01Facts
The Petitioner Society entered into a Development Agreement (DA) in 2013 for property redevelopment with the Respondent Developer
¶ 3Following defaults in statutory dues, corpus payments, and transit rent, the Society filed a Section 9 Petition in 2017 seeking interim protection
¶ 4On December 14, 2017, the Court attached various personal assets of the partners and issued a blanket injunction against the Developer from alienating any properties across all their projects
¶ 30, 32Subsequently, thirty-one interim applications were filed by third parties (allottees/tenants from unrelated projects and family members) seeking to recover dues or intervene in the proceedings
¶ 11-14An Arbitral Tribunal was finally constituted in September 2024, and a Section 17 Order was passed in February 2026
¶ 5, 702Issues
i.1. Whether a Section 9 Court preserves jurisdiction to entertain applications from third parties who are not signatories to the arbitration agreement
¶ 20-21ii.2. Whether the Court should continue exercising jurisdiction under Section 9 once an Arbitral Tribunal has been constituted and has passed orders under Section 17
¶ 22, 24iii.3. Whether blanket injunctions affecting unrelated projects should be maintained or relegated to the Arbitral Tribunal for reconsideration
¶ 34, 3903Law Applied
The Court applied Section 9 and Section 17 of the Arbitration and Conciliation Act, 1996, noting that the jurisdiction is limited to "parties" as defined under Section 2(1)(h) for the preservation of the "subject-matter of the arbitration agreement"
¶ 19-21The Court relied on the principle from Firm Ashok Traders v. Gurumukh Das Saluja regarding the necessity of a manifest intent to arbitrate
¶ 23The Court integrated the doctrine of "veritable parties" or "non-signatories" as established in Cox and Kings Ltd. v. SAP India (P) Ltd., ASF Buildtech v. Shapoorji Pallonji, and Adavya Projects v. Vishal Structurals, which requires a non-signatory to show demonstrable proximity, consent, or a de facto connection to the dispute to be impleaded
¶ 27-28Provisions in the judgment · 7 · Linked ones open on LawLens
Arbitration and Conciliation Act, 1996 Section 2Section 9Section 11Section 17Section 21Section 36Section 37
04Reasoning
The Court reasoned that Section 9 is not a standalone equity jurisdiction but is strictly aid-of-arbitration; therefore, the Society is the only "protectee" under this specific DA
¶ 21The Court found that third-party decree-holders from unrelated projects lack privity and cannot "shoo-in" to Section 9 proceedings to execute money decrees obtained in other forums
¶ 27, 41Regarding the continuation of the December 2017 blanket injunction, the Court observed that under Section 9(3), once a Tribunal is formed, the Court must refrain from entertaining applications unless Section 17 is inefficacious
¶ 22The Court concluded that since the Society’s claims (damages of ~Rs. 18.65 Crores) are now before the Tribunal, the Tribunal is the proper forum to assess whether the security currently held in Court (over Rs. 11 Crores) is sufficient or surplus
¶ 34-3705Holding
The Court disposed of the Section 9 Petition and all 31 Interim Applications and held that third parties with no privity have no standing to intervene
¶ 71, 48-51The Court directed: (i) the Arbitral Tribunal to assess within three months the amount required to secure the Society's claim; (ii) any surplus funds to be released to the Developer, subject to orders from other competent execution courts; (iii) Respondent partner Tejal Rupji to honor his undertaking to clear third-party decrees within 12 months of such release; and (iv) the Court Commissioner to handover all materials to an official Registry-designated Commissioner and be paid fees of Rs. 2,50,000
¶ 70(C), 70(D), 70(F), 70(G)Original Court PDF
Rupji ConstructionsvsMunicipal Corporation Of Greater Mumbai (Mcgm) (Org Resp No 2)
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