 March
2025 from Municipal Corporation of Greater Mumbai (MCGM) and
thereafter issued notice to vacate dated 28 March 2025 on the Society
calling it upon to ensure vacation of all the flats, bank premises and
garages within 30 days. By letter dated 7 April 2025, the Society
forwarded 20 consent letters by its members informing the Developer
that some of the members (Respondent Nos.2 to 6) have refused to vacate
possession of their respective premises. Respondent No.2 occupies
Garage No.6, Respondent Nos. 3 and 4 occupy the bank premises on
the ground floor and Respondent Nos. 5 and 6 occupy residential Flat
No. 8 on the first floor. The Developer served Advocate’s notice dated 8
April 2025 to the Society as well as to Respondent Nos.2 to 6 for
execution of consent letters for vacation of possession of their respective
premises. Since Respondent Nos.2 to 6 failed to cooperate in the
redevelopment process by vacating possession of their respective
premises, the Developer filed Arbitration Petition No.175/2025 under
the provisions of Section 9 of the Act, inter-alia, seeking interim
measures of direction against Respondent Nos.2 to 6 for signing and
executing consent letters for vacation of the premises in their
occupation in terms of the Development Agreement dated 12 March
2025. Alternatively, direction was sought for execution of consent letter
either by the Court Receiver or Prothonotary & Senior Master of this
Court on behalf of Respondent Nos.2 to 6. This is how Arbitration
Petition No. 175/2025 was filed by the Developer for the purpose of
ensuring vacation of the premises in occupation of Respondent Nos.2 to
6 for smooth carriage of the redevelopment process.
Page No.3 of 23 14 July 2025 ::: Uploaded on - 16/07/2025 ::: Downloaded on - 16/07/2025 21:13:54 ::: Neeta Sawant 13-ARAPPL-20093-2025.docx 3) The Arbitration Petition was resisted by Respondent Nos.2
to 6 by filing their respective Affidavits in Reply. After considering the
pleadings and the submissions canvassed on behalf of the rival parties,
the learned Single Judge proceeded to dispose of the Arbitration
Petition No. 175/2025 without grant of any relief in favour of the
Developer by judgment and order dated 20 June 2025. The Developer is
aggrieved by judgment and order dated 20 June 2025 and has filed
Arbitration Petition (L.) No. 20093/2025. The Society is also aggrieved
by judgment and order dated 20 June 2025 and has filed Arbitration
Appeal (L) No. 20373/2025.
4) Mr. Dhond, the learned Senior Advocate appearing for the
Developer would submit that Respondent Nos.2 to 6, in their capacity
as members of the Society, are bound by the terms and conditions of the
Development Agreement and cannot take stand contrary to the
obligations of the Society arising out of the Development Agreement.
That the Developer has agreed to offer permanent alternate
accommodation to Respondent Nos.2 to 6 in accordance with the
decision taken by the General Body of the Society. That even garage
occupier is being provided permanent alternate accommodation in lieu
of garage premises. That the so called dispute between Respondent
Nos.2 to 6 and the Society about entitlement of the members to a
particular area in the new building cannot be a subject matter of
adjudication in proceedings filed under Section 9 of the Act. He would
submit that the issue involved in the Appeal is squarely covered by the
judgment of this Court in Ambit Urbanspace Versus. Poddar
Apartment Co-operative Housing Society Limited1.
1 Commercial Arbitration Appeal (L) Nos. 12585 of 2025 and 16482 of 2025 decided on
1 July 2025.
Page No.4 of 23 14 July 2025 ::: Uploaded on - 16/07/2025 ::: Downloaded on - 16/07/2025 21:13:54 ::: Neeta Sawant 13-ARAPPL-20093-2025.docx 5) Mr. Khandeparkar, the learned counsel appearing for the
Society would adopt the submissions canvassed by Mr. Dhond.
Additionally, he would submit that the members of the Society are
bound by the covenants of the Development Agreement, which include
arbitration clause. He relies on provisions of Section 28(3) of the Act
mandating the Arbitral Tribunal to take into account the contract
applicable to the transaction and would submit that the alleged
grievance of Respondent Nos.2 to 6 of discrimination falls completely
outside the agreement between the Developer and the Society. That the
said dispute is between the Society and members, which cannot be
mixed up with the issue of Society’s obligations under the Development
Agreement. He would rely on judgment of the Apex Court in Bengal
Secretariat Cooperative Land Mortgage Bank and Housing Society
Ltd. Versus. Alok Kumar and another 2 in support of the contention that
Court cannot sit in appeal over commercial wisdom of the Society in
striking a bargain with the Developer. Inviting our attention to the
judgment of this Court in Calvin Properties and Housing Versus. Green
Fields Co-operative Housing Society Limited and others 3, he would
submit that the individual claims of members of the Society cannot be
adjudicated in proceedings under Section 9 of the Act and that the same
needs to be adjudicated in separate proceedings.
