[Cites 8, Cited by 0]
Bombay High Court
Om Sri Maa Shakti I Namah vs Marve Co-Operative Housing Society Ltd on 5 May, 2026
2026:BHC-OS:11518
901-CARBP-126-2023.docx
rrpillai IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION PETITION NO. 126 OF 2023
M/s. Om Sri Maa Shakti I Namah
A Partnership firm duly registered
under the provisions of
Indian Partnership Act, 1932
and having its principal place of
Business at Shop No. 8, Saloni Apts.
TPS 56th Road, Borivali (West), Mumbai 400 092
Represented by its Authorised
Representative Mr. Prashant K. Doshi ... Petitioner
Versus
Marve Co-operative Housing Society Ltd.
A society registered under the Maharashtra
Co-operative Societies Act, 1960
and having its office at Marve Road,
Malad (W), Mumbai-400 064 ... Respondent
Mr. Bhavin Gada, Mr. Ameet Mehta, Mr. Nirav Marjadi, Ms.
Srushti Mehta, Mr. Kushal Harnesha i/b. Solicis Lex for the
Petitioner.
Mr. Gauraj Shah a/w. Mr. V. A. Joshi, Mr. Vir Patel i/b. Chitnis
Vaithy and Co.for the Respondent.
CORAM : GAURI GODSE, J.
RESERVED ON: 22nd DECEMBER 2025
PRONOUNCED ON: 5th MAY 2026
Digitally
signed by
RAJESHWARI
RAJESHWARI RAMESH 1/23
RAMESH PILLAI
PILLAI Date:
2026.05.05
16:10:38
+0530
::: Uploaded on - 05/05/2026 ::: Downloaded on - 06/05/2026 15:34:32 :::
901-CARBP-126-2023.docx
JUDGMENT:
1. This petition is filed under Section 34 of the Arbitration
and Conciliation Act, 1996 ("Arbitration Act"), for setting aside
the Arbitral Award dated 11th July 2022, passed by the Sole
Arbitrator, dismissing the petitioner's claim for specific
performance, challenging the termination of the development
agreement, and partly allowing the counterclaim of the
respondent. The claimant is directed to pay to the respondent
the amount received from the members for the additional
area.
Facts In Brief Pleaded By The Claimant:
2. The respondent society negotiated with the petitioner
and entered into a Development Agreement, under which all
members were to be provided with 7% of the area over and
above the area occupied by them in the old building. The
members also insisted on the upfront payment of the entire
corpus fund to the society, amounting to Rs. 24 Lakhs, which
has been duly paid. Thereafter, the respondent, by following
due process of law, duly appointed the petitioner by passing a
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unanimous resolution, to redevelop the building of the
respondent.
3. The building of the said society was constructed
sometime in the year 1973. There are 21 members who have
22 flats (one member has two flats with one share certificate)
in the old building, on ground plus four upper floors, without a
lift. On average, each flat had 380 sq. ft. of carpet area. The
petitioner, in pursuance of said Development Agreement,
initiated various steps by offering rent to the members of the
respondent and, upon obtaining various approvals from
MCGM, started construction on the said property. Until the
stoppage of work, the petitioner had incurred a sum of
approximately Rs. 18,00,00,000/- towards the redevelopment
process and had reached the construction of the ground + five
upper floors.
4. As per the Development Agreement, the area assigned
for redevelopment was about 1239.3 square metres, but upon
conducting enquiry, the petitioner came to know that the area
of the plot as per the MCGM record was 1309.3 square
metres, but out of this area, certain area had been
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surrendered for construction of road on two occasions,
thereby leaving behind a net area of 892.30 square meters
which was available for the purpose of redevelopment. On 1st
March 2013, IOD was issued, and the petitioner made an
application for a commencement certificate on 28 th December
2011. On 7th June 2013, a commencement certificate was
issued. On 19th November 2013, a commencement certificate
up to 5 floors was issued. On 12th February 2015, the property
card was issued by the concerned authority of MCGM
showing the respondent's name. On 1st August 2015, the
respondent's advocates issued a termination letter terminating
the Development Agreement and invoking the arbitration
clause.
