Borivali Shree Ganesh Nateshwar Cooperative Housing Society Ltd v. The Gorai Road MHB Cooperative Housing Society Association

14. Mr. Khandeparkar would contend that since the Section 9 Petition has been filed after the arbitral tribunal in the bipartite dispute between Gorai and SBM was constituted, a separate arbitration between any constituent member and Gorai would create chaos, and therefore, every member of Gorai must be regarded as a veritable party and must seek to intervene in the bipartite arbitration proceedings. According to him, Borivali, by being a member of Gorai, has lost its individual identity and must be bound by the decisions of Gorai and cannot seek to pursue an independent remedy or claim interlocutory protection under Section 9 of the Act.

15. None appeared on behalf of SBM and therefore is no contentions on behalf of SBM to be dealt with. Analysis and Findings:

16. All observations made in this judgement are prima facie in nature, bearing in mind the jurisdiction in which these Petitions have been considered.

17. Having heard the Learned Counsel for the parties and upon examining the record with their assistance, what is writ large on the face of the record is that the bipartite MoU and the Confirmation Deed constitute the very foundation of the tripartite Development Agreement and Supplemental DA. The existence of the bipartite relationship is the basis of the tripartite relationship. That very foundation stands totally eroded and undermined by the termination of the MoU and the Confirmation Deed. Therefore, it is untenable for Gorai to seek to restrain Borivali pursuant to the Development Agreement and the Supplemental DA. Moreover, MHADA has cancelled approvals for the very layout redevelopment by its decision dated March 22, 2024. In respect of another building covered by the same layout development plan, namely, Building No. 15, for which Gorai had issued a public tender notice, MHADA took pains to publish a public notice to warn the public that it had cancelled the layout development plan and warned the public about dealing with any development purporting to be pursuant to the layout development plan.

18. Therefore, what is writ large is that nothing can be done in furtherance of the layout development as envisaged by Gorai, with or without SBM. Therefore, there is no instrument containing any contractual provision that would survive with any reasonable basis to hold up Borivali’s interests in redevelopment of the Building standing on the Subject Land. While Gorai and SBM are said to be engaged in arbitration over the bilateral MoU and Confirmation Deed, there is no evidence of any interlocutory protection that SBM has obtained. In any event, the provisions of the MoU and the Confirmation Deed are prima facie incapable of performance now, with MHADA having cancelled the layout development plan.

19. MHADA’s cancellation of the layout development plan may have been challenged in WPL 700, but apart from a plain statement that the matter is “sub judice”, it is apparent that no reliefs have been obtained against MHADA’s cancellation till date. If Gorai itself has sought to terminate the relationship with SBM that authored the layout development plan and MHADA has ensured that the very same plan has been cancelled, there is no scope for any performance under the tripartite Development Agreement.

20. In any case, five societies have gone on to develop their premises entirely on their own, and one of them has even obtained a final Occupancy Certificate after complete redevelopment. Therefore, the original plan envisaged for 16 societies’ premises being redeveloped is incapable of specific performance. Therefore, the Development Agreement and the Supplemental DA, which are the only instruments to which Borivali is a party, and are dependent upon the MoU and the Confirmation Deed, are incapable of performance. Therefore, there is nothing in the substratum of these instruments that can legitimately constitute the subject matter of the arbitration agreement that is amenable to protection or preservation in relation to Gorai’s interests or SBM’s interests.

21. Gorai’s own firm position on the alleged breaches and the failure on the part of SBM to discharge its obligations in respect of the redevelopment, is aligned with the position canvassed by Borivali in relation to the breaches by SBM. Conscious of this position, Gorai would contend that Borivali is still on the hook with Gorai, and must hope for and await some future development plan that Gorai may plan. Towards this end, Gorai would contend that disputes in the relationship between Borivali and Gorai can only be amenable to the dispute resolution process under Section 91 of the Societies Act. Towards this end, Gorai would contend that Borivali and Gorai fall within the categories of relationships listed in that provision and therefore, would invoke Paragraph 27 of Margaret Almeida, which is extracted below:

27. It can be seen from the scheme of Section 91, to confer exclusive jurisdiction on the Cooperative Court, the dispute must satisfy two requirements. It was held so in Marine Times Publications (P) Ltd. v. Shriram Transport & Finance Co. Ltd.[2] at para 11: (SCC p. 474) "11. Before a dispute can be referred to a Cooperative Court under the provisions of Section 91(1) of the said Act it is not only essential that the dispute should be of a kind described in sub-section (1) of Section 91 but it is also essential that the parties to the said dispute must belong to any of the categories specified in clauses (a) to (e) of sub-section (1) of the said section." Both the subject-matter as well as the parties to the dispute must be those specified under the section. In other words, if either of the abovementioned two requirements is not satisfied then the dispute cannot be adjudicated by the Cooperative Court. If one of the parties to the dispute is not an enumerated person, the question whether the subject-matter of the dispute is one which falls exclusively within the jurisdiction of the Cooperative Court need not be examined. Similarly, if it is found in a given case that the subject-matter of the dispute is not covered by Section 91, an enquiry into the question whether the parties to the dispute fall under any of the categories enumerated under Section 91 would become irrelevant. [Emphasis Supplied]

22. The opening provisions of Section 91(1) may also be noticed to touch upon the nature of the disputes between the categories of persons listed that would attract Section 91 of the Societies Act: Notwithstanding anything contained in any other law for the time being in force, any dispute touching the constitution, elections of the committee or its officers other than elections of committees of the specified societies including its officer, conduct of general meetings, management or business of a society shall be referred by any of the parties to the dispute, or by a federal society to which the society is affiliated, or by a creditor of the society, to a Cooperative Court, if both the parties thereto are one or other of the following:

23. Indeed, Section 91 of the Societies Act is a non obstante provision and provides for any disputes among the categories of persons listed in it being dealt with by the Co-operative Courts. Assuming Borivali is still a member of Gorai (despite its strong assertion that it has quit its membership), Section 91 of the Societies Act would be attracted only in relation to disputes over the governance of the society, and not in relation to disputes about contracts executed by the society.

24. Even a plain reading of Paragraph 27 of Margaret Almeida would indicate that both the requirements must be met – the relationship falling within the categories covered by Section 91 of the Societies Act; and the subject matter of the dispute being a dispute of the nature set out therein.

25. Borivali states that it is not even a member of Gorai anymore while Gorai contends that one cannot resign a membership. That subject itself can be a dispute between a society and its constituent covered by Section 91 of the Societies Act. However, that is a red herring for purposes of these Petitions, because the dispute is not really about Borivali’s membership of Gorai but it is about whether there is any scope whatsoever to implement the redevelopment envisaged in the tripartite Development Agreement, which contains the arbitration agreement. That is hardly a subject matter of an inter-constituent and intra-society dispute for the Co-operative Court to have jurisdiction under Section 91 of the Societies Act. Therefore, applying the very principle laid out in Margaret Almeida, it would be apparent that these Petitions are not at all subject matter of what is covered by the jurisdiction of the Co-operative Court under Section 91 of the Societies Act.

26. There are no interlocutory reliefs in relation to the proceedings challenging the termination of the bipartite relationship between Gorai and SBM in favour of SBM. In fact, those proceedings were triggered by the termination effected by Gorai. Therefore, in those bipartite proceedings, SBM could at best claim damages and it is Gorai that would assert the death of that relationship. It is seen from the record that SBM had asserted that it had spent over Rs. 10 crores. Gorai may have its own contentions about breaches by SBM and make a claim for damages against SBM. There is also no interlocutory relief against MHADA’s cancellation of the layout development plan in WPL 700.

27. Therefore, for all practical purposes, prima facie, the tripartite Development Agreement which contains the arbitration agreement between the parties really does not entail any element of inferring any potential fetter on Borivali from pursuing its best interests in redeveloping its own Building on the Subject Land. Even from the perspective of adjusting equities, there are no equities in favour of keeping Borivali on the hook with Gorai and SBM. The Building is entirely owned by Borivali while the Subject Land on which the Building stands, is enjoyed by Borivali by way of the Lease Deed from MHADA. Even assuming that Borivali is still a member of Gorai, the substratum of the Development Agreement stands undermined, and therefore there ought to be no impediment in Borivali’s path flowing from the contents of the Development Agreement or the Supplemental DA.

