The Bombay High Court (Bombay Bench) dismissed a writ petition filed by a cooperative housing society seeking to escape arbitration proceedings initiated by a Developer, holding that the Society is bound by arbitration clauses signed by its constituent flat purchasers.
The petitioner, a registered cooperative housing society, had filed the petition to challenge an order passed by the sole arbitrator under Section 16 of the Arbitration and Conciliation Act, 1996 (ACA). This order refused to dismiss arbitration proceedings between the Developer and the Society regarding the conveyance and title of land under the Maharashtra Ownership of Flats Act (MOFA). The society insisted that it was not a party to the arbitration agreement, as its name does not appear in the sale agreements containing the arbitration clause.
The Developer developed and sold flats in several buildings at Pune, but failed to execute the conveyance in favour of the flat purchasers’ society, compelling unilateral “deemed conveyance” under MOFA. The dispute pivoted on whether the arbitration clauses in individual flat sale agreements bind the Society subsequently formed by those buyers, especially for disputes over the title and scope of the conveyance.
The Society argued that it could not be compelled to arbitrate since it was a non-signatory to the sale agreements and that the conveyance deed itself had no arbitration clause. The Developer contended that all rights, obligations, and arbitration provisions from individual agreements became vested in the Society once formed, making the Society bound by those agreements and eligible for arbitration. The arbitrator agreed with the Developer, and the High Court was approached via writ jurisdiction seeking to quash that finding.
The Bench comprising Justice N.J. Jamadar held that the ACA is a self-contained code, with judicial interference sharply curtailed except for cases of “patent lack of jurisdiction”, which was not made out here. It found that after formation, a housing society legally steps into the shoes of its members for rights and obligations stemming from their contracts with the developer.
The Court observed that the Society not being a signatory itself is irrelevant where it acts as a collective agent for those flat buyers. The judgment relied on principles from Daman Singh v. State of Punjab[1] confirming Societies’ corporate identity, and cited relevant Bombay High Court and Supreme Court precedents discouraging writ challenges to interlocutory arbitral orders.
In result, the Court dismissed the writ petition with costs, expressly holding that all objections to jurisdiction should ordinarily be raised before the arbitral tribunal and reviewed in any subsequent challenge under Section 34 of the ACA. It affirmed that collective entities formed out of contracting parties cannot escape the arbitration obligations underlying their members’ contracts, and such disputes should not be converted into writ matters unless there is a clear and obvious lack of jurisdiction.
Cases relied on:
1. Cox and Kings Limited vs Sap India Private Limited & Anr. (2024) 4 SCC 1
2. BKS Galaxy Realtors LLP (Previously known BKS Galaxy Realtors Pvt Ltd) and Ors vs Sharp Properties and Ors. 2024 SCC OnLine Bom 3514
3. Deep Industries Limited vs Oil and Natural Gas Corporation Limited & Anr. (2020) 15 SCC 706
4. SBP & Co vs Patel Engineering Ltd & Anr. (2005) 8 SCC 618
5. Punjab State Power Corporation Limited vs Emta Coal Limited & Anr. (2020) 17 SCC 93
6. Bhaven Construction Through Authorised Signatory Premjibhai K. Shah vs Executive Engineer, Sardar Sarovar Narmada Nigam Limited & Anr. (2022) 1 SCC 75
7. Nivedita Sharma vs Cellular Operators Association of India (2011) 14 SCC 337
8. Daman Singh & Ors vs State of Punjab & Ors. (1985) 2 SCC 670
9. Arunkumar H. Shah HUF vs Avon Arcade Premises Cooperative Society Limited & Ors. 2025 SCC OnLine SC 828
10. Mazda Construction Company vs Sultanabad Darshan CHS Ltd. 2012 SCC OnLine Bom 1266
11. Radhakrishna Ananta Prabhu & Ors. vs Giri Constitution & Ors. 1992 Mh.L.J. 836
Appearances:
For the Petitioner: Mr. A.A. Kumbhakoni, Senior Advocate, with Ronak Utagikar, Anand Akut, Ameya Patwardhan and Manoj Badgujar
For Respondent No.1: Mr. S.C. Wakankar, with Aishwarya Bapat
For the Respondent-State: Mrs. S.D. Chipade, AGP
[1] (1985) 2 SCC 670