5. On 23rd September 2015, a reply was issued to the
respondent's termination notice. The petitioner had explained
the steps it had taken after obtaining vacant possession of the
subject property, such as obtaining a property card and area
rectification, to secure further CC for the redevelopment of the
subject property. Further, the petitioner followed up with
departments for area correction/boundary correction of the
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subject property, to claim the road setback area and hand
over the same to MCGM, to carry out subdivision of land and
get appropriate orders thereon, and to carry out rectification of
the conveyance deed of the subject property. On 17 th October
2015, the advocate for the claimant, in a rejoinder letter to the
petitioner's reply, raised false and incorrect contentions.
6. On 7th December 2015, PAAA was executed between
the petitioner, the respondent and a member of the
respondent. On 12th July 2016, an order by this Court in the
respondent's Section 9 petition was passed, whereby by
consent, the parties decided that the rent deposited by the
petitioner with the court be handed over to the respondent,
and the petitioner undertook to furnish a Bank Guarantee for a
sum of Rs.75,00,000/- and pay arrears of property tax within a
period of four weeks.
7. The respondent undertook to withdraw its letter to the
MCGM if the petitioner complied with its undertaking. The
petitioner was granted liberty not to hand over possession of
the flats to the members of the respondent until its claim
regarding the payment required to be made by the members
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for the additional area was decided. Respondent's Section 9
petition was disposed of. On 30th August 2016, the respondent
issued a termination notice to the petitioner for allegedly
defaulting on its obligations under the development
agreement and the undertakings given to this Court. On 14 th
September 2016, reply to the second Termination Notice by
the advocate for the petitioner was issued to the respondent.
The petitioner contended that it had, by its letter dated 12 th
July 2016, requested the respondent to extend the time period
for complying with the order dated 12 th July 2016, and that the
respondent had agreed to include the suggestion in the
respondent's meeting to be held on 18 th August 2016.
However, without considering the request, the respondent had
purportedly terminated the agreement.
8. On 20th June 2017, the petitioner, by letter, forwarded
copies of the pay orders for the Bank Guarantee, rent, and
property taxes to the respondent. On 3 rd December 2017, the
members of the respondent executed a consent letter in
favour of the petitioner, allowing the petitioner to carry out the
redevelopment.
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9. The petitioner filed the statement of claim challenging
the termination of the agreement and sought specific
performance. The respondent filed a statement of defence
and a counterclaim. On 13th November 2019, a demand draft
of Rs. 2,70,00,000/- was issued by the petitioner in favour of
the respondent, and on 22nd November 2019, consent terms
were executed between the petitioner and the respondent.
The terms are signed by the members of the respondent, by a
representative of the respondent and by the advocates of the
respective parties. On 22nd November 2019, minutes of a
meeting was recorded that the matter was reserved for the
passing of an order by the Arbitral Tribunal. On 27 th December
2019, the parties exchanged a draft of the consent terms. On
3rd March 2020, the respondent's advocate sent an email to
the Tribunal requesting an award.
10. The respondent took a complete resiled after having
agreed to most of the terms between the parties and, in fact,
signing a consent term to that effect. On 3 rd March 2020, the
petitioner's advocate sent an email to the Tribunal and the
respondent, expressing shock and surprise at the
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respondent's conduct. It was stated that the respondent has
not received any communication since the parties signed the
consent terms. A request was made to the Tribunal to
convene a meeting to understand and seek the reason why
the consent terms between the parties were unilaterally
rejected. On 9th March 2020, minutes of the meeting were
recorded, whereby the Tribunal noted that the parties were
trying to settle the disputes. It is further noted that the
mandate had expired. Parties undertook to file an appropriate
application seeking an extension. On 9th March 2020, the
minutes of the consent terms meeting were exchanged
between the petitioner and the respondent. On 29 th June
2020, an email by the advocate of the petitioner to the
advocate of the respondent, forwarding the minutes of
settlement arrived between the parties, and requesting to
finalise the same.
11. On 8th July 2020, an email by an advocate of the
respondent to an advocate of the petitioner wrongly alleged
that no settlement talks had purportedly transpired between
the parties as recorded on 9 th March 2020. Further, the
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respondent made demands that were over and above the
terms agreed between the parties. On 2 nd October 2020, this
Court extended the mandate until 28th February 2021 to
complete the arbitral proceedings. On 26 th February 2021, the
petitioner filed written submissions before the Tribunal. On
26th April 2021, the respondent filed written submissions
before the Tribunal. On 26th April 2021, this Court extended
the mandate of the Hon'ble Tribunal by three months to pass
an award. On 26th July 2021, the extended mandate of the
Tribunal. On 11th July 2022, the impugned award was passed
by the Arbitral Tribunal.
