Bombay High Court
The Mulund Endeavour Chs Ltd vs Alag Property And Constructions … on 16 February, 2026
2026:BHC-OS:4343
CARBPL-21165-2025 - FINAL.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION PETITION (L)
NO. 21165 OF 2025
The Mulund Endeavour Co-operative Housing
Society Ltd. ...Petitioner
Versus
M/s Alag Property and Constructions Private ...Respondents
Ltd. and Ors.
Mr. Mayur Khandeparkar a/w. KS Vardhan, Anna and Somya
i/by TN Tripathi and Co., for the Petitioner.
Mr. Karl Tamboly i/b. Mr. Sanjay P. Shinde, for the Respondents.
CORAM : SOMASEKHAR SUNDARESAN, J.
DATE : February 16, 2026
JUDGEMENT :
1. This Petition has been filed under Section 9 of the Arbitration
and Conciliation Act, 1996 (“the Act”), seeking interim reliefs in respect
of land bearing City Survey No. 554/1 admeasuring approximately
4182.60 sq. mtrs. at Mulund, Mumbai ( “Subject Property”). Four
buildings, titled as A, B, C and D stand on the Subject Property. The
buildings belong to the Petitioner, The Mulund Endeavour Co-operative
Housing Society Ltd. (“Society”), which entered into a Development
Agreement dated July 2, 2016 ( “Development Agreement”) with
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Respondent No. 1, M/s. Alag Property and Constructions Private Ltd.
(“Developer”).
2. It is the case of the Society that despite execution of the
Development Agreement, no concrete steps had been taken by the
Developer to make progress and obtain the Intimation of Disapproval
(“IOD”) and commence redevelopment. Eventually, the application for
an IOD was made only on September 13, 2017, about 14 months after
the execution of the Development Agreement. The IOD was eventually
obtained only on September 3, 2019. Thereafter, the parties executed a
Supplementary Development Agreement dated September 30, 2019
(“Supplementary DA”), intended to provide for the impact of the efflux
of time, as well as introduction of Development Control and Promotion
Regulations, 2034 (“DCPR 2034”). Eventually, the possession of the
Subject Property was handed over to the Developer on January 5, 2020.
The IOD was re-validated by the Developer on September 3, 2020, and
on January 27, 2021, the Developer obtained the first Commencement
Certificate up to the plinth level, five years after the execution of the
Development Agreement.
3. It is the Society’s case that there was a constant change of
plans and contractors, and no progress had been made in the
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redevelopment. The scheduled date for completion of the
redevelopment in terms of the Supplementary DA was January 26,
2025, while according to the Society, only 30% of the work had been
completed. It is the Society’s case that additional Transferable
Development Rights / Floor Space Index ( “TDR/FSI”) that was required
to be loaded on to the redevelopment of the Subject Property has not
been effected till date.
4. The Society contends that various amounts payable to its
members, including amounts owed in terms of transit rent, brokerage,
transportation expenses and hardship compensation, remain unpaid,
and the arrears have mounted to the tune of Rs. 9.77 crores. That apart,
in breach of its obligation, the Developer has not paid Municipal taxes
since 2023 and arrears of the same add up to Rs 1.13 crores.
5. The Society contends that, as of the second week of January
2025, work at the Subject Property has come to a complete stop.
Therefore, on February 23, 2025, the Society passed a unanimous
resolution at a Special General Body Meeting ( “SGBM”) to terminate the
Development Agreement & the Supplementary DA and attendant
documentation on account of various defaults and breaches on the part
of the Developer. On February 28, 2025, a notice of termination
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(“Termination Notice”) was sent by the Society to the Developer
pursuant to the SGBM resolution.
6. The Society invoked arbitration by an Invocation Notice
dated May 10, 2025. It is the Society’s case that apart from a generic
letter containing bald denials in response to the Termination Notice,
there has been no response from the Developer. Eventually, in May,
2025, this Petition under Section 9 of the Act was filed, seeking
interlocutory protective reliefs, including roping in the Court Receiver to
take charge of the Subject Property and hand it over to the Society to
pursue redevelopment either by itself or through any other Developer.
