M/S MUKESH PATEL AND OTHERS vs PANT NAGAR GANESH KRUPA COOPERATIVE HOUSING SOCIETY LIMITED

2025:BHC-OS:18704
1-CARAP-389-2024 - OJ-F.docx


IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION APPLICATION NO. 389 OF 2024
SHRADDHA
KAMLESH
TALEKAR
M/s. Mukesh Patel and Ors. ...Applicant
Versus
Digitally signed by
SHRADDHA
KAMLESH TALEKAR
Date: 2025.10.13
17:46:25 +0530
1) Pant Nagar Ganesh Krupa Cooperative
Housing Society Limited
2) Avvad Spaces LLP
3) Shubham Ambience Co-Operative
Housing Society Limited …Respondents
Mr. Mayur Khandeparkar a/w. Mr. Vikram Garewal, Mr. Aditya
Miskita, Mr. Devansh Bheda, Mr. Parth Jasani, Mr. Kartikeya
Awasthi i/b M/s. Purnanand & Co., for Applicant.
Mr. Dinyar Madon, Senior Advocate a/w. Mr. Ziad Madon and
Mr. Shubro Dey, for Respondent No. 2.
Mr. Cyrus Ardeshir, Senior Advocate a/w. Roop Basu and Heenal
Wadhwa i/b The Law Point, for Respondent No. 3.
CORAM : SOMASEKHAR SUNDARESAN, J.
DATE : OCTOBER 9, 2025
Oral Judgement:
Context and Factual Background:
1. This is an Application under Section 11 of the Arbitration and
Conciliation Act, 1996 (“ the Act ”) seeking appointment of an arbitral
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tribunal in connection with disputes and differences that would be
relatable to an arbitration clause contained in a Development
Agreement dated October 15, 2010 (“ Development Agreement ”)
between the Applicant, Mukesh Patel (“ Patel ”) and Respondent No. 1,
Pant Nagar Ganesh Krupa Cooperative Housing Society Limited
(“ Earlier Society ”).
2. The Society has admittedly been merged, among others, into
Respondent No. 3, Shubham Ambience Co-Operative Housing Society
Limited (“ Merged Society ”), and therefore, the privity, if any, of the
Development Agreement is now between Patel and the Merged Society.
3. Ordinarily, a matter of this nature, would not necessitate
writing of a reasoned judgement, inasmuch as it is an application under
Section 11 connected to an admittedly existent arbitration agreement.
However, it is the insistence of Patel that Respondent No. 2, Avvad
Spaces LLP (“ Avvad ”), another developer who has since been appointed
as a developer for redevelopment of the property, after the termination
of the Development Agreement, is a veritable party to the arbitration
proceedings under the Development Agreement. This insistence is
strongly opposed by Avvad, dealing with every strand of submissions
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made by Patel. Pleadings have been permitted and that warrants
dealing with the legal issues raised by Patel and countered by Avvad.
4. The Development Agreement had been terminated way back
on February 8, 2019, pursuant to a resolution passed by the members
of the Society on December 15, 2018. Patel asserts that despite such
termination, the Development Agreement subsists. Towards this end,
Patel would contend that some members of the Society continued to
receive transit rent under the Development Agreement.
5. Well after the termination effected , much water has flown ,
including a public advertisement for appointment of Avvad as a
Developer with the appointment purported to have been made five
years later, on November 8, 2022. That appointment is said to have
been ratified by a Special General Body Meeting held on February 19,
2023.
6. Disputes and differences under the Development Agreement
are sought to be agitated in arbitration but by including Avvad as a
veritable party in the arbitration proceedings, seeking to invoke known
principles of law governing participation by non-signatory parties in
arbitration proceedings.
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7. Patel indeed filed a Petition under Section 9 of the Act
seeking interlocutory protection against the termination of the
Development Agreement. While the termination had been effected in
February 2019, the Section 9 Petition was filed on March 9, 2023, four
years after the event. That Petition too came to be dismissed for non-
removal of office objections. An application for restoration is said to
have been filed and the same pending on the docket of this Court,
although for the past nine months , praecipes requesting circulation of
restoration applications are routinely listed within days of the request
being made.
