A developer cannot condition possession or PAAA execution on disputed GST absent express contractual authority.

The Society’s members had vacated their homes during redevelopment.

Under a registered Development Agreement dated 30 October 2023, the Respondent developer was required, among other things, to execute and register a Deed of Rectification or fresh Permanent Alternate Accommodation Agreement (PAAA) within 30 days of obtaining the revised Commencement Certificate, and later to hand over possession after obtaining the Occupation Certificate.

The revised Commencement Certificate was obtained on 11 March 2025, but the developer did not execute the PAAA.

After obtaining the Occupation Certificate on 31 July 2026, the developer called on members to take possession but made execution of the PAAA and handover conditional on each member paying Rs.4,25,000 towards GST.

The Society invoked arbitration and sought interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, including execution of the PAAA and delivery of possession without payment of the disputed GST demand.

1. Whether the developer could make payment of the disputed GST demand a condition for executing and registering the PAAA or handing over the completed flats.

2. Whether the developer’s obligation to execute and register the PAAA arose independently of the later Occupation Certificate, and whether interim directions could require performance of that obligation.

3. Whether the Court could direct the PAAA to record the members’ existing registered entitlements without finally determining the disputed carpet-area measurement.

Section 9 of the Arbitration and Conciliation Act, 1996 permits the Court to grant interim measures to protect the subject matter of arbitration, without finally determining issues reserved for the arbitral tribunal.

Under Clause 8(iv) of the Development Agreement, the developer had to execute and register the PAAA within 30 days of obtaining the revised Commencement Certificate; the possession clause separately required possession to be offered after receipt of the full Occupation Certificate.

Clause 21 contemplated that GST might become payable by a member, while paragraph 5(b) of Schedule II to the Central Goods and Services Tax Act, 2017 and Notifications Nos. 4/2018-Central Tax (Rate) and 6/2019-Central Tax (Rate) were relevant to the asserted tax liability and its timing.

The Court held that a possible tax liability is distinct from a contractual right to withhold execution of the PAAA or possession; such withholding requires an express contractual term or legal requirement, neither of which was shown.

Clause 8(iv) tied execution of the PAAA to the revised Commencement Certificate, not to the later Occupation Certificate.

Since the revised certificate had been obtained and no agreement postponing or waiving the obligation was shown, the PAAA obligation remained outstanding.

The subsequent Occupation Certificate activated the separate possession obligation.

Although the GST legislation and notifications gave the developer a basis to contend that tax liability might arise, the agreement did not make payment of the disputed GST amount a condition precedent to execution or possession; the developer also provided no supporting calculation or individual assessment for the amount demanded.

The Court therefore left GST liability and quantum open, while directing performance of the outstanding contractual obligations.

It likewise declined to determine the disputed area afresh, directing that the documents reflect the members’ existing registered entitlements and leaving any genuine measurement dispute for arbitration.

The developer was directed, within two weeks, to execute and register a Deed of Rectification or fresh PAAA for each of the 27 members, at its own cost, reflecting their existing registered entitlements; within two weeks after execution and registration, it must hand over vacant and peaceful possession of the respective flats.

Neither execution nor possession may be conditioned on prior payment of the disputed GST demand, but the developer may pursue any lawful GST claim.

GST liability and quantum, and the Society’s monetary claims, were left open for arbitration; there was no order as to costs.