Contentions of the Parties:
7. It is in this background that I have heard Mr. Mayur
Khandeparkar, Learned Advocate for the Society as well as Mr. Karl
Tamboly, Learned Advocate for the Developer. With their assistance, I
have examined the material on record.
8. Mr. Khandeparkar would submit that the members of the
Society had vacated the premises as early as January 5, 2020, and have
suffered non-payment of amounts owed to them by the Developer. The
transit rent payable to members of the Society entailed a year-on-year
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escalation, and that too has not been paid since January 2023.
Compiling all the financial obligations owed by the Developer, it is his
contention that there is an admitted liability of Rs. 9.77 crores due and
owing by the Developer. The non-payment of Municipal taxes would, in
fact, expose the Society to the risk of its property being attached towards
recovery of taxes.
9. Mr. Khandeparkar would submit that even the
Commencement Certificate has lapsed. The Developer seeks to convert
the redevelopment project on the Subject Property into a slum
rehabilitation project, and a permanent transit camp under the
Maharashtra Slum Areas (Improvement, Clearance and
Redevelopment) Act, 1971 may come up on the Subject Property. He
would submit that the members of the Society would simply be
uninterested in the Subject Property becoming a slum rehabilitation
project, and they are fully entitled to not be held to ransom by a
Developer in this manner. The provisions in the Development
Agreement prohibits bringing in a third party into the project without
the Society’s consent, and the Development Agreement clearly envisages
that the Municipal Corporation of Greater Mumbai has the authority
and not the Slum Rehabilitation Authority.
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10. Mr. Karl Tamboly, Learned Advocate on behalf of the
Developer would submit that the Society is not justified in terminating
the Development Agreement without granting any opportunity for cure
in terms of the Development Agreement. He would quarrel with the
estimation of 30% completion in the project and contend that there
have been ongoing negotiations between the parties to work out
modalities for future development, payment of arrears and other facets
necessary for continuation and completion of the redevelopment
project.
11. Adverting to the affidavit-in-reply filed by the Developer, Mr.
Tamboly would submit that the Developer has already completed the
ground, basement, podium and 2 to 3 residential floors, in each of the 3
wings that constitute the redevelopment project. Relying upon the
impact of the Covid-19 pandemic, he would submit that the delay until
February 28, 2022, is attributable to the aftermath of the pandemic.
Contending that 40-45 % construction using the Real Estate Regulatory
Authority (“RERA”) standards had been completed, Mr. Tamboly would
submit that third party rights have also been created in the constructed
premises and it would not be just or legal to terminate the Development
Agreement or to appoint a Court receiver.
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12. The IOD, had been received on September 3, 2019, which led
to execution of the Supplementary DA on September 30, 2019, but
handover of possession had been delayed until January 5, 2020. Three
19-storey buildings that are to be constructed are well underway and
construction until the third floor has been completed on the Subject
Property, and third-party rights with execution of agreements with
other flat purchasers have also been executed. He would point to a chart
of various such agreements executed with third parties as set out in
Exhibit R-3 annexed to the affidavit-in-reply, as indeed execution of
agreements with the members of the Society.
13. Mr. Tamboly would pitch the completion percentage at 40%
and contend that the Developer has incurred expenses of more than Rs.
60 crores. He would submit that the Developer had fairly and validly
proposed redevelopment under Clause 33 (11) of the DCPR 2034, which
would create a win-win situation for all the parties and would also lead
to an additional FSI, which would enable fulfilment of various financial
and non-financial obligations contracted between the parties. He would
submit that the Developer has specifically assured the Society that no
permanent transit camp would be accommodated on the Subject
Property, and the entire plan, as envisaged in the existing sanction plan,
would remain unchanged and there would be no change to the area
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deliverable to the members on the Society under the Development
Agreement or the Supplementary DA. He would submit that the
Developer is also keen to deliver post-dated cheques for the total rent
amount to the Society, as security for future rental payments.
