Full Judgment Text
2026:BHC-OS:6503
13.CARBPL.20999.2025.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION PETITION (L) NO.20999 OF 2025
Jai Gopal Krishna CHSL & Ors. ...Petitioners
Versus
Vitrag Infra Projects LLP ….Respondent
Mr. Gauraj Shah a/w. Ms Aakansha Anand & Ms Sweta
Jalgaonkar i/b. Mahesh Menon & Co., for Petitioners.
Mr. Nikhil Seth, for Respondent.
CORAM: SOMASEKHAR SUNDARESAN, J.
DATE : FEBRUARY 27, 2026
ORAL JUDGEMENT:
Context and Factual Background:
1. This is a Petition filed under Section 37 of the Arbitration and
Conciliation Act, 1996 ( “the Act” ) impugning an Order dated June 24,
2025, passed by the Learned Sole Arbitrator making certain
arrangements for interlocutory reliefs in connection with arbitration of
disputes arising over a Development Agreement dated December 31,
2021 (“ Development Agreement ”).
Digitally
signed by
AARTI
GAJANAN
PALKAR
Date:
2026.03.13
15:24:54
+0530
AARTI
GAJANAN
PALKAR
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2. Petitioner No.1, Jai Gopal Krishna Co-operative Housing Society
Limited ( “Society” ) comprises 20 members in respect of a building
comprising ground plus four storeys, constructed in 1979-80.
Petitioner No.2, Raju Lokumal Achpilia and Petitioner No.3, Haresh
Lokumal Achpilia ( “Land Owners” ) are the original Land Owners on
whose land, the building came to be constructed. The Land Owners
occupy a bungalow standing on the same parcel of land. The land on
which the Building and the Bungalow stand, totally admeasures 938.80
square meters, and is located at Borivali, Mumbai (collectively,
“ Subject Property ”). The Society, the Land Owners (Petitioner No.2)
and the Respondent, Vitrag Infra Projects LLP ( “Developer” ), have
executed the Development Agreement, by which the Developer was
granted development rights over the Subject Property.
3. In terms of the Development Agreement, specific transit rent, de-
housing compensation, hardship allowance, brokerage, transportation
charges, and the like had been contracted. The development period
was envisaged as 24 months, extendable by 6 months, with such period
commencing after obtaining the Commencement Certificate. The
Intimation of Disapproval ( “IOD” ) was to be obtained on or before
December 31, 2021, with a 60-day grace period. The Development
Agreement contains provisions relating to modification of layout and
the tentative plans annexed to it.
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4. The redeveloped building was to comprise ground floor plus nine
storeys. The Development Agreement envisaged redevelopment in
terms of Regulation 33(7)(B) of the DCPR 2034. A Power of Attorney
was executed by the Petitioners in favour of the partners of the
Developer, only on April 18, 2022.
5. The Development Agreement was sought to be terminated by
way of a termination notice dated October 9, 2023 ( “Termination
Notice” ), which had been preceded by pre-termination notice dated
August 29, 2023, as provided for in the Development Agreement. The
disputes pursuant to the Termination Notice eventually led to
arbitration proceedings in which the Impugned Order came to be
passed.
6. The Impugned Order disposed of cross-applications by the
parties under Section 17 of the Act, each of which is said to have been
partially allowed. The Learned Arbitral Tribunal directed that status
quo be maintained over the Subject Property and that neither party
shall create any third-party rights on the Subject Property. The
Developer was directed to pay transit rent of an amount of Rs.20,000/-
per month and Rs.15,000/- per month to the members of the Society,
as stipulated under the Development Agreement, with effect from July
1, 2025, until disposal of the arbitral proceedings, without claiming any
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equities and without prejudice to the rights and contentions of the
parties.
7. Monthly cheques are directed to be forwarded to the members of
the Society by the seventh day of each calendar month for that month.
The Learned Arbitral Tribunal also ruled that any failure to pay such
amounts would lead to the automatic vacation of the Impugned Order,
with the Society and the Land Owners then being free to undertake
redevelopment as they deem appropriate. The arbitral proceedings
have been expedited and are actively underway.
Contentions of the Parties:
8. Against this backdrop, I have heard Mr. Gauraj Shah, Learned
Counsel for the Petitioners and Mr. Nikhil Seth, Learned Counsel for
the Respondent, and with their assistance, I have examined the record.
9. Mr. Shah on behalf of the Petitioner would submit that the
Impugned Order is perverse, inasmuch as it fails to take into account
the fact that the Society and the Land Owners have lost confidence and
faith in the Developer. He would submit that the Developer violated
material terms of the Development Agreement. Although the IOD was
obtained on January 2, 2023, the Developer escalated the matter with
the municipal authorities about the dilapidated nature of the building,
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to get the demolition to be effected at the hands of the Municipal
Corporation of Greater Mumbai ( “MCGM” ). He would submit that
there had been default in payment of rent as well and the Developer,
mid-course, sought to alter the project from being a project
contemplated under Regulation 33(7)(B) of the DCPR 2034 to a project
under Regulation 33(11) of DCPR 2034.