6) Mr. Narula, the learned counsel appearing for Respondent
No.2 (Garage Occupier) would oppose both the Appeals submitting that
the Society and the Developer have practiced discrimination amongst
residential flat owners and commercial premises owners/garage owners
while effecting the redevelopment process. That residential flat owners
are being offered additional 39% area over the premises in the old
building whereas his client (Respondent No.2) is being granted 20% less
2 2022 SCC OnLine SC 1404
3 2013 SCC OnLine Bom 1455
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area than the area of garage currently in his occupation. That flat
owners/members are receiving higher areas in the redeveloped
building at the cost of reduction of area of Respondent No.2. That the
learned Judge has appreciated this discriminatory treatment meted out
to Respondent No.2 and has exercised discretion in not granting any
relief to the Developer in arbitration proceedings. He would rely upon
judgment of the Apex Court in Wander Ltd. and another Versus. Antox
India P. Ltd.4 in support of his contention that this Court cannot
interfere in the exercise of discretion by the learned Single Judge while
refusing to grant interim measures.
7) Mr. Narula would further submit that the decisions of the
Society in undertaking redevelopment process are marred by fraud,
misrepresentation and suffer from violation of statutary guidelines. He
would place reliance on direction dated 4 July 2019 issued under
Section 79A of the Maharashtra Co-operative Societies Act, 1960 to
demonstrate that the redevelopment process undertaken by the Society
suffers from lack of transparency. That the Society had initially decided
to go for self development. However, without inviting tenders, the
Society has handed over the redevelopment rights to the Developer
without offering any choice to the Society members and without
discussing the redevelopment benefits with the members. That
appreciating the position that the entire redevelopment process is
arbitrary and discriminatory, the learned Single Judge has rightly
refused to grant any interim measures in favour of the Developer. That
39% of the fungible area made available in respect of garage of
Respondent No.2 is being handed over to the residential flat owners
resulting in gross reduction in the area of Respondent No.2 in the new
building. He would rely upon judgment of this Court in Avenues
4 1990 (Supp) SCC 727
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Seasons Properties LLP Versus. Nissa Hoosain Nensey & Ors. 5 in
support of the contention that arbitration agreement can be invoked
only against a member who has signed the Development Agreement.
He would pray for dismissal of the Appeals.
8) Mr. Tamboly, the learned counsel appearing for
Respondent Nos.3 and 4, who are owners of commercial bank premises
on the ground floor would submit that his clients are being provided
with only 19% additional area as compared to grant of 39% additional
area to residential flat owners. Additionally, it is submitted that the
premises have already been gifted by Respondent Nos.3 and 4 in favour
of son and granddaughter, who were not impleaded as party
Respondents to the Arbitration Petition. That Respondent Nos.3 and 4
have challenged Society’s Resolution before the Co-operative Court. He
would distinguish the judgment of this Court in Ambit Urbanspace
(supra) contending that when allegations of fraud are involved, rights of
members of the Society would not be subservient to the Society’s
obligations under the Development Agreement. Lastly, Mr. Tamboly
would submit that jurisdiction of the Appellate Court under Section 37
of the Act is limited and that the Appellate Court cannot interfere with
exercise of discretion by the learned Single Judge merely because
another view is plausible. He would pray for dismissal of both the
Appeals.
9) Rival contentions of the parties now fall for our
consideration.
10) Before proceeding further, it must be noted that brother of
Respondent Nos. 5 and 6 (occupiers of residential Flat No.8) has appeared
5 Appeal Nos. 42, 43 and 44 of 2024 decided on 22 October 2024.
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in person and has submitted that Respondent Nos.5 and 6 has agreed to
execute the consent letter for vacation of Flat No.8. Thus the dispute is
now restricted only in respect of Respondent No.2 (owner of Garage No.6)
and Respondent Nos. 3 and 4 (owner of bank premises). Therefore, the
position that obtains today is that out of 16 flats, one bank premises on
ground floor and six garages (total 23 premises), owners/occupiers of
21 premises have executed/agreed to execute consent letters for
vacation of the premises and are willing to co-operate in the
redevelopment process of the Society’s building. It is only the
owner/occupier of the two premises viz. Garage No.6 and bank
premises on ground floor who are opposing the redevelopment process.
