Mig Bandra Realtors Builders Pvt Ltd vs Middle Income Group Co-Operative Housing Society Limited
- Court
- Bombay High Court
CNR No : HCBM020307952026
2026:BHC-OS:23209
carbpl30794-2026-JF.doc
AGK
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION (L) NO.30794 OF 2026
MIG (Bandra) Realtors & Builders
Private Limited
… Petitioner
ATUL
GANESH
KULKARNI
Vs.
Digitally signed by
ATUL GANESH
KULKARNI
Date: 2026.10.27
12:11:16 +0530
Middle Income Group Cooperative
Housing Society Limited
… Respondent
Mr. Ravi Kadam, Senior Advocate with Mr. Rohan
Kadam, Ms. Rujuta Patil, and Mr. Yohaan Shah i/by
Negandhi Shah & Himayatullah for the Petitioner.
Dr. Sanjay Jain with Mr. Nishant Sasidharan, Mr. Karan
and Mr. Divyand Shukla i/by LJ Law for the
Respondent.
CORAM : AMIT BORKAR, J.
RESERVED ON : OCTOBER 21, 2026.
PRONOUNCED ON : OCTOBER 27, 2026
JUDGMENT:
1. The present Petition is filed by the Petitioner under Section 9
of the Arbitration and Conciliation Act, 1996, along with its
amendments (hereinafter referred to as the “Arbitration Act”). The
Petitioner is seeking a mandatory injunction directing the
Respondent, Middle Income Group Co-operative Housing Society
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Limited, to immediately admit the 177 Flat Purchasers of the
Petitioner as members of the Respondent Society. The Petitioner is
seeking a direction that the Respondent should not insist upon any
condition which is not provided in Clauses 9.5 and 9.9 of the
Development Agreement read with Clause 20 of the Consent Terms
dated 27 December 2021 (“Consent Terms”), which were recorded
between the parties in the arbitration proceedings before the Sole
Arbitrator. According to the Petitioner, the proportionate Corpus,
Share Money and Sinking Fund payable in respect of the said 177
Flat Purchasers have been paid fully and without any default. It is
the Petitioner's case that Clauses 9.5 and 9.9 of the Development
Agreement, read with Clause 20 of the Consent Terms, provide all
the grounds on which the Respondent can refuse to admit the Flat
Purchasers as members. The Petitioner states that the
circumstances in which such admission can be refused admittedly
do not exist. This is clear from the correspondence exchanged
between the parties. Therefore, according to the Petitioner, the
Respondent has no right to refuse admission of the 177 Flat
Purchasers as members of the Respondent Society.
2. The facts and circumstances which have given rise to the
present Petition are as follows. On 31 October 2010, the
Respondent, which is a co-operative housing society registered
under the Maharashtra Co-operative Societies Act, 1960 (“MCS
Act”), entered into a Development Agreement (“DA”) with the
Petitioner for redevelopment of the property of the Respondent
situated at Gandhinagar Layout, Bandra (East), Mumbai 400 051
(“Project”). Thereafter, in the year 2015, the parties entered into a
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Deed of Modification in respect of the Development Agreement.
On 8 May 2020, the Respondent issued a letter to the Petitioner
stating that it was terminating the Contract. Thereafter, on 27
December 2021, the parties arrived at a settlement before the
learned Sole Arbitrator. The terms of this settlement were recorded
in the Consent Terms. Clause 20 of the Consent Terms, among
other things, provided that the Respondent would refuse to admit
a Flat Purchaser as a member of the Respondent Society only if
there was a default in payment of the proportionate Corpus
payable in respect of that Flat Purchaser. On 4 January 2022, the
learned Sole Arbitrator passed a Consent Award in accordance
with the Consent Terms dated 27 December 2021. Thereafter, on
23 February 2026, the Respondent addressed a letter to the
Petitioner.
3. On 24 February 2026, the Respondent addressed another
letter to the Petitioner. On 25 February 2026, the Petitioner replied
by addressing a letter to the Respondent. Thereafter, on 7 March
2026, the Petitioner addressed a letter to the Respondent,
informing it that the proportionate Corpus in respect of 354 Flat
Purchasers had been paid. Along with this letter, the Petitioner
forwarded 96 application forms, undertakings and copies of
agreements for sale or possession letters relating to the Flat
Purchasers. The Petitioner provided their complete particulars,
including details of payment of the entrance fee and Sinking Fund,
and called upon the Respondent to admit these Flat Purchasers as
members of the Respondent Society. On 10 March 2026, the
Petitioner again addressed a letter to the Respondent, providing
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the UTR details relating to the deposit and payment made on 7
March 2026.
4. On 24 May 2026, a Special General Body Meeting (“SGM”)
of the members of the Respondent Society was held. At this
meeting, the Respondent passed a resolution which it sought to
rely upon for imposing additional conditions for admitting the Flat
Purchasers as members of the Society. According to the Petitioner,
these conditions were not provided in Clause 20 of the Consent
Terms. Thereafter, on 8 June 2026, the Petitioner addressed
another letter to the Respondent, calling upon it to admit the new
Flat Purchasers as members of the Respondent Society. As the
Respondent did not do so, the Petitioner addressed a letter on 12
June 2026, again requesting the Respondent to admit the new Flat
Purchasers as members.
5. On 25 June 2026, the Respondent addressed a letter to the
Petitioner, seeking to make the admission of the Flat Purchasers as
members subject to their agreeing to the Respondent's proposed
use of the amount held by the Respondent in excess of Rs.
18,00,00,000/- towards the Corpus. This included the proposed
use of the amount for meeting maintenance expenses on behalf of
the original 176 members occupying an area of 2,61,375 square
feet of RERA carpet area. According to the Petitioner, such a
condition was not provided in Clause 20 or in any other clause of
the Consent Terms. The Petitioner contends that the Respondent
could not make the admission of the Flat Purchasers dependent
upon acceptance of this additional condition.
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6. On 26 June 2026, the Petitioner addressed a letter to the
Respondent, objecting to the condition mentioned in the
Respondent's letter dated 25 June 2026. The Petitioner stated that
this condition had never been agreed to by it and had no basis in
the Consent Terms, the Contract, the bye-laws of the Respondent
Society or the law. Thereafter, on 3 July 2026, the Petitioner
addressed another letter to the Respondent, confirming and
completing payment of the entire proportionate Corpus at the rate
of Rs. 688.66 per square foot, along with the Share Money and
Sinking Fund payable in respect of the concerned Flat Purchasers.
According to the Petitioner, by making these payments, it had fully
complied with its obligations under Clause 20 of the Consent
Terms.
7. On 15 July 2026, the Petitioner addressed a letter to the
Respondent because the Respondent had still not admitted the Flat
Purchasers as members of the Society. Thereafter, on 16 July 2026,
the Petitioner again called upon the Respondent, by a letter, to
admit the new Flat Purchasers as members. Since the Respondent
continued to refuse admission, the Petitioner addressed yet
another letter on 24 July 2026, once again requesting the
Respondent to admit the new Flat Purchasers as members of the
Respondent Society.
8. On 1 September 2026, the Petitioner addressed a final letter
to the Respondent, without giving up any of its rights and
contentions. In this letter, the Petitioner referred to the
correspondence exchanged between the parties and stated that it
had fully complied with Clause 20 of the Consent Terms. The
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Petitioner called upon the Respondent to admit the Flat Purchasers
as members of the Society within 24 hours. It stated that, if the
Respondent failed to do so within that period, the Respondent
would be treated as having committed a default and breached
Clause 20 of the Consent Terms, as well as its obligations under
the MCS Act and the bye-laws of the Respondent Society.
