Shree Heraambh Vastu Nirman LLP vs Mulund Sagar Prasad Cooperative Housing Society Limited

The Applicant has filed the present Application under Section 11(6) of the Arbitration and Conciliation Act, 1996. The Applicant seeks appointment of an Arbitrator for protecting and enforcing its rights under the Agreement dated 15 February 1996 read with the Supplementary Agreement dated 16 April 2005. The Respondent-Society is now taking steps for redevelopment of the property. Therefore, the Applicant has sought an interim injunction against the Respondent-Society so that its rights are protected during the redevelopment process.

The facts leading to the filing of the present Application are that on 15 February 1996, the Applicant and the Respondent-Society entered into an Agreement for development of the property., disputes arose between the parties. In view of those disputes, the parties entered into a Supplementary Agreement dated 16 April 2005. In December 2024, the Respondent-Society started the process for a Scheme under Section 79A of the Maharashtra Co-operative Societies Act, 1960 (MCS Act). On 2 April 2026, the Applicant invoked the arbitration clause by issuing a Notice dated 2 April 2026. The Respondent, through its Advocate, replied to the said Notice on 26 April 2026 and refused to agree to the appointment of an Arbitrator. Therefore, the Applicant filed the present Application on 6 May 2026.

Learned Advocate for the Applicant submits that during the meetings held between the parties, the office bearers of the Respondent-Society agreed to waive the alleged termination said to have been made by the Resolution dated 24 September 2017. According to the Applicant, the office bearers of the Respondent proposed that the Applicant should carry out the redevelopment work as a contractor. They sought assistance from the Applicant for appointment of a PMC/Architect. The Applicant was requested to obtain quotations from Architects known to the partners of the Applicant. The office bearers of the Respondent agreed that the Applicant would get the benefit of the balance FSI and the permissible TDR available on the subject plots during the development. On the basis of this understanding and assurance, the Applicant agreed to assist in appointing the Architect. The Applicant agreed to take up the redevelopment work as the Developer. At the request of the office bearers of the Respondent, the Applicant obtained quotations from three different PMCs/Architects for the proposed development project. The correspondence and emails exchanged between the proposed PMCs/Architects, the office bearers of the Respondent and Mr. Sunil Phulzade, partner of the Applicant, are referred to hereunder. On 4 April 2023, the partner/s of Atelier Pachupate Partners (APP) had a meeting with the office bearers of the Respondent and the Applicant. This meeting between APP and the Respondent was arranged through the Applicant and was held at the premises of the Applicant at Mulund, Mumbai. Nearly eight to ten office bearers or committee members of the Respondent were present in the said meeting. On 10 April 2023, APP sent an email to Mr. Vinod Tulalwar, Chairman, and Mr. Satej Chikhalkar, Secretary, enclosing its covering letter for appointment as Architect for the redevelopment. On 11 April 2023, Mr. Atmaram Pachupate of APP forwarded the said email to Mr. Sunil Phulzade, partner of the Applicant., on 21 April 2023, Mr. Vinod Tulalwar, Chairman, replied to the email dated 10 April 2023 and requested APP to submit its quotation. Accordingly, on 27 April 2023, APP sent its quotation by email to Mr. Vinod Tulalwar, Chairman. A copy of the said email was marked to Mr. Satej Chikhalkar, Secretary, Mr. Sunil Phulzade, partner of the Applicant, and another recipient.

