Bombay High Court Allows Builder To Pursue Fresh Arbitration Despite Appeal Against Earlier Award

The Bombay High Court has allowed Vardhaman Builders to pursue fresh arbitration for damages over the termination of a redevelopment agreement, despite a pending appeal against an earlier arbitral award in the same dispute.

Justice Sandeep V. Marne noted that the Supreme Court had refused to interfere with an earlier Bombay High Court order that allowed Vardhaman Builders to pursue fresh arbitration limited to damages.

He held, “The Apex Court has permitted continuation of parallel proceedings viz. Appeal, as well as fresh arbitral proceedings meaning thereby that a reference to arbitration can be made for adjudication of claims of the Applicant for damages/compensation even during pendency of the Appeal.”

The dispute concerns redevelopment rights over a property in Borivali (East), Mumbai. Narendra Balasaheb Ghatge and the legal heir of late Vasant Ghatge are the property owners. In 2003, Narendra Ghatge and late Vasant Ghatge entered into an MoU for redevelopment of the property.

In 2005, a fresh agreement was executed with Vardhaman Builders. Under this arrangement, the developer received exclusive development rights in return for ₹1.5 crore, two flats free of cost, and one flat at a concessional rate for Narendra Ghatge.

The property owners terminated the agreement in July 2006, prompting Vardhaman Builders to invoke arbitration. In the first round, the sole arbitrator rejected Vardhaman Builders' claims for specific performance as well as damages in November 2011.

The Bombay High Court later set aside that award. However, the appeal against that decision remains pending before a Division Bench.

During the pendency of that appeal, the property owners entered into a fresh development agreement with another developer.

With the appeal still pending, Vardhaman Builders continued its legal battle, seeking interim protection and a fresh arbitration process.

In 2023, it made another bid to restart arbitration. That effort failed, with the court holding that insofar as the claim sought specific performance of the redevelopment agreement, it was ex facie time-barred.

The position shifted in November 2025, when the court allowed Vardhaman Builders to issue a fresh arbitration notice, but only for a claim seeking damages for the alleged wrongful termination of the agreement.

After the property owners did not respond to that notice or participate in constituting an arbitral tribunal, Vardhaman Builders returned to court seeking appointment of an arbitrator.

The developer argued that this round stood on a different footing, as it had dropped its demand for specific performance and was pursuing only damages and compensation.

Instead, it was pursuing only damages and compensation.

It also argued that the earlier ruling had already made clear that arbitration could still be invoked despite the pending appeal because the earlier arbitral award had been set aside.

The property owners opposed the plea, contending that the fresh arbitration request was premature as the appeal against the earlier award is still awaiting a decision.

They also argued that if the right to invoke fresh arbitration arose in 2017, when the earlier award was set aside, the present application filed in 2026 was barred by limitation.

Rejecting the objection, the court noted that the property owners had challenged the November 2025 order before the Supreme Court, which declined to interfere.

On limitation, the court relied on its recent ruling in Edelweiss Financial Services Ltd. v. Percept Finserve Pvt. Ltd.

It held that a court considering appointment of an arbitrator can only examine whether the application itself was filed within time. Whether the underlying damages claim is time-barred is a question for the arbitral tribunal.

“A referral court exercising jurisdiction under Section 11(6) of the Arbitration Act cannot decide the issue of claim-limitation and all that needs to be examined is whether the application is filed within a period of 3 years from the date of accrual of cause of action,” the court held.

The court noted that Vardhaman Builders issued the fresh arbitration notice on January 9, 2026, and filed the present application on January 30, 2026. It therefore held that the application was within limitation.

Holding that the application was not premature and was within limitation for the limited purpose of appointing an arbitrator, the court appointed former Bombay High Court judge Justice M.S. Sanklecha as sole arbitrator to adjudicate disputes relating to damages, compensation, and losses arising from the termination of the development agreement.