The Bombay High Court has held, prima facie, that in a society redevelopment dispute, where the Development Agreement is between the developer and the society, refusal of some members to vacate can trigger an arbitral dispute against the society, and the Court can grant interim relief under Section 9 of the Arbitration Act even against non-signatory members occupying the society premises.
The Court further held that substantial compliance with the contractual vacation mechanism is sufficient at the interim stage, that execution of the Permanent Alternate Accommodation Agreement is required before actual handover of possession and not before initiation of proceedings, and that absence of a bank guarantee under the Section 79A guidelines does not by itself invalidate redevelopment where the requirement is recommendatory and alternative security exists.
The Court also held that mere pendency of suits challenging redevelopment steps, in the absence of any stay order, is not a legal bar to granting Section 9 relief, and that in redevelopment matters, an interim direction to vacate is permissible where it is necessary to prevent the project from being stalled by a small minority after overwhelming majority approval.
A Single Judge Bench of Justice Amit Borkar first identified the real issue as whether, in exercise of powers under Section 9 of the Arbitration and Conciliation Act, it could direct dissenting members to vacate their flats at this stage despite objections on notice, PAAA execution, bank guarantee, pendency of suits and non-signatory status. On the objection that the petition was premature for want of notice under Clause 6.1, the Bench held that the material prima facie showed sufficient compliance. The Intimation of Approval had been received on 30 April 2026, the Society informed members, and undertakings from 68 members were collected. The Bench said that even if the dissenting respondents disputed the exact manner of communication, that did not establish complete non-compliance. The Bench also noted that even after receiving the petition along with the Intimation of Approval, the dissenting members still did not furnish undertakings to vacate.
On the argument that no member could be asked to vacate until the Permanent Alternate Accommodation Agreement under Clause 9.4 was executed, the Bench rejected the respondents’ interpretation. It held that Clause 9.4 protects members by requiring execution of the PAAA before actual handing over of possession, but it cannot be read in a way that makes Clause 6.1 ineffective. According to the Court, proceedings under Clause 6.1 can begin even before PAAA execution, provided the PAAA is executed before actual vacation. The developer’s statement that it would execute PAAA with the dissenting members whenever directed was treated as sufficient protection at this stage.
On the bank guarantee issue, the Bench accepted the developer’s case that the absence of a bank guarantee did not invalidate the redevelopment. It noted that the developer had clearly informed the Society in its offer that no bank guarantee would be furnished as the project would be under RERA, and the Society had accepted that condition. Relying on the Court’s earlier view that the bank guarantee requirement under the Section 79A Government Resolution is recommendatory and not mandatory, the Bench said that mere absence of a bank guarantee could not be used to deny interim relief, especially when the Development Agreement itself provided alternative security by reserving around 11,000 sq. ft. carpet area.
On the effect of pending civil suits challenging redevelopment resolutions and transaction documents, the Bench held that mere pendency of such suits does not suspend rights flowing from a valid agreement unless some stay or interim protection has actually been granted. Since none of those proceedings had resulted in an order staying the redevelopment, the Bench said they could not be used to block Section 9 relief. The Bench reiterated that individual disputes regarding implementation of redevelopment, appointment of the developer, validity of resolutions or benefit distribution must be agitated before the appropriate forum and do not bar interim measures under Section 9.
On the maintainability objection based on the dissenting members not being signatories to the arbitration agreement, the Bench held that the proposed arbitration was between the developer and the Society, which had executed the Development Agreement and undertaken to secure vacant possession from members. The Bench held that refusal of individual members to vacate was only the triggering event giving rise to an arbitral dispute between the developer and the Society.
The Bench also rejected the submission that the developer was effectively seeking final relief under the guise of interim relief. It observed that in redevelopment matters, where an overwhelming majority has accepted the project and only a few members are holding it up, a direction to vacate is meant to facilitate performance of the Development Agreement pending arbitration. The Bench clarified that such an order is not a final adjudication on ownership or independent rights.