14. Mr. Tamboly also has instructions to submit that there would
be no clubbing of the Subject Property with any other layout and the
same would remain an independent property in the land records. He
would submit that owing to Public Interest Litigation on air pollution in
the city, several restrictions were imposed on the Developer which led to
a delay in the implementation schedule. He would also allude to
litigation before the National Green Tribunal, Bhopal Bench, which led
to a direction to the Ministry of Environment and Forests to strictly
enforce and comply with environmental regulations, in respect of
buildings located within a 5 km radius for protected area under the law
governing wildlife protection. He would submit that if the Developer is
allowed to complete the project, he would be able to smoothly effect
closure for the project. Mr. Tamboly would also point to various other
denials of individual allegations made against the Developer in the
Section 9 Petition.
Analysis and Findings:
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15. Having heard the Learned Advocates for the parties, it is
apparent that the project is way behind schedule, and the Society now
has to depend upon a material alteration to the originally envisaged
redevelopment plan. The Developer is evidently hoping to leverage a
deviation from the Development Agreement as the basis of moving
forward. It is seen from the record that the Developer is seeking
permission of the Society to permit a dilution of stake of the present
promoter of the Developer and also to convert the redevelopment into a
project connected to a slum rehabilitation project.
16. Indeed, the Developer, who is already in default on multiple
counts, has made an assurance that there would be no permanent
transit camp on the Subject Property. While he has already indicated
that there may be some changes to the layout of the sale flats, there
would be no change to the layout of the flats of existing members of the
Society. Assurances of post-dated cheques are being held out by the
Developer, and payments of “ad hoc” amounts towards municipal taxes
are sought to be relied upon to give comfort to the Society.
17. In a nutshell, what is writ large on the face of the record is
that the Developer is seriously in default in the time and cost
commitments owed under the Development Agreement. Indeed, the
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Society has also pointed to multiple development agreements executed
between the same Developer and other societies in the years 2015 and
2016, which are also embroiled in inordinate delays, payment defaults
and arbitration proceedings. These are denied by the Developer, but
what is writ large is that the Developer is in default and hopes to
renegotiate the contract to even continue with the project.
18. The Society has also prima facie been able to bring to bear
evidence, that in the RERA records, the project is shown as having been
kept in abeyance. That apart, from the entries made in the RERA
records, it appears, prima facie, that the Developer has registered sale
agreements on multiple floors without even loading the requisite
TDR/FSI and obtaining the Commencement Certificate. The upshot of
this position is that potentially sales of entitlements that do not yet
exist, are being effected.
19. Having examined such material, a review of the
Commencement Certificate would also indicate that it was valid until
January 26, 2024, with Commencement Certificate approval extending
up to sixth to eighth slab of various wings, whereas the project entails a
total of 19 floors. What is actually constructed in each wing is about two
to three floors. In these circumstances, having examined the current
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plight of the Society, the following extract from the judgement in the
case of Rajawadi1 would be instructive:-
“65. These development agreements are, above all, in the nature of
an entrustment. They are not entered into blindly. There is a long and
laborious process of society notices, general body meetings, the
appointment of a consultant as an advisor, calling for tenders,
scrutinizing the bids, ensuring compliance with laws and regulations,
looking at the proposals and so on to the end of the chapter. This is as it
must be. For what is it that is actually happening here? The society is
entrusting an outsider with the one single asset that justifies the society’s
existence, that actually defines the society : the society’s property. This
is not the entrustment of some other land on which to build so that
the society can make handsome profits; no, this is the entrustment of the
actual property being used by the society and its members, the very
homes in which they live. The society’s members agree to this upheaval,
to move out altogether, to separate from each other while their new
homes are built. The promise to them is that they will be looked after and
provided for while their new homes are being built. Days, weeks, months
and years pass; the members do not receive the promised rent. Thus
begins the downward slide. The promised homes are delayed, then
delayed further, and then delayed even further. This cuts at the root of
the initial entrustment. A development project for a society demands
commitment, fidelity, respect and honesty. When these begin to
disappear, the contractual relationship collapses. Where there was
anticipation and confidence, there is now just bitterness, disappointment
and despair. There is a breakdown of confidence, and there is only
distrust. Loss of faith and confidence on account of contractual
1
Rajawadi Arunodaya Co-operative Housing Society v. Value Projects Pvt Ltd. – 2021 SCC OnLine
Bom 9572
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CARBPL-21165-2025 – FINAL.docxviolations and breaches by a developer are sufficient grounds to find for
the society and against the developer. Indeed, I would go a step further.