Contentions of the Parties:
8. I have heard Mr. Mayur Khandeparkar, Learned Advocate for
Patel, Mr. Cyrus Ardeshir, Learned Senior Advocate for the Merged
Society and Mr. Dinyar Madan, Learned Senior Advocate for Avvad. I
have examined the voluminous record generated in these proceedings
with their assistance and gone through the copious written material
submitted to Court.
9. Mr. Khandeparkar would place strong reliance on case law
governing participation of non-signatories to an arbitration agreement
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1
in the arbitration proceedings, in particular, on Cox and Kings read
2
with, ASF Buildtech . It is his case that the development rights now
conferred on Avvad forms a subject matter of the rights enjoyed by
Patel, and therefore, on the ground of subject commonality, Avvad
must necessarily be made a party to the arbitration proceedings, and
that this Court should return a finding that Avvad is a veritable party to
the arbitration proceedings. He would request that this Court could
either endorse Avvad as a veritable party on a prima facie basis or leave
this issue to the Learned Arbitral Tribunal to determine.
10. Mr. Cyrus Ardeshir would submit that the Merged Society
can have no quarrel with proceeding to arbitration should Patel be
advised to pursue such proceedings that are hopelessly time barred,
leaving it open for the Merged Society to present the objection on
limitation to the Learned Arbitral Tribunal.
11. Mr. Dinyar Madan would strongly object to Avvad being
made a party even to these proceedings. He would submit that there is
no basis whatsoever for Avvad to be made a party to the Section 11
proceedings, much less even being subjected to consideration as to
1 Cox and Kings Ltd. v. SAP India (P) Ltd. - (2024) 4 SCC 1.
2 ASF Buildtech (P) Ltd. v. Shapoorji Pallonji & Co. (P) Ltd. - 2025 SCC OnLine
SC 1016
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whether it is a veritable party in the arbitration proceedings.
Analysis and Findings:
12. At the threshold, it is made clear that whether Avvad must be
drawn into the arbitration proceedings sought to be initiated by Patel
against the Society is the sole question being answered. All the
recording and observations of facts in this order are made purely
bearing in mind the aforesaid question, also bearing in mind the
limited scope of jurisdiction of this Court under Section 11 of the Act,
namely, examination of the existence of an arbitration agreement.
13. At first blush, it is attractive to leave this facet of the matter
entirely to the Learned Arbitral Tribunal. However, considering the
firm opposition to leaving this to the Learned Arbitral Tribunal and the
case law on the subject, since Patel has chosen to make Avvad a party in
these proceedings, and considering the scope of Section 11 of the Act
and the requirement to examine the existence of an arbitration
agreement, in my opinion, it would be necessary to examine the scope
of existence of a right to arbitrate against the third party.
14. It would be appropriate and necessary to examine whether
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Avvad could have any role to play in arbitration proceedings between
Patel and the Merged Society. Patel’s contentions in support of a
declaration that Avvad is prima facie a veritable party is based on the
ground that:-
a) Avvad is purported to be a person claiming through or
under the Merged Society, and is therefore a veritable
party. Therefore, there is no need to invoke
arbitration against Avvad in view of the foregoing
proposition, and in reliance on the law declared in
ASF Buildtech , that a separate invocation against a
veritable party is not necessary;
b) Avvad has entered the scene knowing fully well about
the existence of Patel’s interests under the
Development Agreement and therefore the concept of
lis pendens would apply; and
c) Section 19(b) of the Specific Relief Act, 1963 would
necessarily mean that specific performance may be
enforced against any party to a contract and also
against any other person claiming under a party to the
contract, by a title arising subsequent to the contract.
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15. At the threshold, it is difficult to see how Avvad could be
regarded as a party claiming through or under the Merged Society in
relation to the Development Agreement. To begin with, Avvad has no
claim and purports to make no claim, whether under the Development
Agreement or otherwise. It is Patel who seeks to make a claim against
Avvad by bringing him into the dispute Patel purports to have with the
Merged Society.
16. That apart, Avvad is a subsequent grantee of development
rights and has nothing to do with the Development Agreement to which
Patel was a party, which came to be terminated in February 2019, with
a Section 9 Petition being filed in March 2023, and that too well after
Avvad was appointed as a developer in November 2022. The
agreement that Avvad would have with the Merged Society is a
different agreement and that cannot become connected with Patel
merely because at some time in the past, Patel had executed the
Development Agreement. It is not as if the Development Agreement
(between Patel and the Merged Society) was assigned or novated to
Avvad, as a transfer of the rights enjoyed by Patel being conveyed to
Avvad.
