Bombay High Court Allows Widow To Withdraw ₹1.25 Crore Pending Arbitration Over Disputed Flat Sale

The Bombay High Court on 27 October allowed Laxmi Madhukar Athawale, a 75-year-old widow, to withdraw Rs. 1.25 crore with accrued interest deposited by SSD Escatics Private Limited and its representatives, pending arbitration over a Mumbai flat allegedly sold to her despite an earlier sale and mortgage.

Justice Amit Borkar held that continued retention of money deposited as interim protection may cause undue hardship when circumstances materially change, and that withdrawal may be permitted subject to safeguards preserving the parties' rights in the underlying dispute. The Bench held:

“The money lying in Court comes from the very transaction relating to her purchase of the flat. Keeping the entire amount in Court for an unlimited period, even after the circumstances have changed, would cause continuing hardship to her".

Athawale purchased Flat No. 301 in Kapil Vastu Cooperative Housing Society, Goregaon (West), Mumbai, claiming that SSD Escatics and its representatives assured her that the company had clear title to the property.

Relying on these representations, she paid Rs. 85.10 lakh through cheques and Real Time Gross Settlement (RTGS) and allegedly handed over gold worth Rs. 40 lakh. The parties executed a Memorandum of Understanding on 13 January 2020.

However, the flat had already been sold to Jeki Jitendra Mehta and Shweta Patel under a registered agreement dated 20 December 2017 and mortgaged to DBS Bank. Athawale subsequently lost possession after the bank auctioned the property for Rs. 1.15 crore.

On 24 July 2024, the High Court found a strong prima facie case in Athawale's favour and directed SSD Escatics and its representatives to deposit Rs. 1.25 crore within two weeks. It modified the order on 8 August 2024.

The respondents deposited the amount nearly two years later, paying Rs. 60 lakh on 4 August 2026 and the remaining Rs. 65 lakh on 11 September 2026, following contempt proceedings initiated by Athawale.

Athawale then sought permission to withdraw the deposited amount with interest before the arbitration concluded. She cited her loss of possession and her need for funds for accommodation and medical treatment while undergoing dialysis.

Opposing the application, SSD Escatics and its representatives argued that they had admitted receiving approximately Rs. 85 lakh, not the entire Rs. 1.25 crore. They contended that their communication dated 9 May 2023, proposing payment of Rs. 1.25 crore, concerned an unfinished settlement and did not establish liability. Further, permitting withdrawal would grant final relief before the arbitrator decided the dispute.

Rejecting these objections, the Court noted that the original deposit direction followed consideration of receipts, payments, correspondence and representations concerning the property. It also noted that the respondents themselves had proposed paying Rs. 1.25 crore during settlement discussions.

Justice Borkar observed that circumstances had materially changed since the original interim order because Athawale had lost possession of the flat and needed money for accommodation and medical treatment. He also rejected the respondents' reliance on their own delay in complying with the deposit order, observing:

“The Respondents cannot take advantage of their delay in complying with the order of this Court, particularly when because of the delay the Petitioner remained without the protection which the Court had directed.”

Accordingly, the High Court allowed Athawale to withdraw Rs. 1.25 crore with accrued interest, subject to an undertaking that the amount would remain subject to the final decision in arbitration and that she would comply with any direction for repayment or restitution issued by a competent court. It clarified that the withdrawal will not prevent the respondents from contesting her claims before the arbitrator.

Appearances for petitioner (Laxmi Madhukar Athawale): Advocates Baharaiz Irani, Afrin Dalal, Anosh Irani, Amit Padwal and Saniya Ahmed.

Appearances for respondents (SSD Escatics Private Limited, Vivek Tanna and Jayesh Tanna): Advocates Rajiv Narula, Devansh Shah, Shrey Shah and Aksha Huddar, instructed by Huddar & Associates.