In a relief to director Rakeysh Omprakash Mehra, the Bombay High Court dismissed the application filed by Avenue Seasons Properties LLP (the developer) seeking that the dispute between the director and the developer should go before a co-operative court or arbitral tribunal.
Mehra, PS Bharathi and Nissa Hoosain Nensey had approached the HC challenging the development agreement between Pali Hill Neptune Co-operative Housing Society and Avenue Seasons Properties LLP. The society comprises two buildings and two bungalows. The bungalows are owned by Mehra and Nensey.
According to the development agreement, the society would be redeveloped by the developer and even the bungalow owners would be provided apartments.
Mehra and Nensey challenged this before the HC claiming that they were being arbitrarily treated at par with flat owners. Challenging the resolution passed by the society for redevelopment, their suit prayed a declaratory order from the HC that they are owners of their respective bungalows.
The developer filed an application claiming that there was an arbitration clause in the development agreement and hence under Section 8 of the Arbitration and Conciliation Act the suit be sent either to the Co-Operative Court and/or for reference of disputes to arbitration.
The developer had also filed a second application under Section 9 of the Arbitration and Conciliation Act seeking appointment of a court receiver to take possession of the premises.
According to developer’s counsel, Virag Tulzapurkar, the plaintiffs (Mehra, Bharathi and Nensey) were members of the society, thus party to the development agreement and were bound by the arbitration clause in the agreement.
However, Snehal Shah and Nausher Kohli, advocates for the plaintiffs argued that the arbitration agreement was limited to the disputes between the society and developer only. Whereas, the plaintiffs stated that they were not signatories or parties to the agreement.
Justice Gautam Patel observed that an arbitration agreement is an “expression of volition and consensus ad idem of the contracting parties”.
The court noted that in the present case, certain members had signed the agreement and some members had not. Hence, the non-signatory members cannot be bound by it, observed justice Patel while dismissing the developer’s applications.
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