Dev Pooja Builders Private Limited vs Vilas Nana Gaikwad & Ors.

The present Petition is filed under Section 9 of the Arbitration and Conciliation Act, 1996 ("Act"). By this Petition, the Petitioner is asking for relief against Respondent Nos. 1 and 2, who are members of Respondent No. 3 Society and are stated to be not cooperating with the redevelopment. The Petitioner seeks that Respondent Nos. 1 and 2 hand over quiet, peaceful and vacant possession of their premises to the Petitioner. According to the Petitioner, these reliefs are necessary for protecting its rights which are subject matter of the proposed arbitration and for making effective any award which may be passed in the arbitration proceedings. The arbitration agreement between the parties is contained in the Development Agreement dated 26th August 2025 entered into between the Petitioner and the members of Respondent No. 3 Society for redevelopment of the Society. Disputes have now arisen between the parties in relation to the said redevelopment.

The facts and circumstances which, according to the Petitioner, have resulted in filing of the present Petition are stated below. The Petitioner is carrying on the business of construction and real estate development. Respondent Nos. 1 and 2 are members of Respondent No. 3 Society. The Society has in all 36 members. The building of Respondent No. 3 Society was constructed about 35 years ago. The respective SGBMs of the First and Second Societies were held on 28 July 2023 in the presence of Smt. Vaishali Pathare, representative of the Assistant Registrar of Co-operative Societies. In the SGBM of the First Society, 14 out of its total 17 members were present. In the SGBM of the Second Society, 16 out of its total 19 members were present. All the members who were present voted in favour of appointing the Petitioner as the developer for redevelopment of their respective properties. Accordingly, both the First and Second Societies passed resolutions, amongst other things, accepting the offer of the Petitioner and appointing the Petitioner as the developer for redevelopment of their respective properties., on 14 June 2024, the First and Second Societies jointly applied to the Deputy Registrar of Co-operative Societies for amalgamation of both Societies into one Society under the Maharashtra Co-operative Societies Act, 1960. This was done so that the two properties could be developed together as one continuous piece of land. The Deputy Registrar of Co-operative Societies passed an Order dated 1 July 2024, inter alia, amalgamating the First and Second Societies into Respondent No. 3 Society, namely, “Charkop Dhanwantri Kabira Co-operative Housing Society Ltd.” The Deputy Registrar directed cancellation of the separate registration certificates of the First and Second Societies.

Respondent No. 3 Society entered into a Development Agreement dated 26 August 2025 with the Petitioner. Under this Agreement, development rights in respect of the said property were given to the Petitioner. Respondent No. 3 Society executed a Power of Attorney in favour of the directors of the Petitioner, authorising them to carry out the redevelopment of the said property. The Petitioner issued a Notice dated 10 July 2026 to Respondent No. 3 Society. By this Notice, the Petitioner informed the Society that it had obtained the IOA along with the sanctioned plans and the other necessary NOCs and permissions from the concerned authorities. The Petitioner therefore called upon all the members of Respondent No. 3 Society to sign individual consent letters. By these letters, the members were to confirm that they would vacate their respective premises within 30 days from the date of the Notice. Under the Development Agreement, each member of Respondent No. 3 Society is to receive a new flat or shop having an area equal to the area of his or her existing flat or shop, together with an additional 41% area. The members are to receive other benefits, including one exclusive car parking space for each member, corpus, transit fund, rent, brokerage and shifting charges. The Petitioner has stated that it paid 10% of the total agreed corpus fund at the time when the Development Agreement was executed. According to the Petitioner, except Respondent Nos. 1 and 2, all the other members of Respondent No. 3 Society have signed individual consent letters agreeing to vacate their premises. The period of 30 days provided under clause 11 of the Development Agreement for vacating the premises expired on 10 August 2026. Since Respondent Nos. 1 and 2 have not vacated their premises, the Petitioner has filed the present Petition. The Petitioner has stated that it is invoking the arbitration provision contained in clause 51 of the Development Agreement.

