[Cites 7, Cited by 0]

Bombay High Court

Tagore Nagar Ashtavinayak Chs Ltd vs Puneet Realty Pvt Ltd on 28 January, 2026

2026:BHC-OS:2356

                                                                                 ARBPL.38852 of 2025.doc



                                    IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                                        ORDINARY ORIGINAL CIVIL JURISDICTION

                                      ARBITRATION PETITION (L) NO. 38852 OF 2025

                     Tagore Nagar Ashtavinayak CHS Ltd.                                       .. Petitioner

                          Versus

                     Puneet Realty Pvt. Ltd.                                                 .. Respondent


                           Mr. Pradeep Sancheti, Senior Counsel, a/w B.K. Barve, Simmy
                           Sebastian, Dhanesh Gaikwad, i/b B.K. Barve, for the Petitioner.

                           Mr. Mayur Khandeparkar, a/w Viraj Parikh, i/b Jayesh Mestry,
                           for Respondent.


                                        CORAM            :   SOMASEKHAR SUNDARESAN, J.

                                         DATE            :   JANUARY 28, 2026


                     ORAL JUDGEMENT :


                     Context and Factual Background:

1. This is a petition filed under Section 37 of the Arbitration and

Conciliation Act, 1996 ("the Act") impugning an order dated November

3, 2025 ("Impugned Order") passed by a Learned Arbitral Tribunal

under Section 17 of the Act.

2. The Petitioner, Tagore Nagar Ashtavinayak Co-operative Digitally signed by AARTI Housing Society Ltd. ("Society") and the Respondent, Puneet Realty AARTI GAJANAN GAJANAN PALKAR

2026.01.28 15:20:41 JANUARY 28, 2026 +0530 Aarti Palkar

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Private Ltd. ("Developer") entered into a memorandum of

understanding dated January 10, 2023 (" MOU") in connection with

redevelopment of Building No. 32, at Vikhroli East, constructed in 1963

by the Maharashtra Housing Board under the subsidised industrial

housing scheme of the Maharashtra Housing and Area Development

Authority ("MHADA"). The building was to be sold to the association of

allottees and the land underneath the building was to be leased to such

association. The Society was formed by the allottees.

3. It is common ground that the building has been and is in a

dilapidated condition. By a public notice dated 17.05.2022, the Society

invited bids from various developers for redevelopment of the building.

The Developer responded to the said tender and made a proposal on

May 31, 2022. By a special general body meeting (" SGBM") resolution

passed on August 17, 2022, the Society approved the appointment of

the Developer in order to effect the redevelopment of the building.

4. The parties then engaged on the draft of a development

agreement and eventually, the final draft of the Development

Agreement ("DA") is said to have been sent by the Developer to the

Society by an email dated December 14, 2022. On December 30, 2022,

another SGBM was held to approve execution of the MOU with the

Developer. The finalised draft of the DA was to be an annexure to the

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MOU, which would entail granting redevelopment rights to the

Developer and enabling the Developer to perfect the lease of the land

from MHADA by payment of the requisite amounts stipulated by

MHADA and the sale of the building from MHADA in favour of the

Society.

5. Various other annexures such as the resolutions passed by the

Society, which were in the possession of the Society, were meant to be

annexed to the MOU. According to the Developer, despite repeated

requests, these documents were not provided by the Society, but the

parties continued to act in terms of the MOU, with the Developer taking

steps and also incurring expenses in coordination with the Society, and

the Society benefitting from such actions, even while seeking to

renegotiate and get a bigger and better deal .

6. The MOU provided that the Developer must obtain the

conveyance within a period of 270 days from its execution. The MOU

was executed by the Developer, the Society and also by multiple

members of the Society, other than those who were deceased as of the

date of its execution. Another MOU came to be executed on March 9,

2023 which was executed by legal heirs of ten members who had not

executed the MOU earlier. The new MOU was identical in its terms to

the earlier MOU and contained the same 270-day deadline by reference

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to the period and not by reference to a date.

7. Meanwhile, MHADA communicated the amounts payable by

the Society as Rs. 89.98 lakh as of April 28, 2023. On May 15, 2023, it

is claimed by the Developer, the Government of Maharashtra had

proposed a waiver of additional charges for 56 MHADA societies

including the Society. However, the Developer offered to pay MHADA

the amount claimed, under protest, and MHADA is said to have

rejected the proposal on July 4, 2023.