10. Mr. Shah would submit that this would lead to the
accommodation of project-affected persons on the Subject Property,
which was not something envisaged in the course of development of the
property under the Development Agreement. By virtue of the
Impugned Order, he would submit, the rent has been paid only since
July 1, 2025. Therefore, the Impugned Order is perverse inasmuch as
right since May 2023, when the members of the Society vacated their
premises to enable demolition by the MCGM, no transit rent has been
paid until after the Impugned Order. He would rely on the line of
1
judgements following Rajawadi Arunodaya CHSL .
11. Mr. Nikhil Seth, Learned Advocate on behalf of the Developer
would submit that the Society had a different set of office-bearers when
the Development Agreement was executed. When the Managing
Committee changed in July 2023, the attempt to disrupt the
Development Agreement commenced, he would submit, to contend
1
Rajawadi Arunodaya CHSL Vs. Value Projects Pvt. Ltd. - 2021 SCC OnLine Bom 9572
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that transit rent was indeed offered to be paid over, but it was the
Society that refused to collect it. The Developer has been committed to
the Development Agreement, specifically under Regulation 33(7)(B) of
the DCPR 2034. The proposal to alter the development to one under
Regulation 33(11) of the DCPR 2034 was merely a proposal, which is
sought to be exploited in favour of supporting the Termination Notice.
12. Mr. Seth would also submit if the appellants chose not to create
third-party rights for more than 20 months even after the Termination
Notice, the status quo for a few more months while the arbitration is
actively underway would not harm the Petitioners. He would dispel the
contentions about the merits of the Termination Notice and would
submit that the two grounds of termination, namely, non-execution of
the project as per timeline, and the change in approach from a
development under Regulation 33(7)(B) to one under Regulation 33(11)
were rightly, on a prima facie basis , found to be untenable by the
Learned Arbitral Tribunal.
13. Mr. Seth would submit that the deadline for the IOD in the
Development Agreement was December 31, 2021, which is the date on
which the Development Agreement was executed. He also submitted
that if this deadline was missed, a further 60 days were already
provided for the purposes of obtaining the IOD. The Developer issued
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a vacation notice to the Society within 15 days of obtaining the IOD and
called upon the members to vacate by the third week of April 2022.
14. The Society and its members delayed the execution of the
Permanent Alternate Accommodation Agreement ( “PAAA” ), and with
each of the timelines stipulated in the Development Agreement being
missed, there was no protest whatsoever because the parties were
engaged in working on the development. He would submit that the
Learned Arbitral Tribunal has rightly relied upon the letter dated
October 16, 2022, which indicates the extension of timelines and the
participation by the parties in working on the project. He would submit
that the Land Owners wield an outsized influence over the decisions of
the Society, and they have not vacated the bungalow at all. Therefore,
they cannot expect the timelines for the redevelopment to be adhered
to when they themselves have refused to vacate. The Land Owners
have allowed the building to be demolished and now want to
renegotiate the Development Agreement. When the Termination
Notice was issued, the Developer explicitly confirmed its willingness to
proceed under Regulation 33(7)(B) of the DCPR 2034 as contracted,
and it cannot be stated that the Developer is not ready and willing to
perform.
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Scope of Review:
15. I have closely reviewed the Impugned Order from the perspective
of the scope of jurisdiction available to this Court in terms of Section 37
of the Act, bearing in mind that the challenge in question is to an
interlocutory order passed by the Arbitral Tribunal. It is important to
examine whether the interlocutory arrangement complained of is
perverse and implausible to a degree that warrants the Section 37
Court’s interference. It is equally well-settled that an Appellate Court
exercising the power under Section 37 of the Act to review the exercise
of discretion by an Arbitral Tribunal at an interim stage, would be well
guided by the principles set out by the Supreme Court in Wander vs.
2
Antox , namely, that interference is warranted only if there is
something perverse or implausible in the exercise of discretion in
making an interlocutory arrangement. The following extract from
Wander would suffice:
14. The appeals before the Division Bench were against the
exercise of discretion by the Single Judge. In such appeals, the
appellate court will not interfere with the exercise of discretion of
the court of first instance and substitute its own discretion except
where the discretion has been shown to have been exercised
arbitrarily, or capriciously or perversely or where the court had
ignored the settled principles of law regulating grant or refusal of
interlocutory injunctions. An appeal against exercise of discretion
is said to be an appeal on principle. Appellate court will not
2
Wander Ltd. Vs. Antox India (P) Ltd. – 1990 Supp SCC 727
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reassess the material and seek to reach a conclusion different from
the one reached by the court below if the one reached by that court
was reasonably possible on the material. The appellate court
would normally not be justified in interfering with the exercise of
discretion under appeal solely on the ground that if it had
considered the matter at the trial stage, it would have come to a
contrary conclusion. If the discretion has been exercised by the
trial court reasonably and in a judicial manner the fact that the
appellate court would have taken a different view may not justify
interference with the trial court's exercise of discretion.