28. The ownership of interests in such property brings with it, the entitlement to exploit the same and enjoy the full fruits of such ownership. Indeed, such rights came to be fettered by the arrangements obtaining from the tripartite Development Agreement, which in turn was dependent on the bipartite MoU and Confirmation Deed between Gorai and SBM. That very bipartite relationship having been rendered incapable of specific performance, there is no contractual or legal basis to fetter Borivali’s interests in the course of preserving the subject matter of the arbitration agreement covered by this Section 9 Petition. The redevelopment itself now being rendered impossible to perform, in my opinion, Borivali would be entitled to protection from any interference, intermeddling and obstruction on the part of Gorai and SBM purporting to claim rights under the tripartite Development Agreement.

29. Therefore, a case has been made out to direct that neither Gorai nor SBM may interfere with the enjoyment of rights by Borivali over the Building and the Subject Land, in reliance upon the tripartite Development Agreement or the Supplemental DA. Borivali may indeed claim damages from Gorai and SBM and therefore, there is an eminent possibility of a dispute being referable to arbitration. Naturally, this Court cannot comment on the nature and scope of rights and obligations between the parties outside the ambit of what is covered by the arbitration agreement. Therefore, it is made clear that nothing contained in this judgement relates to making adjustments in relation to the dispute about whether Borivali has validly walked out of Gorai or whether there are residual disputes in that regard. However, neither Gorai nor SBM would be entitled to interfere with the enjoyment of interests by Borivali, claiming their perceived rights under the tripartite Development Agreement or the Supplemental DA.

30. A specific objection on behalf of Gorai is that the Section 9 Petition was filed in 2023 and there is no sign of arbitration being initiated until now. This, Mr. Khandeparkar would submit, shows that there is no manifest intent on the part of Borivali to arbitrate. The upshot is that reliefs must not even be considered. I am afraid this contention does not lend itself to acceptance at all. It is now trite law (and that too, incidentally, in the context of redevelopment contracts) that a potential for a likely dispute is adequate to invoke the jurisdiction of the Section 9 Court. Even in the absence of an imminent dispute, reliefs under Section 9 are sought and granted in a manner that resolves the dispute altogether without having to proceed to arbitration. This is a proposition that is hardly alien to parties involved in redevelopment litigation. An extract from a judgement by a Learned Division Bench in would be instructive:- The last issue that remains is about possibility of arbitration taking place between the parties. The Society and its members are bound by the covenants of the Development Agreement. If Society fails to discharge its obligations under the Development Agreement and if its members do not vacate possession of premises, the Developer will have to invoke arbitration and seek appropriate reliefs against the Society. Non-vacation of premises by Respondent Nos. 2 to 4 can thus Judgement dated July 14, 2025 in Pranav Constructions Ltd. Vs. Priyadarshini Cooperative Housing Society Ltd. And others – in Arbitration Appeal (L) No. 2009[3] of 2025 along with Arbitration Appeal (L) No. 2037[3] of 2025 become a trigger point for invocation of arbitration by Developer against the Society. It is therefore di cult to hold at this juncture that ffi there is absolutely no possibility of arbitration taking place between the parties.

31. Therefore, the absence of invocation of arbitration by Borivali is not fatal to consideration of reliefs in this Petition. The jurisdiction under Section 9 can be invoked before invocation of arbitration. Indeed, there has to be a manifest intention to arbitrate, and towards that end, one has to examine if there is a potential dispute on hand. It is difficult to hold at this juncture that there is absolutely no possibility of arbitration taking place between Borivali and Gorai or Borivali and SBM. Borivali is entitled to obtain a position of peace and protection from disruption of its interests by Gorai and SBM and then consider launching its arbitration for damages should it be so advised.

32. That apart, evidently, there indeed are disputes and differences between Gorai and Borivali about whether the tripartite Development Agreement could at all be the basis of any further rights being claimed by Gorai or SBM against Borivali. That apart, Borivali may truly have the ability to press claims for damages against both Gorai and SBM if so advised.