8. On September 15, 2023, MHADA raised a demand of Rs. 96.03

lakhs, which amount was indeed paid by the Developer to MHADA on

September 21, 2023. According to the Developer, the conveyance was

held up due to the Society's failure to provide documents to MHADA.

Meanwhile, further payments to MHADA were indeed made by the

Developer towards service charges, lease rent, assessment charges,

goods and service tax etc. The no-objection certificate from MHADA

was eventually received by the Developer in the Society's favour on

November 6, 2023. MHADA also provided the draft of the lease deed

and the sale deed, which would firm up the absolute title of the Society

to the land on which the building stands, to enable the redevelopment

envisaged in the transaction between the parties.

9. The conveyance was not effected. On January 28, 2024, the

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Society suddenly took a stance that the Developer had failed to obtain

the conveyance within the contracted period of 270 days. The parties

then started trading correspondence. On February 5, 2024, the Society

convened a SGBM, by which the execution of the sale deed and the

lease deed in respect of the property was approved. On April 12, 2024,

the Society authorized the Developer to represent its interests before

MHADA by issuing a letter in favour of the Developer.

10. Meanwhile, the Deputy Registrar of Co-operative Societies

disqualified the members of the then managing committee of the

Society for a period of five years on April 15, 2024. In parallel, on April

29, 2024, MHADA provided the finalised and duly engrossed

instruments of lease deed and sale deed for execution in favour of the

society, and issued a direction that stamp duty be paid on the

instruments after having them adjudicated by the stamp authorities.

11. At this stage, the Society took a firm stance that the Developer

had failed to take steps to complete the conveyance within the

stipulated time of 270 days from the execution of the MOU. On May

30, 2024 the Developer paid the stamp duty and thereafter the parties

traded correspondence as to whether or not the Developer was in

compliance with the MOU. The Society started demanding greater

transit rent and towards this end, the parties sent emails to each other

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and the Developer in fact sent a revised set of terms by an email dated

November 11, 2024.

12. On April 21, 2025, the Society issued a notice (" Termination

Notice") to the Developer that at a SGBM held on April 19, 2025, it had

been decided to terminate the appointment of the Developer. The

Developer filed a petition under Section 9 of the Act, which was

converted into an application under Section 17, which eventually led to

the Impugned Order.

Impugned Order:

13. The reliefs granted in the Impugned Order would be

appropriate to note. The Learned Arbitral Tribunal returned prima

facie findings in favour of the Developer having complied with its part

of the bargain. The termination on the premise of conveyance not

having been executed in 270 days was untenable while the blanks in the

MOU were inconsequential and did not deter the Society from

demanding performance of the MOU that it now seeks to repudiate.

14. The primary prayer made by the Developer before the Learned

Arbitral Tribunal was to stay the effect and operation of the

Termination Notice and to prevent the Society from taking further

steps in connection with the Termination Notice. The Learned Arbitral

Tribunal has granted the same. The reliefs granted in the Impugned

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Order read thus:-

i) Interim reliefs is granted in terms of prayer clauses (a) to (d) of the application, however, subject to the following conditions.

ii) The Respondent Society shall be entitled to obtain lease of its land and the sale deed of its building from MHADA. The Claimant shall render all necessary assistance for the same and shall also paid any stamp duty or charges as may be demanded by MHADA for the same. The Claimant may claim these amounts from the Respondent in the present arbitration proceedings. The Tribunal will adjudicate upon these claims at the final hearing of the arbitration.

iii) After the lease deed and the sale deed are executed, the Claimant shall offer transit rent to all members of the Society to enable them to shift to alternate premises, if they so desire. The members who desire to avail of this offer made by the Claimant shall vacate their premises and deposit the keys with the Respondent Society and the Respondent Society shall confirm the receipt of the keys and vacant possession. After confirmation from the Respondent Society, the Claimant shall commence payment of transit rent to such members who have vacated their premises. The Claimant may claim the amounts paid to these members in the present arbitration proceedings.

iv) The manner in which the aforesaid amounts under clause (ii) and (iii) are to be adjusted or paid over to the Claimant shall be determined at the final hearing of the arbitration. The Tribunal shall also determine whether the Claimant is entitled to interest on the amounts paid by it, and if so, from what rate and from what date.

v) The amounts paid would be subject to final award, and it may be possible that the Tribunal may impose a charge on the Respondent's property for recovery of the said amounts in case the Claimant succeeds in seeking recovery of the said amounts after final adjudication of the disputes.

vi) The Claimant shall not claim any equities on the basis of any payments made by it or any assistance rendered by it in compliance of the aforesaid directions. The same shall not affect the Respondent's right to

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contend that the MOU has been validly terminated, which termination shall be adjudicated in the final hearing of the arbitration.

vii) In case the Claimant refuses to or neglects to abide by the aforesaid directions, the Respondent is at liberty to apply to the Tribunal for vacation of the interim orders forthwith.