A major factor that weighed with the Court was that the redevelopment had already crossed several important stages: 68 out of 80 members had accepted the project, the developer had been appointed, the Development Agreement and Power of Attorney were executed and registered, two Deeds of Adherence had been signed, the General Body had approved the PAAA, and MHADA had issued the Intimation of Approval and sanctioned plans. The Bench held that if the project was stopped at this stage because 12 members were not cooperating, prejudice would be caused not only to the developer but also to the 68 members waiting for implementation.
At the same time, the Bench acknowledged that dissenting members are entitled to pursue their grievances in proper proceedings and that some personal hardship, especially to senior citizens, was real. But it held that such hardship could be balanced by granting reasonable time for compliance and by requiring execution of the PAAA before actual vacation. The Bench recorded the developer’s undertaking that it would execute the PAAA before taking possession and would not insist on the 18% contractual penalty from certain respondents if they complied within time.
Briefly, a Section 9 petition was filed by Antariksh Realtors Pvt Ltd. seeking interim reliefs in relation to a society redevelopment project. The developer asked the Court to direct 12 dissenting flat occupants of Vidyavihar Palmview Co-operative Housing Society to hand over quiet and vacant possession of their flats so that demolition and redevelopment under the registered Development Agreement dated 7 August 2024 could commence. In the alternative, the developer sought appointment of the Court Receiver with power to take physical possession, including with police help, and also sought injunctions against obstruction, transfer, or creation of third-party rights in respect of the flats.
The Society consists of 80 flats across four residential buildings. According to the developer, 68 members supported the redevelopment, while respondent nos. 2 to 17 occupying 12 flats opposed it. The developer’s revised offer dated 30 November 2022 promised each member 1080 sq. ft., comprising 1040 sq. ft. RERA carpet area and 40 sq. ft. balcony, and it expressly stated that since the project would be undertaken under RERA, no bank guarantee would be furnished.
A Special General Body Meeting held on 21 April 2023 appointed the petitioner as developer by a majority of 61 out of 80 members, and that resolution was approved by the Deputy Registrar under Section 79A. Later, the Society formally issued a Letter of Appointment on 21 June 2024. The draft Development Agreement, Power of Attorney and related side letters were circulated to members, considered in the Special General Body Meeting of 20 January 2024, clarified by the developer on 31 January 2024, and thereafter the Development Agreement dated 7 August 2024 and the irrevocable Power of Attorney were executed and registered.
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The developer relied heavily on Clause 6.1 of the Development Agreement. Under that clause, after obtaining vacation approvals and informing the Society, members were required to furnish undertakings within 15 days agreeing to vacate; if any member failed to cooperate, the Society and/or the developer could initiate legal proceedings against such non-cooperating member for obtaining vacant possession. Thereafter, Deeds of Adherence were executed on 30 August 2024 and 9 December 2024 confirming and ratifying the redevelopment documents.
The Society held another Special General Body Meeting on 28 February 2026 in which the draft Permanent Alternate Accommodation Agreement was approved by 44 members, and the flat allotment methodology was also approved. MHADA issued the Intimation of Approval on 30 April 2026, which was forwarded by the developer to the Society along with approved plans. The developer said that except the 12 contesting respondents, all remaining 68 members gave written undertakings agreeing to vacate, leading to filing of the present petition on 5 June 2026.
The dissenting members opposed the petition on several grounds. They argued that the petition was premature because no proper notice under Clause 6.1 had been served on them; that no Permanent Alternate Accommodation Agreement had yet been executed under Clause 9.4; that Section 9 could not be used to grant what was effectively final relief; that they were not signatories to the Development Agreement or arbitration agreement; that the Development Agreement did not comply with the Section 79A guidelines because no bank guarantee had been furnished; and that some of them had already filed civil suits challenging the redevelopment documents. They also sought reasonable time on humanitarian grounds as some respondents were senior citizens and one was medically house-bound.
