Bombay high court grants interim relief under section 9 arbitration act and directs deposit of Rs. 58,97,600 for registered deed of cancellation and dishonoured cheque

Bombay High Court Issues Interim Relief Under Section 9 of Arbitration Act, Mandating Deposit of Rs. 58,97,600 for Cancellation Deed and Dishonoured Cheque.

Case Title: Hemlata Ajay Ramani v. Alag Property Constructions Pvt. Ltd.

Case No.: Comm. Arbitration Petition (L) No. 24230 of 2026

Citation: (2026) ibclaw.in 6040 HC

Coram: Justice Amit Borkar

Decided on: 5 October 2026 The Bombay High Court has partly allowed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 and directed a developer to deposit Rs. 58,97,600 in Court till the arbitral proceedings are decided. Justice Amit Borkar held that the petitioner's claim was prima facie supported by a registered Deed of Cancellation and a dishonoured cheque, and that there was a reasonable apprehension about recovery of the amount.

The petitioner and the respondent had entered into an Agreement for Sale dated 31 March 2021 for Flat No. 1001 in a building known as Alag Endeavour. Possession was to be given on or before 31 December 2025. As possession was not given, the petitioner sought a refund and filed a complaint before MahaRERA. On 28 March 2026, the parties executed and registered a Deed of Cancellation, under which the respondent became liable to refund the amount. Towards this liability, the respondent issued a post-dated cheque dated 30 June 2026 for Rs. 58,97,600. The cheque was dishonoured on 1 July 2026 with the endorsement “Funds Insufficient”.

The petitioner submitted that the respondent was facing arbitration and execution proceedings in respect of several redevelopment projects. It was pointed out that in Commercial Execution Application No. 99 of 2025, the respondent had stated through its advocate that the amounts in its disclosed accounts were negligible, and this was recorded in an order dated 20 November 2025. The petitioner also relied on an interim award obtained by Endeavour Society and on two registered Deeds of Assignment dated 14 July 2026, by which the respondent assigned its redevelopment rights in respect of two societies for a lump-sum consideration.

The respondent denied the Agreement for Sale and the payment of Rs. 58,97,600. It argued that no legal liability existed and that the petition was an attempt to pressurise it to settle disputes on the petitioner's terms. It also referred to disputes with one Mr. Atul Ramani, and to petitions under Sections 8 and 9 of the Insolvency and Bankruptcy Code that were rejected, with an appeal pending before the NCLAT.

The Court accepted that under Section 9 it should not decide disputed questions meant for the Arbitral Tribunal. However, it drew a distinction between a claim disputed only by an oral statement and a claim supported by a registered document and a cheque issued in connection with it. The Court noted that the respondent had not explained the execution of the registered Deed of Cancellation or why a cheque for the same amount was issued. On the dishonour, the Court observed that it did not by itself establish the respondent's financial position, but it showed that the expected payment was not made.

Relying on Essar House Private Limited v. Arcellor Mittal Nippon Steel India Limited, (2022) 20 SCC 178, the Court observed that Section 9 permits an interim measure to secure the amount in dispute, but the power cannot be used merely because a money claim is disputed. The party seeking protection must show circumstances because of which protection is necessary.

The Court then weighed the circumstances relied upon. The statement recorded in the order dated 20 November 2025 was held to be a circumstance that could not be ignored. At the same time, the Court held that pending execution proceedings by other societies do not automatically mean that the petitioner will be unable to recover her amount, and that the interim award by itself could not lead to a conclusion that the respondent would not pay. As to the assignments, the Court noted that the respondent had not disputed them, but held that a transfer of rights for consideration is not proof of an intention to defeat the claim, since the consideration may be available as an asset. The petitioner's assertion that the respondent had no business was not treated as an established fact. Considering all circumstances together, the Court found a genuine concern about whether the amount could be recovered easily if found payable.

The Court found no direct connection between the respondent's disputes with Mr. Atul Ramani, including the proceedings before the NCLT and the NCLAT, and the petitioner's claim. It also did not accept that the petition was filed only to pressurise the respondent. The Court further clarified that the prayer described the amount as “admittedly due and payable”, but since the respondent had disputed liability, no admission could be recorded.

On balance of convenience, the Court noted that the direction sought was only to secure the amount and not to pay it to the petitioner, and that the respondent would remain free to contest liability before the Arbitral Tribunal.

The Court directed the respondent to deposit Rs. 58,97,600 within four weeks and to keep it in a fixed deposit with a nationalised bank for one year, to be renewed until further orders. The amount is not to be released to the petitioner at this stage. A copy of the deposit receipt and the fixed deposit receipt is to be furnished to the petitioner within one week of the deposit. The claim for interest or any other amount, and all contentions of the parties, were kept open. The Court clarified that its observations are prima facie and shall not influence the Arbitral Tribunal.