177 Flat Buyers Still Await Society Membership As Bombay HC Rejects Developer’s Interim Bid Amid Unresolved Corpus And Bank-Guarantee Disputes

The parties entered into a Development Agreement for redevelopment of the Respondent Society’s property.

After the Society purported to terminate the agreement, the parties settled their arbitration in Consent Terms dated 27 December 2021, followed by a Consent Award dated 4 January 2022.

The Petitioner sought a mandatory injunction under Section 9 of the Arbitration and Conciliation Act, 1996, directing the Society to admit 177 flat purchasers as members.

It contended that the purchasers’ proportionate corpus, share money and sinking fund had been paid, and that the Society was imposing conditions not contained in the agreement or Consent Terms.

The Society disputed the corpus calculation and timing of payment, and contended that bank guarantees had expired before the periods or milestones specified in the Consent Terms.

The Petition was dismissed.

Section 9 of the Arbitration and Conciliation Act permits interim measures after an arbitral award is made but before enforcement under Section 36; however, it is a protective jurisdiction and ordinarily cannot substitute for execution or finally determine disputed rights.

Under Dorab Cawasji Warden v. Coomi Sorab Warden, (1990) 2 SCC 117, an interim mandatory injunction requires a stronger case than an ordinary prima facie case, serious injury not adequately compensable in money, and a balance of convenience supporting relief.

Under Deoraj v. State of Maharashtra, (2004) 4 SCC 697, where interim relief would substantially grant the final relief, a very strong prima facie case and exceptional circumstances demonstrating that refusal would cause greater injustice are required.

Periyakkal v. Dakshyani, (1983) 2 SCC 12, recognises a limited power to extend time fixed by a compromise decree to prevent serious injustice, exercisable only in a proper case and not merely because a party seeks it.

The relevant contractual terms—Clauses 9.5 and 9.9 of the Development Agreement and Clause 20 of the Consent Terms—require admission of purchasers upon compliance with the stipulated documentary and payment requirements, while permitting refusal where the required proportionate corpus remains unpaid.

Clauses 9.5 and 9.9 supported the Petitioner’s contention that the Society could not impose an additional condition tied to the Clause 10 Excess Amount; that monetary dispute was distinct from the corpus obligation under Clause 20.

But the Petitioner had not established, for purposes of the requested mandatory relief, that the full corpus was correctly calculated and paid: the applicable rate and formula remained disputed, and the payments relied upon began after possession had been handed over, contrary to Clause 20’s stated timing requirement.

The bank guarantees had also expired before the periods or milestones relied upon by the Society, raising unresolved questions under Clauses 3 and 4 of the Consent Terms; the Petitioner’s offer to provide replacement guarantees did not establish that the earlier obligations had been performed or that termination could not revive.

Because admitting the purchasers would substantially grant the relief sought and could be difficult to reverse, the unresolved compliance and termination issues meant the Petitioner had not met the heightened Dorab and Deoraj standards.

The Section 163 objection and non-joinder objection did not independently defeat the Petition.

The Petition was dismissed, with no order as to costs.

The Court left open the parties’ substantive rights and the amounts payable under Clauses 10 and 20, and did not affect the purchasers’ independent remedies under the MCS Act.