Defence of The Respondent:
12. The claimant breached the terms and conditions of the
contract. Under clause 18 of the development agreement, if
the benefit of any enhanced FSI became available after
issuance of the full IOD, the same was to be shared between
the parties in equal proportion. The benefit of fungible FSI that
had become available after issuance of the IOD was neither
discussed nor disclosed to the respondent. The claimant
failed to provide the 7% additional carpet area under clause
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26 of the agreement. The claimant also failed to disclose the
total number of car parking spaces in the approved plan as
required under clause 31 of the agreement. The claimant
failed to make payment of the municipal assessment taxes as
agreed in clause 43 of the agreement, and also failed to
obtain the requisite insurance policy as per clause 48 of the
agreement. Under clause 59 of the agreement, the claimant
was required to furnish an irrevocable bank guarantee of Rs.
1,25,00.000/-. However, only a bank guarantee of Rs. 75
lakhs was furnished, which lapsed on 23rd January 2015.
13. According to the respondent, the petitioner did not
comply with the obligations under the agreement, failed to
obtain the plans' approval, and did not pay the monthly
compensation. In breach of the agreed terms, the claimant
created a third-party interest without handing over the 22 flats
to the members. Hence, the termination of the agreement was
valid. In the absence of compliance with the terms and
conditions of the agreement and failure to plead and prove the
readiness and willingness to perform its part of the contract,
the claimant was not entitled to specific performance of the
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contract as prayed.
Submissions On Behalf Of The Petitioner (Claimant):
14. The claimant had always shown readiness and
willingness to comply with the terms and conditions of the
contract. Pursuant to the order passed by this court, the
claimant had also deposited a pay order in this Court. The
claimant had also issued a letter on 20th June 2017 to the
society for submitting further pay orders. Hence, the claimant
was always ready and willing to provide all the security as per
the terms and conditions of the contract, and also comply with
all the obligations on the part of the claimant.
15. As per clauses 37 and 39 of the agreement, if any
member wishes to purchase additional area over and above
the area provided free of cost, then the member was required
to pay such extra consideration amount, and the member's
right to the additional area would be concluded only upon full
payment. Hence, there was no substance in the grievance
made on behalf of the respondent that an additional area was
not provided. A period of 24 months, including a grace period
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of six months, was agreed upon from the date of
commencement of the certificate to complete the construction.
It was also agreed that if there was any difference or any
dispute between the petitioner and the society, the same
would be settled by mutual discussion, and if not settled, the
parties would go to arbitration. Hence, the respondent's
conduct in terminating the agreement shows a complete
disregard for the terms and conditions of the contract.
16. By the counterclaim, the society sought to recover the
amount paid by members for the purchase of additional area
under the contract. Hence, the society would not be entitled to
claim any amount from the petitioner on behalf of the
members. The learned Arbitrator failed to consider the
questions of law and facts involved in the dispute. The learned
arbitrator passed the award in a hurry after a very long time,
following the conclusion of the arguments. Hence, the award
would be liable to be set aside on the ground that it was
passed after a very long lapse of time after the conclusion of
the arguments.
17. The learned arbitrator failed to take into consideration
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the relevant terms and conditions of the contract. Hence,
failure on the part of the learned Arbitrator to decide in
accordance with the terms of the contract governing the
parties would attract the patent illegality ground as the
oversight would amount to gross contravention of section
28(3) of the Arbitration Act. He therefore submitted that the
impugned award is liable to be set aside under Section 34 of
the Arbitration Act. To support his submissions, learned
counsel for the petitioner relied upon the decisions of the
Apex Court in State of Chhattisgarh and Another vs. Sal
Udyog Pvt. Ltd.1 and State of Maharashtra vs. Hindustan
Construction Company Ltd.2
Submissions On Behalf Of The Respondent:
18. The claimant breached various terms and conditions of
the contract. The learned Arbitrator has considered all the
terms and conditions of the contract and the claimant's failure
to comply with its obligations. Failure to provide flats to the
members before creating third-party rights is also considered
an important factor in refusing the discretionary relief of
(2022) 2 SCC 275
(2010) 4 SCC 518
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specific performance. A perusal of the award would indicate
that the law arbitrator has considered all the terms and
conditions of the contract.
