1. Appeal against the refusal of interim relief under Section 9 of the Arbitration and Conciliation Act in a dispute involving property rights and breached contractual obligations. (Para 1 )
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2026 Supreme(Online)(Bom) 5617
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
A. S. Gadkari, Kamal Khata, JJ
Devidas R. Sheregar – Appellant
Versus
Zeenal Constructions Pvt. Ltd. – Respondent
COMMERCIAL ARBITRATION APPEAL (L) NO. 25270 OF 2026|COMMERCIAL ARBITRATION PETITION (L) NO. 12193 OF 2026
Important Points
Interim protection under Section 9 of the Arbitration Act is necessary to preserve the subject matter of the dispute, particularly when the disposal of the property would frustrate a party's claim for specific performance.
Subject
Civil - Arbitration
Act Referred
Headnote
(A) Arbitration and Conciliation Act - Section 9 - Interim Protection - The purpose of interim protection is to preserve the subject matter of the dispute; where the disposal of the land would frustrate a claim for specific performance of commercial premises, an injunction against creating third-party rights is warranted. (Para 4)
(B) Specific Performance - Frustration of Remedy - If the underlying property is transferred to a third party, the claimant's right to specific performance is extinguished, leaving only a claim for damages. (Para 3(ii))
Issues: Whether the Appellants are entitled to an injunction preventing the Respondents from creating third-party rights in the subject land to preserve their claim for specific performance.
(B) Specific Performance - Frustration of Remedy - If the underlying property is transferred to a third party, the claimant's right to specific performance is extinguished, leaving only a claim for damages. (Para 3(ii))
Issues: Whether the Appellants are entitled to an injunction preventing the Respondents from creating third-party rights in the subject land to preserve their claim for specific performance.
Legal Category Hierarchy
Advocates:
For the Appellants/Petitioners: Bahraiz Irani, Amit Padwal, Anosh Irani, Afrin Dalal
For the Respondents: Gaurav Mehta, Sahil Wagh, Aseem Naphade, Y.S. Shukla
For the Appellants/Petitioners: Bahraiz Irani, Amit Padwal, Anosh Irani, Afrin Dalal
For the Respondents: Gaurav Mehta, Sahil Wagh, Aseem Naphade, Y.S. Shukla
Table of Contents
2. Appellants sought injunctive relief to preserve subject property from third-party alienation, while Respondents contested the subsistence of the contractual agreement due to the passage of time. (Para 2 , 3 , 6 , 7 )
3. The court found that failing to preserve the subject property would frustrate the claim for specific performance and recognized the respondents' potential intent to cheat the appellants. (Para 3 , 4 , 5 , 6 , 9 )
4. Interim relief under Section 9 of the Arbitration Act is essential for preserving the subject matter of a dispute to prevent the frustration of future claims for specific performance. (Para 4 , 6 , 9 )
5. The Appeal is allowed, granting the prayed injunction to restrain the creation of third-party rights, title, and interest in the subject property. (Para 10 )
6. What is the primary purpose of interim measures under Section 9 of the Arbitration and Conciliation Act?
The primary purpose is to preserve the subject matter of the dispute during the arbitral proceedings. This ensures that the eventual claim for specific performance is not rendered nugatory by the disposal of the subject property. (Para 4 , 6 )
7. Can the court grant injunctive relief even when there are allegations of fraud and cheating under the IPC?
Yes, if the prima facie case indicates fraudulent conduct or an intent to cheat, the court may grant injunctive relief to safeguard the interests of the party, even if criminal proceedings are not simultaneously instituted. (Para 5 , 8 , 9 )
8. Does the court have the power to initiate criminal proceedings under its constitutional jurisdiction?
Yes, the court holds the power to suo motu direct the initiation of criminal proceedings under Article 226 of the Constitution of India in order to meet the ends of justice. (Para 11 )
Judgment (Per : Kamal Khata, J) :-
1) The Appellants, the Original Petitioners, have filed the present Appeal, being aggrieved by and dissatisfied with the Judgment and Order dated 19th June, 2026, passed by learned Single Judge, whereby dismissing the Appellants’ Petition under Section 9 of the Arbitration and Conciliation Act, 1996 (for short, the “Arbitration Act”), seeking urgent ad-interim reliefs for the appointment of the Court Receiver, High Court, Bombay, in respect of the piece and parcel of land known as Dave’s Estate admeasuring approximately 1405 square yards, situated at S.V. Road, Goregaon (W), Mumbai, and for consequential reliefs, restraining the creation of third party rights, title and interest in or dealing with, the said property to the prejudice of the Appellants’ contractual and arbitrary rights.
2) We have heard Mr. Bahraiz Irani, learned Advocate for the Appellants; Mr. Gaurav Mehta, learned Advocate for Respondent Nos. 1 and 2; and Mr. Aseem Naphade, learned Advocate for Respondent Nos. 3 to 6.
3) Having perused the Impugned Order, we find that it deserves to be set aside for the following reasons:
(i) It is an undisputed fact that the Respondents had received an amount of Rs. 60 lakhs under the Memorandum of Understanding (MoU) dated 27th June, 2005. The said amounts have neither been returned nor have the Respondents delivered the commercial premises admeasuring 4360 square feet that were to be constructed in the Krishna Ambika Arcade on the subject plot. The delivery of these premises was to be made within 24 months from the receipt of an IOD or within such time as may be mutually agreed. Admittedly, the Respondents have failed to obtain the IOD for the subject project. Hence, limitation is not an issue.
(ii) It is not in dispute that the Respondents are attempting to transfer the rights in the plot in favour of some other third party. Although the Appellants would not have direct rights over the subject plot on which the proposed Krishna Ambika Arcade was to be constructed, they would certainly be entitled to the commercial premises admeasuring 4360 square feet proposed to be constructed thereon. Therefore, if the Respondents were to create third party rights in the land, claim of the Appellants for specific performance would be entirely frustrated and their only remedy would be to claim damages.
4) In our view, interim protection contemplated under Section 9 of the Arbitration Act is to preserve the subject matter of the dispute between the parties. In our view, if the land itself is disposed off by the Respondents, the Appellants would be remediless to the extent of their claim for specific performance.
5) Perusal of the record indicates that, the Respondents have attempted to play fraud on the Appellants. They have outrightly cheated the Appellants. In our view, the Appellants, who are a group of doctors by profession, had together invested their hard-earned money with the Respondents, who continue to use the monies of the Appellants interest free for over 21 years and now claim that the MoU stood terminated or that it came to an end long ago by the conduct of the parties.
6) Prima facie, it appears to be a bald and baseless contention. At this stage, the Court need not go into the evidentiary value of this contention. The Arbitrator has already been appointed and the only question raised for our consideration is whether the Appellants are entitled to an injunction preventing the Respondents from creating third party rights, title and interest in respect of the subject land.
7) Upon a question being posed to learned Advocate Mr. Naphade, appearing for Respondent Nos. 3 to 6, he explained that, his clients were negotiating with Respondent Nos. 1 and 2 for purchasing development rights in respect of the subject land/property. In that view, we also attempted to forge a settlement between the Respondents and the Appellants, but the same did not fructif