33. The prima facie case being so clear that the redevelopment envisaged in the tripartite Development Agreement is incapable of being performed, indeed, Borivali is worthy of protection in any potential arbitration that may by initiated in relation to the dispute between Gorai and Borivali. Whether that dispute would cover the matter of membership of Gorai and whether that would come within the fold of Section 91 of the Societies Act would be a mixed question of fact and law. What is clear at this stage is the fact that the tripartite Development Agreement is prima facie incapable of performance and Borivali must be protected from being fettered ahead of potential arbitration.

34. Considering the stance taken by Gorai in these very proceedings, it is evident that Gorai is resolute in interfering with and intermeddling in Borivali’s pursuit of its right to redevelop the Building on its own, despite Gorai itself having terminated the agreement with SBM. Borivali is required to be protected from such interference and intermeddling by Gorai. For its part, SBM has not bothered to defend this Section 9 Petition, which further underlines the moribund nature of the Development Agreement containing the arbitration clause.

35. As regards Gorai’s contention that Borivali is a veritable party to the bipartite arbitration proceedings between Gorai and SBM, it is not even Gorai’s case that it has sought to make Borivali a party to those proceedings in the two years since the arbitral tribunal was constituted. If Gorai were serious about Borivali being a veritable party, it would be reasonable to expect that by now applications for impleading Borivali would have been taken, at the least by Gorai, if not by SBM. Till date Gorai has done nothing to implead Borivali in those proceedings even while attempting to claim the right to do so in its submissions, among others, invoking the law declared in ASF Buildtech[3].

36. In these circumstances, the contention about the purported chaotic consequences resulting from multiple potential arbitration proceedings is not tenable. Even while executing the tripartite development agreement, it was open to the parties to have negotiated and arrived at an arbitration agreement that would combine adjudication of disputes under both streams of relationships and thereby avoid the chaos that is now purportedly perceived. In my opinion, this is an untenable proposition because the parties, with full sovereign autonomy, agreed to the arbitration agreements as they stand. ASF Buildtech Private Limited Vs. Shapoorji Pallonji and Company Private Limited – 2025 SCC OnLine SC 1016 Had there been a view that there ought not to be scope for separate arbitrations, the parties would have provided for that position in their contracts.

37. This is a facet that is irrelevant to the absence of a strong prima facie case for Gorai to interfere with Borivali’s desire to develop the property despite having no ability to redevelop the property in terms of the Development Agreement containing the arbitration clause. Other societies that are members of Gorai have moved on, with one society even getting the final Occupation Certificate. The facet of purported chaos does not outweigh the irreparable injury that would be occasioned to Borivali in continuing to be kept on the hook.

38. The Building is already quite old. Based on an already dead bipartite relationship, the derivative tripartite relationship cannot be the basis of holding up Borivali’s interests. If Borivali is continued to be held up on the basis of what is otherwise an agreement incapable of specific performance, grave and irreparable harm could be occasioned to its interests. That apart, no inconvenience would at all be caused to Gorai or to SBM in these circumstances by prohibiting them from meddling with Borivali’s efforts to pursue redevelopment on its own. The balance of convenience too works in favour of granting the protection sought rather than denying it. Therefore, a clear case has been made for intervention of this Court as sought in Borivali’s Petition.

39. In these circumstances, the Section 9 Petition is hereby allowed in terms of prayer Clause (a), which reads thus:- (a)Pending the hearing and final disposal of the arbitration proceedings before the Ld. Arbitrator and before the award is put to execution, this Hon'ble Court be pleased to pass an order of injunction against the Respondents not to interfere with, intermeddle or create any obstruction in the redevelopment process of the Petitioner;

40. Both the captioned Section 9 Petitions stand finally disposed of in the aforesaid terms. Interim applications, if any in these proceedings would also stand disposed of.

41. All actions required to be taken pursuant to this order shall be taken upon receipt of a downloaded copy as available on this Court’s website. [SOMASEKHAR SUNDARESAN, J.]