19. The learned Arbitrator held that the question of any
delay in the execution of the project on account of time spent
updating or rectifying the property card would not arise. All the
defences raised by the petitioner are dealt with in the
impugned award. The petitioner's contention that the project
was delayed on account of changes in the Development
Control Regulations, demonetization, introduction of the GST
Act, defending the proceedings initiated by third-party flat
purchasers and one of the building contractors is discarded in
the impugned award with reasons.
20. The learned Arbitrator held that the claimant failed to
comply with the undertakings as recorded in the consent
orders dated 16th June 2016 and 12th July 2016. Hence, the
respondent rightly terminated the Agreement. The respondent
issued the termination notice dated 29th August 2016 on
account of the petitioner's failure to honour the undertakings
given to this Court to furnish security and to pay taxes. The
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petitioner took no action for more than a year against the
termination of the agreement and the power of attorney. The
petitioner's attempts are to harass the respondent society and
to block the respondent society from appointing a new
developer to complete their redevelopment.
21. The respondent's counterclaim for the return of the
amount accepted by the petitioner from the members for the
additional area is based on clause 37 of the agreement. The
petitioner accepted the amount from the members for the
additional area under the agreement. Hence, the respondent's
counterclaim for return of the said amount in view of
termination of the agreement is well within the scope of the
terms and conditions of the agreement. There is no substance
in the additional grounds raised by the petitioner that,
because the development agreement was not executed
independently with the members, the counterclaim cannot be
allowed. There is also no substance in the additional ground
of challenge that the award is made after a long lapse of time
from the date of extension of the mandate. The award is made
well within the extended mandate period. All the arguments of
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the petitioner and the entire evidence on record are clearly
dealt with by the learned Arbitrator. Hence, there is no
substance in the additional grounds raised by the petitioner.
22. The petitioner has no financial capacity, readiness, or
willingness to perform his part of the contract. The petitioner
failed to perform the obligations under the development
agreement and has breached every single undertaking given
to this court and the indulgence granted by the society and its
members. The grounds raised in this petition are an attempt to
reargue the case by re-appreciating the evidence, which is not
permissible under section 34 of the Arbitration Act. It is an
established legal principle that the interference of a court
under Section 34 is limited and permissible only when the
arbitral award is arbitrary, perverse or suffers from patent
illegality, which goes to the root of the matter or when the
conscience of the court is shocked. In the present case, no
such ground is made out, warranting any interference under
Section 34 of the Arbitration Act. The respondent has taken
over the physical position of the property and is at an
advanced stage of its development by appointing a new
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developer. The petitioner's conduct of consistently breaching
its obligations and the undertaking given to this court also
precludes the petitioner from any relief in this petition.
Analysis and Conclusions:
23. I have carefully perused the findings recorded by the
learned Arbitrator while considering the submissions of the
parties. I have also perused the pleadings and the evidence.
The terms of the contract and all subsequent stages are
discussed in detail by the learned Arbitrator. The terms of the
contract reveal the petitioner's obligations. The petitioner's
argument that steps were taken to complete all the
procedures required for area correction and the incorporation
of the respondent's name on the property card are part of the
obligations recorded in the agreement. The petitioner, on
sanction of the plans, had to enter into a permanent alternate
accommodation agreement with the members of the
respondent. The members of the respondent had to vacate
their respective flats only after the petitioner obtained IOD. If
members of the respondent wish to purchase additional area,
then the consideration was provided in the agreement. The
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timelines to complete construction were also provided. The
petitioner could offer possession to third-party purchasers only
after offering possession to the members. Therefore, in view
of the terms and conditions agreed between the parties and
the subsequent conduct of the petitioner in not performing all
the obligations and not adhering to the timelines are dealt with
by the learned Arbitrator. The petitioner's grounds to
challenge the termination of the agreement are also dealt with
by the learned Arbitrator. Considering the petitioner's conduct
as seen from the evidence on record, the learned Arbitrator
has discarded all the grounds raised for challenging the
termination of the contract. Failure on the part of the petitioner
to prove readiness and willingness, and the capacity to
complete the project, is also considered an important factor in
refusing relief of specific performance.