11) The learned Single Judge has disposed of Arbitration
Petition No. 175/2025 filed under the provisions of Section 9 of the Act
without grant of any relief in favour of the Developer. Perusal of the
order of the learned Single Judge would indicate that decision of the
Society in allotting lesser percentage of additional area to garage and
commercial premises owners as compared to residential flat owners is
the main reason for non-grant of any relief in favour of the Developer.
After noticing that the Society has practiced discrimination by granting
only 19% increase to commercial occupants as compared to 39%
increase to residential unit owners, the learned Single Judge has refused
to exercise discretion in favour of the Developer. Another reason for
non-grant of any relief by the learned Single Judge in favour of the
Developer is absence of possibility of real arbitration happening
between the parties. The learned Judge also took note of pending
proceedings in the Co-operative Court between Respondent Nos.3 and 4
and the Society and held that the position of the parties would
unalterably vary if any order is passed under Section 9 by the Court.
Page No.8 of 23 14 July 2025 ::: Uploaded on - 16/07/2025 ::: Downloaded on - 16/07/2025 21:13:54 ::: Neeta Sawant 13-ARAPPL-20093-2025.docx 12) Two broad issues that arises for determination in the present Appeals are as under :-
(i) Whether individual members of a Co-operative Society are
bound by the covenants in the Development Agreement executed
by the Society with the Developer and whether their individual
rights are subservient to the obligations of Co-operative Society
under the Development Agreement ?
(ii) Whether existence of disputes between the members and the
Society about their entitlements flowing out of redevelopment
process can be a ground for the Court not to make interim
measures directing vacation of premises in exercise of power
under Section 9 of the Act ?
13) As observed above, two members of the Society who are
owners/occupiers of Garage No.6 and bank premises on ground floor
are refusing to handover possession of their premises for carrying out
redevelopment process of the Society’s building. Their grouse is non-
grant of similar treatment as compared to residential unit owners. They
feel discriminated as the General Body of the Society has resolved to
grant lesser additional area to garage and commercial premises owners
as compared to residential premises owners. The issue for consideration
is whether this grouse of Respondent No.2 and Respondent Nos.3 and 4
can be agitated in a petition filed under Section 9 of the Act.
14) Respondent No.2 as well as Respondent Nos.3 and 4 are
admittedly members of the Society. The Society has executed
Development Agreement with the Developer and the Society is
contractually bound by the covenants agreed therein. The issue about
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convenants of agreement executed between the Society and the
Developer being binding on individual members is no more res-integra.
In recent decision delivered by us in Ambit Urbanspace (supra), the
principle of rights of individual members of the Society being
subservient to Society’s obligation under the Development Agreement
towards the Developer has been discussed. This Court discussed the
ratio of the Division Bench judgment in Girish Mulchand Mehta and
another Versus. Mahesh S. Mehta and another 6 and held in paras-24 to
28 as under :-
24) The covenants of the Development Agreement are binding on the
Society and its members. The issue about a Developer seeking interim
measures against a member of the Society who is not a signatory to the
Development Agreement, and who have not consented for
redevelopment, is no more res integra. This Court has repeatedly held that
a non-co-operative member of a co-operative housing society is bound by
the collective will expressed through the general body resolutions and
that therefore the covenants of Development Agreement would bind
individual member as well. It is also equally well settled that if a
particular member of the Society is not party to the Development
Agreement, Court can make interim measures against such non-co-
operative member by having recourse to the provisions of Section 9 of
the Act.
25) In Girish Mulchand Mehta (supra), the Division Bench of this Court
has dealt with a situation where the Appellants therein were non-co-
operative members to the redevelopment process initiated by the Society.
They refused to handover possession of their respective flats, inter alia, on
the ground that they were not parties to the Development Agreement.
The Developer took recourse to petition under Section 9 of the Act before
the learned Single Judge of this Court, who found that the two non-co-
operative members (Appellants therein) were causing obstruction resulting
in delay in redevelopment of the Society’s building. The Single Judge
therefore allowed the petition under Section 9 of the Act appointing Court
Receiver with power to take physical possession of the flats in question
and handing it over to the Developer for the purpose of demolition and
construction of the new building. In the Appeal preferred by the said two
non-co-operative members before the Division Bench, one of the issues
formulated was whether interim measures could be passed by the Court
in exercise of power under Section 9 of the Act only against a party to an
Arbitration Agreement or arbitration proceedings. The question so
formulated is reflected in para-12 of the judgment which reads thus :-
6 2010 (2) Mh.L.J. 657
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12. The next question is whether order of formulating the interim
measures can be passed by the Court in exercise of powers under
section 9 of the Act only against a party to an Arbitration Agreement
or Arbitration Proceedings. As is noticed earlier, the jurisdiction under
section 9 can be invoked only by a party to the Arbitration Agreement.