The Applicant paid an amount of Rs.1,00,000/- to APP towards its professional fees for preparing the feasibility report. The Applicant arranged a quotation from another Architect, namely Allianz De Architecture (ADA). On 6 June 2023, Mr. Suresh L. Hulikal of ADA sent a quotation for preparing the feasibility report to Mr. Satej Chikhalkar, Secretary. A copy of the said email was forwarded to Mr. Sunil Phulzade, partner of the Applicant. In the said email, Mr. Suresh Hulikal stated that he had been referred by Mr. Sunil Phulzade, partner of the Applicant. On 6 June 2023, Mr. Sunil Phulzade informed Mr. Suresh Hulikal of ADA that Mr. Satej Chikhalkar would get back to him regarding the proposed development. On 8 June 2023, Mr. Satej Chikhalkar sent an email to ADA, with copies to Mr. Sunil Phulzade and Mr. Vinod Tulalwar. In the said email, he requested that the subject of the email be changed from 'Redevelopment' to 'Self Development' and asked ADA to revert., in response to the email dated 8 June 2023, ADA issued a quotation under its covering letter dated 12 June 2023 addressed to the Respondent. The name of Mr. Sunil Phulzade was mentioned under the caption 'Reference' in the said letter. Another Architect, Rijen Architeer, whose quotation was arranged through the Applicant, sent its quotation by email dated 21 June 2023. The email was addressed to Mr. Vinod Tulalwar, with a copy to Mr. Satej Chikhalkar and a blind carbon copy to Mr. Sunil Phulzade, partner of the Applicant. The name of Mr. Sunil Phulzade was mentioned under the caption 'Reference' in the said letter., a meeting with Mr. Jayesh Jadhav, partner of Rijen Architeer, was held at the premises of the Respondent. Nearly 40 to 50 members of the Respondent and the partners of the Applicant were present at the meeting. However, after receiving the aforesaid quotations, the office bearers of the Respondent did not agree to have any discussions with the Applicant or the proposed Architects. According to the Applicant, this conduct of the Respondent came as a shock to it. The Applicant addressed a letter dated 25 September 2023. By the said letter, the Applicant placed the relevant facts on record, called upon the Respondent to provide the documents mentioned therein and asserted its rights under the Agreement and the Supplementary Agreement.

The Applicant contends that in view of the Agreement, the Supplementary Agreement and the discussions held between 2021 and 2023, including the correspondence exchanged with the Architects, its rights relating to the balance FSI and permissible TDR and its right to develop the property of the Respondent continued to remain in force. Through its Advocate, the Applicant issued a notice dated 21 December 2024 asserting its rights under the Agreement and the Supplementary Agreement in the manner stated therein. The Applicant addressed an email through its Advocates to Dedhia Trade Links, stating that the proposed redevelopment of the Respondent should be carried out subject to and in accordance with the rights of the Applicant under the Agreement and the Supplementary Agreement. According to the Applicant, these facts show that the Respondent had waived its alleged termination and entered into discussions with the Applicant for redevelopment of the property. The Respondent considered and entertained the proposals made for the development. Its office bearers accepted the role of the Applicant as developer/contractor in the development process. The Applicant states that after the Resolution was passed in the AGM dated 30 September 2023, its rights under the Agreement and the Supplementary Agreement were affected and, therefore, a cause of action arose in its favour.

From the above facts, according to the Applicant, it is clear that the Respondent had waived its alleged termination and had decided to appoint the Applicant as developer/contractor for the development of the property. The Applicant contends that the unilateral termination by the Respondent was invalid and illegal. However, without prejudice to that contention, the Applicant relies upon the above facts to place on record the subsequent conduct of the Respondent and the understanding which, according to the Applicant, had developed between the parties regarding redevelopment of the property.

Learned Advocate for the Respondent submits that, the present Application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 is clearly and hopelessly barred by limitation under Article 137 of the Limitation Act, 1963. According to the Respondent, the Application is not maintainable and deserves to be dismissed at the threshold, with costs payable to the Respondent. Learned Advocate for the Respondent submits that the Applicant is seeking to enforce rights under the Agreement dated 15 February 1996, the Power of Attorney dated 15 February 1996 and the Supplementary Agreement dated 16 April 2005. It is submitted that disputes between the parties had started as early as in 2001-2002., the Respondent-Society terminated the Power of Attorney dated 15 February 1996 and the Supplementary Agreement dated 16 April 2005 by passing a Resolution in its AGM dated 24 September 2017. The said Resolution was communicated to the Applicant by a letter dated 29 September 2018. According to the Respondent, therefore, the cause of action, if any, arose in the year 2017 or 2018. However, the Applicant did not take any steps to commence arbitration proceedings or seek any other legal remedy within the prescribed period of three years. It is submitted that the Applicant approached this Court only on 2 April 2026, after a delay of more than seven years. According to the Respondent, the Applicant is trying to bring back claims which had become old, stale, and barred by limitation. In view of these facts, the Respondent submits that the present Arbitration Application is barred by limitation, is not maintainable and deserves to be dismissed with costs.

