Housing Society Member Can Seek Interim Relief Despite Not Signing Agreement With Arbitration Clause: Bombay HC

The Bombay High Court has recently ruled that a housing society member cannot be denied interim protection in a redevelopment dispute merely because he has not signed the redevelopment agreement.

Justice Amit Borkar held that the member's recorded membership and claimed rights in the property must also be considered.

“However, the fact that the Petitioner has not signed the agreement is not enough to reject his Petition without considering his claim, membership and need for interim protection. He is a recorded member claiming rights in premises forming part of the building being redeveloped. His claimed entitlement is directly affected by the Development Agreement and the steps being taken by the Respondents under it,” the court held.

The court was hearing a petition filed by Anil Sunder Jhangiani, a member of Om Sadan Cooperative Housing Society in Borivali, Mumbai. He sought protection against being forced to vacate his premises or being penalised before a Permanent Alternate Accommodation Agreement (PAAA) was executed and registered.

Jhangiani claimed that the entire ground floor, measuring 2,000 square feet, was a single commercial unit. The redevelopment agreement, however, described it as three shops and one residential flat, with a stated area of 1,923.75 square feet.

The society and its developer, Polo Infra Developers, opposed his plea. They argued that he had not signed the redevelopment agreement and should pursue his claims before the Co-operative court or a civil court.

The court clarified that it was not deciding whether Jhangiani was entitled to 2,000 square feet of commercial premises in the redeveloped building. That dispute would have to be decided in appropriate proceedings.

On eviction, the court relied on a clause in the redevelopment agreement requiring the PAAA to be executed and registered before a member vacates the premises. The society and developer could not insist that Jhangiani leave before fulfilling this condition.

“The Respondents may continue the redevelopment work. However, they cannot treat the Petitioner as having refused to vacate in breach of the Development Agreement when the document required before vacating has not been executed and registered,” the court observed.

The court also ruled that the society and developer could not impose or recover a penalty merely because Jhangiani had not vacated before the PAAA was executed and registered. Any demand based solely on his failure to vacate before this contractual condition was fulfilled would be premature.

The court left the dispute over the ground floor's area, configuration and commercial character open for determination. It did not declare that the entire ground floor was a single commercial unit measuring 2,000 square feet.

The society and developer must provide the current redevelopment plans sanctioned or approved by the Brihanmumbai Municipal Corporation, along with relevant drawings and documents showing the proposed alternative accommodation, within two weeks. They must also prepare a draft PAAA in Jhangiani's name, recording his membership and shareholding while preserving both sides' claims over the premises.

The court directed them to continue providing undisputed contractual benefits, including transit rent, displacement compensation, hardship compensation and other redevelopment benefits, subject to the parties' rights and contentions.

They must also identify the alternative accommodation proposed for Jhangiani. It cannot be allotted to a third party in a manner that defeats his rights under the PAAA or the final decision in arbitration.

The redevelopment project can continue while the dispute is resolved. If arbitration has not commenced, Jhangiani must take steps to initiate it within the period prescribed under Section 9(2) of the Arbitration and Conciliation Act, 1996, subject to any additional time permitted by the court.

For Petitioner (Anil Sunder Jhangiani): Advocates Shyam Kapadia, Megha Gupta, Khushboo Acharya and Lavanita Chityala i/by Hedgehog & Fox LLP.

For Respondent (Om Sadan Cooperative Housing Society Limited): Advocates Ranjeev Carvalho and Videsha Rohira i/by Amrita Lalwani.

For Respondent (Polo Infra Developers Private Limited): Advocates Gauraj Shah, Pratik Jani and Princee Vaishnav i/by Prime Legem.