9. Even after the period granted by the Petitioner had expired,
the Respondent did not admit the Flat Purchasers as members of
the Society. According to the Petitioner, there was no default in
payment of the proportionate Corpus, Share Money or Sinking
Fund. Despite this, the Respondent has continued to refuse
admission of the Flat Purchasers as members. The Petitioner
contends that the Respondent is insisting upon conditions which
are not provided in Clauses 9.5 and 9.9 of the Development
Agreement read with Clause 20 of the Consent Terms. According
to the Petitioner, these additional conditions are not supported by
the Consent Terms, the Contract, the bye-laws of the Respondent
Society or the MCS Act. In these circumstances, as the Respondent
has continued to withhold admission of the Flat Purchasers despite
the Petitioner's claim of having fulfilled its payment obligations,
the Petitioner has been compelled to file the present Petition
before this Court.
10. Mr. Ravi Kadam, learned Senior Advocate appearing for the
Petitioner, submitted that under the registered Development
Agreement dated 31 October 2010 (“DA”), read with the Deed of
Modification dated 23 August 2014 (“DOM”), the Deed of
Confirmation dated 29 September 2015 and the Deed of
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Rectification dated 30 September 2015, the Petitioner had
undertaken redevelopment of the Respondent Society's property at
Gandhinagar Layout, Bandra (East). The Society purported to
terminate the Contract on 8 May 2020. The dispute was thereafter
referred to a Sole Arbitrator, before whom the parties entered into
Consent Terms dated 27 December 2021 (“CT”), resulting in the
Consent Award dated 4 January 2022. Learned Senior Advocate
submitted that the redevelopment is now substantially complete.
The Occupation Certificate for the rehabilitation component was
received on 5 February 2025 and all 176 original members have
received possession of their new flats. Out of 601 flats sold by the
Petitioner, possession of 445 flats, having RERA carpet area of
5,81,012 square feet, has been handed over to the purchasers.
According to the Petitioner, the corpus of Rs. 18 crores for the
Society has been constituted as required under the Consent Terms.
The Petitioner is seeking admission of these purchasers as
members, since their proportionate corpus of Rs. 40,00,90,711/-,
along with share application money, sinking fund and fixed deposit
interest, is with the Society. It is submitted that under Clauses 9.5
and 9.9 of the DA, read with Clause 20 of the CT, the Society is
required to admit the purchasers and cannot continue to keep
them out of membership after receiving the amounts payable in
respect of their flats.
11. Learned Senior Advocate submitted that the Society's
objections relate to money claims and should not be used to deny
membership to the purchasers. Before filing the Petition, the only
dispute was regarding the “Excess Amount” under Clause 10 of the
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CT. The Society had quantified this amount at Rs. 5.10 crores in its
SGM resolution dated 24 May 2026. The Petitioner has kept ready
a demand draft dated 8 September 2026 for Rs. 5,10,00,000/- in
favour of the Prothonotary & Senior Master to secure this claim, so
that the amount can be decided later without withholding the
purchasers' membership in the meantime. It is submitted that the
Society has raised different claims, including a corpus of Rs. 19.94
crores for the original members, a rate of Rs. 711.16 per square
foot instead of Rs. 688.61 per square foot, and a total corpus of Rs.
94,98,25,333.30/-. The Society has questioned the difference
between Rs. 890 per square foot collected from purchasers and Rs.
688.61 per square foot deposited with it. According to the
Petitioner, the figures claimed by the Society have changed from
time to time, whereas the Society's own resolutions had adopted
the rate of Rs. 688.66 per square foot on RERA carpet area. The
Petitioner relies upon the Society's acceptance of more than Rs. 40
crores towards corpus between 7 March 2026 and 30 September
2026, along with fixed deposit interest of Rs. 71,97,206/-. It is
submitted that the Society had acknowledged that admission of
the purchasers was “currently underway” and had earlier referred
only to financial issues with the developer. The Petitioner contends
that the later objections cannot be made a ground for refusing
membership, particularly when the Society has accepted the
payments on the basis earlier adopted by it.
12. Learned Senior Advocate submitted that Clauses 9.5 and 9.9
of the DA require the Society to admit the new purchasers after the
necessary applications and documents are submitted and the
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required payments are made. Article 2.3 of the DA, read with
Clause 2(h)(2.3) of the DOM, provides for payment of a
proportionate corpus calculated with reference to the FSI and the
sinking and reserve funds of the Society. Clause 20 of the CT
requires this corpus to be paid before possession is handed over
and states that the Society's own corpus shall be Rs. 18 crores.
According to the Petitioner, this amount is made up of Rs. 10
crores under Clause 9 and Rs. 8 crores under Clause 11 of the CT.
On this basis, the rate works out to Rs. 688.61 per square foot on
RERA carpet area. The Petitioner submits that its calculation is
supported by the Society's own SGM agenda and resolution dated
24 May 2026, which adopted the rate of Rs. 688.66 per square
foot. It is submitted that the Excess Amount under Clause 10 is
payable to the original members as Hardship Compensation and is
separate from the corpus payable under Clause 20. The Society
cannot include the same amount in the members' corpus and claim
it separately as the Excess Amount. The Petitioner disputes the
Society's later calculation based on FSI or built-up area, including
the alleged shortfall of Rs. 22.55 per square foot, as it is based on a
different method from the RERA carpet area calculation earlier
adopted by the Society. The Petitioner submits that the amount
charged from purchasers under their Agreements for Sale is a
commercial decision and does not determine the Society's
entitlement under the DA, DOM and CT. Therefore, according to
the Petitioner, the corpus payable to the Society must be decided
under the agreed formula and not by using a later calculation
which was never previously adopted.
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13. Learned Senior Advocate submitted that the dispute
regarding the Excess Amount is not a reason to withhold
admission of the purchasers, particularly when the Petitioner has
offered to secure Rs. 5.10 crores by demand draft. The Society has
not consistently calculated this amount. It first referred to Rs.
4,76,63,288/-, later to approximately Rs. 5.10 crores and
thereafter to Rs. 1,94,63,320/- with interest. The Petitioner
disputes the later calculation and says that it includes amounts
which were not lying with the Society on the relevant date. It is
submitted that this money claim can be examined in appropriate
proceedings and that the Society's claim is protected by the
demand draft. The Petitioner explains that corpus payments began
after possession because the Society did not disclose its calculation
of the Excess Amount until 23 February 2026, despite earlier
requests and an offer made by the Petitioner to begin depositing
the corpus. The money was kept in fixed deposits, and the Society
accepted the interest earned during the intervening period. The
Petitioner says that the Society cannot now treat the timing of
payment as a permanent disqualification, after accepting
substantial amounts and interest. As regards the bank guarantees,
the Petitioner submits that both guarantees were furnished and
accepted by the Society on 25 January 2022. On compliance with
the Conditions Precedent, the earlier termination stood cancelled
under Clause 6 of the CT. According to the Petitioner, the later
expiry of the guarantees cannot revive a termination which had
been cancelled. It is submitted that Clause 3, which deals with the
guarantees, is not included in the obligations mentioned in Clause
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5, under which the Society cannot terminate the Contract while
the Petitioner performs the stated obligations. The Petitioner says
that the redevelopment is substantially complete, the Occupation
Certificate has been received and only limited landscaping work on
the northern side remains. Without prejudice, the Petitioner has
offered to revalidate the guarantees until the remaining work is
completed. It is submitted that the Society's belated objection
regarding the guarantees cannot be allowed to put the rights of the
purchasers who have taken possession at risk.