Mr. Khan, learned Advocate for the Petitioner, submits that the Petitioner has spent a large amount of money and incurred substantial costs for redevelopment of the property of Respondent No. 3 Society. According to him, the Petitioner is therefore suffering substantial loss even though there is no fault on its part. He relies upon clauses 12 and 18 of the Development Agreement. According to him, if any member of Respondent No. 3 Society fails to vacate his, her or their premises as required under the Agreement, such member will not be entitled to receive rent or compensation for the period of delay. Such member will be required to pay a penalty of Rs. 5000/- (Rupees Five Thousand only) for every day of delay or default in vacating the premises. He relies upon clauses 18.1 and 18.1.1. According to these clauses, any loss suffered by the Petitioner, including costs, charges, fees and expenses incurred for getting a dissenting or non-cooperating member to vacate the premises, is to be borne by that member. The Petitioner is entitled to adjust such amount from the hardship compensation or monthly compensation payable to the concerned member under the Development Agreement. Learned Advocate for the Petitioner submits that the 30-day period mentioned in clause 11 of the Development Agreement, and mentioned in the Petitioner's Notice dated 10 July 2026, expired on 10 August 2026. The Petitioner has stated that except Respondent Nos. 1 and 2, all the other members of Respondent No. 3 Society are ready and willing to vacate their respective premises as required under the Development Agreement.

Learned Advocate for the Petitioner submits that the buildings of Respondent No. 3 Society are in a dilapidated condition and require immediate demolition. It is submitted that the buildings are more than 35 years old. The Petitioner states that it has complied with the requirements of the Development Agreement and has obtained the IOA along with the sanctioned building plan for construction of the new building on the property of Respondent No. 3 Society. According to the Petitioner, unless all the members, including Respondent Nos. 1 and 2, vacate their premises, the existing building cannot be demolished. As a result, the Petitioner cannot start the redevelopment work or commence construction of the new building in place of the existing building.

Mr. Bagwe, learned Advocate for Respondent No. 2, submits that the present Petition has been filed too early. According to him, certain conditions were required to be fulfilled before the obligation of a member to vacate could arise. He relies upon clauses 12.1 and 12.2 of the Development Agreement. According to him, registration of the individual PAAA is a condition which has to happen before compulsory vacation of the premises. He submits that when the present Petition was filed, that requirement had not yet been completed. According to learned Advocate for Respondent No. 2, there was therefore no present enforceable default on the part of the member. His submission is that a member cannot be treated as having breached the Agreement by refusing to vacate when the Developer has not first completed the conditions which, under the Agreement, are required to be completed before the member has to vacate. According to him, the 30-day notice issued by the Petitioner cannot create a default if the contractual conditions for vacation were not first fulfilled.

Learned Advocate for Respondent No. 2 submits that the relief sought by the Petitioner is in substance a final relief and is only presented as an interim relief under Section 9. According to him, once possession is handed over and the existing building is demolished, the situation cannot be reversed. The main dispute would therefore substantially come to an end. He submits that Section 9 is meant to provide protection during arbitration and cannot be used as a summary proceeding for specific performance or eviction. Learned Advocate for Respondent No. 2 submits that obtaining the IOA does not show that the Petitioner was completely ready to start the redevelopment. According to him, the IOA dated 8 July 2026 is conditional. It does not establish that a valid plinth or Commencement Certificate has been obtained. It does not establish that all NOCs have been fully complied with, that permission for demolition has been obtained, or that the Petitioner can immediately and lawfully commence the redevelopment work.

I have considered the submissions of the learned Advocates appearing for the Petitioner and Respondent No. 2 and the judgment in Pranav Constructions Limited v. Priyadarshini Cooperative Housing Society Limited, Arbitration Appeal (L) No. 20093 of 2025 decided on 14 July 2025.

From the material on record, it is not in dispute that Respondent Nos. 1 and 2 are members of Respondent No. 3 Society and that Respondent No. 3 Society has entered into the Development Agreement dated 26 August 2025 with the Petitioner for redevelopment of its property. The Petitioner has stated that the redevelopment process has gone ahead. In paragraph 31 of the Petition, the Petitioner has stated that the individual agreements for permanent alternate accommodation were shared with the Society and its members and the said agreements have been registered. The Petitioner has stated that, as on the date of filing of the Petition, "the Petitioner along with Respondent No.3 has executed and registered individual agreement for permanent alternate accommodation with 34 out of the total 36 members of the Respondent No.3." This statement is important for considering the present dispute. The dispute is not regarding existence of the Development Agreement or whether permanent alternate accommodation is to be given to the members. The dispute is mainly regarding Respondent Nos. 1 and 2, who have not come forward to complete the same process.

