A binding contract requires clear agreement on essential terms; mere negotiations or approvals do not suffice if key elements remain undefined.

JUDGEMENT :

Context and Factual Background:

1. This Petition is an appeal filed under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996 (“the Act”) challenging an order dated October 14, 2024 (“Impugned Order”) passed by a Learned Arbitral Tribunal refusing grant of interlocutory relief sought by the Petitioner in an application filed under Section 17 of the Act.

2. The factual matrix relevant for purposes of this appeal may be summarised as follows:-

a) The Petitioner, Heritage Lifestyle and Developers Pvt.Ltd. (“Heritage”) is a Developer while the Respondent, Madhugiri Co-operative Housing Society Ltd. (“Madhugiri”) is a Housing Society located at Plot No. 408, CTS No. 1775, Shindewadi, Sion Trombay Road, Chembur, admeasuring 7,340 sq. yards, with a total of 82 members having 84 flats;

b) Heritage made a bid pursuant to a tender floated by Madhugiri, which was further revised on September 27, 2012. The proposal from Heritage was that a total carpet area of 61,538 square feet would be provided to Madhugiri’s members and additional area of 2,000 square feet would be provided pro rata.

c) A final proposal was made on December 24, 2012 and that entailed providing Madhugiri’s members 62,700 square feet with additional area 4,500 square feet to be distributed pro rata, with one car parking slot for every member;

d) The project was to be completed in 24 months of receipt of the Commencement Certificate to be issued by the municipal authorities. On February 17, 2013, a special resolution was passed by Madhugiri, and eventually, on March 12, 2013, a formal letter of intent was issued;

e) The parties executed and registered a Development Agreement dated March 19, 2014 (“DA”) in connection with redevelopment of Madhugiri’s two buildings – each having three floors.. The DA entailed redevelopment of Madhugiri’s buildings. A key feature was that out of the total area of 1,09,220 square feet, flats for Madhugiri’s members would constitute 62,700 square feet, and the balance would belong to Heritage. Entitlements of additional floor space index (“FSI”) or transferable development rights (“TDR”) due to any difference in actual plot area was to be divided between Madhugiri and Heritage in the ratio of 54:46;

f) Even while the DA was executed, the parties negotiated and signed on the same day i.e. on March 19, 2014, a Supplemental Development Agreement, which was not registered (“SDA”) but was notarised and stamped, dealing with hardship compensation, transit rent, shifting expenses etc.;

g) The DA read with the SDA entailed that if there were any basic increase in the FSI / TDR because of changes in legal entitlements, that would belong solely to Madhugiri;

h) Performance under the DA did not take place for several years and the obligations under the agreed contracts have not been complied with. There is no specific evidence of the Madhugiri having violated any provisions of the DA. The parties are at loggerheads about the reasons for non-performance but that need not detain my attention at this stage of the matter, considering the nature of the controversy to be decided in this judgement. Suffice it to say, multiple approvals secured for the project including the Intimation of Disapproval lapsed without activity commencing;

i) The parties appear to have consistently had differences of opinion on the additional entitlements that would arise for t