The Bombay High Court division bench of Chief Justice Alok Aradhe and Justice Sandeep V. Marne has set aside an order passed by a single judge under Section 9 of the Arbitration Act, which had stalled the redevelopment of the Priyadarshini Co-operative Housing Society (Petitioner) owing to individual grievances from Respondents.

The bench ruled that such individual dissent from a minority of society members cannot impede a collectively sanctioned redevelopment project once validly approved by the general body.

Facts:

The dispute arose when Pranav Constructions Ltd (Petitioner), the appointed developer, filed for interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, after certain members refused to vacate their premises despite the execution of a Development Agreement on March 12, 2025.

While 21 out of 23 occupants had willingly signed consent letters, initially six but during the proceedings 3 parties, the occupants of Garage No. 6 (Respondent No. 2) and a bank premises (Respondent No. 3 & 4) resisted, citing discriminatory treatment in area allocation compared to residential flat owners.

The Single Judge had dismissed the developer’s plea on grounds of alleged discrimination and lack of arbitration prospects. However, the Division Bench firmly ruled that such grievances, even if genuine, must be addressed separately before the Cooperative Court or through civil litigation. "Members of a co-operative housing society are bound by the collective will of the society and the covenants of the Development Agreement," the Court observed, while emphasising the supremacy of general body decisions over individual objections.

It was the case of the developer (Petitioner) that Respondent Nos. 2 to 6, being members of the Society, were bound by the terms of the Development Agreement and could not act contrary to the society’s contractual obligations. It was contended that permanent alternate accommodation had been offered to all respondents, including the garage owner, in accordance with the General Body’s resolution.

It was also submitted that disputes regarding the extent of area to be allotted could not be adjudicated under Section 9 of the Arbitration and Conciliation Act, 1996. Reliance was placed on Ambit Urbanspace Versus. Poddar Apartment Co-operative Housing Society Limited., Commercial Arbitration Appeal (L) Nos. 12585 of 2025 and 16482 of 2025.

Opposing the contentions, the Respondents submitted that the Society and the Petitioner have favoured residential owners by providing additional area to them thus being discriminatory against the Respondents who are commercial premises/ garage owners.

Further it was also contended that without inviting tenders, the Society has handed over the redevelopment rights to the developer without offering any choice to the Society members and without discussing the redevelopment benefits with the members, thereby deeming the entire redevelopment process arbitrary and discriminatory.It was submitted that the learned Single Judge has rightly refused to grant any interim measures in favour of the Developer (Petitioner).

On due consideration of the submissions made by the parties, the court narrowed down to the following issues:

Two broad issues that arises for determination in the present Appeals are as under:-

(i) Whether individual members of a Co-operative Society are bound by the covenants in the Development Agreement executed by the Society with the Developer and whether their individual rights are subservient to the obligations of Co-operative Society under the Development Agreement ?

(ii) Whether existence of disputes between the members and the Society about their entitlements flowing out of redevelopment process can be a ground for the Court not to make interim measures directing vacation of premises in exercise of power under Section 9 of the Act ?

In addressing the first issue, the Court reaffirmed the settled legal position that once a valid Development Agreement is executed by the society through its General Body Resolution, individual members including those who have not signed the agreement are bound by it.

Citing the precedent in Ambit Urbanspace v. Poddar Apartment Co-operative Housing Society Ltd. and the authoritative Division Bench ruling in Girish Mulchand Mehta v. Mahesh S. Mehta, 2010 (2) Mh.L.J. 657 the Court held that a dissenting minority cannot override the collective will of the society.

It emphasized that the proprietary rights of individual members are subservient to the society’s obligations under such agreements. The Court further observed that in Ambit Urbanspace (supra), the garage occupiers were not members of the Society and therefore this Court has decided the further issue of permissibility to make interim measures under Section 9 of the Act against a person occupying premises in the Society’s building but not a member thereof.

In contrast, the present case involves a Respondent who is both a garage occupier and a member of the society. Additionally, the Developer had undertaken to provide permanent alternate accommodation to the Respondent.

As such, the Ambit Urbanspace decision was found relevant insofar as it established that individual members’ rights are subordinate to the society’s obligations arising from the Development Agreement.

The Court concluded that under Section 9 of the Arbitration Act, it has the authority to direct the eviction of uncooperative members to facilitate the redevelopment process, since the Development Agreement is binding even on members who resist compliance.

In regards to the second issue, the Court rejected the contention that the presence of unresolved grievances such as alleged discrimination in allotment of additional area between residential and commercial/garage occupants was a valid reason to deny interim measures under Section 9.

The Court observed that these were intra-society disputes concerning entitlements, and such issues must be resolved either before the Co-operative Court under Section 91 of the Maharashtra Co-operative Societies Act, 1960, or through a civil suit, depending on the nature of the grievance.

In the view of the above, the court was of the opinion that the discretion exercised by learned Single Judge was based on irrelevant considerations as Developer has no role to play in deciding the distribution of additional area between the members.

That decision is taken by the majority of members of the society. Thus, the relief of interim measures is declined to the developer by taking into consideration a factor over which it has no control. Therefore the bench observed “….that in our view exercise of discretion while declining relief under Section 9 of the Act is improper warranting interference by the Appellate Court.”

Accordingly, the court passed the following order,

“In our view, therefore the Developer has made out a case for grant of interim measures in petition filed under Section 9 of the Act. We accordingly proceed to pass the following order :-

(I) Judgment and order dated 20 June 2025 passed in Arbitration Petition No. 175/2025 is set aside.

(II) Respondents Nos. 2 to 4 are directed to execute consent letters and to vacate the possession of the premises in their occupation to the Developer in terms of the Development Agreement dated 12 March 2025 for the purpose of demolition and redevelopment of Society’s building.

(III) In the event Respondent Nos.2 to 4 fail to vacate possession of the premises in their occupation within a period of four weeks, the Developer is granted liberty to approach the Court Receiver of this Court, who shall take possession of premises in occupation of Respondent Nos.2 to 4 and handover the same to the Developer by taking police assistance, if necessary.

Case Title: Pranav Constructions Limited Versus Priyadarshini Co-operative Housing Society Limited and others, Arbitration Appeal (L) NO. 20093 OF 2025

Advocates For Pranav Constructions Limited (Appellant in Arbitration Appeal (L) No. 20093 of 2025 and Respondent No. 1 in Arbitration Appeal (L) No. 20373 of 2025): Mr. V. R. Dhond, Senior Advocate With Mr. Prathamesh Kamath, Mr. Harsh Behany, Ms. Prachi Sanghavi, and Ms. Saloni Manjrekar Instructed by HN Legal

Advocates For Priyadarshini Co-operative Housing Society Limited (Appellant in Arbitration Appeal (L) No. 20373 of 2025 and Respondent No. 1 in Arbitration Appeal (L) No. 20093 of 2025): Mr. Mayur Khandeparkar With Mr. Mohit Khanna

Instructed by Mr. Yash A. DhakadAdvocates For Respondent No. 2 (Garage Occupier): Mr. Rajiv Narula Instructed by Jhangiani Narula & Associates

Advocates For Respondent Nos. 3 and 4 (Owners of Bank Premises): Mr. Karl Tamboly Instructed by Mr. Jamshed Ansari