The Petitioner has stated in paragraph 31 that it "is ready and willing to execute such agreement with Respondent Nos. 1 and 2". It is stated that Respondent Nos. 1 and 2 are "refusing to cooperate in the redevelopment project" and are not coming forward "for signing the Consent Letter and for the execution of the agreement for permanent alternate accommodation." Therefore, the Petitioner's case is not that permanent alternate accommodation is being refused to Respondent Nos. 1 and 2. The case of the Petitioner is that it is ready to execute the same agreement with them, but Respondent Nos. 1 and 2 are not coming forward to complete the process.

This position has to be considered along with Clause 12 of the Development Agreement. Clause 12.1 provides the steps to be followed after receipt of the IOD/10A, sanctioned plans and the relevant NOCs and permissions. It provides for giving 30 days' notice and execution of individual agreements for permanent alternate accommodation. Clause 12.2 provides as follows:

The first part of Clause 12.2 gives protection to a member until the individual agreement for permanent alternate accommodation is registered. Therefore, the submission of learned Advocate for Respondent No. 2 that registration of the individual agreement is an important step before requiring the member to vacate cannot be said to be without any basis. However, the second part of the same Clause 12.2 has to be considered. The parties have provided for a situation where a member delays or refuses to come forward for execution of the individual agreement. In such situation, the Agreement states that "the Developer shall not be liable for the same" and that the Developer "shall be fully entitled to seek vacation of the premises held by the members" for redevelopment of the property. Therefore, the clause cannot be understood to mean that a member can keep the redevelopment stopped for an unlimited period by refusing to come forward for execution of the individual agreement and taking the position that the agreement has not been registered.

In the present case, in paragraph 31 of the Petition, the Petitioner has stated that it "is ready and willing to execute such agreement with Respondent Nos. 1 and 2". The case of the Petitioner is that the Respondents are not coming forward for execution. This statement has to be seen with the fact that individual agreements have been executed and registered with 34 out of the 36 members. Therefore, from the material before the Court, I do not find sufficient reason to accept that the Petitioner is seeking possession without being ready to provide permanent alternate accommodation to Respondent Nos. 1 and 2.

The submission of Respondent No. 2 that there is "no present enforceable default” therefore cannot be accepted. The position may have been different if the Petitioner had not prepared or offered the individual agreement or had refused to provide the alternate accommodation promised under the Development Agreement. The material before the Court shows otherwise. The Petitioner has completed the process with 34 members and has stated that it is ready to execute the same agreement with Respondent Nos. 1 and 2. According to the Petitioner, the difficulty is that they are not coming forward. The latter part of Clause 12.2 deals with such delay or refusal. Therefore, Respondent Nos. 1 and 2 cannot keep the redevelopment stopped for an indefinite period by not completing the step which they are required to complete.

I have considered the submission that the period of 30 days had not started because the contractual requirements were not completed. Clause 12.3 provides that the Society has to hand over vacant and peaceful possession of the property within 30 days from receipt of intimation regarding the relevant permissions including the IOD. The Petitioner has stated that such intimation was given by Notice dated 10 July 2026 and that the period of 30 days expired on 10 August 2026. There is material showing that the Petitioner had obtained the IOD and sanctioned plans. In the facts of the present case, I am therefore not inclined to accept that non-execution of the PAAA agreements by Respondent Nos. 1 and 2 can be used by them as an indefinite reason for stopping the redevelopment, particularly when the Petitioner says that they have refused to come forward and Clause 12.2 deals with such refusal.

The submission that the IOA is conditional and therefore does not show complete readiness cannot defeat the Petition. The Petitioner's case is not based only upon the IOA. The Petitioner relies upon the Development Agreement, sanctioned plans, permissions stated to have been obtained, execution of PAAA agreements with 34 members and the consent and cooperation of the other members. At this stage, the Court is not required to decide whether every future requirement of the redevelopment has been completed. The immediate question is whether interim protection is required so that the redevelopment agreed between the parties is not stopped because of non-cooperation of two members.