14. Learned Senior Advocate submitted that the Petition is
maintainable under Section 9 of the Arbitration and Conciliation
Act, 1996, which permits interim measures after an arbitral award
is made but before it is enforced. The passing of the Consent
Award does not prevent the Petitioner from seeking interim relief
from this Court. The objection under Section 163 of the
Maharashtra Co-operative Societies Act, 1960, is said to be
misplaced, since the Petitioner is seeking enforcement of its own
rights against the Society under the DA, DOM and CT and is not
seeking to exercise any independent remedy belonging to the
purchasers. It is submitted that the purchasers are not necessary
parties because no relief is claimed against them; the relief sought
is a direction to the Society to perform its obligation to admit them
as members. The Petitioner relies upon Periyakkal v. Dakshyani ,
(1983) 2 SCC 12, paragraph 4, to submit that the Court has power
under Section 151 of the Code of Civil Procedure, 1908, to grant
relief against forfeiture where necessary to prevent serious
injustice. Reliance is placed on Dorab Cawasji Warden v. Coomi
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Sorab Warden , (1990) 2 SCC 117, paragraphs 16 and 17, and
Deoraj v. State of Maharashtra , (2004) 4 SCC 697, paragraph 12,
in support of the submission that a mandatory injunction can be
granted where a strong case is made out and refusal of relief
would cause serious and irreparable injury. According to the
Petitioner, the purchasers have taken possession of their flats,
while their corpus and other amounts are being held and invested
by the Society. Even then, they have not received share certificates,
voting rights or a voice in the Society's affairs. It is submitted that
their continuing exclusion causes serious prejudice, whereas the
Society's money claims can be secured and decided separately. The
Petitioner maintains that it is ready and willing to perform its
obligations under the Consent Terms.
15. Learned Senior Advocate submitted that the Society's
objections are essentially monetary and do not justify refusing
membership to the purchasers. The only dispute existing before
the Petition was filed concerned the Excess Amount under Clause
10, and the Petitioner has secured the highest amount claimed by
the Society by offering the demand draft of Rs. 5,10,00,000/-
dated 8 September 2026. The other claims raised after filing of the
Petition can be decided separately, and admitting the purchasers as
members would not prevent the Society from pursuing those
claims according to law. It is submitted that the Society's own
resolutions and its acceptance of substantial corpus payments
support the Petitioner's case that the agreed rate was Rs. 688.61 to
Rs. 688.66 per square foot on RERA carpet area. The Society
cannot now adopt a different calculation and use it to keep the
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purchasers out of membership. The Petitioner submits that the
redevelopment is substantially complete, the original members
have received their flats and 445 purchasers have taken
possession. In these circumstances, refusal to admit the purchasers
despite the Society holding substantial amounts belonging to or
collected in respect of them causes continuing prejudice. The
Petitioner submits that the requirements for granting a mandatory
injunction are satisfied and prays that this Court make the Petition
absolute in terms of prayer clauses (a) and (b).
16. Dr. Sanjay Jain, learned Advocate appearing for the
Respondent, submitted that the Respondent had appointed the
Petitioner to redevelop its property. However, the Respondent
terminated the Contract by its letter dated 8 May 2020. The
Petitioner challenged the termination in the arbitration
proceedings. The learned Arbitral Tribunal granted a conditional
stay of the termination under Section 17 of the Arbitration and
Conciliation Act, 1996 (“the Act”). The Petitioner was required to
perform certain obligations, including furnishing bank guarantees
of approximately Rs. 100 crores. Instead of complying with these
conditions, the Petitioner challenged the order under Section 37 of
the Act. The arbitration proceedings ultimately ended in a Consent
Award dated 31 January 2022, passed in terms of the Consent
Terms dated 27 December 2021 (“the CT”). The Consent Terms
and the Consent Award are collectively referred to as “the Award”.
17. Mr. Sanjay Jain submitted that the Petitioner has filed the
present Petition under Section 9 of the Act, seeking mandatory
injunctions directing the Respondent to admit the new flat
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purchasers as members of the Society. The Petitioner alleges that
the Respondent has failed to comply with the Award. However, the
Petitioner has not joined the purchasers as parties to the Petition.
According to the Respondent, the Petitioner is seeking a finding
that it has complied with the Award or, alternatively, that its
breaches should be excused. The Petitioner has raised the
following grounds in support of its request.
(i) The Respondent is refusing to admit the new
purchasers as members because the Petitioner has not
obtained their written confirmations permitting the
Respondent to retain Rs. 5.1 crores towards the maintenance
expenses of the original 176 members. The Petitioner
contends that the money would benefit all the members. It
has offered to deposit the amount in Court until the
Respondent obtains appropriate relief in the arbitration
proceedings.
(ii) The Petitioner relies upon the working prepared in
2021 and the resolutions passed at the Special General Body
Meeting (“SGM”) dated 24 May 2026. According to the
Petitioner, these documents approved the rate of Rs. 688.61
per square foot, and the corpus has been paid for every
applicant seeking membership. The Petitioner contends that
the Respondent cannot now claim a higher amount. It alleges
that the resolution dated 30 September 2026 is an
afterthought because it was passed after the Petition had
been adjourned to enable the Respondent to file its Reply.
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(iii) In the alternative, the Petitioner seeks an extension of
time to remedy its alleged breaches. It submits that the
original members have been provided with their new flats
and that revival of the termination would unfairly prejudice
the new purchasers.
18. Mr. Sanjay Jain submitted that the dispute regarding Rs. 5.1
crores arises under Clause 10 of the Consent Terms and must be
considered separately.
(i) The resolutions passed on 24 May 2026 sought
confirmation regarding the proposed treatment of the Excess
Amount under Clause 10 of the Consent Terms.
(ii) Clause 10 requires the Excess Amount to be paid
exclusively to the original 176 members as Hardship
Compensation. Instead of distributing the amount among
those members, the Respondent proposed to retain it
towards their maintenance expenses. The Respondent sought
express confirmations from the new purchasers so that they
would not later raise any claim against the retained amount,
which, according to the Respondent, belongs exclusively to
the original members. Mr. Jain submitted that this request
was consistent with the purpose of Clause 10.
(iii) Mr. Jain submitted that the Petitioner has admittedly
not paid the Excess Amount and has committed a breach of
its financial obligation under the Consent Terms.
19. Mr. Sanjay Jain submitted that Clause 20 of the Consent
Terms concerns a separate dispute and creates a separate financial
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obligation.
(i) Clause 20 requires the Petitioner to pay the Respondent
the proportionate corpus payable in respect of each new flat
purchaser, in accordance with Article 2.3 of the Development
Agreement (“DA”) read with the Deed of Modification
(“DOM”), before handing over possession of the concerned
flat.
(ii) Clauses 10 and 20 deal with different amounts and
provide for different consequences. Clause 20 permits the
Respondent to refuse admission of a flat purchaser as a
member if the required payment is not made. This right is
without prejudice to the other rights and remedies available
to the Respondent.
(iii) According to the Respondent, the proportionate corpus
under Clause 20 has to be calculated by considering three
factors. These are the proportion between the FSI consumed
for the rehabilitation component and the FSI consumed for
the sale component, the sinking fund of the Respondent
Society, and its reserve funds.
