Objections To Terms Of Redevelopment Agreement Can't Be Adjudicated By Court U/S 9 Of Arbitration Act: Bombay HC

The Bombay High Court bench of Justice Somasekhar Sundaresan has held that objections related to the terms of the redevelopment agreement raised by members of the society can be decided only by the appropriate forum having jurisdiction over such issues. These matters cannot be adjudicated under section 9 of the Arbitration and Conciliation Act, 1996 (Arbitration Act). Brief Facts: This Petition has been filed under Section 9 of the Arbitration Act in relation to a Development Agreement dated July 31, 2024 (“Development Agreement”) executed between the Petitioner, Elite Housing LLP (“Elite”), and Respondent No. 1, Spectrum Co-operative Housing Society Ltd. (“Spectrum”). The Development Agreement pertains to the redevelopment of the property and existing structures located at Road No. 14-B, Khar West, Mumbai – 400052. Spectrum has 20 members, of whom 18 have agreed to vacate their premises under the Development Agreement. Respondents No. 2 (Lulla) and No. 7 (Haldar) are the only holdouts. Lulla occupies Flat No. 6 and is involved in a family inheritance dispute with his siblings (Respondents No. 3 to 6). Haldar and his late mother are listed as holders of Flat No. 12. Respondent No. 9, Leena (wife of Respondent No. 8), resides there with her sons and is willing to vacate, provided she receives the transit compensation. The redeveloped flats earmarked are Flat No. 1101 (1060 sq. ft.) for Flat No. 6 and Flat No. 801 (1002 sq. ft.) for Flat No. 12. Contentions: The Petitioner submitted that every member of Spectrum has confirmed that it is willing to move forward and it is only in respect of the two flats i.e. Flat No. 6 and Flat No. 12 that there is a hurdle. The amounts due and payable in respect of these two flats are also ready to be paid and only because the owners and occupants have led to a stand-off, these sums have not been paid. Learned Counsel for Lulla objected to the Development Agreement raising concerns such as inadequate security, unfair sharing of development potential, and lack of provisions for force majeure. However, the majority of Spectrum's members have approved the agreement. It was further submitted that the premises should not be vacated until execution of the Permanent Alternate Accommodation Agreement (PAAA), receipt of the Revised IOD, and issuance of a formal notice to vacate. Observations: The court at the outset noted that the redevelopment is stalled solely due to unresolved disputes over two flats Flat No. 6 and Flat No. 12 among family members. While objections regarding entitlements and procedural lapses have been raised, these are to be addressed by appropriate regulatory or quasi-judicial authorities. The core issue remains the absence of documentation for the two flats, which is unjustifiably halting the entire project. Based on the above, the court issued the following directions- The Petitioner may approach the Learned Court Receiver within one week from the date of upload of the order to execute the tripartite agreements for Flat No. 6 and Flat No. 12 in Spectrum. The Petitioner must demonstrate that the documents to be signed provide equal treatment to the entitlements for both flats, with any variations limited to identification, size, and features, consistent with the Development Agreement. Flat No. 6 and Flat No. 12 shall be identified as per Exhibits J1 and K1 of the Petition respectively. Once executed, the agreements shall bind the respective claimants from the Lulla and Haldar families. Upon receipt of the revised Intimation of Disapproval (IOD), Elite shall issue a formal notice to all Spectrum members, including respondents, with a copy marked to the Court Receiver, fixing a specific deadline no less than four weeks for vacating all flats. Concurrently, Elite must deposit all dues related to Flats 6 and 12 with the Registry of the Court, providing a detailed breakdown of the computation for verification by the Court Receiver. If the flats are not vacated within the stipulated deadline, the Court Receiver is authorized to take physical possession, with police assistance if necessary, and hand them over to Elite for redevelopment. A copy of the order is to be served on the local Deputy Commissioner of Police for necessary preparation. All payments related to Flat No. 6 hardship compensation, transit rent, brokerage, and displacement shall be made by the Court Receiver to Respondent No. 2 (Lulla) upon handing over possession to Elite. Similarly, for Flat No. 12, such payments shall be made to Respondent No. 9 (Leena), who resides there with her sons. These payments are strictly for facilitating alternative accommodation and do not affect the internal disputes or legal claims among family members, which shall be resolved through separate litigation. After redevelopment, Flats 1101 and 801 shall initially be handed over to Lulla and Leena,...

Objections To Terms Of Redevelopment Agreement Can't Be Adjudicated By Court U/S 9 Of Arbitration Act: Bombay HC

Mohd Malik Chauhan

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