I have considered the submissions made by the learned Advocate for the Applicant and the learned Advocate for the Respondent. The first question is whether the present Application under Section 11(6) of the Arbitration and Conciliation Act, 1996 is filed within limitation. The next question is whether, from the material placed before the Court, it is so clear that the Applicant's claims have become dead claims and, therefore, there is no purpose in appointing an Arbitral Tribunal.

The Respondent submits that the dispute between the parties is very old. According to the Respondent, disputes had started as far back as in 2001-2002. The Respondent relies upon the AGM Resolution dated 24 September 2017 by which the Power of Attorney dated 15 February 1996 and the Supplementary Agreement dated 16 April 2005 were terminated. It is submitted that the said Resolution was communicated to the Applicant by letter dated 29 September 2018. Therefore, according to the Respondent, the Applicant knew about the termination in 2017 or, in any case, in 2018. Even, the Applicant did not start arbitration proceedings or take any legal steps for more than seven years. On this basis, the Respondent submits that the Application filed in 2026 is an attempt to revive an old claim which has become time-barred.

This submission of the Respondent has to be considered by keeping in mind the difference between the limitation applicable to the main claim of the Applicant and the limitation applicable to the Application under Section 11(6). The Supreme Court has explained this difference. In Aslam Ismail Khan Deshmukh v. ASAP Fluids (P) Ltd., (2025) 1 SCC 502, after considering Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, BSNL v. Nortel Networks India (P) Ltd., (2021) 5 SCC 738, Arif Azim Co. Ltd. v. Aptech Ltd., (2024) 5 SCC 313 and SBI General Insurance Co. Ltd. v. Krish Spg., (2024) 12 SCC 1, the Supreme Court has held that the Court hearing a Section 11 Application has to make only a limited enquiry at that stage.

In Vidya Drolia, the Supreme Court observed:

This principle has importance in the present case. The Respondent relies upon the termination of 2017 and its communication in 2018. The Applicant disputes the effect of that termination and has placed material showing that there was conduct and correspondence between the parties after that period.

The Supreme Court explained the position in paragraph 154.4 of Vidya Drolia as follows:

Thus, merely because the Respondent has raised an objection of limitation, the appointment of an Arbitrator cannot be refused. The Court has to examine whether the present case is one of those very limited cases where it is clear from the record that the claim is dead and there is no real dispute requiring arbitration. In my view, the material presently placed before the Court does not make the position so clear.

The Respondent relies upon the Resolution dated 24 September 2017 and the letter dated 29 September 2018. However, the Applicant has placed material showing the conduct of the parties after these dates. The Applicant states that discussions took place between the parties from 2021 to 2023. It has relied upon meetings with Architects and PMCs, exchange of emails, quotations obtained from different Architects and participation of the office bearers of the Respondent in the process.

In particular, the Applicant relies upon the meeting held on 4 April 2023 with Atelier Pachupate Partners, the email dated 10 April 2023, the reply dated 21 April 2023 asking for a quotation and the quotation sent on 27 April 2023. The Applicant has relied upon the correspondence concerning Allianz De Architecture. The email dated 6 June 2023, the communication dated 8 June 2023 by which the Respondent requested that the subject be changed from 'Redevelopment' to 'Self Development', and the quotation sent under the letter dated 12 June 2023 are relied upon. The Applicant has relied upon the quotation sent by Rijen Architeer on 21 June 2023 and the meeting held in the presence of several members.

These facts cannot be ignored only because the Respondent says that the termination had taken place in 2017 or that the Applicant knew about it in 2018. At this stage, the Court is not required to decide whether the later conduct of the Respondent amounts to waiver of the termination. The Court is not required to decide whether the subsequent conduct created a fresh agreement, amounted to an acknowledgment of the Applicant's rights or otherwise changed the legal position arising from the earlier Agreements. These questions may require consideration of the correspondence, conduct of the parties, meetings and surrounding circumstances in detail.

The Applicant has relied upon its letter dated 25 September 2023. According to the Applicant, by this letter it placed the relevant facts on record and asserted its rights under the Agreement and the Supplementary Agreement., the Applicant issued a notice dated 21 December 2024 asserting those rights. The Applicant communicated with Dedhia Trade Links regarding the proposed redevelopment and stated that the redevelopment should be carried out in accordance with its rights under the Agreement and the Supplementary Agreement. The Respondent disputes the legal effect of these communications. However, the fact that such subsequent conduct took place cannot be completely ignored at the threshold.