(iv) Mr. Jain submitted that the FSI ratio between the
rehabilitation component and the sale component is 21:79.
Therefore, the new purchasers are required to contribute
79% of the resulting corpus, while the contribution
attributable to the original members is 21%.
(v) He submitted that Clause 20 includes the sinking fund
and reserve funds while calculating the contribution
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attributable to the original members. According to the
Respondent, the amount of Rs. 18 crores, being the
aggregate amount under Clauses 9 and 11 of the Consent
Terms, forms part of the agreed arrangement for the original
members' maintenance. The Respondent submitted that this
amount was part of the settlement formula. Having rejected
that arrangement, the Petitioner cannot seek to enforce the
Consent Terms selectively for its own benefit.
20. Mr. Sanjay Jain submitted that the Petitioner cannot rely
upon the rate of Rs. 688.61 per square foot merely because the
Respondent had earlier considered that rate.
(i) According to the Respondent, the resolutions dated 24
May 2026 did not finally settle the amount payable under
Clause 20. The request for confirmation regarding the Excess
Amount under Clause 10 was a separate matter. The
Petitioner cannot treat the two issues as one and claim that
the Respondent has accepted all its calculations.
(ii) Without prejudice to its contention that the rate of Rs.
688.66 per square foot was not finally accepted, the
Respondent submitted that it is entitled to correct an
erroneous calculation and recover the amount payable under
the Award.
(iii) The Respondent submitted, in the alternative, that
even if the resolutions are treated as a concluded settlement,
they would amount to a compromise or adjustment of a
money decree. Such a compromise or adjustment was
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required to be recorded under Order XXI Rule 2 of the Code
of Civil Procedure, 1908, within 30 days. Since no such
recording was obtained, the Petitioner cannot rely upon the
resolutions to claim a compromise or adjustment contrary to
the Award.
(iv) Mr. Jain submitted that the SGM held on 30 September
2026 took note of the Petitioner's breaches and authorised
the Respondent to take appropriate action. According to him,
the earlier proposal was no longer operative. He submitted
that the date on which the resolution was passed does not
affect the Respondent's right to rely upon the Petitioner's
breaches.
21. Mr. Sanjay Jain submitted that the Petitioner has committed
two breaches of Clause 20 of the Consent Terms.
(i) The first breach concerns the shortfall in the
proportionate corpus. According to the Respondent, the
Petitioner has calculated the amount at an incorrect rate of
Rs. 688.61 per square foot and has failed to deposit the full
amount payable under the Award.
(ii) The second breach concerns the timing of payment.
Possession of the flats commenced in February 2025,
whereas the Petitioner began making payments towards the
corpus only in July 2026. The Respondent contends that
even the amounts paid were insufficient. According to Mr.
Jain, the Petitioner has failed to comply with the
requirement that the corpus be paid before possession is
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handed over to the purchasers.
22. Mr. Sanjay Jain submitted that Clauses 2 to 6 of the Consent
Terms must be read together. Clause 2 keeps the termination in
abeyance, subject to strict and timely compliance with Clause 3.
Under Clause 4, a default results in revival of the termination.
According to the Respondent, the Petitioner accepts this
consequence under the Consent Terms. Clause 5 prevents
termination only so long as the Petitioner strictly performs its
specified obligations, including those under Clauses 10 and 20.
Clause 6 provides for automatic cancellation of the earlier
termination upon compliance with the Conditions Precedent. Mr.
Jain submitted that the Petitioner has failed to fulfil these
requirements and cannot, therefore, claim that the termination
remains cancelled.
23. Mr. Jain submitted that Clause 3(i) requires the relevant
bank guarantee to remain valid for two years after possession of all
the rehabilitation premises is handed over or the part Occupation
Certificate (“OC”) is received, whichever is later. The part
Occupation Certificate was received on 5 February 2025, and
possession of the rehabilitation premises followed. According to
the Respondent, the bank guarantee was required to remain valid
until at least 5 February 2027. However, it expired on 6 June 2026.
The Respondent contends that this amounts to a breach of Clause
3(i).
24. Mr. Jain submitted that Clause 3(ii) requires the other bank
guarantee to remain valid until the specified milestones are
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achieved. That guarantee expired on 6 June 2024, whereas the
part Occupation Certificate was received only on 5 February 2025.
Further, all the amenities specified in Annexure 26 of the Consent
Terms have not yet been completed. According to the Respondent,
the Petitioner has breached Clause 3(ii).
25. Mr. Sanjay Jain submitted that merely furnishing the bank
guarantees at the initial stage did not bring the Petitioner's
obligations under Clauses 3(i) and 3(ii) to an end. The Petitioner
was required to keep the guarantees valid for the periods specified
in the Consent Terms. According to the Respondent, their expiry
attracts the consequences provided under Clause 4, irrespective of
whether the Respondent had separately demanded their renewal
or replacement. Subsequent correspondence and resolutions
cannot undo the breaches committed or prevent the termination
from reviving in accordance with the Consent Terms.
26. Mr. Jain submitted that Clause 3 lays down conditions which
had to be fulfilled for the settlement to operate in the agreed
manner. Under Clause 6, the earlier termination would stand
cancelled only upon compliance with the Conditions Precedent.
According to the Respondent, this required strict and timely
compliance with the obligation to keep the bank guarantees valid.
The Respondent contends that compliance with these conditions
was essential for the Contract to continue and that failure to
comply results in revival of the termination without any action
being necessary.
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27. Without prejudice to its contention that the termination has
revived, Mr. Sanjay Jain submitted that even if the Court holds that
the Contract continues to subsist, the Petitioner's breaches of
Clauses 10 and 20 entitle the Respondent to terminate the
Contract under Clause 5 of the Consent Terms. He pointed out that
the SGM held on 30 September 2026 authorised the Respondent to
take action in respect of these and other breaches.
28. Mr. Jain submitted that the Petitioner has sought an
extension of time during the course of arguments to remedy the
alleged defaults. According to the Respondent, the Award must be
enforced in accordance with its terms. The Court cannot alter the
agreed conditions or extend the time for compliance when the
Consent Terms themselves specify the consequences of a default.
Since the termination has revived under the Award, the Petitioner
cannot seek an extension of time to cure the breaches and thereby
avoid the agreed consequences.
29. Mr. Sanjay Jain submitted that the conditional stay of
termination was a concession available to the Petitioner only upon
strict and timely compliance with the agreed conditions. According
to the Respondent, once the Petitioner failed to comply with those
conditions, the protection against termination came to an end. The
resulting revival of termination is neither a forfeiture nor a penalty.
It is the consequence which the parties themselves agreed to in the
Consent Terms.
30. Mr. Sanjay Jain submitted that granting the mandatory
injunctions sought by the Petitioner would confer the benefit of the
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Award upon a party which has failed to comply with its
obligations. According to the Respondent, once the new purchasers
are admitted as members, they cannot be removed merely because
the Petitioner has committed breaches of the Consent Terms. He
submitted that the Petitioner has failed to establish any urgent
need for the preventive relief sought in the Petition.
31. Mr. Jain submitted that, even according to the Petitioner's
own case, the cause of action, if any, arose in February 2026. The
Petitioner has not adequately explained the delay in approaching
the Court. It has not explained why it has not initiated execution
proceedings for obtaining reliefs which, according to the
Respondent, are final in nature. Nor has the Petitioner explained
why execution proceedings would not be an available remedy.