[Emphasis Supplied]
16. In a plethora of judgements under Section 37 of the Act, the
principle articulated in Wander v. Antox has been followed and
reiterated. In other words, the Section 37 jurisdiction, when
considering a challenge to an order passed under Section 17 of the Act,
is a light-touch jurisdiction, where the Court must not substitute the
Learned Arbitral Tribunal’s plausible view with its own competing
plausible view. The Learned Arbitral Tribunal is the forum that is
seized of the factual facets of the matter, and thereby is the master of
the evidence, with control over what constitutes the quality and
quantity of evidence. In such effort, if the Learned Arbitral Tribunal
has conducted itself perversely, or has been arbitrary and unreasonable
or has returned an interlocutory arrangement that could be regarded as
perverse, the Section 37 Court would indeed correct the position. This
is the standard to apply.
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Analysis and Findings:
17. Having heard Learned Advocates for the parties and having
examined the material on record with their assistance, it is clear that on
each and every issue raised by the Petitioners, the Learned Arbitral
Tribunal has squarely examined the material before it to return the
findings and the arrangements that the Learned Arbitral Tribunal
believed to be reasonable and in the best interests at an interlocutory
stage.
18. The letter dated October 16, 2022, on which the Learned Arbitral
Tribunal relied to indicate that the Society was indeed happy with the
Development Agreement and was engaging with the Developer, is
strongly contested by Mr. Shah on the premise that it is a handwritten
letter written by a lone member. H0wever, on examination of the
same, it is apparent that it is a letter written by the Secretary of the
Society and confirms that the Society would furnish a letter approving
the draft of the PAAA as soon as possible. Upon such approval, it was
proposed that the Developer would pay the requisite charges for the
IOD and obtain the same, and thereafter the Society would issue a
letter to the MCGM consenting to carry out the procedures in law for
the demolition of the building on the ground that it is dilapidated.
These developments would indeed transpire.
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19. The Developer was meant to continue to release payments under
the Development Agreement upon the Municipal Authorities issuing
the letter for eviction and disconnection of water and electricity supply,
and meanwhile, all the PAAAs were to be registered. It is also recorded
that the non-dissenting members would be paid the amounts of transit
rent upon issue of notice by the Municipal Authorities since that would
constitute the act of vacating the premises. When one examines this
letter and the manner in which the Learned Arbitral Tribunal has dealt
with the same, it would be difficult to conclude that the findings of the
Learned Arbitral Tribunal are perverse and implausible. The Learned
Arbitral Tribunal has taken an informed view that on a prima facie
basis, the timelines in the Development Agreement indeed got
readjusted as late as October 2022. The further approach of the parties,
with the vacation of the building in May 2023 and the demolition in
May 2023, was consistent with the letter.
20. The IOD was indeed obtained by the Developer on January 2,
2023. Against this backdrop, the Learned Arbitral Tribunal has
examined the termination clause in the Development Agreement as
indeed to the provisions relating to alteration of plans. While the
Development Agreement indeed provided for the Developer to modify
the plans without disturbing the area allocation to the Society, the
Learned Arbitral Tribunal has in fact concluded that the very
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framework of the development could not be changed from Regulation
33(7)(B) to a project under Regulation 33(11). That apart, the Learned
Arbitral Tribunal has noticed the commitment of the Developer to stick
to the development under Regulation 33(7)(B) and has therefore
factored that into its assessment of the prima facie case. Moreover, it is
apparent that the PAAAs were not signed because of this issue and
since this issue stands addressed, there should be no impediment to
executing the PAAA.
21. While the Society contends that the Developer was meant to pay
twelve months’ transit rent and paid only one month’s transit rent, the
Learned Arbitral Tribunal has directed that transit rent be paid from
July 1, 2025 on a monthly basis. Evidently, the Petitioners are unwilling
to accept the transit rent because they believe in their right to terminate
the Development Agreement. Whether the Termination Notice was
valid, is a facet that the Learned Arbitral Tribunal has kept open and
would examine at the stage of trial.
22. Mr. Shah contends that the Land Owners have not consented to
any extension of time. Even if one could say the Society had done so, he
would contend, that would itself point to the fact that the Society, with
its members undergoing the hardship of having vacated their premises,
had indeed endorsed the letter dated October 16, 2022. Yet the Land
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Owners, who are but one of the members of the Society are holding out
without vacating their bungalow and desire to terminate the
Development Agreement. In response to a specific query from the
Bench as to whether the Land Owners have effected the conveyance
that they were obliged to make in favour of the Society, it was found
that such conveyance has not been effected. Therefore, it is apparent
that the Land Owners are potentially exercising an outsized influence
over the Development Agreement, whereas ordinarily they ought to
have only one vote for every flat.
23. That apart, the Learned Arbitral Tribunal has noticed that the
power of attorney itself had been executed only in April 2022, four
months after the execution of the Development Agreement, and that
the Petitioners had positively participated in obtaining of the IOD and
getting the building demolished. The change in office-bearers of the
Society intervened in July 2023. The fundamental ground of
termination i.e. the plan being changed by such a magnitude by shifting
from Regulation 33(7)(B) to Regulation 33(1) has also been put to rest.