Section 9, however, does not limit the jurisdiction of the Court to pass
order of interim measures only against party to an Arbitration
Agreement or Arbitration Proceedings; whereas the Court is free to
exercise same power for making appropriate order against the party to
the Petition under section 9 of the Act as any proceedings before it.
The fact that the order would affect the person who is not party to the
Arbitration Agreement or Arbitration Proceedings does not affect the
jurisdiction of the Court under section 9 of the Act which is intended
to pass interim measures of protection or preservation of the subject-
matter of the Arbitration Agreement.
26) The Division Bench answered the question so formulated in
paragraphs-16 and 18 of the judgment as under :-
16. In the present case, it is not in dispute that the General Body of
the Society which is supreme, has taken a conscious decision to
redevelop the suit building. The General Body of the Society has
also resolved to appoint the respondent No. 1 as the Developer.
Those decisions have not been challenged at all. The appellants
who were members of the Society at the relevant time, are bound by
the said decisions. The appellants in the dispute filed before the
Cooperative Court have only challenged the Resolution dated 27-4-
2008, which challenge would merely revolve around the terms and
conditions of the Development Agreement. As a matter of fact, the
General Body of the Society has approved the terms and conditions
of the Development Agreement by overwhelming majority. Merely
because the terms and conditions of the Development Agreement
are not acceptable to the appellants, who are in minuscule minority
(only two out of twelve members), cannot be the basis not to abide
by the decision of the overwhelming majority of the General Body
of the Society. By now it is well established position that once a
person becomes a member of the Co-operative Society, he loses his
individuality with the Society and he has no independent rights
except those given to him by the statute and Bye-laws. The member
has to speak through the Society or rather the Society alone can act
and speaks for him qua the rights and duties of the Society as a
body (see Daman Singh v. State of Punjab, reported in (1985) 2 SCC 670 :
AIR 1985 SC 973). This view has been followed in the subsequent
decision of the Apex Court in the case of State of U.P. v. Chheoki
Employees Co-operative Society Ltd., reported in (1997) 3 SCC 681 : AIR
1997 SC 1413. In this decision the Apex Court further observed that
the member of Society has no independent right qua the Society and it
is the Society that is entitled to represent as the corporate aggregate.
The Court also observed that the stream cannot rise higher than the
source. Suffice it to observe that so long as the Resolutions passed by
the General Body of the respondent No. 2 Society are in force and not
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but are bound by the majority decision of the General Body. Notably,
the appellants have not challenged the Resolutions passed by the
General Body of the Society to redevelop the property and more so, to
appoint the respondent No. 1 as the Developer to give him all the
redevelopment rights. The proprietary rights of the appellants
herein in the portion (in respective flats) of the property of the
Society cannot defeat the rights accrued to the Developer and/or
absolve the Society of its obligations in relation to the subject-
matter of the Arbitration Agreement. The fact that the relief prayed
by the respondent No. 1 in section-9 Petition and as granted by the
Learned Single Judge would affect the proprietary rights of the
appellants does not take the matter any further. For, the proprietary
rights of the appellants in the flats in their possession would be
subservient to the authority of the General Body of the Society.
Moreso, such rights cannot be invoked against the Developer
(respondent No. 1) and in any case, cannot extricate the Society of
its obligations under the Development Agreement. Since the relief
prayed by the respondent No. 1 would affect the appellants, they were
impleaded as party to the proceedings under section 9 of the Act,
which was also necessitated by virtue of Rule 803-E of the Bombay
High Court (Original Side) Rules. The said Rule reads thus:–
“R. 803-E.Notice of Filling Application to persons likely to be
affected.– Upon any application by petition under the Act, the
Judge in chambers shall, if he accepts the petition, direct notice
thereof to be given to all persons mentioned in the petition
and to such other persons as may seem to him to be likely to be
affected by the proceedings, requiring all or any of such
persons to show cause, within the time specified in the notice,
why the relief sought in the petition should not be granted”.
18. We have no hesitation in taking the view that since the appellants
were members of the Society and were allotted flats in question in that
capacity at the relevant time are bound by the decision of the General
Body of the Society, as long as the decision of the General Body is in
force. As observed earlier, the appellants have not challenged the
decisions of the General Body of the Society which is supreme, insofar
as redevelopment of the property in question or of appointment of the
respondent No. 1 conferring on him the development rights. The
appellants have merely challenged the Resolution which at best would
raise issues regarding the stipulations in the Development Agreement.