32. Mr. Sanjay Jain submitted that the new purchasers are
entitled to pursue such remedies as may be available to them
under the Maharashtra Co-operative Societies Act, 1960. The
Respondent would contest any such proceedings on their merits.
However, according to the Respondent, the possibility of the
purchasers pursuing their independent remedies does not entitle
the Petitioner, which is alleged to have defaulted in its obligations
under the Award, to obtain the mandatory injunctions sought in
the present Petition.
REASONS AND FINDINGS:
33. I have heard Mr. Ravi Kadam, learned Senior Advocate for
the Petitioner, and Mr. Sanjay Jain, learned Advocate for the
Respondent. The main issue before this Court is whether the
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Petitioner has shown sufficient grounds for directing the
Respondent Society, by a mandatory injunction under Section 9 of
the Arbitration and Conciliation Act, 1996 (“the Arbitration Act”),
to admit the 177 Flat Purchasers named in Exhibit “Q” as members
of the Society.
34. According to the Petitioner, the redevelopment work is
mostly completed, possession of the flats has been given to the
purchasers and the required proportionate corpus, Share
Application Money and Sinking Fund under the Consent Terms
have been paid. The Petitioner says that the Society is not
admitting the purchasers because it is asking for conditions which
are not found in the DA or the CT. The Respondent says that the
Petitioner has not followed the Consent Terms. According to the
Respondent, the corpus was not correctly calculated, the payments
came after possession was handed over and the bank guarantees
expired before the secured obligations were completed. On this
ground, the Respondent says that the earlier termination of the
Contract has again become effective under the Consent Terms.
35. The Respondent first says that the Petitioner must go before
the executing Court and cannot seek relief under Section 9 after
the Consent Award has been passed. However, Section 9 permits a
party to approach the Court for interim protection “at any time
after the making of the arbitral award but before it is enforced in
accordance with section 36”. Therefore, the passing of the Consent
Award alone does not stop the Petitioner from approaching this
Court under Section 9. To this extent, the Respondent's objection
cannot be accepted. However, the Court having power under
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Section 9 does not mean that every relief connected with an award
can be given in such proceedings. Section 9 is for interim
protection. It cannot normally take the place of execution
proceedings or be used to finally decide rights which need a fuller
examination. Here, the Petitioner wants an immediate order
directing the Society to admit the purchasers as members. Once
they are admitted, it may be difficult to reverse that position if the
Respondent later proves that the Contract has been terminated.
The relief is mandatory in nature and would give the Petitioner a
substantial part of what it ultimately wants.
36. The Supreme Court has explained the law relating to interim
mandatory injunctions in Dorab Cawasji Warden v. Coomi Sorab
Warden , (1990) 2 SCC 117, particularly in paragraphs 16 and 17.
For such relief, the Court requires a stronger case than the ordinary
prima facie case needed for a prohibitory injunction. The Court
must be satisfied that the applicant has a strong case, that refusal
of relief would cause serious injury which money cannot
compensate and that the balance of convenience supports granting
the injunction. The Court must see whether granting the injunction
may cause injustice to the other party if the applicant ultimately
fails.
37. The Supreme Court has explained in Deoraj v. State of
Maharashtra , (2004) 4 SCC 697, particularly in paragraph 12, that
where an interim order would substantially give the applicant the
final relief, there must be a very strong prima facie case and
circumstances showing that relief is necessary to prevent serious
injustice. The Court must consider whether refusing relief would
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cause greater injustice than granting it. Such relief is meant for
exceptional situations. These principles must be applied while
considering the arguments of both sides in this Petition.
38. The first issue is about the Society's duty to admit the new
purchasers as members. Clause 9.5 of the DA provides as follows:
“9.5 It is agreed that within a period of 30 days from the
receipt of the intimation by the Society from the Developer
along with necessary membership application, the Society
shall, admit the new purchasers, as its Members on payment
of the requisite entrance fee, share application money and a
copy of the Sale Agreement duly stamped and registered,
without any premium or unauthorized payments.”
39. Clause 9.9 provides:
“9.9 The Society undertakes to induct all the new Purchasers
as members of the said Society upon the Developer handing
over possession of the new Purchasers Flats and take all
necessary steps in that regard and grant to them identical
privileges as those enjoyed by the Members including the
usage of Common Areas and Facilities, subject of payment of
the additional corpus amount…”
40. These clauses show that the parties intended to admit the
new purchasers as members after the necessary documents were
given and the required payments were made. The Society cannot
refuse membership only because it wants to introduce a condition
which was never agreed upon. At the same time, the Petitioner
cannot demand membership without completing its financial and
other duties under the agreed arrangement. Clauses 9.5 and 9.9
must be read together with Clause 20 of the CT, which deals with
payment of the proportionate corpus.
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41. Clause 20 provides, among other things, as follows:
“In the event of any default in payment of the aforesaid
payment, then without prejudice to other rights and
remedies of the Respondent, the Respondent shall not admit
such flat purchaser as member of the Claimant (sic). If any
amount is not paid as contemplated by this clause, then the
Claimant shall be treated as in default of its financial
obligation under this clause.”
42. The clause states:
“It is clarified that the Respondent will have with an amount
of Rs. 18,00,00,000/- (being the aggregate of the amount
mentioned in clause 9 and 11).”
43. Clause 20 must be understood according to what it says.
Payment of the proportionate corpus is an duty of the Petitioner.
The clause allows the Society to refuse admission if the required
amount has not been paid. The question is whether the Petitioner
has shown, for the present proceedings, that it has paid the full
corpus required under the Consent Terms in the agreed manner.
The dispute regarding the Excess Amount:
44. The Petitioner says that the Society has wrongly connected
admission of the purchasers with the amount of Rs. 5.10 crores
claimed as the Excess Amount under Clause 10 of the CT.
According to the Petitioner, Clause 10 relates to Hardship
Compensation payable to the original 176 members. This is a
separate money obligation and cannot be made a condition for
admitting the new purchasers as members.
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45. There is force in the Petitioner's argument that the Excess
Amount under Clause 10 and the proportionate corpus under
Clause 20 are different matters. Clause 10 concerns an amount
payable to the original members in the proportions given in
Annexure '28'. Clause 20 concerns the proportionate corpus
payable for the Petitioner's flats. Therefore, the Society cannot
make the dispute about the Excess Amount an additional condition
for membership when such a condition is not supported by the
relevant clauses of the agreement.
46. The Respondent says that it asked the new purchasers to give
confirmations because it wanted to keep the Excess Amount for the
maintenance expenses of the original members instead of
distributing the money among them. According to the Respondent,
these confirmations were needed so that the new purchasers
would not make future claims against money belonging only to the
original members. I cannot say that the Society's request is
unreasonable from its point of view. But the question is whether
the Consent Terms make acceptance of this proposal necessary for
admission of the purchasers. No such condition appears in the
relevant parts of Clauses 9.5, 9.9 or 20.
47. The Respondent says that the Petitioner has not paid the
Excess Amount and has breached Clause 10. The Petitioner relies
upon its demand draft dated 8 September 2026 for Rs.
5,10,00,000/-, which, according to it, covers the highest amount
claimed by the Society. The correspondence and figures before the
Court show that the exact amount payable under Clause 10 is still
disputed. The Society has mentioned different figures at different
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times, including Rs. 4,76,63,288/-, approximately Rs. 5.10 crores
and Rs. 1,94,63,320/- with interest.