24. The learned Arbitrator has recorded findings on the
breaches committed by the petitioner by referring to the
relevant clauses 18, 26, 31, 43, 48, 59 and 62 of the
agreement. There appears to be no dispute that the petitioner
also failed to comply with the obligation to furnish the bank
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guarantee as security, as agreed in the terms and conditions
of the agreement. The breach committed by the petitioner of
the undertaking given to this court is also part of the record.
The explanations and justifications given by the petitioner
regarding the provision of security in view of the mutually
agreed terms are rejected by the learned arbitrator for want of
any satisfactory evidence. Therefore, all the grounds raised
on behalf of the petitioner as recorded in the above
paragraphs are only about reviewing the evidence.
25. I have perused the terms and conditions of the
agreement and the counterclaim. Learned counsel for the
respondent is right in pointing out that the counterclaim is well
within the scope of the terms and conditions of the contract,
and in particular, clause 37 of the agreement. There is no
dispute that the amount accepted by the petitioner from the
members pertains to the additional area under the
development agreement. Therefore, the counterclaim is well
within the scope of the terms and conditions of the
development agreement. The respondent is entitled to seek
return of the amount on behalf of its members on the ground
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of termination of the development agreement. There is also no
merit in the additional ground of challenge that the award is
liable to be set aside, as it is made after a long lapse of time
from the date of extension of the mandate. The award is made
well within the extended mandate period. Nothing is shown as
to how the award is vitiated on the said ground. I have already
recorded reasons to hold that the award is made on well-
considered reasons after appreciating the pleadings and
evidence on record. It is not a ground raised by the petitioner
that any particular evidence or any submission was not
considered by the learned Arbitrator. Hence, there is no merit
in the additional grounds raised by the petitioner. The award
cannot be set aside on the additional grounds raised by the
petitioner.
26. The grievance made that the terms were amicably
settled and the respondent resiled without any intimation or
reason has no meaning. There is nothing on record to indicate
that any terms of amicable settlement were finalised and
accepted on record by the learned Arbitrator. Therefore, such
a grievance cannot be considered for the first time in a
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Section 34 petition. It is also not a valid ground to set aside
the award.
27. The learned Arbitrator has, in detail, dealt with the terms
and conditions of the agreement, after appreciating the
evidence, interpreted all the terms of the contract, and
concluded that the petitioner failed to comply with the
obligations and that the respondent is justified in terminating
the contract. The reasonable conclusion reached by the
learned Arbitrator is a plausible view. It is a well-established
legal principle that reappreciating the findings of the arbitral
tribunal and taking an entirely different view is not permissible
in a petition under Section 34, thereby virtually acting as a
court of appeal. There cannot be a reappreciation of evidence,
and the award cannot be set aside only on the ground that, on
merits, another view is possible. It is also a settled view that
perversity would include patent illegality if the finding is based
on no evidence at all, or an award that ignores vital evidence,
or a finding based on documents taken behind the back of the
parties. In the present case, the learned Arbitrator has
considered the entire evidence. Thus, the view taken by the
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learned Arbitrator is based on a consideration of the entire
evidence on record and an interpretation of the terms of the
contract. Hence, the decisions of the Apex Court relied upon
by the learned counsel for the petitioner are of no assistance
to the petitioner in the facts of the present case.
28. The law on the scope of interference in the Section 34
petition is no longer res integra. In multiple decisions of the
Apex Court, it is held that the Section 34 Court must not lightly
interfere with arbitral awards in a casual and cavalier
manner, unless a conclusion can be drawn that the award
suffers from perversity and patent illegality that goes to the
root of the matter. The Apex Court has held in various
decisions that the mandate under Section 34 is to respect the
finality of the arbitral award and the party autonomy to get
their dispute adjudicated by an alternative forum as provided
under the law.
29. In the present case, there is no ground to set aside the
award under the limited scope of Section 34 of the Arbitration
Act. Hence, no interference is called for in the impugned
Award.
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30. For the reasons recorded above, the petition is
dismissed.
[GAURI GODSE, J.]