The General Body of the Society has taken a conscious decision which
in this case was after due deliberation of almost over 5 years from
August, 2002 till the respondent No. 1 came to be finally appointed as
Developer in terms of Resolution dated 2nd March, 2008. Moreover,
the General Body of the Society by overwhelming majority not only
approved the appointment of respondent No. 1 as developer but also
by subsequent Resolution dated 27th April, 2008 approved the draft
Development Agreement. Those terms and conditions have been
finally incorporated in the registered Development Agreement
executed by the Society in favour of respondent No. 1. That decision
and act of the Society would bind the appellants unless the said
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Resolutions were to be quashed and set aside by a forum of competent
jurisdiction. In other words, in view of the binding effect of the
Resolutions on the appellants, it would necessarily follow that the
appellants were claiming under the Society, assuming that the
appellants have subsisting proprietary rights in relation to the flats
in their possession. It is noticed that as of today the appellants have
been expelled from the basic membership of the Society. Their right to
occupy the flat is associated with their continuance as member of the
Society. It is a different matter that the decision of expelling the
appellants from the basic membership of the. Society will be subject to
the outcome of the decision of the superior authority where the
appeals are stated to be pending. If the decision of the Society to expel
the appellants is to be maintained, in that case, the appellants would
have no surviving cause to pursue their remedy even before the Co-
operative Court much less to obstruct the redevelopment proposal. As
a matter of fact those proceedings will have to be taken to its logical
end expeditiously. Even if the appellants were to continue as
members, they would be bound by the decision of the General Body
whether they approve of the same or otherwise. In any case, keeping
in mind that the Development Agreement does not absolutely take
away the rights of the appellants in the flats in question, as after
demolition of the existing building, the appellants would be
accommodated in the newly constructed flats to be allotted to them in
lieu of the existing flats, on the same terms as in the case of other
members, provided the appellants continue to remain members of the
Society. Under the Development Agreement, the respondent No. 1 is
obliged to complete the project within 18 months from the date of
receipt of full Commencement Certificate from the Corporation. The
full Commencement Certificate would be issued only upon the vacant
possession of the entire building is delivered to the respondent No. 1
who in turn would demolish the same with a view to reconstruct a
new building in its place. Significantly, out of twelve (12) members, ten
(10) members have already acted upon the Development Agreement
as well as have executed separate undertaking-cum-agreement with
the respondent No. 1 Developer. They have already vacated flats in
their occupation to facilitate demolition of the existing building and
have shifted to alternative transit accommodation as back as in
February, 2009. The project has been stalled because of the obstruction
created by the appellants herein who are in minuscule minority. The
said ten members of the Society who have already shifted their
premises, they and their family members are suffering untold
hardship. At the same time, the respondent No. 1 who has already
spent huge amount towards consideration of the Development
Agreement and incurred other incidental expenses to effectuate the
Development Agreement in addition will have to incur the recurring
cost of paying monthly rent to the ten members who have already
shifted to transit accommodation. The learned Single Judge has noted
that the appellants are not in a position to secure the amount invested
and incurred including the future expenses and costs of the
respondent No. 1 herein in case the project was to be stalled in this
manner. Even before this Court the appellants have not come forward
to compensate the respondent No. 1 herein and the other ten members
of the Society for the loss and damage caused to them due to
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avoidable delay resulting from the recalcitrant attitude of the
appellants. Considering the impact of obstruction caused by the
appellants to the redevelopment proposal, not only to the
respondent No. 1 Developer but also to the overwhelming majority
of members (10 out of 12) of the Society, the learned Single Judge of
this Court opined that it is just and convenient to not only appoint
the Court Receiver but to pass further orders for preservation as
well as protection and improvement of the property which is
subject-matter of Arbitration Agreement. We have already noticed
that the Court’s discretion while exercising power under section 9
of the Act is very wide. The question is whether in the fact situation
of the present case it is just and convenient to appoint Court Receiver
coupled with power conferred on him to take over possession of the
entire building and hand over vacant and peaceful possession thereof
to the respondent No. 1 who in turn shall redevelop the property so as
to provide flats to each of the members of the Society in lieu of the
existing flats vacated by them as per the terms and conditions of the
Development Agreement, as ordered by the learned Single Judge. For
the reasons noted by the Learned Single Judge which we have
reiterated in the earlier part of this decision, we find that it would be
just and convenient to not only appoint Court Receiver to take over
possession of the property but also pass further order of empowering
the Court Receiver to hand over vacant possession of the suit building
to the respondent No. 1 to enable him to complete the redevelopment
work according to the terms and conditions of the Development
Agreement.
