Bombay High Court Allows Five Doctors' Appeal In 21-Year Property Dispute, Finds Prima Facie Fraud

The Bombay High Court on 21 October set aside a Single Judge's order refusing interim protection to five doctors who invested Rs. 60 lakh in commercial premises under a 2005 agreement, holding that the developers had prima facie attempted to cheat them by retaining their investment for over 21 years without delivering the promised property.

A Division Bench comprising Justices A.S. Gadkari and Kamal Khata allowed the appeal filed by Dr. Devidas R. Sheregar, Dr. Alka Jain, Dr. Manoj S. Aithal, Dr. Suresh Shetty and Dr. Shishir Shetty against Zeenal Constructions Private Limited and other parties, protecting their contractual rights over the proposed premises in the Krishna Ambika Arcade Project in Goregaon, Mumbai. The judges observed:

“Perusal of the record indicates that, the Respondents have attempted to play fraud on the Appellants. They have outrightly cheated the Appellants. In our view, the Appellants, who are a group of doctors by profession, had together invested their hard-earned money with the Respondents, who continue to use the monies of the Appellants interest free for over 21 years and now claim that the MoU stood terminated or that it came to an end long ago by the conduct of the parties.”

The dispute arose from a Memorandum of Understanding (MoU) dated 27 June 2005, under which the five doctors invested Rs. 60 lakh towards commercial premises measuring 4,360 square feet in the proposed Krishna Ambika Arcade project. The project was planned on Dave's Estate, a property measuring approximately 1,405 square yards on S.V. Road, Goregaon West, Mumbai.

The MoU required the developers to deliver the premises within 24 months of obtaining an Intimation of Disapproval (IOD), a development approval, or within another period mutually agreed upon by the parties. However, the developers neither obtained the IOD nor delivered the premises or refunded the doctors' investment.

The doctors approached the High Court under Section 9 of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Court Receiver and protection against the creation of third-party rights over the property. After a Single Judge dismissed their petition on 19 June 2026, they challenged the decision before the Division Bench.

Zeenal Constructions and the other opposing parties contended that the MoU had terminated or ended through the parties' conduct. Meanwhile, counsel for prospective purchasers Jayantilal Kewal Chand, Dhanesh Kantilal Tejawat, Babulal Devraj Jain and Sadashiv Pranavshankar Dave informed the Court that they were negotiating with Zeenal Constructions and Prakash Barot to acquire development rights in the property.

Rejecting the developers' contention at the interim stage, the Court noted that they had admittedly failed to obtain the IOD. It also held that limitation was not an issue. It emphasised that transferring the land could defeat the doctors' claim for specific performance of the agreement. It observed:

“In our view, if the land itself is disposed off by the Respondents, the Appellants would be remediless to the extent of their claim for specific performance.”

Further, the Bench expressed the prima facie view that the opposing parties had intended to cheat the doctors from the inception of the transaction. Attempts to facilitate a settlement failed because the amount offered was considered inadequate in comparison with the investment the developers had retained interest-free for over 21 years.

Accordingly, the High Court allowed the appeal and granted interim protection to safeguard the doctors' contractual rights over the disputed property against its transfer to third parties. Although the Bench considered initiating criminal proceedings on its own motion, it refrained from doing so and expressed hope that the parties would settle the dispute.

Appearances for appellants (Dr. Devidas R. Sheregar and others): Advocates Bahraiz Irani, Amit Padwal, Anosh Irani and Afrin Dalal.

Appearances for respondents (Zeenal Constructions Pvt. Ltd. and Prakash Barot): Advocates Gaurav Mehta and Sahil Wagh, instructed by DM Legal Associates.

Appearances for respondents (Jayantilal Kewal Chand and others): Advocates Aseem Naphade and Y.S. Shukla.