A disputed termination claim does not automatically bar a society from proceeding with redevelopment.

The Society and Respondent No. 1 entered into a Development Agreement on 30 September 2020 for redevelopment of the Society’s property.

Members vacated the existing building in or around September 2021; construction later stalled, and transit rent allegedly stopped in February 2025.

The Society terminated the agreement in October 2025 and sought interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, including unpaid transit rent, security for liquidated damages and municipal taxes, possession of the site, and permission to proceed with another developer.

Respondents disputed the termination and asserted that an October 2025 MOU provided for Respondent No. 2 to take over the project. The Court treated the validity of termination and the parties’ final contractual rights as matters for the appropriate proceedings.

1. Whether interim protection under Section 9 should be granted for the Society’s claims for unpaid transit rent, liquidated damages, and municipal taxes while the contractual dispute remains unresolved.

2. Whether the Society could be permitted to proceed with redevelopment through another developer, and obtain possession of the site, despite the Respondents’ challenge to the termination and asserted rights under the MOU.

Section 9 of the Arbitration and Conciliation Act, 1996 empowers the Court to grant appropriate interim measures of protection where a prima facie case, balance of convenience, and the consequences of granting or refusing relief justify intervention; such relief must protect rights without finally deciding disputed claims.

In Essar House Private Limited v. Arcellor Mittal Nippon Steel India Limited, (2022) 20 SCC 178, the Supreme Court affirmed the breadth of Section 9 while requiring judicial and proportionate exercise of that power.

Transit rent may be protected as an interim contractual obligation where members have vacated their homes and supporting material establishes the claim prima facie; disputed liability may remain subject to arbitration, including through payment or security arrangements.

The Court also applied the principle reflected in Heritage Lifestyle, New Aarti, Jal Ratan Deep, Solaris Developers and ISON Builders that a Society need not ordinarily be prevented from pursuing redevelopment merely because the earlier developer disputes termination, provided its rights and claims remain open and the circumstances justify interim protection.

The Court considered the members’ prolonged displacement, the alleged stoppage of construction and transit rent, and the documents supporting the Society’s claims, while leaving responsibility for delay and the validity of termination undecided.

It directed payment of Rs. 53,92,556.16 for transit rent up to the stated October 2025 termination date, subject to credit for payments proved to have been made; it did not decide the claim for the later period.

Because the calculation and contractual basis of liquidated damages and municipal taxes required further examination, the Court ordered those amounts secured rather than released to the Society.

It further concluded that the Society should not be prevented from pursuing redevelopment solely because the Respondents contested termination; the Respondents’ contractual claims, including specific performance and damages, remained open.

The Respondent liable under the Development Agreement was directed to pay Rs. 53,92,556.16 towards transit rent within four weeks, subject to adjustment for payments made, and to secure Rs. 21,40,000 in claimed liquidated damages and Rs. 41,83,753 in claimed municipal taxes within the same period, by deposit or unconditional bank guarantee.

Respondent No. 1 was directed to vacate and hand over the property and remove its movables and machinery within four weeks.

Respondent No. 1 and its partners, servants and agents were restrained from obstructing redevelopment or creating third-party rights in the property or free-sale FSI; the Society was permitted to take necessary steps to redevelop through another developer.

The validity of termination, specific performance, damages, the tax liability, and transit rent claimed for periods after termination were left open for determination in the appropriate proceedings.