There is urgency for the society. Therefore, the slightest delay in project
completion, unless specifically accepted by the society, and even one
single default in payment of transit rent or other dues is actually
sufficient to warrant a termination. There is no such thing in these
matters as ‘substantial compliance’. That is not the principle of
obligations in the realm of private law.
[Emphasis Supplied]
20. Indeed, Mr. Tamboly would contend that it is not necessary
to grant interim relief of the extreme nature claimed on behalf of the
Society, and one must instead explore how to balance the competing
interests of the parties. He would submit that appointing a Court
Receiver to take custody of the project and hand it over to another
Developer would be grossly unfair and disproportionate to the situation
at hand. I have also given my anxious consideration to the facet of what
would be a more appropriate means of adjusting the balance between
the parties. I find that this facet, too, has been aptly answered in the
following extract from Rajawadi :-
“64. I mention this (and some of this may indeed be speculation)
because when one speaks of the ‘balance of convenience’, another
umbrella term, one must attempt to give it some life and colour and
actual societal context. This speaks of the comparative mischief or
hardship to be weighed when granting or refusing relief. But there is
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undoubtedly caused immense prejudice and harm to the members of
the Society. The hardship to the members is real and immediate; the so-
called hardship to the Developers is notional. When it spent in the
project, this was no altruism or charity. It was an investment toward
great profit. Every investment involves risk. The Developer gambled on
the project. Receiving monthly rent is not a sop, not a matter of
‘convenience’. It is a matter of survival. Therefore, the non-payment of
dues, the delays in project completion, and not paying transit rent for
months together speaks to an inherent, and constantly growing, social
injustice. It should not be allowed to continue. Therefore, apart from the
exceptionally strong prima facie case that the Society makes out, the
‘balance of convenience’ is decidedly in its favour.”
[Emphasis Supplied]
21. The situation that the Society in the captioned Petition finds
itself in, would well fit what has been described by the Learned Single
Judge in Rajawadi, which is extracted above.
22. As regards the third-party interests having been created, it
would not be inappropriate, however unfortunate, to quote from
another judgement of a learned Single Judge of this Court in Vaidehi
Akash2, which would indicate that the third-party purchasers who derive
their interests from the redevelopment do so by taking a risk on their
assessment of performance by the Developer. The Society itself cannot
2
Vaidehi Akash Housing Pvt. Ltd. v. New D.N. Nagar Co-operative Housing Society Union Ltd. –
2014 SCC OnLine Bom 5068
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be tied down by the third-party interests created by a defaulting
Developer. The following extract from Vaidehi Akash would be
noteworthy:
“85. There being no privity of contract between the Society and the
third party purchasers claiming under Vaidehi, the third party
purchasers cannot claim specific performance of their respective
agreements for sale except through Vaidehi. They stand or fall
by Vaidehi. If the rights of Vaidehi are brought to an end upon a lawful
termination of the Society Development Agreement, the third party
purchasers cannot lay any independent claim against the Society or
anyone claiming through the Society. The agreements with third party
purchasers are premised upon a valid, subsisting and enforceable
agreement between their vendors, namely, Vaidehi and the owners,
namely, the Society and in fact refer to the Society Development
Agreement in this behalf. Admittedly, therefore, the third party
purchasers had, or at any rate, ought to have, notice of the Society
Development Agreement and its terms and conditions and Vaidehi’s
obligations to perform the same. If Vaidehi fails to perform these
obligations, the purchasers cannot but suffer the consequences. In other
words, the purchaser’s rights are subject to Vaidehi’s rights and not
higher than those. Therefore, from a contractual standpoint, the third
party purchasers have no case against the Society or Rustomjee, who
claim through the Society.