48. The material before the Court does not allow a final decision
about the amount payable under Clause 10. The Petitioner's offer
to secure Rs. 5.10 crores is relevant when considering the balance
of convenience. It shows that the Petitioner is willing to protect the
Society's money claim. But securing this amount does not prove
that every other obligation under the Consent Terms has been
completed. It does not remove the effect of a separate breach
under Clause 20 or the clauses relating to bank guarantees.
49. I find that the Society cannot rely only on the dispute about
the Excess Amount to impose a membership condition which is not
part of the agreed terms. However, the Petitioner's willingness to
secure this money claim cannot be treated as if all its duties have
been completed. These are separate matters and must be
considered separately.
The dispute regarding the rate and calculation of the proportionate
corpus:
50. The next issue is the rate at which the proportionate corpus
had to be calculated. The Petitioner relies upon the calculation
prepared in 2021 and the resolutions passed by the Society at its
SGM held on 24 May 2026. According to the Petitioner, the Society
had accepted the rate of Rs. 688.66 per square foot based on RERA
carpet area. It had accepted payments at Rs. 688.61 per square
foot. Therefore, the Petitioner says that the Society cannot now
demand Rs. 711.16 per square foot or calculate the corpus using
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another method.
51. The Respondent says that the Petitioner's calculation is
wrong. According to it, the proportionate corpus must be worked
out by considering the FSI used for the rehabilitation component
and the sale component, together with the Society's sinking fund
and reserve funds. The Respondent says that the FSI ratio between
rehabilitation and sale is 21:79. Therefore, the new purchasers
must contribute 79% of the corpus calculated on that basis. It says
that the Society's corpus cannot be limited to Rs. 18 crores if the
correct calculation under Clause 20 gives a higher amount.
52. The Society's own resolutions and its acceptance of payments
at around Rs. 688.61 per square foot are important in this matter.
The SGM Agenda dated 24 May 2026 is stated to have accepted
the rate of Rs. 688.66 per square foot based on RERA carpet area.
The resolution communicated by the Society on 25 June 2026
required corpus payment at that rate on RERA carpet area. These
facts support the Petitioner's argument that the rate now claimed
by the Respondent is different from the basis it had earlier
followed. The Respondent cannot ignore its earlier conduct. If the
Society had adopted a particular method to calculate the corpus,
asked for payment on that basis and then accepted substantial
amounts without raising an objection, it must explain why it is
now following a different method. A later resolution alone does
not prove that the earlier calculation was wrong or that the
Petitioner must pay the additional amount now claimed. However,
the earlier resolutions and the payments received must be seen
along with the Consent Terms. The rate of Rs. 688.61 per square
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foot is not mentioned in the part of Clause 20 placed before this
Court. Clause 20 refers to the proportionate corpus payable under
Article 2.3 of the DA read with the DOM. The Petitioner relies
upon its own calculation, while the Respondent says that this
calculation does not include the relevant FSI, sinking fund and
reserve funds.
53. The figures given to the Court are different. The Petitioner
refers to a corpus of Rs. 18 crores for the original members and Rs.
64,82,22,379/- for the sale component. According to its
calculation, the total corpus for the whole project is about Rs.
83.91 crores. The Respondent refers to a members' corpus of Rs.
19,94,63,320/- and a total corpus of Rs. 94,98,25,333.30/-. It
claims that there is a shortfall of at least Rs. 22.55 per square foot.
These calculations are disputed. On the material now available,
the correct amount payable under the Consent Terms cannot be
finally decided.
54. I am unable to accept the Petitioner's argument that the
Respondent has lost its right to question the calculation only
because it accepted payments earlier. Acceptance of money is an
important fact, particularly when no objection was made at that
time. But whether this acceptance became a final settlement or
adjustment of the obligations under the Consent Award is a
separate question. The Respondent denies that the resolutions
were a final settlement. It has relied upon Order XXI Rule 2 of the
Code of Civil Procedure, 1908, saying that no compromise or
adjustment was recorded in the manner required by law. The
Respondent's objection under Order XXI Rule 2 cannot be decided
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only by looking at the name given to the resolution. The actual
terms of the resolution, the authority under which it was passed,
the conduct of the parties and whether they intended to settle their
obligations under the Consent Award will have to be examined.
These matters need not be finally decided in this Petition. For the
present purpose, the resolutions and payments relied upon by the
Petitioner do not conclusively prove that the full amount payable
under Clause 20 has been finally calculated and paid.
55. The Respondent alleges that the Petitioner collected Rs. 890
per square foot from the purchasers but deposited only Rs. 688.61
per square foot with the Society. This allegation needs
consideration. The Petitioner says that it made a commercial
decision to recover the corpus cost for the entire project from the
sale component. This included the amount of Rs. 18 crores funded
by the Petitioner. According to the Petitioner, the amount collected
under the Agreements for Sale does not decide how much the
Society is entitled to receive under the Consent Terms.
56. There is merit in the distinction made by the Petitioner on
this issue. The amount collected from the purchasers does not
decide the amount payable to the Society. The Society's
entitlement must be worked out from the DA, the DOM and the
CT. If the Petitioner collected more than the amount it was
required to deposit with the Society under the contract, this fact
alone does not give the Society a right to claim the whole
difference. Equally, collecting Rs. 890 per square foot does not
prove that the amount deposited satisfies the formula. The amount
payable must be decided by applying the relevant clauses. I find
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that the Society's later claims cannot be accepted only because
they are mentioned in its Reply or Sur-Rejoinder. The claim of Rs.
711.16 per square foot and the claim that the members' corpus
should be Rs. 19.94 crores require proper examination of the
formula and the calculations supporting them. At the same time,
the Petitioner has not shown, on the material considered in this
Petition, that Rs. 688.61 per square foot was finally accepted as
the only rate permitted under the Consent Award.
The time of payment of the corpus:
57. The time when the corpus was paid is a different issue from
the rate at which it had to be calculated. Clause 20 says that the
proportionate corpus must be paid before possession of the
concerned flat is handed over to the purchaser. The Respondent
says that possession started in February 2025, but the corpus
payments began much later. The Petitioner says that payments
started on 7 March 2026 and were later completed at the rate
which it considers correct. From the material before the Court, it
appears that the corpus payments were not completed before
possession was handed over. Possession is stated to have started in
February 2025, while the payments relied upon by the Petitioner
started in March 2026. Therefore, even if the Petitioner's statement
about the first payment date is accepted, the payments were made
after possession had been given. This does not follow the
requirement stated in Clause 20.
58. The Petitioner explains the delay by saying that the
Respondent did not disclose its calculation of the Excess Amount
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until 23 February 2026, even though earlier requests were made
and an offer to start depositing the corpus had been given. The
Petitioner says that the collected money was kept in fixed deposits
and that the Society received Rs. 71,97,206/- towards the interest
earned during this period. The Petitioner relies upon the Society's
SGM Agenda dated 24 May 2026 and its letter dated 11 July 2026,
in which the admission of purchasers was stated to be “underway”.
These facts must be considered. The Society's own conduct is
relevant to see whether it accepted the delayed payments and
whether it can now treat the delay as a complete and permanent
disqualification. The interest received for the intervening period is
relevant. But accepting interest does not prove that the Society
agreed to give up the requirement of payment before possession or
agreed to extend the time under Clause 20. The material before
the Court does not show any clear and final agreement of this
kind. I find that the Respondent cannot ignore its own conduct
while objecting to delayed payment. However, the Petitioner has
not shown that the delay was accepted in a manner which removes
the consequences of not following Clause 20. The question
whether the Petitioner committed a default cannot be answered
only by saying that the Society received the money later.