[Emphasis Supplied]

Contentions of the Parties:

15. I have heard Mr. Pradeep Sancheti, Learned Senior Advocate on

behalf of the Society, and Mr. Mayur Khandeparkar as well as Mr. Viraj

Parikh on behalf of the Developer on different dates. With their

assistance, I have had the benefit of reviewing the material on record to

assess whether any case has been made out for an intervention into the

Impugned Order, bearing in mind the scope of jurisdiction under

Section 37 of the Act.

16. Mr. Sancheti would contend that while the MOU contains a

reference to the DA, no DA is actually annexed to the MOU. The MOU

(both iterations) itself contains blanks including the dates of the

meetings and resolution numbers, rendering it an inchoate instrument,

on which specific relief could never be granted. Therefore, interim relief

in aid of specific relief too could never have been granted. Emails from

the Developer acknowledge that the draft of the DA has not been signed

and the Learned Arbitral Tribunal too has found that no DA was

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annexed to the MOU. Moreover, by an email of February 1, 2024, the

Society clearly refused any intention to sign the DA.

17. The email dated January 17, 2023 which refers to the DA being

finalised on December 13, 2022, but there is no approval of the general

body of members of the Society, Mr. Sancheti would submit. The

correspondence traded between the parties throughout 2023 would

indicate that there were negotiations between the parties on the rent

payable, and the Developer even sent revised terms of rent as part of

this exercise. There is nothing to indicate that any SGBM approved of

any terms and therefore there is no concluded contract, Mr. Sancheti

would submit. The Society was without a Managing Committee

between April 15, 2024 and April 6, 2025. Thereafter, he would

submit, the SGBM to terminate the MOU was held on April 19, 2025

and the Termination Notice was issued.

18. The upshot of the submission is that there was no concluded

contract for specific performance to be granted. There was no

consensus on the terms and conditions, and the parties were still

negotiating terms when the Termination Notice was issued. Therefore,

the Learned Arbitral Tribunal was wrong in considering grant of

interim relief on an inchoate contract. The building is admittedly

dilapidated and when rent is still being negotiated, it was wrong on the

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part of the Learned Arbitral Tribunal to grant relief.

19. Mr. Mayur Khandeparkar on behalf of the Developer would

point to specific clauses in the MOU to contend that the MOU signed by

both sides squarely records that the DA had been finalised. He would

also point to the provision in the MOU that ensured that there could be

no modification to the DA except in writing The DA was to be executed

within 15 days of the conveyance being executed, and the conveyance

had indeed been executed within the expected timeline of 270 days of

the second MOU.

20. Mr. Khandeparkar would also point to multiple SGBM

resolutions on the record and two specific resolutions approving of the

MOU of which the DA was the intended annexure. These were put to

the members and they knew what they approved on December 30,

2022 since the finalised DA was clearly made available to them. The

blanks were references to resolution numbers and dates, and nothing

turned on the content being left blank, when what was meant to be

filled in the blanks is evident from contemporaneous evidence even if

on a prima facie basis.

21. Mr. Khandeparkar would rely on the Supreme Court decision in

Murugesan1 to submit that a party that has reaped the benefits of an

1 Union of India vs. Murugesan - 2022 (2) SCC 525

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agreement cannot seek to resile from it and contend that the agreement

was not valid and binding. Mr. Khandeparkar would point out that 27

out of 32 members have personally signed the MOU, but the Society

itself has signed both the MOUs. He would explain the email dated

February 1, 2023 from the Society recording that it was not willing to

sign the draft DA at that juncture, to indicate that the Developer wrote

to the Society on January 16, 2023 asking for the annexures to be

completed, with a reminder on January 27, 2023. It was in response

that the Society replied on February 1, 2023 that the office bearers were

not willing to sign the draft DA at that stage. Even at this stage, they

did not say that the DA had not been finalised but had indicated their

refusal to sign.

