01Facts
The Petitioner Society entered into a Development Agreement (DA) dated May 2, 2013, with the Respondent Developer for property redevelopment
¶ 3Following defaults by the Developer regarding statutory dues, transit rent, and construction milestones, the Society filed a Section 9 petition in 2017 seeking interim protection
¶ 4-5On December 14, 2017, the Court issued an injunction restraining the Developer from alienating any assets across all its projects and directed the attachment of various personal assets
¶ 5, 30, 32Over several years, 31 Interim Applications (IAs) were filed by third-party decree-holders and allottees from unrelated projects of the Developer, seeking to claim funds (~Rs. 11 crores) deposited in Court
¶ 1, 6, 12-13An Arbitral Tribunal was finally appointed on September 2, 2024, and subsequently passed an order under Section 17 on February 4, 2026
¶ 5, 702Issues
i.1. Whether a Section 9 Court should continue to exercise jurisdiction and entertain third-party interventions once an Arbitral Tribunal is constituted and Section 17 proceedings have commenced
¶ 8, 22ii.2. Whether third parties (decree-holders or allottees from unrelated projects) who are not signatories to the arbitration agreement can intervene in Section 9 proceedings to claim deposited assets
¶ 20, 2703Law Applied
The court primarily applied Section 9 and Section 17 of the Arbitration and Conciliation Act, 1996
¶ 19It emphasized that the term "party" under Section 2(1)(h) is restricted to signatories or "veritable parties" to the arbitration agreement
¶ 20, 27The court relied on the "Group of Companies" doctrine and principles governing non-signatories established in Cox and Kings Ltd. v. SAP India (P) Ltd., ASF Buildtech Pvt. Ltd. v. Shapoorji Pallonji, and Adavya Projects Pvt. Ltd. v. Vishal Structurals, which require demonstrable proximity or consent to rope in third parties
¶ 28Additionally, the court applied the temporal restriction in Section 9(3), which mandates that a Court shall not entertain Section 9 applications once a tribunal is formed unless the Section 17 remedy is inefficacious
¶ 19Provisions in the judgment · 1 · Linked ones open on LawLens
Arbitration and Conciliation Act, 1996 Section 2
04Reasoning
The Court reasoned that Section 9 is not a standalone equity jurisdiction but is strictly in aid of preserving the subject matter of the specific arbitration agreement
¶ 19, 21Since the Arbitral Tribunal was constituted and had already passed a Section 17 order, the "rule of law" dictated that the Court exit the proceedings to avoid becoming coram non judice
¶ 24, 46Regarding third-party intervenors, the Court found they lacked privity to the DA and did not qualify as "veritable parties" because their claims arose from entirely different projects and contracts
¶ 21, 50The Court observed that while the 2017 injunction was expansive, its continued necessity must now be assessed by the Tribunal based on the specific Statement of Claim (SOC) filed by the Society, rather than the interests of the world at large
¶ 34, 3805Holding
The Court disposed of the Section 9 Petition and all 31 IAs, holding that the jurisdiction now vests with the Arbitral Tribunal under Section 17
¶ 25, 71The Court held that third-party applicants have no standing to intervene and must seek relief in appropriate execution or civil forums
¶ 48, 51The Arbitral Tribunal was directed to determine within three months which portion of the deposited funds is necessary to secure the Society's claims; any surplus must be released to the Developer
¶ 70(C)-(D)The developer was ordered to abide by his undertaking to settle decree-holders' claims within 12 months of such release
¶ 70(F)The Court-appointed Commissioner was directed to hand over all materials to an official Registry Commissioner and was awarded fees of Rs. 2,50,000
¶ 70(G)Original Court PDF
Mulund Raviraj Co-Operative Housing Society Ltd.vsRupji Constructions And 3 Ors And Vinod Balkrishna Bagayatkar And 4 Ors (Applicants/Intervener)
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