(emphasis and underlining added)
27) The Division Bench in Girish Mulchand Mehta took note of Rule
803E of the Bombay High Court Original Side Rules under which the
Court is empowered to direct issuance of notice to all persons who are
likely to be affected by the proceedings. The Division Bench held that
Court’s powers under Section 9 are very wide and accordingly upheld
the order of the Single Judge directing vacation of possession of flats even
though the Appellants therein were not signatories to the Development
Agreement. What is important are the findings recorded by the Division
Bench holding that the proprietary rights all members of the Society in
respect of the flats in their possession would be subservient to right
acquired by the developer under the Development Agreement and
cannot extricate the Society of its obligations under that agreement.
28) In our view, the judgment in Girish Mulchand Mehta clearly lays
down a law that covenants of Development Agreement would bind even
non-cooperative members, who are not signatories thereto and Court can
exercise power under Section 9 of the Act to direct handing over of
possession of the flats to the developer by such non-cooperative members
for the purpose of demolition and construction of new building. The
judgment in Girish Mulchand Mehta has consistently been followed in
various decisions of this Court and in order not to increase the length of
this judgment, we find it unnecessary to discuss ratio of all of those
judgments. This is how the issue of jurisdiction of Court exercising power
under Section 9 of the Act to make interim measures against member of
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Co-operative Society who is not signatory to the Development Agreement
is well settled.
(emphasis and underlining supplied)
15) In Ambit Urbanspace, the garage occupiers were not
members of the Society and therefore this Court has decided the further
issue of permissibility to make interim measures under Section 9 of the
Act against a person occupying premises in the Society’s building but
not a member thereof. In the present case, it is not necessary to go into
the said aspect as Respondent No.2-garage occupier is not only a
member of the Society but the Developer has agreed to allot him
permanent alternate accommodation. Therefore, the ratio of the
judgment in Ambit Urbanspace is relevant to the present Appeals only
to the extent of principle of rights of individual members of the Society
being subservient to Society’s obligation under the Development
Agreement. This Court exercising jurisdiction under Section 9 of the Act
can make interim measures against individual members of the Society
who refuses to co-operate in the redevelopment process. Thus
covenants of Development Agreement would bind even a non-co-
operating member of the Society. The Court exercising powers under
Section 9 of the Act can therefore make interim measures qua such non-
co-operating members by directing them to vacate possession of
premises for ensuring smooth redevelopment of Society’s building. This
would conclude the first issue for determination.
16) Now we turn to the second and the main issue involved in
the Appeals. As observed above, the learned Single Judge has taken
note of dispute between Respondent Nos.2 to 6 with the Society about
grant of lesser additional area in redevelopment process. It is held that
Respondent Nos.2 to 4 are being discriminated by not granting pari
pasu benefit of additional area as compared to residential unit owners.
The issue for consideration is whether the Court exercising power
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under Section 9 of the Act can refuse to make interim measures on the
ground of existence of such dispute between Society and members. As
held in Girish Mulchand Mehta (supra), the grievances between the
Society and its members qua entitlements flowing out of redevelopment
process cannot be agitated in proceedings filed under Section 9 of the
Act. They need to be decided separately under Section 91 of the M.C.S.
Act as the Co-operative Court alone has jurisdiction to decide validity
of Resolutions adopted by the General Body of the Society. If such
disputes do not touch upon business of Society, the member will have
to file a Civil Suit. This position is also clear from the following
observations made by this Court in judgment in Calvin Properties and
Housing (supra) :-
In my view, in these proceedings under Section 9 of Arbitration and
Conciliation Act, this Court cannot adjudicate upon the merits of
individual claims of the respondents members of the society and
the same can be adjudicated only in appropriate proceedings. In
these proceedings only interim measures can be granted by this
Court. This Court is thus not adjudicating on the issue raised by
respondent Nos. 2 to 6C whether they are entitled to any larger area
as claimed. In view of the fact that more than 3/4th majority of
members have passed resolution and have agreed to appoint the
petitioner as developer on the terms and conditions agreed upon and
recorded in development agreement, in my view, respondent Nos. 2 to
6C cannot stop the redevelopment project.
(emphasis and underlining added)
17) In our view, therefore the alleged grievances of Respondent
Nos.2 to 4 in respect of various decisions taken by the General Body and
Managing Committee of the Society in implementing the
redevelopment process cannot be decided in petition filed under
Section 9 of the Act nor existence of such disputes would be a bar for
Section 9 Court to make interim measures in a given case. The members
of the Society are bound by the covenants of the Development
Agreement and if they act contrary to the covenants of the Development
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Neeta Sawant 13-ARAPPL-20093-2025.docxstep in and make necessary interim measures. Merely because an
individual member has some grievances against the Society in respect
of either appointment of Developer or implementation of
redevelopment process or grant of additional area, the same needs to be
resolved outside the framework of Section 9 of the Arbitration Act.