24. In these circumstances, in my view, the Learned Arbitral
Tribunal cannot be faulted for the outcome it arrived at in respect of
maintenance of status quo pending the expedited conclusion of the
arbitration proceedings. The competing positions adopted by the
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respective parties are diametrically opposite, inasmuch as the
Petitioners are desirous of walking away with the termination of the
Development Agreement, while the Developer is desirous of specifically
performing the Development Agreement.
3
25. Judgements in Rajawadi and in ISON Builders LLP have been
cited by the Petitioners to emphasise the observations made in
Rajawadi to indicate that this is what the Learned Arbitrator ought to
have done. In my opinion, the facts in Rajawadi are different from the
facts of instance case. Prima facie , the outsized influence that the Land
Owner seems to wield over the redevelopment is markedly distinct and
different from the fact patterns in Rajawadi and ISON Builders LLP .
26. That apart, even if one were to take the view that the same
position ought to be adopted in the facts of the instant case, such a
contention would at best represent a prayer for taking one plausible
view that is being canvassed, only to substitute another plausible view
that has been taken by the Learned Arbitral Tribunal. The role of this
Court is not to pick what appears to be the best out of competing
plausible views, but to determine whether the view challenged in the
Section 37 Petition is an implausible and perverse view warranting
Court intervention. Seen from that prism, the judgments relied upon
3
ISON Builders LLP Vs. Om Sai Ram Cooperative Housing Society (Proposed) &
Ors.-2026 SCC OnLine Bom 319
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and the principles invoked by Mr. Shah to assail the Impugned Order
do not appeal to me for blanket application to the facts of the case.
Order and Directions:
27. I do find the need to make a small intervention to address the
contention that the interlocutory arrangement is not consistent with
the Development Agreement in its entirety. The arrangement made by
the Learned Arbitral Tribunal for transit rent being paid from July 1,
2025, until the final disposal of the arbitration proceedings at the same
rate as originally provided for, although the Development Agreement
provides for an escalation, is the only vulnerable element in the
Impugned Order. Therefore, in my view, if this vulnerability is also
addressed, there is no basis at all to interfere with the Impugned Order.
28. The members of the Society evidently vacated their premises in
May 2023, and therefore ought to be paid transit rent since then. The
Developer claims to have offered to pay and that the Society refused to
accept it. The Developer was obliged to pay for twelve months, and
thereafter, there was to be an escalation.
29. Therefore, the only intervention being made in exercise of
jurisdiction under Section 37 of the Act, even while upholding the
Impugned Order, is to direct the Developer to pay transit rent and
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other amounts payable under the Development Agreement from June
2023 until July 2025, within a period of four weeks from the upload of
this order on the website of this Court.
30. I do note that other payments due under Clause 12 (hardship
allowance), Clause 13 (brokerage) and Clause 14 (transportation) have
indeed been made and accepted by members of the Society. The clause
governing transit rent, in fact, envisages an escalation, but does not
stipulate the rate of escalation.
31. Therefore, as a protective measure, considering that the parties
had indeed agreed upon the need for an escalation, it is also directed
that the transit rent component from May 2023 until July 2025, when
the transit rent was first paid by the Developer to the Society, shall be
paid. If the Society is unwilling to accept it, the same shall be deposited
with the Registry of this Court. With effect from April 2026, there shall
be an escalation in the amount deposited at the rate of 10% per annum
calculated on the base rates of such rent. All amounts so deposited in
this Court, if the Society does not accept them, shall be swept into a
fixed deposit every month with a lien being marked in favour of the
Society; such deposit, along with accruals, shall abide by the outcome
in the arbitration proceedings.
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32. Within four weeks from the upload of this order, the Developer
shall file an affidavit before the Learned Arbitral Tribunal
demonstrating compliance with this modified version of the Impugned
Order. Every month thereafter, within a week of making the deposit as
scheduled on the seventh day of each calendar month, i.e. by the
fourteenth day of each calendar month, an affidavit shall be filed with
the Learned Arbitral Tribunal demonstrating compliance with the
payment already made with documentary proof of a lien actually having
been marked.
33. That apart, since the Impugned Order has relied upon the
Developer having given up redevelopment in terms of Regulation
33(11) and the same is being confirmed in the course of these
proceedings, it is made clear that the entire arrangement would be
predicated on the development being pursued in terms of Regulation
33(7)(B) of the DCPR 2034, subject of course to the final determination
of the issue in the arbitration proceedings.
34. With the aforesaid directions, there being no basis to interfere
with the Impugned Order, the Petition is disposed of, subject to the
aforesaid modification. The Impugned Order is left undisturbed.
35. The limited intervention made above is only to make the
interlocutory arrangement consistent with the Development
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Agreement, which would cure even the smallest potential to find fault
with the Impugned Order – a course indeed available to the Section 37
Court, whose jurisdiction is coextensive with the jurisdiction of the
Learned Arbitral Tribunal under Section 17 of the Act.
36. With the aforesaid directions and marginal modifications, the
Petition is finally disposed of .
37. 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.
