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2026 Supreme(Online)(Bom) 76
HIGH COURT OF BOMBAY
HON'BLE SHRI JUSTICE SANDEEP V. MARNE
ISON BUILDERS LLP – Appellant
Versus
OM SAI RAM COOPERATIVE HOUSING – Respondent
CARAPL/37280/2025
For the Appellants/Petitioners: Karl Tamboly, Rohan Savant, Chirag Sarawagi, Yash Sinha, Tushar Goradia
For the Respondents: Prateek Seksaria, Rohit Agarwal, Nishant Chothani, Yash S. Jain, Pooja Yadav, Komal Punjabi, Santosh Nachnekar
In redevelopment disputes, the right of residents to secure housing in dilapidated buildings outweighs a developer's right to profit. Interim measures are denied if a developer causes gross delays and demonstrates an intent to profiteer rather than execute the project.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 9 and 11 - Development Agreement - Interim measures - Termination on grounds of delay - Right to redevelopment vs. right to profit - In redevelopment cases, when exercising discretion for temporary injunctions, the court weighs the right of society members to secure alternate accommodations against the developer's right to earn profits. Where members are residing in dilapidated structures and the developer has failed to make progress for a prolonged period, the right of the members to be rehoused prevails over the developer's interest. (Paras 36, 37)
(B) Development Control Regulations - Regulation 33(7) - Redevelopment of municipal tenanted properties - Procedural requirements including inventory, tenancy verification, and consent verification - Failure of the developer to provide financial capacity documents leading to delays in the issuance of essential permissions constitutes a valid ground for loss of faith and termination of the agreement. (Paras 26, 27, 33)
(C) Specific Performance - Unregistered Development Agreement - Registration Act, 1908 - The mere possibility that a development agreement is capable of being specifically performed does not automatically entitle a developer to interim measures under Section 9 of the Arbitration Act, especially when the developer has committed gross delays. (Para 39)
(D) Equity - Profiteering - Where a developer attempts to negotiate the transfer of a project to another entity for profit instead of executing the redevelopment, such conduct disentitles the developer to equitable relief. (Paras 42, 44, 46)
Facts of the case:
A developer was appointed by municipal tenants to redevelop land owned by the Municipal Corporation. Over 11 years, the project failed to progress past the initial stages of tenancy and consent verification. The developer failed to submit financial capacity documents for two years, causing the Municipal Corporation to close and later revive the proposal. The society eventually terminated the development agreement and appointed a new developer, citing gross delay and loss of trust. The developer sought interim measures to stay the termination and prevent the appointment of a new developer, as well as the appointment of an arbitrator.
Findings of Court:
The court found the developer solely responsible for significant delays in the consent verification process. Because the tenants were languishing in 75-year-old dilapidated structures, their right to housing outweighed the developer's commercial interests. The court also noted that the developer was attempting to profiteer by negotiating the sale of the project to another developer. The termination by the society was deemed neither arbitrary nor erroneous.
Issues: Whether the developer is entitled to a stay on the termination of the development agreement and an injunction against appointing a new developer despite gross delays in execution; whether the right of society members to be rehoused takes precedence over the developer's right to profit.
Ratio Decidendi: The right of residential members to obtain permanent housing in dilapidated buildings prevails over a developer's right to profit. Where a developer fails to progress the project for over a decade and exhibits a motive to profiteer rather than develop, they cannot stall the redevelopment process through interim injunctions. (Paras 37, 46)
Result: Commercial Arbitration Petition (L) No. 36533 of 2025 dismissed; Commercial Arbitration Application (L) No. 37280 of 2025 allowed by appointing a sole Arbitrator.
1) Petitioner-Developer has filed Commercial Arbitration Petition (L) No. 36533 of 2025 seeking interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking stay on termination notice dated 25 October 2025 by which the First Respondent-Society has terminated the Development Agreement executed by it in favour of the Petitioner. Petitioner has further sought injunction against Respondent No.1-Society and against its members (Respondent Nos.3 to 22) from appointing any other developer to develop the property.
2) Commercial Arbitration Application (L) No. 37280 of 2025 is filed under Section 11 of the Arbitration Act for appointment of Arbitrator for adjudication of disputes and differences between the Petitioner and First Respondent-Society.
3) The land bearing C.S.No. 109 (Part) situated at D/8, Gandhi Nagar Dainik Shivneri Junction and Majrekar Lane, Lower Parel (West) Mumbai is owned by Municipal Corporation of Greater Mumbai (MCGM). There are 28 tenanted structures on the said land, allottees of which are municipal tenants. Respondent Nos. 3 to 22 claim to be the municipal tenants and have formed Respondent No.1 as the proposed cooperative housing society for the purpose of carrying out development on the land. In the Annual General Meeting held on 29 March 2014, the society resolved to appoint Petitioner as the developer for developing the property. A Development Agreement dated 22 December 2014 was executed between the Petitioner and Respondent No.1-proposed Society. The Power of Attorney dated 30 December 2014 was also executed in favour of the partners of the Petitioner-Firm.
4) The Petitioner claims to have submitted redevelopment proposal under Regulation No. 33(7) of Development Control Regulations, 1991 (DCR 1991). Petitioner relies on Architect's letter dated 20 June 2015. A circular was issued on 10 October 2016 by MCGM providing for guidelines for redevelopment of municipal tenanted properties under the modified Regulation 33(7) of DCR 1991. The revised guidelines were issued on 17 November 2020. Under both the guidelines various steps are prescribed for processing the redevelopment proposal which includes the process of tenancy verification/consent verification and issuance of Annexure-2. According to the Petitioner, a technical scrutiny in respect of the redevelopment proposal was conducted in July and August 2018. Petitioner claims that due to Covid-19 pandemic, the proposal could not progress. It is claimed that 28 sub-tenants were converted into principal tenants by the Municipal Corporation. On 31 March 2021, the Municipal Commissioner wrote to the Petitioner calling it upon to provide its financial capacity. By further letter dated 17 November 2021, Petitioner was once again called upon to demonstrate its financial capacity. On account of Petitioner's failure to do so, the redevelopment proposal was recorded as filed by the Municipal Corporation vide letter dated 23 May 2022. The society and the Petitioner wrote to the Municipal Corporation whereafter the proposal was revived. Petitioner claims to have submitted the requisite documents. By notice dated 29 March 2023, consent verification of 28 tenants was proposed to be conducted by MCGM. The consent verification of 28 tenants was held on 6 April 2023. A biometric report was prepared on 6 April 2023. According to the Petitioner, out of the 28 tenants, 3 tenants fell under residential category, 17 tenants in commercial category and 8 tenants fell under residential-cum-commercial category.
5) On 22 May 2024, a show cause notice was issued to the Petitioner alleging delay in redevelopment. The Society issued reply dated 3 June 2024 supporting the Petitioner. Petitioner also replied to the show cause notice. In the meantime, the Petitioner and Society entered into correspondence for issuance of Annexure-2.
6) In the above background, Intimation of Disapproval (IOD) was issued to Kamsai Nerolac Paints Ltd./R