I do not find it possible to accept, in the facts of the present case, that the relief sought is necessarily a final relief merely because possession is being sought. The Petitioner seeks possession for a particular purpose, namely demolition of the existing building and redevelopment of the Society's property. Possession is not sought for taking away the contractual rights of Respondent Nos. 1 and 2. Their right to permanent alternate accommodation is recognised under the Development Agreement. The Petitioner has stated that it is ready to execute the necessary agreements with them. Therefore, an interim order can be passed for protecting the redevelopment process without finally deciding any independent claim which Respondent Nos. 1 and 2 may have regarding their contractual or statutory rights.

The judgment in Pranav Constructions Limited is relevant while considering this issue. The Division Bench has held that disputes between individual members and the Society regarding their claims or entitlements are not to be finally decided in proceedings under Section 9. At the same time, the existence of such disputes does not prevent the Court from granting interim measures where the members are bound by the Development Agreement. The Court observed:

The same judgment states:

Therefore, if Respondent Nos. 1 and 2 have any separate dispute regarding the area to be given to them, the terms of permanent alternate accommodation, validity of any resolution or any other individual entitlement, such dispute cannot be decided in the present Section 9 proceedings. They will have to take such dispute before the appropriate forum. But merely because such a dispute may exist, Respondent Nos. 1 and 2 cannot be permitted to stop the redevelopment contrary to the arrangement entered into under the Development Agreement.

I have considered the submission of learned Advocate for Respondent No. 2 that the Court under Section 9 should not grant an order which in effect gives the final relief to the Petitioner. The general principle is correct. However, merely because possession is an important step in redevelopment does not mean that an order for handing over possession can never be passed under Section 9. The Court has to see the terms of the contract, the purpose for which possession is required and what may happen if interim protection is refused. In the present case, the Development Agreement provides for vacation, demolition and redevelopment. Clause 12.3 provides for handing over possession for "demolition and re-development of the said Property". Therefore, the relief sought is directly connected with performance of the Development Agreement which contains the arbitration arrangement between the parties.

There is another important part of the Agreement. Clause 12.4 provides:

Thus, the parties have recognised that if a member does not vacate, the redevelopment can be delayed. The Agreement has provided consequences for such delay. Respondent Nos. 1 and 2 therefore cannot, merely by refusing to execute the PAAA agreements, keep the whole redevelopment process stopped for an indefinite period.

The submission of the Petitioner that redevelopment cannot proceed unless the existing premises are vacated has substance. If 34 members have completed the relevant documentation and are ready to vacate, while Respondent Nos. 1 and 2 continue to remain in possession, their continued occupation can prevent demolition of the existing building and commencement of construction of the new building. In such circumstances, the balance of convenience is in favour of preventing obstruction to the redevelopment, while at the same time protecting the contractual right of Respondent Nos. 1 and 2 to permanent alternate accommodation. At the same time, the rights of both sides have to be protected. The main objection of Respondent No. 2 is that the PAAA agreements have not yet been executed and registered in favour of Respondent Nos. 1 and 2. I therefore consider it proper to protect that right while granting possession. The Petitioner shall provide the final PAAA agreements to Respondent Nos. 1 and 2 and shall remain ready to execute and register the same. Respondent Nos. 1 and 2 shall execute and complete registration of the PAAA agreements within one week from the date on which they hand over vacant possession of their respective premises pursuant to this order. In this manner, the Respondents will continue to have the contractual protection of permanent alternate accommodation and, at the same time, the redevelopment will not remain stopped for an unlimited period.

Once the Court finds that Respondent Nos. 1 and 2 are required to vacate in the circumstances of the present case, the requirement of execution and registration of the PAAA agreements cannot be used as a continuing reason for retaining possession. The parties have acted upon the Development Agreement to a substantial extent. The process has been completed with 34 members. The Petitioner has stated that it is ready to complete the same process with Respondent Nos. 1 and 2. Therefore, the proper course would be to protect both sides by fixing a definite period for execution and registration of the PAAA agreements and directing handing over of possession for redevelopment.

