After Doctors’ Rs 60 Lakh Went Unreturned For 21 Years, Bombay HC Bars Third-Party Rights In Plot Tied To Promised 4,360-Sq-Ft Premises

Under a Memorandum of Understanding dated 27 June 2005, the appellants paid the respondents Rs. 60 lakh in connection with a proposed project on Dave’s Estate.

The respondents were to construct and deliver commercial premises measuring 4,360 square feet within 24 months of receiving an IOD, or within such other time as mutually agreed; the respondents had not obtained the IOD or returned the money.

The appellants sought relief under Section 9 of the Arbitration and Conciliation Act, 1996, including protection against third-party rights in the property.

After the Single Judge dismissed the petition on 19 June 2026, the appellants appealed.

An arbitrator had already been appointed, and respondents 3–6 were negotiating with respondents 1–2 for the development rights in the property.

Section 9 of the Arbitration and Conciliation Act, 1996 empowers the court to grant interim measures to preserve the subject matter of a dispute; the Court stated that such protection is warranted where disposal of the subject matter may leave a party remediless on its claim for specific performance.

The Court also quoted Sections 215 and 420 of the Indian Penal Code, concerning specified conduct relating to recovery of stolen property and cheating that dishonestly induces delivery of property, respectively.

It expressed a prima facie view on alleged fraudulent intent but did not determine criminal liability.

No precedent was cited; although the Court mentioned its power under Article 226 to consider directing criminal proceedings, it did not invoke that power.

The Court considered the payment of Rs. 60 lakh, the failure to obtain the IOD, and the non-delivery of the promised premises, noting that the money had not been returned.

It accepted that the appellants had no direct rights in the land itself but reasoned that a transfer to a third party could frustrate their claim to the premises and reduce their remedy to damages.

The ongoing negotiations for development rights supported the need to preserve the property pending arbitration.

The Court regarded the respondents’ contention that the MoU had terminated or ended by conduct as a matter not requiring evidentiary determination at the interim stage; it also considered limitation not to be an issue on the stated facts.

Its observations concerning alleged cheating were prima facie and did not constitute a final finding of criminal liability.

The Division Bench allowed the appeal, set aside the Single Judge’s order, and granted relief in terms of prayer clauses (A) to (D).