Such grievances can be agitated either in a dispute filed under Section
91 of the M.C.S. Act if they touch upon the business of the Society or in
the alternative members can file a Civil Suit in respect of their
grievances qua the decisions adopted by the Society if they do not touch
upon the business of the Society. In the present case, Respondent No.2
has raised serious disputes about the manner in which the
redevelopment process is implemented by the Society. Undertaking
redevelopment through a Developer, choice of Developer made by the
General Body of the Society, as well as the benefits granted to the garage
owners are sought to be questioned by Respondent No.2. He needs to
adopt appropriate proceedings qua his grievances. While Respondent
Nos.3 and 4 have filed a dispute before Co-operative Court, Respondent
No.2 has apparently not filed any proceedings to challenge the
Resolutions adopted by the General Body of the Society. However,
existence of such disputes cannot be a reason to defeat petition filed
under Section 9 of the Act.
18) Reliance placed by Mr. Narula on Division Bench judgment
of this Court in Avenues Seasons Properties LLP (supra) does not cut
any ice. This Court has decided Appeal under Section 37 of the Act in
which order passed under Section 8 of the Act was under challenge. In
case before the Division Bench, the Plaintiffs had sought a declaration
that their bungalows were separate and individual structures and that
the Resolution passed by the Housing Society seeking to include their
bungalows in redevelopment process was illegal. In that suit, the
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Developer filed an application under Section 8 of the Act for return of
plaint by relying on arbitration clause in the Development Agreement
executed with the Society. In the light of this factual position, the issue
before the Division Bench was whether Plaintiffs, who did not sign the
Development Agreement, were bound by arbitration clause and
whether the plaint in their suit could be directed to be returned by
having recourse to Section 8 of the Act. This Court concluded that a
party who is not a signatory to the Development Agreement and who
had filed a suit seeking a declaration for exclusion of bungalows from
redevelopment process could not be relegated to arbitration by virtue of
agreement executed between the Developer and the Society. In our
view, the judgment has no application to the facts of the present case.
Though it is sought to be suggested by Mr. Narula that the views
expressed in Avenues Seasons Properties LLP and in Ambit
Urbanspace are not consistent, in our view, there is no inconsistency in
the views as the issue before the Division Bench in Avenues Seasons
Properties LLP was entirely different and arose in the context of a suit
filed by bungalow owners for a declaration that they should be treated
separately from the other structures of the Society and should not be
included with Society’s redevelopment process. On the other hand, in
Ambit Urbanspace, the garage occupiers, who were not signatories to
the Development Agreement, wanted to participate in the
redevelopment process, but were insisting that they must be provided
with permanent alternate accommodations while carrying out
redevelopment of the Society’s building. Apart from this, there is a
fundamental difference between the nature of proceedings involved in
both the judgments. Avenues Seasons Properties LLP proceedings
arose out of Developer’s application under Section 8 of the Act seeking
return of plaint and relegation of dispute to arbitration, whereas
proceedings in Ambit Urbanspace arose out of petition filed under
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Section 9 of the Act. The position remains consistent that a non-
member and a non-signatory to the Development Agreement can also
be roped in for seeking interim measures under Section 9 of the Act if
such a person occupies any premises in the building of the Society. In
Avenues Seasons Properties LLP, the claim of the Plaintiffs was that
they do not occupy any part of the building of the Society and their
bungalows are independent than that of structures of the Society. This
the fundamental difference between the two judgments. In the instant
case, Respondent Nos.2 to 4 are part of Society’s building and have not
taken a position that they need to be excluded from redevelopment
process. In our view, therefore reliance by Mr. Narula on judgment of
Division Bench of this Court in Avenues Seasons Properties LLP does
not assist the case of Respondent No.2.