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17. The reliance upon an isolated strand and sentence in ASF
Buildtech is disingenuous inasmuch that judgement only builds further
on the law declared in Cox and Kings , which in turn, declared the law
on invoking the “group of companies” doctrine. First and foremost, it
would be appropriate to examine the plain meaning of the term
“veritable party” for purposes of examining the application of the law in
Cox and Kings and in ASF Buildtech .
18. When the law allows a non-signatory to an arbitration
agreement to be regarded as a “veritable party”, it essentially permits a
non-signatory to be treated as a signatory to the arbitration agreement.
Towards this end i.e. to ascertain if a party is a de facto signatory to an
arbitration agreement even when such party is de jure not a signatory
to the arbitration agreement, various factors and surrounding factual
circumstances may be taken into account. The term “veritable” in the
context of “party” means a party that is truly, genuinely, authentically
to be regarded as a party to the agreement that such party has not
signed.
19. When the Supreme Court declared the law in Cox and Kings ,
the Supreme Court did so in the context of whether a party that is part
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of the same “group of companies” to which a signatory belongs, could
be regarded as a veritable party. The declaration of the law has to be
seen in this context. Two or more companies forming part of a group of
companies are evidently “related parties” – related by such degree of
common ownership, management or control that would lead to their
being treated as members of the same group.
20. This is precisely why even in accounting standards as
universally applied all over the globe, dealings between two distinct and
separate enterprises or entities but forming part of the same group, are
treated with distrust, with the presumption being that such dealings are
not informed by genuine arms-length rigorously negotiated contracts,
unless specific stipulations for treating them as such are complied with.
This is the foundational principle on which the “group of companies”
doctrine is based – that in a contract between two parties, a third party
that is related to a party to the contract regarded de facto as a party to
the contract despite being a third party.
21. The law declared in Cox and Kings and elaborated in ASF
Buildtech must be read in this light. The very opening paragraphs of
Cox and Kings makes this abundantly clear. Therefore, when these
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judgements throw light on how third parties who may not fall within
the scope of “group of companies” but are placed in the same position,
the law declared must be appreciated in context. It is most
inappropriate to pick and choose individual sentences from concluding
summaries in the judgements ignoring the rest of the detailed
articulation of what led to such summaries.
22. It is trite law on what a precedent is. To quote from Ravi
3
Ranjan , which puts it succinctly:
41. It is well settled that a judgment is a precedent for the issue of law
that is raised and decided. The judgment has to be construed in the
backdrop of the facts and circumstances in which the judgment has
been rendered. Words, phrases and sentences in a judgment, cannot be
read out of context. Nor is a judgment to be read and interpreted in the
manner of a statute. It is only the law as interpreted by in an earlier
judgment, which constitutes a binding precedent, and not everything
that the Judges say.
[Emphasis Supplied]
23. Therefore, when ASF Buildtech builds further on Cox and
Kings , it expands the reasoning on discerning the veritable nature of a
party but without losing sight of the need to establish that the third
party to a contract is in a factual position that would for all practical
3 Ravi Ranjan Developers Pvt. Ltd. Vs. Aditya Kumar Chatterjee – (2022) SCC
OnLine SC 568
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purposes i.e. de facto , render him to be a party to that very contract.
This is a vital and important threshold to be met. For a party to be
regarded as a veritable party, one has to bring to bear circumstances
that would show that such non-signatory is for all practical purposes to
be regarded as a signatory. In fact, Paragraph 109 of ASF Buildtech is
instructive and is reproduced below:-
“109. From the above exposition of law, it can be seen that
there is nothing within the scheme of the Act, 1996, which
prohibits or restrains an arbitral tribunal from, impleading a
non-signatory to the arbitration proceedings on its own
accord. So long as such impleadment is undertaken upon a
consideration of the applicable legal principles — including,
but not limited to, the doctrines of ‘group of companies’, ‘alter
ego’, ‘composite transaction’, and the like —the arbitral
tribunal is fully empowered to summon the non-signatory to
participate in the arbitration. This autonomy stems from the
broad jurisdiction conferred upon arbitral tribunals under the
Act, 1996 to rule upon their own jurisdiction, including any
objections with respect to the existence or validity of the
arbitration agreement, as enshrined under Section 16. The
impleadment of a non-signatory, being fundamentally a
question of jurisdiction and consent, Special Leave Petition (C)
No. 21286 of 2024 Page 142 of 190 falls squarely within the
province of the tribunal's powers, free from any statutory
prohibition.”