The decision in Nortel Networks India (P) Ltd. has to be understood in the same manner. The Supreme Court observed:

The Supreme Court observed:

The present case is different from a case where, after the cause of action arose, there was complete silence on the part of the claimant and there was no intervening event. Here, the Applicant has placed before the Court a series of events which took place after the alleged termination. Whether these events have any legal effect upon limitation will require consideration of the Agreements, correspondence, conduct of the parties and other facts. It cannot be said at this stage that there is no doubt whatsoever regarding the Applicant's substantive claims.

I am unable to accept the submission of the Respondent that, for deciding the limitation of the present Section 11 Application, the period must be counted from the alleged termination in 2017 or from the letter dated 29 September 2018. The Supreme Court in Arif Azim, as subsequently explained and affirmed in SBI General Insurance Co. Ltd., has made the position clear. In a Section 11(6) Application, the limitation starts when a valid notice invoking arbitration is issued and the other party fails or refuses to comply with the requirements of that notice.

The Supreme Court stated:

This position was specifically clarified by the Supreme Court in SBI General Insurance Co. Ltd.. In paragraph 136, the Supreme Court held:

The present case has to be examined in the light of this legal position. The Applicant invoked arbitration by notice dated 2 April 2026. The Respondent replied through its Advocate on 26 April 2026 and refused to agree to the appointment of an Arbitrator. The present Application was filed on 6 May 2026. Thus, the Application was filed soon after the Respondent refused to act upon the notice invoking arbitration.

Therefore, the present Application under Section 11(6) cannot be held to be barred by limitation. The right of the Applicant to approach this Court for appointment of an Arbitrator arose when the Respondent failed or refused to comply with the notice invoking arbitration. For deciding the limitation of the Section 11 Application, the period of three years under Article 137 cannot be counted from the alleged termination in 2017 or from its communication in 2018.

This distinction is important in the present case. The submission of the Respondent, if accepted at this stage, would first require the Court to hold that the Applicant's contractual rights came to an end in 2017 or 2018 and that the subsequent conduct of the parties had no legal effect. The Respondent may raise such a contention before the Arbitral Tribunal. However, for deciding whether the present Section 11 Application is within limitation, this Court cannot enter into such a detailed examination.

The Supreme Court in Aslam Ismail Khan Deshmukh has specifically stated:

Applying this principle, this Court cannot decide in the present proceedings whether the substantive claims of the Applicant under the Agreement dated 15 February 1996 or the Supplementary Agreement dated 16 April 2005 are barred by limitation. That question may require consideration of the alleged termination, conduct of the office bearers of the Respondent, the letter dated 25 September 2023, the notice dated 21 December 2024 and other facts relied upon by both sides. These matters are disputed. They can be considered by the Arbitral Tribunal after the parties place their pleadings, documents, and evidence before it.

The Respondent submits that after the Resolution dated 24 September 2017, the Applicant had no surviving right. The Applicant disputes this. It says that the Respondent waived the alleged termination and continued discussions with the Applicant regarding redevelopment. The Applicant submits that the office bearers accepted its role as developer/contractor and agreed that it would receive the benefit of the balance FSI and permissible TDR.

In my view, this dispute cannot be decided merely from the oral submissions of the parties. The emails and letters relied upon by the Applicant have to be considered. Their meaning and legal effect may depend upon the authority of the concerned office bearers, the resolutions passed by the Society, the terms of the Agreements and the surrounding circumstances. Whether the office bearers had authority to bind the Society, whether the discussions resulted in any concluded arrangement and whether the subsequent conduct amounted to waiver or otherwise affected the termination are questions which cannot be decided in the limited proceedings under Section 11.

At the same time, the Applicant's submission that the Respondent participated in the process of considering Architects cannot at this stage be treated as conclusive proof that the Applicant's earlier contractual rights were restored. Similarly, the Respondent's submission that the termination continued to remain effective cannot at this stage be treated as established so as to bring the arbitration to an end. Both sides have placed material in support of their respective cases. The existence of these competing factual positions shows that this is not a case where the Court can safely say that there is no subsisting dispute.