[ SOMASEKHAR SUNDARESAN, J.]
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION PETITION (L) NO.20999 OF 2025
Jai Gopal Krishna CHSL & Ors. ...Petitioners
Versus
Vitrag Infra Projects LLP ….Respondent
Mr. Gauraj Shah a/w. Ms Aakansha Anand & Ms Sweta
Jalgaonkar i/b. Mahesh Menon & Co., for Petitioners.
Mr. Nikhil Seth, for Respondent.
CORAM: SOMASEKHAR SUNDARESAN, J.
DATE : FEBRUARY 27, 2026
ORAL JUDGEMENT:
Context and Factual Background:
1. This is a Petition filed under Section 37 of the Arbitration and
Conciliation Act, 1996 ( “the Act” ) impugning an Order dated June 24,
2025, passed by the Learned Sole Arbitrator making certain
arrangements for interlocutory reliefs in connection with arbitration of
disputes arising over a Development Agreement dated December 31,
2021 (“ Development Agreement ”).
Digitally
signed by
AARTI
GAJANAN
PALKAR
Date:
2026.03.13
15:24:54
+0530
AARTI
GAJANAN
PALKAR
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2. Petitioner No.1, Jai Gopal Krishna Co-operative Housing Society
Limited ( “Society” ) comprises 20 members in respect of a building
comprising ground plus four storeys, constructed in 1979-80.
Petitioner No.2, Raju Lokumal Achpilia and Petitioner No.3, Haresh
Lokumal Achpilia ( “Land Owners” ) are the original Land Owners on
whose land, the building came to be constructed. The Land Owners
occupy a bungalow standing on the same parcel of land. The land on
which the Building and the Bungalow stand, totally admeasures 938.80
square meters, and is located at Borivali, Mumbai (collectively,
“ Subject Property ”). The Society, the Land Owners (Petitioner No.2)
and the Respondent, Vitrag Infra Projects LLP ( “Developer” ), have
executed the Development Agreement, by which the Developer was
granted development rights over the Subject Property.
3. In terms of the Development Agreement, specific transit rent, de-
housing compensation, hardship allowance, brokerage, transportation
charges, and the like had been contracted. The development period
was envisaged as 24 months, extendable by 6 months, with such period
commencing after obtaining the Commencement Certificate. The
Intimation of Disapproval ( “IOD” ) was to be obtained on or before
December 31, 2021, with a 60-day grace period. The Development
Agreement contains provisions relating to modification of layout and
the tentative plans annexed to it.
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4. The redeveloped building was to comprise ground floor plus nine
storeys. The Development Agreement envisaged redevelopment in
terms of Regulation 33(7)(B) of the DCPR 2034. A Power of Attorney
was executed by the Petitioners in favour of the partners of the
Developer, only on April 18, 2022.
5. The Development Agreement was sought to be terminated by
way of a termination notice dated October 9, 2023 ( “Termination
Notice” ), which had been preceded by pre-termination notice dated
August 29, 2023, as provided for in the Development Agreement. The
disputes pursuant to the Termination Notice eventually led to
arbitration proceedings in which the Impugned Order came to be
passed.
6. The Impugned Order disposed of cross-applications by the
parties under Section 17 of the Act, each of which is said to have been
partially allowed. The Learned Arbitral Tribunal directed that status
quo be maintained over the Subject Property and that neither party
shall create any third-party rights on the Subject Property. The
Developer was directed to pay transit rent of an amount of Rs.20,000/-
per month and Rs.15,000/- per month to the members of the Society,
as stipulated under the Development Agreement, with effect from July
1, 2025, until disposal of the arbitral proceedings, without claiming any
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equities and without prejudice to the rights and contentions of the
parties.
7. Monthly cheques are directed to be forwarded to the members of
the Society by the seventh day of each calendar month for that month.
The Learned Arbitral Tribunal also ruled that any failure to pay such
amounts would lead to the automatic vacation of the Impugned Order,
with the Society and the Land Owners then being free to undertake
redevelopment as they deem appropriate. The arbitral proceedings
have been expedited and are actively underway.
Contentions of the Parties:
8. Against this backdrop, I have heard Mr. Gauraj Shah, Learned
Counsel for the Petitioners and Mr. Nikhil Seth, Learned Counsel for
the Respondent, and with their assistance, I have examined the record.
9. Mr. Shah on behalf of the Petitioner would submit that the
Impugned Order is perverse, inasmuch as it fails to take into account
the fact that the Society and the Land Owners have lost confidence and
faith in the Developer. He would submit that the Developer violated
material terms of the Development Agreement. Although the IOD was
obtained on January 2, 2023, the Developer escalated the matter with
the municipal authorities about the dilapidated nature of the building,
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to get the demolition to be effected at the hands of the Municipal
Corporation of Greater Mumbai ( “MCGM” ). He would submit that
there had been default in payment of rent as well and the Developer,
mid-course, sought to alter the project from being a project
contemplated under Regulation 33(7)(B) of the DCPR 2034 to a project
under Regulation 33(11) of DCPR 2034.