Expiry of the bank guarantees and the alleged revival of
termination:
59. The objection of the Respondent concerns the bank
guarantees and what follows from their expiry. The Respondent
says that Clauses 2 to 6 of the Consent Terms must be read
together. According to it, Clause 2 kept the termination in
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abeyance, Clause 3 required the bank guarantees to be given and
kept valid for the stated periods, Clause 4 provided for revival of
termination in case of default, Clause 5 restricted the Society's
right to terminate while the Petitioner performed the specified
obligations and Clause 6 provided for cancellation of termination
after compliance with the Conditions Precedent.
60. The Petitioner says that both bank guarantees were given
within the required time and were accepted by the Society on 25
January 2022. According to the Petitioner, after this compliance,
the earlier termination stood cancelled under Clause 6. It says that
the later expiry of the guarantees cannot bring back a termination
which had been cancelled. The Petitioner argues that Clause 3 is
not included in the list of obligations mentioned in Clause 5.
Therefore, even if the guarantees expired, the Respondent could
only seek enforcement of the relevant obligation and could not
terminate the Contract.
61. This argument requires the different clauses of the Consent
Terms to be read together. Clause 5 identifies certain obligations,
the performance of which prevents the Respondent from
terminating the Contract. Clause 6 provides for automatic
cancellation of the earlier termination after compliance with the
Conditions Precedent. However, the Respondent says that Clause 3
requires the guarantees to remain valid until certain future events
or milestones are completed. If this is the correct meaning of
Clause 3, the duty does not end only because the guarantees were
given and accepted in January 2022.
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62. The Respondent says that the guarantee under Clause 3(i)
had to remain valid for two years after possession of all
rehabilitation premises was handed over or the part Occupation
Certificate was received, whichever was later. The part Occupation
Certificate was received on 5 February 2025. However, the
guarantee expired on 6 June 2026, before the period which the
Respondent says was required. The other guarantee, which
according to the Respondent had to remain valid until the stated
milestones were completed, expired on 6 June 2024. The
Respondent says that some amenities mentioned in Annexure 26 of
the Consent Terms are still incomplete.
63. The Petitioner has not specifically disputed that the
guarantees expired on the dates stated by the Respondent. It
describes the failure to renew them as an oversight because the
project was mostly completed. It has offered to revalidate the
guarantee of Rs. 52.50 crores, which was reduced to Rs. 12.50
crores after the Occupation Certificate was received, until the
remaining amenity under Annexure 26 is completed. It has offered
to revalidate the guarantee of Rs. 5 crores until 5 February 2027.
64. The Petitioner's willingness to renew or revalidate the
guarantees is a relevant fact. However, it does not prove that the
guarantees remained valid during the periods for which they were
required. A fresh undertaking may protect performance in the
future. Whether it can correct the earlier breach or prevent the
consequences mentioned in the Consent Terms will depend on the
Award and the legal effect of the default.
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65. The Petitioner relies upon the fact that the project is mostly
completed. It says that the original members have received their
flats, the Occupation Certificate has been issued and about 99% of
the project is complete. According to the Petitioner, only the
landscaping on the northern portion of the plot remains. It says
that the remaining amenities are largely complete and that it
continues to pay the common area maintenance charges for the
original members under Clause 30(A) of the Consent Terms.
66. These facts support the Petitioner when considering the
seriousness of the harm which may follow from termination. The
project is stated to be mostly complete. Possession has been given
to the original members and many purchasers. The Society has
received a substantial amount towards the corpus. It is necessary
to carefully consider whether bringing termination back into effect,
with all its consequences, would cause injustice to people who
have taken possession and are living in the flats. However, the
Court cannot ignore a condition only because the result of a breach
may be serious. The question is whether the Petitioner has shown a
strong case that the Society cannot rely upon the expiry of the
guarantees under the Consent Terms. The offer to give fresh
guarantees is not the same as proof that the original obligations
were fulfilled. The Court cannot assume in Section 9 proceedings
that the expiry of the guarantees has no effect under the contract.
67. The Petitioner's reliance upon Clause 5 is not enough to
settle the issue at this stage. Clause 5 may restrict termination
while the Petitioner performs the obligations mentioned in it. But
the Respondent relies upon Clause 4 and says that default under
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Clause 3 brings back the earlier termination. Whether the later
expiry of the guarantees has this effect must be decided by reading
Clauses 3, 4, 5 and 6 together. The Petitioner's argument that
Clause 3 is not mentioned in Clause 5 does not answer the
separate objection based on Clause 4.
68. On the material now available, I cannot treat the
Respondent's objection about the bank guarantees as a mere
technical matter. The guarantees were meant to secure
performance of certain obligations. Their expiry before the periods
or milestones relied upon by the Respondent raises a serious
question about whether the Petitioner followed the Consent Terms.
This question directly affects the Petitioner's claim that it has an
unconditional right to force the Society to admit the purchasers.
Whether the Court can extend time or grant relief against
forfeiture:
69. The Petitioner relies upon Periyakkal , particularly paragraph
4, and says that the Court has power under Section 151 of the
Code of Civil Procedure, 1908, to grant relief against forfeiture and
extend time when necessary to prevent serious injustice. The
Respondent disputes the Petitioner's right to such relief. It says that
the Consent Award must be followed according to its terms and
the Court cannot extend time when the parties have agreed upon
the consequences of default. In Periyakkal , the Supreme Court
accepted that the Court may, in a proper case, extend the time
fixed under a compromise decree when this is necessary to prevent
serious injustice. However, the Court made it clear that time
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cannot be extended or merely because a party asks for it. This
power is to be used in rare cases, depending upon the facts and
circumstances of that case. The Petitioner's reliance on this
decision cannot be rejected only because the parties had agreed to
a particular date for performance. But the decision does not mean
that every default under a Consent Award can be excused by
extending time. The Court must consider what the obligation was,
why the default happened, how the parties acted and what may
happen if relief is granted or refused. It must ensure that the order
does not change the settlement agreed upon by the parties.
70. In this case, the Petitioner relies upon completion of the
redevelopment project, possession being given to the purchasers,
the amounts received by the Society and its willingness to give
fresh bank guarantees. These are important facts. The Respondent,
on the other hand, relies upon the financial duties under Clauses
10 and 20, the failure to pay before possession and the expiry of
the bank guarantees before the required periods or milestones. It
says that termination has again become effective under the
Consent Terms. The difficulty is that the extension of time sought
by the Petitioner is not about only one delayed payment. It would
require the Court to consider the delayed corpus payments, the
correct calculation of the corpus, the unpaid Excess Amount and
the expiry of the bank guarantees. It would affect the question
whether the Contract still exists. The Petitioner's offer to give fresh
guarantees does not settle the effect of the earlier defaults. I find
that the principle in Periyakkal cannot be used to reject the
Respondent's objections. The Court may have power to prevent
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unfair forfeiture in a proper case. But there must be a clear reason
to conclude that relief is necessary to prevent serious injustice.
Such a basis has not been shown to the extent needed for granting
the mandatory injunction sought in this Petition.