[Emphasis Supplied]
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24. Therefore, a judgement has to be read for it truly stands for
and declares and not ignoring the very premise on which a non-
signatory may be attempted to be roped in as a veritable party. To
rope a non-signatory to an arbitration agreement into arbitration
proceedings, elements such as the “group of companies” or “alter ego”
or “a composite transaction” or facts of that nature would need to be
discernible. A historical and long-terminated contract cannot be
allowed to rope in a party to a completely different contract executed
years later, merely because the subject matter of the contract executed
years later, had been the subject matter of the earlier contract.
25. If the non-signatory is not a related party, not a group
company or enterprise, has no commonality of ownership,
management or control, is not alter ego of a party, and is not
undertaking a transaction that is contingent upon or subservient to or a
contact not forming part of a wider, integral and composite transaction,
it would not be possible to invoke principles of making such person a
veritable party.
26. The matter in hand entails roping in a completely
unconnected third party who is not connected to the Development
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Agreement that contains the arbitration agreement. The bargain
between Avvad and the Merged Society is a different one and does not
depend on the Development Agreement. The Development Agreement,
in fact, has purportedly been terminated way back in 2019. The first
whisper of a challenge under Section 9 of the Act appears to have been
made in 2023, and even that challenge has been allowed to lapse by
non-removal of office objections.
27. To now try and rope in Avvad into the arbitration
proceedings sought to be initiated by filing a Section 11 Application in
2025 and requesting this Court to rule that a prima facie case has been
made out, or to refer the parties to arbitration leaving it to the Learned
Arbitral Tribunal to answer the question of veritable party, is wholly
unacceptable. This Court’s jurisdiction entails a limited role of
examining existence of an arbitration agreement – such arbitration
agreement may have been executed formally (between signatories in
conformity with Section 7 of the Act) or should be reasonably and
prima facie discernible from the material on record. ASF Buildtech
allows the arbitral tribunal to take this decision on its own but Patel has
made Avvad a party in these proceedings and this Court is then
required to be satisfied that prima facie the potential to contend
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existence of arbitration agreement with a veritable party exists. Patel
has failed to make any dent in relation to whether such discernment is
at all possible.
28. Whether the Development Agreement was validly terminated
is a matter of evidence. Whether Patel is time-barred in bringing the
termination into question is also a matter of evidence. These are issues
that the Learned Arbitral Tribunal may consider when it hears Patel
and the Merged Society, but the limited issue being considered here is
whether Avvad is to be made one of the parties when Patel and the
Merged Society are referred to arbitration. In my opinion, in the
absence of any reasonable means to discern Avvad as a potential
veritable party, it would not be possible for this Court to return a prima
facie finding that Avvad may be a veritable party. Cox and Kings
requires the Section 11 Court to return such a finding. ASF Buildtech
only enables the arbitral tribunal to make such a determination even if
the Section 11 Court had not been presented with such a determination.
29. The privity of a veritable party has to be a de facto privity to
the agreement in which disputes have arisen. The veritable party has to
have proximity and connections to one of the de jure parties having
privity, in order to be treated as a veritable party. Avvad is a
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counterparty to the Merged Society in its own development agreement
in much the same way Patel had been a counterparty to the Merged
Society under the Development Agreement. It is impossible to draw
linkages to unconnected parties to make them veritable parties.
30. The reliance upon Section 19(b) of the Specific Relief Act
would have no consequence to privity to arbitration agreement. The
provision is extracted below:-
Except as otherwise provided by this Chapter, specific performance of
a contract may be enforced against –
(a) either party thereto;
(b) any other person claiming under him by a title arising
subsequently to the contract, except a transferee for value who has
paid his money in good faith and without notice of the original
contract;
[Emphasis Supplied]
31. The issue at hand is not about whether Patel can move
against Avvad if so advised but about whether Patel can move against
Avvad in arbitration proceedings initiated against the Merged Society.
