01Facts
The Petitioner Society entered into a Development Agreement (DA) dated May 2, 2013, with Respondent No. 1 (Developer) for property redevelopment
¶ 3Following defaults by the Developer in paying corpus amounts, transit rent, and statutory dues, the Society filed a Section 9 Petition in 2017
¶ 4In December 2017, the Court issued an expansive injunction restraining the Developer from alienating any assets or creating third-party rights across *all* its projects
¶ 32Over time, 31 Interim Applications (IAs) were filed by third-party decree-holders and allottees from unrelated projects seeking to claim funds deposited in this Court
¶ 11-14An Arbitral Tribunal was finally constituted on September 2, 2024, and has since passed a Section 17 order
¶ 5, 702Issues
i.1. Whether a Section 9 Court should continue to exercise jurisdiction and maintain interim orders once an Arbitral Tribunal has been constituted and a Section 17 application is filed
¶ 22ii.2. Whether third parties (decree-holders or allottees) who are not signatories to the arbitration agreement can intervene in Section 9 proceedings to recover dues unrelated to the subject matter of the arbitration
¶ 27-2803Law Applied
The Court applied Section 9 and Section 17 of the Arbitration and Conciliation Act, 1996, emphasizing that Section 9 is intended only for the "preservation and protection" of the subject matter of the arbitration agreement
¶ 19Per Section 9(3), once a tribunal is constituted, the Court shall not entertain applications unless the Section 17 remedy is inefficacious
¶ 22Relying on *Ashok Traders v. Gurumukh Das Saluja*, the court noted that Section 9 is not a standalone equity jurisdiction
¶ 23Furthermore, based on *Cox and Kings Ltd. v. SAP India (P) Ltd.* and *ASF Buildtech*, a third party can only be joined if they are a "veritable party" (e.g., via the Group of Companies doctrine or commonality of subject matter), as the term "party" under Section 2(1)(h) is strictly defined
¶ 20, 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 since the Arbitral Tribunal is now functional and has already passed a Section 17 order, the "temporal shelf life" of the Section 9 jurisdiction has expired
¶ 22, 24The Court found that the hundreds of third-party applicants (decree-holders from other projects) had no privity to the DA and were not "veritable parties"; thus, allowing them to chase the Developer's assets within this specific arbitration's Section 9 umbrella would be *coram non judice*
¶ 46, 49The Court observed that the 2017 injunction was so broad that it stalled the Developer's other projects, and now that a Statement of Claim for Rs. 18.65 Crores is before the Tribunal, the Tribunal is the only efficacious forum to determine what specific assets must remain secured
¶ 34, 37-3805Holding
All third-party intervention requests are rejected as they lack privity to the arbitration agreement
¶ 51The Court disposed of the Section 9 Petition and all 31 IAs. It held that: (i) All third-party intervention requests are rejected as they lack privity to the arbitration agreement [para. 51]; (ii) The Learned Arbitral Tribunal shall determine, within three months, the specific amount required to secure the Society's interests; any surplus shall then be released to the Developer [para. 70(C-D)]; (iii) The broad 2017 injunction is referred to the Tribunal for modification/vacation based on the Society's actual claims [para. 70(E)]; (iv) The Court-appointed Commissioner is directed to hand over all materials to the Registry/Tribunal and the previous oversight committee is disbanded
¶ 68-71Original Court PDF
Mulund Raviraj Co-Operative Housing Society Ltd.vsRupji Constructions And Anr And Mahasweta Gannavarapu And Anr (Interveners)
Click to open original judgment
Original judgment, available to read, download and summarize on LawLens.in