22. Mr. Khandeparkar would submit that the parties continued to

act upon the MOU throughout the period in question. On September

22, 2023, the Society wrote to MHADA requesting that payment may

be accepted from the Developer on their behalf. On September 26,

2023, the payment was actually made. Even on April 12, 2024, after

the first assertion of default in complying with the 270-day deadline,

the Society authorised the Developer to collect the engrossed lease and

sale deed on its behalf. All of this points to the prima facie view of the

Learned Arbitral Tribunal being a plausible view, based on assessment

of evidence, which squarely falls in the exclusive domain of the Learned

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Arbitral Tribunal, not leading to anything unreasonable or perverse,

warranting interference by the Section 37 Court.

23. Mr. Khandeparkar would submit that the very fact that the

parties negotiated the transit rent indicates that this provision of an

agreed term was sought to be renegotiated and the parties indeed could

agree to an amendment in writing, towards which an attempt had been

made by the Society. That would only indicate, he would contend, that

there was an underlying agreement that was sought to be amended.

24. The contention that the Society has lost confidence is not a

mantra that can be invoked without any supporting facts, Mr.

Khandeparkar would submit. It has to be backed by facts and

circumstances that justify loss of confidence, and that forms subject

matter of appreciation of evidence, which the Learned Arbitral Tribunal

has reasonably and plausibly analysed.

Analysis and Findings:

25. I have given my anxious consideration to the core contention by

Mr. Sancheti, namely, that there was no DA in place and that the MOU

was inchoate. This is the core ground on which it is claimed that the

Impugned Order returns an impossible outcome. Yet, the core ground

on which the Termination Notice was issued is that the MOU was not

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complied with by the Developer since the conveyance deed had not

been obtained within the contracted 270-day period. Likewise, it

appears that the conduct of the parties did not point to the Society

being of the view that the MOU was inchoate.

26. With that context, I note that the Learned Arbitral Tribunal

examined the validity of the reasons given for the termination. The core

ground of the Termination Notice issued by the Society is that the

Developer had failed to complete the conveyance from MHADA within

a period of 270 days as contracted in the MOU. Therefore, the Learned

Arbitrator considered the core issue as to whether the Developer was in

default on account of the conveyance deed not having been executed

within 270 days.

27. First, the Learned Arbitral Tribunal found that the MOU was

executed in identical terms by the Society and the Developer twice, with

different sets of members executing the two versions (legal

representatives of those who had passed away executing the second

one) and that the 270-day deadline would commence from the second

MOU dated March 9, 2023. The deadline would therefore be December

4, 2023. The Developer had secured permissions from MHADA and

approval for the deeds by November 2023. Therefore, on a prima facie

basis, considering the 270-day deadline being computed from the

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second MOU, the Learned Arbitral Tribunal found the Developer not to

be in default.

28. Second, the Learned Arbitrator examined whether the ground

of termination was, prima facie, valid and appropriate, or whether it

was appropriate to grant protection in order to preserve the subject

matter of the arbitration agreement. Whether the Society was right in

contending that the MOU and the DA were inchoate, is not something

that the Learned Arbitral Tribunal could have answered conclusively at

this stage of the matter. However, the Learned Arbitral Tribunal

examined the issue on a prima facie basis, and ruled that it could not be

held that there was no committed transaction at all between the parties.

29. Indeed, the MOU was approved at a SGBM and was executed in

two iterations by the Society, with varying combinations of members of

the Society also signing it (a large majority of them having signed it).

The record also shows that the MOU was acted upon by both the

Society and the Developer right until the point at which the Developer

delivered engrossed and finalised execution drafts of the lease deed and

sale deed. The Society refrained from having them executed. The MOU

set a deadline and even the terms on which the Developer was selected

indicated that the party chosen as the developer ought to foot the bill

for payments to be made. The Developer performed his obligations. It

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is apparent that the Society did not adopt the stance that there was no

MOU at all in the eyes of law. Instead, the Society took the stance that

the MOU set a deadline and that deadline had been missed.

30. Indeed, the Society took the stance that it has lost confidence in

the Developer, but there is nothing on record, prima facie, to indicate

that any action on the part of the Developer resulted in a justification

for the purported loss of confidence.