Whether the Petition satisfies the requirements for a mandatory
injunction:
71. The Petitioner's complaint about the purchasers' membership
deserves serious consideration. According to the Petitioner, 445
purchasers have taken possession of their flats and substantial
amounts towards the corpus, Share Application Money and
Sinking Fund are with the Society. The Society has received
interest on the fixed deposits. Even then, the purchasers have not
received share certificates or voting rights. If the Petitioner's case is
correct, the purchasers are not getting the usual rights of
membership even after the required amounts have been paid.
72. The Respondent says that the Petitioner cannot ask for
membership for the purchasers while it has not completed its own
duties under the Consent Terms. It says that granting the
injunction would, in effect, give the Petitioner the final relief it has
asked for in the Petition. Once the purchasers are admitted, it may
be difficult for the Society to reverse their admission if the
Petitioner is later found to have committed the breaches alleged by
the Respondent.
73. Both these matters are important. The difficulties faced by
the purchasers cannot be ignored. They have bought flats, taken
possession and, according to the Petitioner, paid the required
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amounts. The Society's receipt of substantial money makes it
necessary to examine why their membership is being withheld.
However, it is the Petitioner which has approached the Court under
Section 9 and it must establish its right to the relief it seeks. The
fact that the purchasers may face difficulty does not remove the
need to show a strong case under the Consent Terms.
74. The test laid down in Dorab Cawasji Warden requires more
than showing that the applicant has a case which can be argued.
The Court must be satisfied that the case is strong enough to
justify a mandatory order before the final rights of the parties are
decided. In Deoraj , the Supreme Court explained that where an
interim order would practically give the final relief, the
circumstances must be exceptional and the balance of convenience
and irreparable injury must strongly support the applicant. The
Petitioner's case must be tested on this higher standard.
75. In the present Petition, Clauses 9.5 and 9.9 of the DA support
the Petitioner's case that the Society must admit the purchasers as
members. The Society cannot impose conditions only because it
wants a different financial arrangement. The dispute about the
Excess Amount under Clause 10,, does not give the Society a
reason to refuse membership. These findings support the
Petitioner. However, the Petitioner must satisfy the Court that it
has performed its duty under Clause 20 or that any default has
been accepted or condoned. The corpus payments were made after
possession was given. The correct amount payable under the
formula remains disputed. The Society's earlier resolutions and
acceptance of payments support the Petitioner's case about the
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rate, but they do not finally decide the entire amount payable
under the Consent Award. Further, the bank guarantees expired
before the periods or milestones which the Respondent says had to
be covered. The Petitioner has offered to give fresh guarantees and
a demand draft of Rs. 5.10 crores to secure the Excess Amount.
These offers may protect the Society from some financial risk.
However, they do not answer the separate question whether
termination has again become effective under Clauses 3 and 4 of
the Consent Terms. Nor do they show that the Court can admit the
purchasers at this stage when such an order would substantially
decide the final dispute.
76. The balance of convenience is not fully in favour of either
side. The purchasers may continue to face difficulty if their
membership is withheld. But the Society has raised serious
questions about the Petitioner's compliance with the Consent
Award and whether the Contract still exists. Granting the
mandatory injunction would give the Petitioner and the purchasers
the main benefit they are asking for, even though important
questions about the conditions for receiving that benefit remain
unanswered.
77. It is necessary to note that the Petitioner seeks admission of
the 177 Flat Purchasers named in Exhibit “Q”. Its arguments refer
to 445 purchasers who have taken possession and 217 membership
application forms. These figures relate to different matters and
cannot be treated as the same. Any relief granted in this Petition
would have to be limited to the persons and applications covered
by the prayers and the relevant requirements. The larger figures
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relied upon by the Petitioner do not show that every purchaser has
fulfilled the conditions for admission.
78. The delay in approaching the Court is another matter to be
considered. The Respondent says that, according to the Petitioner's
own case, the cause of action arose in February 2026, but the
Petition was filed on 2 September 2026. The Petitioner relies upon
the continuing correspondence and its repeated demands for
admission. I do not consider that the delay alone is enough to
reject the Petition. However, while deciding whether to grant a
mandatory order which substantially gives the final relief, the
Court must consider the urgency of the matter along with the
strength of the case. Here, the delay does not remove the serious
questions arising from the alleged defaults. I am unable to hold
that the Petitioner has shown the very strong and clear case
required for the mandatory injunction. This does not mean that
every objection raised by the Respondent is correct. It does not
mean that the Respondent can impose any condition it wants for
admitting the purchasers. It only means that, since the questions
about performance of Clause 20 and expiry of the bank guarantees
remain unresolved, the mandatory relief cannot be granted at this
stage under Section 9 of the Arbitration Act.
The objections under Section 163 of the MCS Act and regarding
non-joinder of the purchasers:
79. The Respondent has relied upon Section 163 of the
Maharashtra Co-operative Societies Act, 1960 (“MCS Act”), and
says that the present Petition is barred. The Petitioner says that it is
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asking the Society to perform its duties towards the Petitioner
under the DA, the DOM and the CT. It is not asking for any relief
against the purchasers or using an independent remedy which
belongs to them under the MCS Act.
80. The Respondent's objection under Section 163 cannot be
accepted only because it is a co-operative housing society. The
nature of the dispute and the relief asked for must be considered.
The present dispute comes from the redevelopment contract and
the Consent Terms between the Petitioner and the Respondent. On
the material considered here, the Respondent has not shown that
the statutory bar relied upon by it stops this Court from examining
the claim under Section 9. Therefore, this objection alone is not
enough to reject the Petition.
81. The Respondent has objected that the flat purchasers have
not been joined as parties. The Petitioner says that it is not asking
for any relief against them. It only wants the Court to direct the
Society to perform its duty to admit them, which, according to the
Petitioner, arises under the DA and the CT. The fact that the
purchasers would benefit from such an order does not mean that
they must be parties for the dispute to be decided.
82. I find that the purchasers not being parties does not show
that the Petition cannot be maintained. The main dispute is
between the Petitioner and the Society about their duties under
the DA and the CT. At the same time, the identity of the
purchasers, the applications made by them and the payments
relating to their flats remain relevant when considering the relief.
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Therefore, this objection does not independently require dismissal
of the Petition. However, the purchasers not being parties cannot
remove the other shortcomings in the Petitioner's case.
83. The Petitioner wants the purchasers to be immediately
admitted as members by a mandatory order. It is not only asking
for an order to secure money or protect property until the dispute
is decided. Such an order would give the purchasers a substantial
benefit which may be difficult to reverse later. In the circumstances
of this case, the strong and exceptional reasons needed for
granting such relief have not been established. I find that,
although some objections of the Respondent cannot be accepted as
separate grounds for refusing membership, the Petitioner has not
shown sufficient grounds for the mandatory injunction sought
under Section 9 of the Arbitration Act. The questions about the
amount and timing of payment under Clause 20, the expiry of the
bank guarantees and the alleged revival of termination remain
unresolved. For this reason, the relief requested cannot be granted
at this stage.
84. The Petition is accordingly dismissed. This dismissal is
limited to the relief asked for in the present proceedings under
Section 9 of the Arbitration Act. It does not finally decide the
amount payable under Clause 10 or Clause 20 of the Consent
Terms. It does not finally decide the rights and duties of the parties
arising from the alleged breaches. Those issues will have to be
decided in the appropriate proceedings according to law. The
Society's claims for money are left open for such decision. The
purchasers' right to pursue any independent remedies available to
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them under the MCS Act is not affected by this decision.
85. There shall be no order as to costs.
(AMIT BORKAR, J.)
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