The court established that the tripartite Development Agreement is unenforceable, and parties cannot interfere with the redevelopment rights of a member society once the underlying agreements are terminated.

JUDGMENT :

SOMASEKHAR SUNDARESAN, J.

Context and Factual Background :

1. The captioned Petitions have been filed under Section 9 of Digitally signed by ASHWINI the Arbitration and Conciliation Act, 1996 (“the Act”) seeking interlocutory reliefs in the form of protection against the Respondents interfering, intermeddling and obstructing efforts of the Petitioners in redeveloping their properties on their own.

2. Commercial Arbitration Petition No.452 of 2024 is treated as the lead Petition by consent of the parties. All references to facts, page numbers and dates in this judgement, are with reference to the said Petition. Learned Counsel for the parties agree that dealing with the issues in the said Petition would also be determinative of the issues raised in the other companion Petition i.e Arbitration Petition No. 562 of 2024 filed by Borivali Madhusudan Cooperative Housing Society Ltd. as well, and both Petitions could be disposed of by this common judgement.

3. The Petitioner, Borivali Shree Ganesh Nateshwar Cooperative Housing Society Limited (“Borivali”) is said to be entitled to Building No.20 (“Building”) developed on land admeasuring 1,240.93 square metres bearing Survey Nos.137A (Part), 27 (Part) and 28(Part), City Survey No.240, Gorai Road, Borivali West, Mumbai 400 082 (“Subject Land”). The Building entails 80 tenements. The Subject Land had been leased to Borivali by a lease deed dated March 12, 1992 by Maharashtra Housing and Area Development Authority (“MHADA”) while the ownership of the Building is covered by a Sale Deed of the same date.

4. On October 27, 2007, a Memorandum of Understanding (“MoU”) was executed between Respondent No. 1, Gorai Road MHB Cooperative Housing Society Association (“Gorai”) and Respondent No. 2, SBM Realtors Pvt. Ltd. (“SBM”), entailing a redevelopment of a layout involving multiple societies who were constituents of Gorai, a federation of societies. A Deed of Confirmation was executed between Gorai and SBM over 2 years later, on February 17, 2010 (“Confirmation Deed”).

5. Pursuant to and based on the MoU and the Confirmation Deed, a tripartite Development Agreement was executed among Borivali, Gorai and SBM on April 15, 2011 (“Development Agreement”). A Supplemental Development Agreement (“Supplemental DA”) came to be executed much later on December 9, 2017. Such an arrangement envisaged a “layout development”, but it entailed only 16 out of the 26 societies that were members of Gorai.

6. Disputes and differences broke out over the non-performance under the MoU and the Confirmation Deed. On July 31, 2022, Gorai resolved to terminate the relationship with SBM in the development of the properties. MHADA had issued a show cause notice on February 18, 2022, to which SBM had replied on March 3, 2022. It is Gorai’s case that SBM had failed to perform its obligations and was not worthy of being entrusted with the development of properties as planned. On the very next day i.e. August 1, 2022, MHADA cancelled the No Objection Certificate issued in respect of the layout development. On the day thereafter i.e. August 2, 2022, Gorai communicated the termination of the MoU and the Confirmation Deed, cutting SBM off.

7. On August 23, 2022, SBM invoked arbitration aga