10. Mr. Shah would submit that this would lead to the
accommodation of project-affected persons on the Subject Property,
which was not something envisaged in the course of development of the
property under the Development Agreement. By virtue of the
Impugned Order, he would submit, the rent has been paid only since
July 1, 2025. Therefore, the Impugned Order is perverse inasmuch as
right since May 2023, when the members of the Society vacated their
premises to enable demolition by the MCGM, no transit rent has been
paid until after the Impugned Order. He would rely on the line of
1
judgements following Rajawadi Arunodaya CHSL .
11. Mr. Nikhil Seth, Learned Advocate on behalf of the Developer
would submit that the Society had a different set of office-bearers when
the Development Agreement was executed. When the Managing
Committee changed in July 2023, the attempt to disrupt the
Development Agreement commenced, he would submit, to contend
1
Rajawadi Arunodaya CHSL Vs. Value Projects Pvt. Ltd. - 2021 SCC OnLine Bom 9572
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that transit rent was indeed offered to be paid over, but it was the
Society that refused to collect it. The Developer has been committed to
the Development Agreement, specifically under Regulation 33(7)(B) of
the DCPR 2034. The proposal to alter the development to one under
Regulation 33(11) of the DCPR 2034 was merely a proposal, which is
sought to be exploited in favour of supporting the Termination Notice.
12. Mr. Seth would also submit if the appellants chose not to create
third-party rights for more than 20 months even after the Termination
Notice, the status quo for a few more months while the arbitration is
actively underway would not harm the Petitioners. He would dispel the
contentions about the merits of the Termination Notice and would
submit that the two grounds of termination, namely, non-execution of
the project as per timeline, and the change in approach from a
development under Regulation 33(7)(B) to one under Regulation 33(11)
were rightly, on a prima facie basis , found to be untenable by the
Learned Arbitral Tribunal.
13. Mr. Seth would submit that the deadline for the IOD in the
Development Agreement was December 31, 2021, which is the date on
which the Development Agreement was executed. He also submitted
that if this deadline was missed, a further 60 days were already
provided for the purposes of obtaining the IOD. The Developer issued
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a vacation notice to the Society within 15 days of obtaining the IOD and
called upon the members to vacate by the third week of April 2022.
14. The Society and its members delayed the execution of the
Permanent Alternate Accommodation Agreement ( “PAAA” ), and with
each of the timelines stipulated in the Development Agreement being
missed, there was no protest whatsoever because the parties were
engaged in working on the development. He would submit that the
Learned Arbitral Tribunal has rightly relied upon the letter dated
October 16, 2022, which indicates the extension of timelines and the
participation by the parties in working on the project. He would submit
that the Land Owners wield an outsized influence over the decisions of
the Society, and they have not vacated the bungalow at all. Therefore,
they cannot expect the timelines for the redevelopment to be adhered
to when they themselves have refused to vacate. The Land Owners
have allowed the building to be demolished and now want to
renegotiate the Development Agreement. When the Termination
Notice was issued, the Developer explicitly confirmed its willingness to
proceed under Regulation 33(7)(B) of the DCPR 2034 as contracted,
and it cannot be stated that the Developer is not ready and willing to
perform.
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Scope of Review:
15. I have closely reviewed the Impugned Order from the perspective
of the scope of jurisdiction available to this Court in terms of Section 37
of the Act, bearing in mind that the challenge in question is to an
interlocutory order passed by the Arbitral Tribunal. It is important to
examine whether the interlocutory arrangement complained of is
perverse and implausible to a degree that warrants the Section 37
Court’s interference. It is equally well-settled that an Appellate Court
exercising the power under Section 37 of the Act to review the exercise
of discretion by an Arbitral Tribunal at an interim stage, would be well
guided by the principles set out by the Supreme Court in Wander vs.
2
Antox , namely, that interference is warranted only if there is
something perverse or implausible in the exercise of discretion in
making an interlocutory arrangement. The following extract from
Wander would suffice:
14. The appeals before the Division Bench were against the
exercise of discretion by the Single Judge. In such appeals, the
appellate court will not interfere with the exercise of discretion of
the court of first instance and substitute its own discretion except
where the discretion has been shown to have been exercised
arbitrarily, or capriciously or perversely or where the court had
ignored the settled principles of law regulating grant or refusal of
interlocutory injunctions. An appeal against exercise of discretion
is said to be an appeal on principle. Appellate court will not
2
Wander Ltd. Vs. Antox India (P) Ltd. – 1990 Supp SCC 727
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reassess the material and seek to reach a conclusion different from
the one reached by the court below if the one reached by that court
was reasonably possible on the material. The appellate court
would normally not be justified in interfering with the exercise of
discretion under appeal solely on the ground that if it had
considered the matter at the trial stage, it would have come to a
contrary conclusion. If the discretion has been exercised by the
trial court reasonably and in a judicial manner the fact that the
appellate court would have taken a different view may not justify
interference with the trial court's exercise of discretion.