86. Let us now consider if these third party purchasers have any rights
under MOFA against the Society. It is submitted on their behalf that the
Society is very much a ‘promoter’ within the meaning of MOFA as
regards their respective agreements for sale. Learned Counsel for thePage 14 of 20
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2(c) of the MOFA. The definition is in the following terms:
“promoter” means a person and includes a partnership firm or a
body or association of persons, whether registered or not who
constructs or causes to be constructed a block or building of flats,
or apartments for the purpose of selling some or all of them to
other persons, or to a company, co-operative society or other
association of persons and includes his assignees; and where the
person who builds and the person who sells are different persons,
the term includes both.”
87. It is submitted that the Society can at any rate be said to have
caused the building of flats to be constructed for the purpose of selling
the same and as a person, who causes such building to be built, is as
much a promoter as a person who sells premises in such building.
88. The Society is the owner of the property and has entered into an
agreement with the developers, i.e. Vaidehi, for redevelopment of its
property. The redevelopment envisages construction of the Society’s
building to accommodate its members and also construction of
building/s of flats/premises to be sold to outsiders. The agreement
authorizes or entitles the developers to construct such building/s and
sell flats/premises therein to outsiders. Such authority or entitlement is
to the developers’ account and in their own right and as an independent
contractor. If in exercise of such authority or entitlement, a building is
constructed by the developers, it cannot be said that such building is
caused to be constructed by the Society within the meaning of Section
2(c) of the MOFA.
89. Any other interpretation would lead to anomalous consequences,
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which could never have been contemplated by MOFA. The owners of
lands entering into agreements for sale or development agreements with
promoters/developers would be held as being subject to all liabilities of
a promoter, such as liability of disclosure of plans and specifications,
outgoings etc. under Section 3 of the MOFA, entering into agreements
in accordance with Section 4, giving possession of flats and suffering
the consequences of Section 8, forming co-operative societies of flat
purchasers under Section 10 and so on. This would be plainly
inconceivable.”
[Emphasis Supplied]
23. It is also apparent to me that the Developer has had a lengthy
period of time to comply with his committed obligations and perform on
the Development Agreement. Yet, the members of the Society who have
vacated their premises over five years ago remain out of their homes,
and towards this end, the observation of another Learned Civil Judge in
the case of and SSD Escatics3 would be noteworthy, which is follows :-
“28. In my view, this submission of Mr. Narula overlooks the fact that
the respondent members had agreed to redevelopment in the hope of
better prospects and payment was made only in inducement for the
members of the society who agreed to redevelop and vacating their
homes rather than continue in the premises during repairs that would
have to be undertaken. Payment of rent cannot be in any manner
considered to be a “benefit”. It only facilitated the members to be
housed in different premises. There is substantial collateral hardship
3
SSD Escatics Pvt. Ltd. v. Goregaon Pearl Co-operative Housing Society Ltd., through its Hon.
Secretary Mr. T.G.K. Kartha – 2018 SCC OnLine Bom 21429
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CARBPL-21165-2025 – FINAL.docxthat is associated shifting from one own home to rented premises and
during the period that is to be taken for the new and permanent home to
be constructed. The respondents are out of their homes for about 11
years. When they vacated their premises they were expecting to be back
in their new homes within a reasonable period of time. Although shifting
to rented premises may appear to be a formality to facilitate
redevelopment, in fact it is a commitment made in anticipation of
performance of the petitioners promises to rehouse them in permanent
accommodation. While resolving to enter into such agreement, the
members of the society, for that matter no home owner, would expect or
tolerate delay of this nature. The contention that the order passed by the
tribunal is a final order must be repelled. In the facts and circumstances
of the case and in my view it is a just order. Sufficient opportunities have
been given to the petitioners to remedy their breaches. The submissions
made at the bar in support of the challenge as to the need to return
alleged benefit, hardship that may be caused to third party purchasers,
failure to issue NOC resulting in starvation of funds etc. are not reason
enough to keep the project in limbo.”
