S.9 Application Not Appropriate For Relief Against Non-Signatory When There Is No Dispute Between Parties To Be Referred To Arbitration: Bombay HC

The Bombay High Court bench of Justice Arif S. Doctor has held that Section 9 of the A&C Act is not the correct mechanism to obtain relief against an entity when the privity of contract is absent between Factual Overview: The dispute arose regarding a Redevelopment Agreement (RDA) and a Supplementary Agreement (SA) dated 20 July 2022. The agreement was entered between the Developer (Petitioner) and the Co-operative Housing Society Limited (Respondent No. 1), comprising eleven members. The RDA was individually signed by each of the eleven members of the society. The Respondent No. 2 (R-2) is neither a member of the society nor has signed the RDA. The petition pertains to a plot of land whose development rights were granted to M/s Gulshan Construction vide a deed of assignment by the owner. The company constructed two structures on the plot, namely A-Wing and B-Wing. The A-Wing initially comprised a ground floor and three upper floors, and B-Wing comprised a ground floor and two upper floors. Later, a fourth floor was added to the A-Wing. All the eleven flats in A-Wing were sold, i.e., the eleven members of the society. The flats in B-Wing were kept unsold and later reserved by a partner of M/s Gulshan Construction for personal use. In 1993, the partner sold all flats in B-Wing to R-2, who, since 2001, has been independently assessed from property tax and has independent water and electricity connections. The bills raised for the same are paid by R-2. The two buildings are segregated by a compound wall, with a separate entrance to both. In 2006, the flat owners of A-Wing formed the society. In 2018, during a Special Body Meeting (SGM), the society resolved to undertake redevelopment. However, according to the petitioner, due to the non-cooperation on the part of R-2, the work did not commence. The society thereafter applied for a unilateral deemed conveyance concerning the land and structure in question, contested by R-2. However, the Competent Authority vide order dated 7 September 2020 granted the deemed conveyance. The said decision was challenged by R-2 by filing a writ petition, which is presently pending. R-2 rejected the petitioner's offer to the society for the redevelopment, claiming exclusive possession of B-Wing. The R-2 was then notified by the society of the RDA and SA's execution and registration. The R-2 was then asked to approve the redevelopment, which the R-2 declined. The redevelopment plans were later approved by the MCGM after the petitioner received an Intimation of Disapproval (IOD). The society then requested the R-2 sign and registered the Permanent Alternate Accommodation Agreement (PAAA) and hand over the apartment possessions. The petitioner addressed a letter to R-2 stating that R-2 had never applied for membership of the society, and opposed the grant of the deemed conveyance by suppressing the purchase agreements. The R-2 did not comply with the petitioner's request, and therefore, the petitioner filed the petition. Submissions: The petitioner made the following submissions: The society is the rightful owner of the land under Wing A & B. No legal barrier is present to prevent the society from redeveloping the property. Also, with respect to the challenge to the deemed conveyance by the R-2, no steps were taken by him to expedite the hearing of the petition, and the interim order does not stay with the order of 7 September 2020.R-2 not being a member of the society would not have any difference as the Court can grant interim relief against third parties to protect the subject matter of the arbitration agreement. To buttress this, the counsel placed reliance on Choice Developers v. Pantnagar Pearls CHS Ltd. & Ors (2022).Minority members/occupants of a co-operative housing society could not hinder the redevelopment project approved by the majority based on any independent right or dispute with the society. To buttress the argument, reliance was placed on Girish Mulchand Mehta & Anr. v. Mahesh S. Mehta & Anr (2010) and M/s Dem Homes LLP v. Taruvel CHSL & Ors. (2024).Reliance placed by the R-2 on the agreement for sale is an unregistered agreement and does not create rights pertaining to the land under B-Wing. The agreement also provided for the purchaser of B-Wing to be admitted as a member of the society, and R-2 cannot demand the partition of the property because the said building is indivisible.The R-2 was treated at par with the eleven members of the society and was granted an additional area of 22% over and above the existing space occupied by R-2. The R-2 cannot be said to be devoid of any rights or entitlement as a result of the said redevelopment. Furthermore, clause 5(c) of the RDA was amended to incorporate the term 'occupant' in order to ensure that R-2 receives equal shares under the redevelopment plan. The Respondent No. 1 made the following submissions: ...

S.9 Application Not Appropriate For Relief Against Non-Signatory When There Is No Dispute Between Parties To Be Referred To Arbitration: Bombay HC

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S.9 Application Not Appropriate For Relief Against Non-Signatory When There Is No Dispute Between Parties To Be Referred To Arbitration: Bombay HC

Mohd Talha Hasan

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