[Emphasis Supplied]
16. In a plethora of judgements under Section 37 of the Act, the
principle articulated in Wander v. Antox has been followed and
reiterated. In other words, the Section 37 jurisdiction, when
considering a challenge to an order passed under Section 17 of the Act,
is a light-touch jurisdiction, where the Court must not substitute the
Learned Arbitral Tribunal’s plausible view with its own competing
plausible view. The Learned Arbitral Tribunal is the forum that is
seized of the factual facets of the matter, and thereby is the master of
the evidence, with control over what constitutes the quality and
quantity of evidence. In such effort, if the Learned Arbitral Tribunal
has conducted itself perversely, or has been arbitrary and unreasonable
or has returned an interlocutory arrangement that could be regarded as
perverse, the Section 37 Court would indeed correct the position. This
is the standard to apply.
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Analysis and Findings:
17. Having heard Learned Advocates for the parties and having
examined the material on record with their assistance, it is clear that on
each and every issue raised by the Petitioners, the Learned Arbitral
Tribunal has squarely examined the material before it to return the
findings and the arrangements that the Learned Arbitral Tribunal
believed to be reasonable and in the best interests at an interlocutory
stage.
18. The letter dated October 16, 2022, on which the Learned Arbitral
Tribunal relied to indicate that the Society was indeed happy with the
Development Agreement and was engaging with the Developer, is
strongly contested by Mr. Shah on the premise that it is a handwritten
letter written by a lone member. H0wever, on examination of the
same, it is apparent that it is a letter written by the Secretary of the
Society and confirms that the Society would furnish a letter approving
the draft of the PAAA as soon as possible. Upon such approval, it was
proposed that the Developer would pay the requisite charges for the
IOD and obtain the same, and thereafter the Society would issue a
letter to the MCGM consenting to carry out the procedures in law for
the demolition of the building on the ground that it is dilapidated.
These developments would indeed transpire.
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19. The Developer was meant to continue to release payments under
the Development Agreement upon the Municipal Authorities issuing
the letter for eviction and disconnection of water and electricity supply,
and meanwhile, all the PAAAs were to be registered. It is also recorded
that the non-dissenting members would be paid the amounts of transit
rent upon issue of notice by the Municipal Authorities since that would
constitute the act of vacating the premises. When one examines this
letter and the manner in which the Learned Arbitral Tribunal has dealt
with the same, it would be difficult to conclude that the findings of the
Learned Arbitral Tribunal are perverse and implausible. The Learned
Arbitral Tribunal has taken an informed view that on a prima facie
basis, the timelines in the Development Agreement indeed got
readjusted as late as October 2022. The further approach of the parties,
with the vacation of the building in May 2023 and the demolition in
May 2023, was consistent with the letter.
20. The IOD was indeed obtained by the Developer on January 2,
2023. Against this backdrop, the Learned Arbitral Tribunal has
examined the termination clause in the Development Agreement as
indeed to the provisions relating to alteration of plans. While the
Development Agreement indeed provided for the Developer to modify
the plans without disturbing the area allocation to the Society, the
Learned Arbitral Tribunal has in fact concluded that the very
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framework of the development could not be changed from Regulation
33(7)(B) to a project under Regulation 33(11). That apart, the Learned
Arbitral Tribunal has noticed the commitment of the Developer to stick
to the development under Regulation 33(7)(B) and has therefore
factored that into its assessment of the prima facie case. Moreover, it is
apparent that the PAAAs were not signed because of this issue and
since this issue stands addressed, there should be no impediment to
executing the PAAA.
21. While the Society contends that the Developer was meant to pay
twelve months’ transit rent and paid only one month’s transit rent, the
Learned Arbitral Tribunal has directed that transit rent be paid from
July 1, 2025 on a monthly basis. Evidently, the Petitioners are unwilling
to accept the transit rent because they believe in their right to terminate
the Development Agreement. Whether the Termination Notice was
valid, is a facet that the Learned Arbitral Tribunal has kept open and
would examine at the stage of trial.
22. Mr. Shah contends that the Land Owners have not consented to
any extension of time. Even if one could say the Society had done so, he
would contend, that would itself point to the fact that the Society, with
its members undergoing the hardship of having vacated their premises,
had indeed endorsed the letter dated October 16, 2022. Yet the Land
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Owners, who are but one of the members of the Society are holding out
without vacating their bungalow and desire to terminate the
Development Agreement. In response to a specific query from the
Bench as to whether the Land Owners have effected the conveyance
that they were obliged to make in favour of the Society, it was found
that such conveyance has not been effected. Therefore, it is apparent
that the Land Owners are potentially exercising an outsized influence
over the Development Agreement, whereas ordinarily they ought to
have only one vote for every flat.
23. That apart, the Learned Arbitral Tribunal has noticed that the
power of attorney itself had been executed only in April 2022, four
months after the execution of the Development Agreement, and that
the Petitioners had positively participated in obtaining of the IOD and
getting the building demolished. The change in office-bearers of the
Society intervened in July 2023. The fundamental ground of
termination i.e. the plan being changed by such a magnitude by shifting
from Regulation 33(7)(B) to Regulation 33(1) has also been put to rest.
