Bombay high court directs developer to hand over possession of redevelopment property to society, appoints arbitrator in section 9 petition

Bombay High Court Orders Developer to Transfer Redevelopment Property to Society; Arbitrator Appointed in Section 9 Petition

Case Title: Padmavati Nagar Co-Operative Housing Society Ltd. v. Viraj Properties and Real Estate Pvt. Ltd.

Citation: (2026) ibclaw.in 4900 HC

Coram: Justice Amit Borkar

The Bombay High Court has directed a developer to hand over vacant possession of a redevelopment property to a co-operative housing society within four weeks, while restraining it from creating third-party rights over the property, in a petition filed by the society under Section 9 of the Arbitration and Conciliation Act, 1996 following termination of the Development Agreement.

The Society had appointed the Respondent as developer in 2010 pursuant to a tender process, and a Development Agreement was executed in 2012 which contemplated completion of redevelopment within 24 months from the date of the Commencement Certificate, with a grace period of six months. Two supplementary agreements were subsequently executed in 2014 and 2022, each reducing the carpet area to be received by members. The Intimation of Disapproval was obtained by the Respondent only in December 2016, more than four years after execution of the Development Agreement, and lapsed in December 2017 without the Respondent obtaining a Commencement Certificate. The old building was demolished in October 2020, after which, according to the Society, no meaningful construction took place. The Society terminated the Respondent's appointment in June 2026 citing prolonged and repeated breaches, following which the Respondent allegedly entered the property and commenced soil testing without the Society's consent.

The Respondent opposed the petition on the ground that Clauses 34 and 28.6 of the Development Agreement contained an irrevocable covenant barring the Society from terminating the Agreement, and that it had incurred expenditure exceeding Rs. 15 crores on the project over fourteen years, including on litigation initiated by individual members which had delayed the project. It contended that possession was a final relief incapable of being granted under Section 9, and that the termination itself had not been challenged before any forum.

The Court, relying on its earlier decisions in Pioneer Constructions v. Sahakarnagar Co-operative Housing Society Ltd. and Huges Real Estate Developers LLP v. Khernagar Adarsh Co-operative Housing Society Limited, held that a developer's contractual rights under a redevelopment agreement do not amount to ownership of the society's land, and that a developer's right to profit remains subservient to the society's right to have its building reconstructed. The Court found that the Respondent had not shown, litigation by litigation, which specific obligation could not be performed and for what period, and that the chronology of delay, from execution of the Agreement in 2012 to lapse of the IOD in 2017 and absence of construction even after demolition in 2020, was not seriously disputed.

While noting that the covenants against termination required consideration and could not be ignored at the interim stage, the Court held that they could not be read as conferring an unlimited right to remain in possession despite prolonged failure to perform the core redevelopment obligations. The Court declined to grant the Society's monetary claim of Rs. 29.56 crores at this stage, leaving it open for adjudication, and also left open the Respondent's claims for expenditure and damages.

The Court accordingly directed the Respondent to hand over peaceful possession within four weeks, restrained it from creating third-party rights, and directed it to disclose on affidavit any third-party arrangements already created. By consent of parties, a sole arbitrator was appointed to adjudicate all disputes arising from the Development Agreement and its supplementary agreements.