[Emphasis Supplied]
24. It is in these circumstances, that in my opinion, the facts at
hand represent a fit case for an intervention in terms of Section 9 of the
Act. I am satisfied that a case has been made out, warranting the grant
of reliefs in terms of prayer clauses (a), (a-1), (a-2), and (b), which, with
some moulding is set out below:-
“(a) The Respondent No. 1, its directors, servants, agents and/or
persons claiming through them are directed to hand over peaceful
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CARBPL-21165-2025 – FINAL.docxpossession of the said property, viz., all that piece or parcel of land or
ground situated at Mulund (East), Mumbai – 400 081 bearing CTS No.
554/1 admeasuring 5002.40 sq. yards equivalent to 4182.60 sq. mtrs. or
thereabouts in the Registration Sub-District of Bandra, Mumbai
Suburban District, Taluka Kurla along with the existing structure/s
(completed or otherwise) standing thereon to the Society;
(a-1) The Learned Court Receiver of this Court having all powers
under Order XL Rule 1 of the Civil Procedure Code shall take
possession of the said property, viz all that piece or parcel of land or
ground situated at Mulund (East), Mumbai 400 081 bearing CTS No.
554/1 admeasuring 5002.40 sq. yards equivalent to 4182.60 sq. mtrs. or
thereabouts in the Registration Sub-District of Bandra, Mumbai
Suburban District, Taluka Kurla along with the existing structure/s
(completed or otherwise) standing thereon (with police assistance, if
required) and hand over the said redevelopment project to the
Petitioners herein;
(a-2) The Respondent No. 1, its Directors, officers, servants, agents,
and/or all or any persons claiming through and under them by an order
of temporary injunction from creating third party rights i.e. mortgages,
sale lien, leave and license, lease, gift and/or encumbrance of any kind
whatsoever in respect of the said property, viz., all that piece or parcel
of land or ground situated at Mulund (East), Mumbai – 400 081 bearing
CTS No. 554/1 admeasuring 5002.40 sq. yards equivalent to 4182.60 sq.
mtrs. or thereabouts in the Registration Sub-District of Bandra, Mumbai
Suburban District, Taluka Kurla along with the existing structure/s
(completed or otherwise) standing thereon and the said redevelopment
project in any manner whatsoever;
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(b) The Respondent No. 1, its Directors, servants, agents,
contractors and/or all or any person claiming through or under them by
way of a temporary injunction from intermeddling, interfering,
obstructing in the redevelopment process of the said property,
construction by the Petitioners by appointment of a third party
developer, contractor, completion by self-development process and/or
all or any other acts done on the said property and the said project by
the Petitioners and/or their assignees, nominees, agents, contractors,
developers;
25. The Society has already invoked arbitration and it shall be
open to the Society to proceed further and take steps to have the
arbitration proceedings commenced at the earliest. The Society is
directed to file an appropriate Application under Section 11 of the Act, if
not already filed, within a period of eight weeks from the upload of this
order on the website of this Court, should there have been no consensus
on the identity of the arbitrator by now.
26. The reliefs granted above shall continue until four weeks after
an Arbitral Tribunal is appointed, provided a Section 11 Application is
filed in the absence of consensus over formation of the Arbitral
Tribunal. The Arbitral Tribunal shall then take over these proceedings
as continuing proceedings under Section 17 of the Act, and pass such
orders as it deems fit, including directions to substitute, reduce, retain
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or enhance the interim protection granted hereby, after hearing the
respective parties.
27. With the aforesaid directions, this Section 9 Petition is
finally disposed of.
28. All actions required to be taken pursuant to this order shall
be taken upon receipt of a downloaded copy as available on this Court’s
website.
29. At the time of pronouncement, Learned Advocate for the
Respondent seeks a stay. For the reasons set out in the judgement, the
request of stay is not worthy of acceptance.
[ SOMASEKHAR SUNDARESAN, J.]
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February 16, 2026
MPBalekar
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