2026 Supreme(Bom) 222

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Somasekhar Sundaresan, J.
Mohammed Ali M. Sali (since deceased) Through Legal Heirs (a) Fatima Nalakath Sahusintavide & Ors. - Petitioners
Versus
Rajaram Chavan Real Estate Private Limited - Respondent
Commercial Arbitration Petition (L) No. 3903 of 2023 With Interim Application (L) No. 4575 of 2023, Commercial Arbitration Petition (L) No. 5353 of 2023
Decided On : 05-03-2026

Third parties affected by Section 17 interim orders refusing possession have Section 37 locus; tribunal's blanket lien over sold flats perverse ignoring allocation confirmations and developer's knowledge of sales.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 9, 17 and 37 - Locus of third parties - Non-signatories to arbitration agreement whose rights in subject flats are adversely affected by tribunal's Section 17 orders refusing interim possession have locus to appeal under Section 37 as affected parties akin to interventions under Section 9 - Principles that acts of court should prejudice no one and third-party rights cannot be overridden without hearing apply. (Paras 50-59)

(B) Arbitration - Section 17 interim measures - Section 37 review - Limited to perversity, patent illegality or arbitrariness; not to substitute plausible view - Tribunal's refusal to direct possession of flats sold from owner's confirmed free sale entitlement perverse for ignoring allocation confirmation letter limiting lien to specific flats, occupation certificate assurance referencing purchasers, pre-litigation conduct acknowledging sales, and judicial observations on developer's money claim nature - Blanket lien over entire entitlement till final adjudication creates inequity to legitimate third-party purchasers. (Paras 34-35, 60-85, 91)

(C) Contracts - Joint development agreement - Redevelopment - Owner entitled to sell 75% free sale component subject to lien on 25% for dues; developer cannot extend lien to already sold flats with its knowledge and without challenge - Disputes over construction costs, tenant areas, reserved plot de-reservation for final arbitration; interim possession via court receiver with balance consideration deposited protects all equities pending award. (Paras 6-12, 64-74, 94)

Facts of the case:
Owner and developer entered joint development agreement for redevelopment entitling owner to free sale flats; developer confirmed specific allocation including lien flats; owner sold subject flats to purchasers via registered agreements with developer's knowledge; developer withheld possession claiming unpaid costs giving blanket lien; tribunal refused owner's Section 17 applications maintaining status quo; purchasers intervened and separately petitioned under Section 37 challenging as perverse.

Findings of Court:
Impugned orders interfered with to extent of subject flats; developer to deliver keys to court receiver; purchasers to deposit balance consideration in fixed deposit abiding arbitration; purchasers placed in possession as agents of receiver without royalty.

Issues: Whether third-party flat purchasers have locus under Section 37 to challenge Section 17 orders; whether tribunal's refusal of interim possession perverse ignoring material evidence and equities.

Ratio Decidendi: Third parties affected by Section 17 orders remediless under Section 37 would undermine check-balance mechanism; tribunal perversely disregarded developer's own confirmations limiting lien, tacit approval of sales creating legitimate third-party rights, and unquantified dues justifying only money claim security not blanket possession denial - Equitable interim via court receiver balances interests.

Result: Petitions allowed in part; directions issued for possession through court receiver with deposits.