The submission that there is no possibility of arbitration cannot be accepted. The Development Agreement contains an arbitration clause. The dispute regarding failure to vacate the premises is connected with the redevelopment arrangement. The Division Bench in Pranav Constructions Limited has observed:

In the present case, the Petition shows that a dispute has arisen regarding the obligation of the members to vacate their premises. Therefore, there is sufficient basis to hold that arbitration is a real possibility and that the Petition for interim protection under Section 9 is maintainable.

The submission of Respondent No. 2 that the Court should wait until every stage of the redevelopment is completed before directing possession cannot be accepted in the present facts. If such approach is adopted, two members can effectively stop the redevelopment which has otherwise been accepted and acted upon by the large majority of the Society members. The Development Agreement provides for vacation of premises and alternate accommodation. It considers a situation where a member refuses to execute the individual agreement. Therefore, the contractual arrangement cannot be allowed to become ineffective merely because Respondent Nos. 1 and 2 have not cooperated. At the same time, I am not deciding finally any claim which may be decided in arbitration or before any other competent forum. The findings recorded herein are for deciding the present interim Petition. On the material available, Respondent Nos. 1 and 2 have not shown sufficient contractual or legal reason for continuing to withhold possession after not coming forward to execute the PAAA agreements despite the Petitioner's stated readiness. In the circumstances of the present case, their continued possession has the effect of obstructing the redevelopment which the parties have agreed to undertake.

I, therefore, find that the Petitioner has made out a case for interim protection under Section 9 of the Act. The Petitioner has shown an existing contractual right under the Development Agreement. The redevelopment process has substantially moved forward. Individual PAAA agreements have been executed and registered with 34 out of 36 members. In paragraph 31 of the Petition, the Petitioner has stated that it "is ready and willing to execute such agreement with Respondent Nos. 1 and 2", while according to the Petitioner they are refusing to come forward. The latter part of Clause 12.2 deals with such refusal and gives the Developer the right to seek vacation of the premises. The continued possession of the two premises can delay the redevelopment.

I am therefore satisfied that the balance of convenience is in favour of granting the reliefs sought by the Petitioner. If Respondent Nos. 1 and 2 continue to remain in possession despite the Development Agreement and their stated refusal to execute the PAAA agreements, the Petitioner will continue to suffer delay in the redevelopment. At the same time, the rights of Respondent Nos. 1 and 2 can be protected by directing execution and registration of the PAAA agreements within one week of handing over possession. This course gives effect to the redevelopment arrangement while preserving the contractual benefit of permanent alternate accommodation to Respondent Nos. 1 and 2.

In view of the foregoing discussion and for the reasons recorded hereinabove, the following order is passed:

ii) Respondent Nos. 1 and 2 shall hand over quiet, peaceful and vacant possession of their respective premises, namely Flat No. 101 on the 1st Floor of the building originally known as "Charkop Kabira CHSL", i.e. the said Second Building, and Flat No. 14 on the 4th Floor of the building originally known as "Charkop Dhanwantari CHSL", i.e. the said First Building, to the Petitioner for the purpose of demolition and redevelopment, within one week from the date of this order;

iii) The Petitioner shall provide the final individual agreements for permanent alternate accommodation to Respondent Nos. 1 and 2 and shall remain ready and willing to execute and register the same;

iv) Respondent Nos. 1 and 2 shall execute and complete registration of the individual agreements for permanent alternate accommodation within one week from the date on which they hand over vacant and peaceful possession of their respective premises to the Petitioner pursuant to this order. The Petitioner shall also complete its part of execution and registration within the same period;

vi) The Court Receiver shall be entitled to take such assistance from the concerned police authorities as may be necessary for taking physical possession of the said premises and implementing this order;

vii) Respondent Nos. 1 and 2, their servants, agents or any person claiming through or under them are restrained from obstructing, interfering with or creating any hindrance in the redevelopment of the property by the Petitioner in accordance with the Development Agreement dated 26 August 2025;

viii) Respondent Nos. 1 and 2 are further restrained from transferring, alienating, encumbering or creating any third-party rights, interest or claim in respect of their respective premises;

ix) The above interim reliefs shall remain in force until further orders in the arbitration proceedings or until modified or vacated by the competent Court or Arbitral Tribunal;

xi) The Petition stands disposed of in the above terms.