Bombay High Court Directs Gagan Ace Developers To Deposit Rs. 7.81 Crore Arbitral Award For Stay

The Bombay High Court on 18 March upheld a District Judge's order under Section 36 of the Arbitration and Conciliation Act, 1996, directing Gagan Ace Developers to deposit the entire arbitral award amount of Rs. 7.81 crore along with interest as a condition for stay.

A Single Bench comprising Justice N.J. Jamadar held that the developers failed to make out any exceptional circumstances warranting an unconditional stay of the award in their dispute with Choice, a partnership firm primarily involved in real estate development and construction.

The Court observed:

“The conspectus of aforesaid consideration is that the Petitioners cannot be said to have succeeded in making out an exceptional case. Nor could it be demonstrated that the Petitioners would suffer a substantial loss if the execution of the award is not stayed. The fact that the Petitioners have suffered an arbitral award, which directs payment, by itself, cannot be construed as a substantial loss.”

The dispute arose from development arrangements concerning land at Ghorpadi, Pune, where the Government of Maharashtra directed the transfer of 30 percent of the constructed area to itself under the Urban Land (Ceiling and Regulation) Act, 1976. Under a Development Agreement dated 17 November 2015 and a Deed of Confirmation dated 4 May 2017, Gagan Ace Developers acquired rights to develop Plot No.5 using residual FSI and TDR benefits.

Issues emerged over alleged excess construction on Plot No.6 and waiver of ULC conditions. Choice and its partner, Atul Bhagat, invoked the arbitration clause contained in the Development Agreement. By majority, the Tribunal directed the developers to pay Rs. 7,81,18,000 with 18 percent interest from the date of claim until realisation.

Gagan Ace Developers challenged the award under Section 34 of the Arbitration Act and sought a stay under Section 36. By an order dated 25 September 2025, the District Judge granted a stay subject to deposit of the full award amount.

Aggrieved, the developers approached the Bombay High Court under Article 227 of the Constitution, arguing that the award was patently illegal and based on damages without proof of loss. Choice contended that no exceptional grounds existed to justify an unconditional stay of the arbitral award.

The Court noted that it was undisputed that the developers had undertaken construction on a portion of Plot No.6. It reiterated that parties' intent must be gathered from within the four corners of the contract. It remarked:

“The intent of the parties, prima facie, appears to be that, the Development Agreement was confined to Plot No.5.”

It held that the Tribunal's finding that the developers had no right to obtain waiver of ULC conditions and had acted beyond the agreement cannot be termed egregiously perverse.

On the stay of awards, the Court clarified that under the second proviso to Section 36(3) of the Arbitration Act, unconditional stay must be granted only where fraud or corruption is shown in the agreement or the award. It added:

“If that is not the ground of challenge to the arbitral award, the case would fall within the ambit of the first proviso and then the Court is expected to have due regard to the provisions of the Code, for grant of stay of money decree.”

Finding no exceptional circumstances such as fraud, perversity, or substantial loss, the Bench upheld the District Court's discretion in imposing the deposit condition. It maintained the conditional stay order and clarified that its observations were limited to the stay issue and would not affect the pending 34 challenge.

Accordingly, the Bench dismissed the writ petition.

Appearances for petitioner (M/s. Gagan Ace Developers): Advocates G.S. Godbole, Sitesh Sharma.

Appearances for respondent (M/s. Choice): Advocates Sandesh Shukla, Milind Hartalkar.