19) Mr. Narula has relied upon celebrated judgment of the
Apex Court in Wander Ltd. (supra) in support of his contention that
Appellate Court cannot interfere in exercise of discretion of the Trial
Court while passing interim order. It must be observed at once that the
judgment in Wander Ltd. outlines the jurisdiction of the Appellate
Court exercisable under Order 43 of the Civil Procedure Code, 1908
against an order of Trial Court granting or refusing to grant temporary
injunction under Order XXXIX Rules 1 and 2 of the Code. In that sense,
principles may not strictly apply to proceedings before the Appellate
Court under Section 37 of the Act while deciding correctness of order
made under Section 9 of the Act. However, even if the principle
enunciated in Wander Ltd. are held to be applicable to Appeal under
Section 37 of the Act, we are of the view that interference in the order
passed by the learned Single Judge is warranted in the facts and
circumstances of the present case as exercise of discretion is based on
irrelevant consideration of entitlement of Respondent Nos.2 to 4 in the
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matter of allotment of additional area in the new building. As held
above, dispute of allotment of additional area is not a relevant
consideration for deciding the petition under Section 9 of the Act as the
said dispute needs to be resolved in independent proceedings under
Section 91 of the M.C.S. Act or by filing a Civil Suit. Ordinarily, the
Appellate Court would be loathe in interfering with discretion exercised
by the learned Single Judge. However, where irrelevant consideration
has affected the mind of the Court while exercising the discretion, the
Appellate Court would be justified in interfering with exercise of
discretion. In the instant case, the equitable and discretionary relief of
interim measures is declined to the developer by taking into
consideration the aspect of alleged discriminatory treatment meted out
to Respondent Nos.2 to 4. What is however ignored is the position that
the Developer has no role to play in deciding the distribution of
additional area between the members. That decision is taken by
majority of members of the society. Thus, the relief of interim
measures is declined to the developer by taking into consideration a
factor over which it has no control. Therefore, in our view exercise of
discretion while declining relief under Section 9 of the Act is improper
warranting interference by the Appellate Court.
20) Reliance is placed by both the parties on judgment of the
Apex Court in Bengal Secretariat cooperative Land Mortgage Bank
and Housing Society Ltd. (supra). Mr. Khandeparkar has relied on the
said judgment in support of the contention that Court cannot sit as an
Appellate Authority over commercial wisdom of General Body of the
Society, whereas, Respondents have relied upon very same judgment in
support of the contention that if the decision of General Body of the
Society is product of fraud or misrepresentation or is opposed to
statutory provisions, the Court can interfere in the decision of the
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General Body of the Society. There can be no dispute about this
proposition. However, the issue is about the exact forum which can go
into the correctness of the Resolution adopted by the General Body of
the Society. If the Resolution adopted by the General Body of the
Society touches upon business of the Society, such resolution needs to
be challenging by filing application under Section 91 of the M.C.S. Act.
On the other hand, if such Resolution does not touch upon business of
the Society, the remedy for an affected party is to file a Civil suit. Under
no circumstances, however, such dispute can be remotely raised in
proceedings filed under Section 9 of the Act.
21) So far as the issue of transfer of membership of Respondent
Nos.3 and 4 in pursuance of execution of gift is concerned, the same is
of little relevance to the redevelopment process undertaken by the
Society and the Developer. If the donees are aggrieved by non-grant of
membership to them in respect of Flat No.8, they have appropriate
remedy available under the provisions of the M.C.S. Act. As of now, the
Developer can only deal with current members of the Society and as
and when the donees of Respondent Nos.3 and 4 secure membership of
the Society, the Developer is bound to handover possession of alternate
accommodation in favour of such transferee member. Vacation of
possession of the premises need not wait admission of donees as
members of the society. Vacation of premises by original member and
grant of possession of alternate accommodation to the succeeding
member is not barred. In our view therefore the aspect of execution of
gift by Respondent Nos. 3 and 4 is wholly irrelevant to the issue of
vacation of premises for carrying out the redevelopment process.
22) The last issue that remains is about possibility of arbitration
taking place between the parties. The Society and its members are
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bound by the covenants of the Development Agreement. If Society fails
to discharge its obligations under the Development Agreement and if its
members do not vacate possession of premises, the Developer will have
to invoke arbitration and seek appropriate reliefs against the Society.
Non-vacation of premises by Respondent Nos. 2 to 4 can thus become a
trigger point for invocation of arbitration by Developer against the
Society. It is therefore difficult to hold at this juncture that there is
absolutely no possibility of arbitration taking place between the parties.
23) In our view, therefore the Developer has made out a case
for grant of interim measures in petition filed under Section 9 of the
Act. We accordingly proceed to pass the following order :-
(I) Judgment and order dated 20 June 2025 passed in Arbitration
Petition No. 175/2025 is set aside.
(II) Respondents Nos. 2 to 4 are directed to execute consent letters
and to vacate the possession of the premises in their occupation
to the Developer in terms of the Development Agreement dated
12 March 2025 for the purpose of demolition and redevelopment
of Society’s building.
(III) In the event Respondent Nos.2 to 4 fail to vacate possession
of the premises in their occupation within a period of four weeks,
the Developer is granted liberty to approach the Court Receiver
of this Court, who shall take possession of premises in occupation
of Respondent Nos.2 to 4 and handover the same to the
Developer by taking police assistance, if necessary.
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allowed without any order as to costs. With dismissal of the Appeals,
nothing survives in Interim Applications and the same also stand
disposed of.
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