The Supreme Court has cautioned that the referral Court should not conduct a mini trial at the Section 11 stage. Paragraph 154.4 of Vidya Drolia makes this position clear. Where the contentions are arguable, where the summary consideration is not sufficient or conclusive and where the facts are disputed, the matter should be referred to arbitration. In the present case, the facts relating to the termination and the subsequent conduct of the parties are disputed. Therefore, this Court should not undertake a detailed examination of those matters at this stage.

I find that the Applicant's submission regarding the subsequent conduct of the parties between 2021 and 2024 cannot be rejected at the threshold. That conduct may have to be considered before any final conclusion is reached regarding the Applicant's contractual rights. However, I am not recording a final finding that the Respondent waived the termination. I am not recording a final finding that the Applicant continues to have the development rights claimed by it. Those questions are left open for the Arbitral Tribunal. The finding of this Court is limited to the fact that these matters are disputed and, therefore, the Court cannot treat the Applicant's claims as clearly dead at the Section 11 stage.

The Respondent's reliance upon the period between 2017-2018 and 2026, therefore, does not make the present Section 11 Application barred by limitation. The delay may have relevance while deciding the substantive claims. It may have relevance to the defences of waiver, acquiescence, abandonment or any other defence which the Respondent may raise before the Arbitral Tribunal. But these matters have to be considered by the Tribunal. They cannot be made a ground for refusing appointment of an Arbitrator when the present Section 11 Application has been filed within three years from the date on which the right to make such Application arose.

This position is consistent with the principle stated by the Supreme Court in Aslam Ismail Khan Deshmukh. Unless the case is manifestly and ex facie dead, the dispute should be left for adjudication by the Arbitral Tribunal. The Tribunal will have an opportunity to consider the complete pleadings, documents, and evidence. It can decide the objection regarding limitation of the substantive claims as a preliminary issue or at the appropriate stage of the arbitration, in accordance with law.

I hold that the objection of the Respondent that the present Section 11(6) Application is hopelessly barred by limitation cannot be accepted. Article 137 of the Limitation Act applies to the present Application. However, for deciding limitation of the Section 11 Application, the starting point is the date on which the right to apply arose in accordance with the principles laid down by the Supreme Court. In the present case, the Applicant issued the notice invoking arbitration on 2 April 2026. The Respondent refused to act upon it by its Advocate's reply dated 26 April 2026. The present Application was filed on 6 May 2026. It is within limitation.

I hold that whether the substantive claims of the Applicant under the Agreement dated 15 February 1996 and the Supplementary Agreement dated 16 April 2005 are barred by limitation need not be decided in the present proceedings. The Respondent will be entitled to raise that objection before the Arbitral Tribunal. The Applicant will be entitled to rely upon the subsequent conduct of the parties, the correspondence, and all other material facts available to it in answer to that objection.

The other submissions of the Respondent relating to the termination, the effect of the Resolution dated 24 September 2017, the authority of the office bearers and the legal effect of the subsequent negotiations are left open. No finding recorded in this order should be understood as a final decision on those substantive questions. The finding necessary at this stage is that these questions are disputed and require adjudication in the arbitral proceedings. The existence of such disputed questions cannot by be made a ground for refusing the reference to arbitration.

On considering the material placed before the Court as a whole, I am satisfied that the Applicant has made out a case for exercise of jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996. There is no sufficient basis to hold that the present Application is barred by limitation. There is no sufficient basis to hold that the Applicant's substantive claims are so clearly dead and stale that an Arbitral Tribunal should not be constituted.

The objection of the Respondent regarding limitation is rejected. The disputes arising out of and in relation to the Agreement dated 15 February 1996 and the Supplementary Agreement dated 16 April 2005 are required to be considered by the Arbitral Tribunal in accordance with law.

The substantive rights and liabilities of the parties are left open for consideration by the Arbitral Tribunal. The Tribunal shall be entitled to consider all objections regarding limitation of the underlying claims, waiver, termination, abandonment, acquiescence, novation and any other defence available to either party. Such questions shall be decided on the basis of the pleadings, documents and evidence placed before the Tribunal.

In the aforesaid circumstances, the present Application under Section 11 of the Act, is deserved to be disposed of in terms of the following order:

All issues on merits are expressly kept open to be agitated before the arbitral tribunal appointed hereby.

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.