The issue is not one whether Patel can pursue specific relief, if he so
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desires, but whether the forum in which he may seek specific relief is
the arbitral tribunal.
32. The underpinning of all the principles of law declared in
relation to arbitration proceedings is the foundational need for consent
to arbitrate. A veritable party is deemed to have given consent, which is
the effect of the law declared in ASF Buildtech read with Cox and Kings .
If such consent, express or deemed, is not discernible, the Section 11
Court cannot force a third party into arbitration or give a lead or a nod
to the Learned Arbitral Tribunal to be consider such third party as a
veritable party.
33. There is one other element that may be touched upon. If
Patel’s submissions were to be accepted, once a contract is executed,
every counterparty to every future contract would become a veritable
party to be roped into the arbitration proceedings. For example, if the
Development Agreement with Avvad were to also get terminated
leading to arbitration proceedings, and a third developer were to be
appointed in future, the question that would arise is to which of three
arbitration agreements would necessarily entail which developer to be a
veritable party. There would be multiple arbitration proceedings and in
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each, one of the parties could contend that the others are veritable
parties and the parties could fight over which of the proceedings must
continue roping in the rest as veritable parties. The consequences are
absurd to say the least, and that too when a foundational requirement
for committing to arbitration is consent or deemed consent.
34. Therefore, Patel’s conceptualisation is wholly misconceived.
The citing of random extracts from ASF Buildtech without regard to the
context and the very foundation on which it is based in a bid to rope in
non-signatory third parties who are not related, not alter egos, and not
involved in a composite interconnected bigger transaction, does not
pass muster.
35. Therefore, I am of the opinion that Avvad is not a veritable
party. It is open to Patel to initiate and pursue arbitration against the
Merged Society. Should Patel insist on making Avvad a party,
arbitration would not be the forum. Should Patel be desirous of
initiating arbitration against the Society, an arbitral tribunal is hereby
constituted in the following terms:
A] Mr. Snehal Shah, a Learned Senior Advocate of this
Court is hereby appointed as the Sole Arbitrator to
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adjudicate upon the disputes and differences between the
parties arising out of and in connection with the Agreement
referred to above;
B] A copy of this Order will be communicated to the
Learned Sole Arbitrator by the Advocates for the Applicant
within a period of one week from the date on which this
order is uploaded on the website of this Court. The
Applicant shall provide the contact and communication
particulars of the parties to the Arbitral Tribunal along with
a copy of this Order;
C] The Learned Sole Arbitrator is requested to forward
the statutory Statement of Disclosure under Section 11(8)
read with Section 12(1) of the Act to the parties within a
period of two weeks from receipt of a copy of this Order;
D] The parties shall appear before the Learned Sole
Arbitrator on such date and at such place as indicated, to
obtain appropriate directions with regard to conduct of the
arbitration including fixing a schedule for pleadings,
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examination of witnesses, if any, schedule of hearings etc.
At such meeting, the parties shall provide a valid and
functional email address along with mobile and landline
numbers of the respective Advocates of the parties to the
Arbitral Tribunal. Communications to such email addresses
shall constitute valid service of correspondence in
connection with the arbitration;
E] All arbitral costs and fees of the Arbitral Tribunal
shall be borne by the parties equally in the first instance,
and shall be subject to any final Award that may be passed
by the Arbitral Tribunal in relation to costs.
36. Needless to say, nothing contained in this order is an
expression of an opinion on merits of the matter or the relative strength
of the parties. All issues on merits are expressly kept open to be
agitated before the Arbitral Tribunal appointed hereby.
37. The Application is finally disposed of in the aforesaid terms.
38. Considering that this is commercial arbitration, considering
the nature of facts involved; the timing of various motions and filings;
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the costs inflicted across rounds of litigation; and the pace and manner
of approaching the Court, costs must follow the event. Costs are
assessed at a token sum of Rs. 1.50 lakhs, payable within four weeks
from the date of this judgement. Such costs shall be paid in equal
proportion to such persons who were members of the Earlier Society at
the time when the Development Agreement was executed and continue
to be members of the Merged Society. Office bearers of the Merged
Society shall ensure such distribution within two weeks of receipt of the
costs.
39. 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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