31. In these circumstances, I find no basis to find fault with the

Learned Arbitral Tribunal's approach to preserving the subject matter

of the arbitration agreement.

32. The contention that there are blanks in the MOU is well dealt

with inasmuch as these blanks relate to the numbers of the resolutions

and their dates, and nothing would turn on these details not having

been entered in the draft. That the DA was to be annexed and the

parties finalised it, is also prima facie covered by the MOU,

necessitating a written agreement to modify the DA. The Learned

Arbitral Tribunal could indeed arrive at a finding after trial that the DA

was not finalised, but to come to a view at this stage that it would never

be able to take a view that there was a meeting of minds and agreement

between the parties would be impossible. The Learned Arbitral

Tribunal has kept all issues open for trial and yet preserved the subject

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matter of the arbitration agreement.

33. The Learned Arbitral Tribunal has also taken note of the fact

that the building was and is dilapidated. Some members of the Society

have even migrated out and therefore, arrangements have been made

to deal with the same in the reliefs extracted above. The Developer too

has been put to terms and been disabled from claiming equities.

Although there was nothing to show that the Developer had not been

ready and willing to perform the MOU (on the contrary, there is every

pointer to the Developer having performed his part of the bargain), the

Learned Arbitral Tribunal has also granted liberty to the Society to have

the Impugned Order vacated should the Developer not comply with the

directions issued in the Impugned Order - to pay transit rent and keep

accounts.

Scope and Standard of Appellate Review:

34. It is well settled law that an appeal is a continuation of the

original proceeding. This has been summarised well in Malluru

Mallapa2 in the following words:

13. It is a settled position of law that an appeal is a continuation of the proceedings of the original court. Ordinarily, the appellate jurisdiction involves a rehearing on law as well as on fact and is invoked by an aggrieved person. The first appeal is a valuable right of the appellant and therein all questions of fact and law decided by the trial court are open for 2 Malluru Mallapa (D) through LRs vs. Karuvathappa & Ors. - (2020) 4 SCC 313

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reconsideration. Therefore, the first appellate court is required to address itself to all the issues and decide the case by giving reasons. The court of first appeal must record its findings only after dealing with all issues of law as well as fact and with the evidence, oral as well as documentary, led by the parties. The judgment of the first appellate court must display conscious application of mind and record findings supported by reasons on all issues and contentions [see : Santosh Hazariv Purushottam Tiwari [Santosh Hazari v. Purushottam Tiwari, (2001) 3 SCC 179] ,Madhukar v. Sangram [Madhukar v. Sangram, (2001) 4 SCC 756] , B.M. Narayana Gowda v. Shanthamma [B.M. Narayana Gowda v. Shanthamma, (2011) 15 SCC 476 : (2014) 2 SCC (Civ) 619] , H.K.N. Swami v. Irshad Basith [H.K.N. Swami v. Irshad Basith, (2005) 10 SCC 243] and Sri Raja Lakshmi Dyeing Works v. Rangaswamy Chettiar [Sri Raja Lakshmi Dyeing Works v. Rangaswamy Chettiar, (1980) 4 SCC 259] ].

35. Yet, it is equally well-settled law that at an appellate Court

exercising the power under Section 37 of the Act to review the exercise

of discretion by an Arbitral Tribunal at an interim stage, would be well

guided by the principles set out by the Supreme Court in Wander vs.

Antox3, namely, that interference is warranted only if there is

something perverse or implausible in the exercise of discretion in

making an interlocutory arrangement. The following extract would

suffice:

14. The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the appellate court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to

3 Wander Ltd. Vs. Antox India (P) Ltd. - 1990 Supp SCC 727

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have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by that court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage, it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion.

[Emphasis Supplied]

36. In a plethora of judgements under Section 37 of the Act, the

principle articulated in Wander vs. Antox has been followed and

reiterated. In other words, the Section 37 jurisdiction, when

considering a challenge to an order passed under Section 17 of the Act,

is a light-touch jurisdiction, where the Court must not substitute the

Learned Arbitral Tribunal's plausible view with its own competing

plausible view. The Learned Arbitral Tribunal is the forum that is

seized of the factual facets of the matter, and thereby the master of the

evidence, with control over what constitutes the quality and quantity of

evidence. In such effort, if the Learned Arbitral Tribunal has

conducted itself perversely, or has been arbitrary and unreasonable or