24. In these circumstances, in my view, the Learned Arbitral
Tribunal cannot be faulted for the outcome it arrived at in respect of
maintenance of status quo pending the expedited conclusion of the
arbitration proceedings. The competing positions adopted by the
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respective parties are diametrically opposite, inasmuch as the
Petitioners are desirous of walking away with the termination of the
Development Agreement, while the Developer is desirous of specifically
performing the Development Agreement.
3
25. Judgements in Rajawadi and in ISON Builders LLP have been
cited by the Petitioners to emphasise the observations made in
Rajawadi to indicate that this is what the Learned Arbitrator ought to
have done. In my opinion, the facts in Rajawadi are different from the
facts of instance case. Prima facie , the outsized influence that the Land
Owner seems to wield over the redevelopment is markedly distinct and
different from the fact patterns in Rajawadi and ISON Builders LLP .
26. That apart, even if one were to take the view that the same
position ought to be adopted in the facts of the instant case, such a
contention would at best represent a prayer for taking one plausible
view that is being canvassed, only to substitute another plausible view
that has been taken by the Learned Arbitral Tribunal. The role of this
Court is not to pick what appears to be the best out of competing
plausible views, but to determine whether the view challenged in the
Section 37 Petition is an implausible and perverse view warranting
Court intervention. Seen from that prism, the judgments relied upon
3
ISON Builders LLP Vs. Om Sai Ram Cooperative Housing Society (Proposed) &
Ors.-2026 SCC OnLine Bom 319
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and the principles invoked by Mr. Shah to assail the Impugned Order
do not appeal to me for blanket application to the facts of the case.
Order and Directions:
27. I do find the need to make a small intervention to address the
contention that the interlocutory arrangement is not consistent with
the Development Agreement in its entirety. The arrangement made by
the Learned Arbitral Tribunal for transit rent being paid from July 1,
2025, until the final disposal of the arbitration proceedings at the same
rate as originally provided for, although the Development Agreement
provides for an escalation, is the only vulnerable element in the
Impugned Order. Therefore, in my view, if this vulnerability is also
addressed, there is no basis at all to interfere with the Impugned Order.
28. The members of the Society evidently vacated their premises in
May 2023, and therefore ought to be paid transit rent since then. The
Developer claims to have offered to pay and that the Society refused to
accept it. The Developer was obliged to pay for twelve months, and
thereafter, there was to be an escalation.
29. Therefore, the only intervention being made in exercise of
jurisdiction under Section 37 of the Act, even while upholding the
Impugned Order, is to direct the Developer to pay transit rent and
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other amounts payable under the Development Agreement from June
2023 until July 2025, within a period of four weeks from the upload of
this order on the website of this Court.
30. I do note that other payments due under Clause 12 (hardship
allowance), Clause 13 (brokerage) and Clause 14 (transportation) have
indeed been made and accepted by members of the Society. The clause
governing transit rent, in fact, envisages an escalation, but does not
stipulate the rate of escalation.
31. Therefore, as a protective measure, considering that the parties
had indeed agreed upon the need for an escalation, it is also directed
that the transit rent component from May 2023 until July 2025, when
the transit rent was first paid by the Developer to the Society, shall be
paid. If the Society is unwilling to accept it, the same shall be deposited
with the Registry of this Court. With effect from April 2026, there shall
be an escalation in the amount deposited at the rate of 10% per annum
calculated on the base rates of such rent. All amounts so deposited in
this Court, if the Society does not accept them, shall be swept into a
fixed deposit every month with a lien being marked in favour of the
Society; such deposit, along with accruals, shall abide by the outcome
in the arbitration proceedings.
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32. Within four weeks from the upload of this order, the Developer
shall file an affidavit before the Learned Arbitral Tribunal
demonstrating compliance with this modified version of the Impugned
Order. Every month thereafter, within a week of making the deposit as
scheduled on the seventh day of each calendar month, i.e. by the
fourteenth day of each calendar month, an affidavit shall be filed with
the Learned Arbitral Tribunal demonstrating compliance with the
payment already made with documentary proof of a lien actually having
been marked.
33. That apart, since the Impugned Order has relied upon the
Developer having given up redevelopment in terms of Regulation
33(11) and the same is being confirmed in the course of these
proceedings, it is made clear that the entire arrangement would be
predicated on the development being pursued in terms of Regulation
33(7)(B) of the DCPR 2034, subject of course to the final determination
of the issue in the arbitration proceedings.
34. With the aforesaid directions, there being no basis to interfere
with the Impugned Order, the Petition is disposed of, subject to the
aforesaid modification. The Impugned Order is left undisturbed.
35. The limited intervention made above is only to make the
interlocutory arrangement consistent with the Development
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Agreement, which would cure even the smallest potential to find fault
with the Impugned Order – a course indeed available to the Section 37
Court, whose jurisdiction is coextensive with the jurisdiction of the
Learned Arbitral Tribunal under Section 17 of the Act.
36. With the aforesaid directions and marginal modifications, the
Petition is finally disposed of .
37. 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.
[ SOMASEKHAR SUNDARESAN, J.]
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