Preservation Of Arbitration Subject Matter Was More Important: Bombay HC Condones 258-Day Delay In Arbitration Plea

The Bombay High Court has condoned a 258-day delay in filing a plea for appointment of an arbitrator, holding that efforts taken by a developer to prevent acquisition of a redevelopment project by the Maharashtra Housing and Area Development Authority (MHADA) constituted sufficient and exceptional cause.

A bench of Justice Sandeep V. Marne allowed INFRA Poonam Developers LLP to initiate arbitration against Jasbir Singh and other partners, observing that the cause to seek arbitration arose only after MHADA acquired the property and the firm lost possession.

The court noted:

"The Applicant was thus required to take several steps for ensuring preservation of the subject matter of arbitration, before it could seek adjudication of disputes with other partners of the Firm."

Emphasising that this made out an exceptional case for condonation of delay, the Court added:

"Considering the above position, in my view, an exceptional and strong case is made out by the Applicant for condonation of delay in filing Application under Section 11(6) of the Arbitration Act. The case involves peculiar circumstances, where taking of steps for preservation of subject matter of arbitration was more important than seeking adjudication of disputes with the other partners. If the Applicant was successful in securing the project, the very perspective of the disputes between the Applicant and other partners would have changed. In the facts of the present case, the Applicant thought it more prudent, and in my view rightly, to first take steps to prevent the property being acquired by MHADA. It was required to litigate repeatedly for ensuring that the Firm does not lose the project. The real cause for seeking arbitration against the Respondents has occurred only after MHADA acquired the property and the Firm has lost the possession. It now appears that the Applicant does not have much hopes left in securing back the investment allegedly made by it in the project by completing the same and it desires to seek recovery of the same from other partners (Respondents)"

The dispute arose from a Deed of Alteration of Partnership dated April 10, 2013, relating to the redevelopment of Panwala Chawl at Parel Sewri Division, Mumbai.

INFRA Poonam Developers LLP had invested approximately Rs 30 crore in the redevelopment project, which was being undertaken by R.B. Builders and Developers.

Trouble began when stop-work notices were issued and the firm defaulted on payment of rent to tenants. This led to the firm being blacklisted, after which the Housing Department permitted acquisition proceedings in January 2024.

Although the applicant had initially invoked arbitration on June 20, 2020 seeking recovery of its investment, it did not immediately move the Court for appointment of an arbitrator.

Its focus, instead, shifted to keeping the project alive. To that end, it secured ad-interim protection under Section 9 on July 20, 2020 and later filed writ petitions in 2024 challenging the acquisition process.

It also deposited Rs 2 crore pursuant to a February 27, 2024 court order to safeguard its stake in the project.

Those efforts ultimately did not succeed. On March 20, 2025, the property stood acquired and vested in MHADA. The developer then filed the present Section 11(6) application on November 15, 2025, along with a plea to condone the delay.

Jasbir Singh and the other partners opposed the plea, arguing that the claims were time-barred and that no sufficient explanation had been offered for the delay. The Court was not persuaded.

It observed that even after excluding the COVID-19 period, the application ought to have been filed by February 28, 2025 in terms of the three-year limitation under Article 137 of the Limitation Act, 1963.

The delay thus worked out to 258 days. The court, however, found the explanation for this delay acceptable.

The record showed that the applicant had remained engaged in multiple proceedings to protect the redevelopment project. These steps, the Court held, were not extraneous but directly linked to preserving the subject matter of the dispute.

In that context, the right to meaningfully pursue arbitration arose only after MHADA completed acquisition and the firm lost possession.

Satisfied that sufficient and exceptional cause had been made out, the court condoned the delay and allowed the application.

With Clause 16 of the alteration deed containing a valid arbitration agreement, the Court appointed Justice A. A. Sayed, former Chief Justice of the Himachal Pradesh High Court, as the sole arbitrator to decide the disputes between the parties.

For Petitioner (INFRA Poonam Developers LLP): Advocates Aman Saraf, Sakshi Agarwal.

For Respondent (Jasbir Singh & Ors.): Advocates Ziyad Madon, Chittesh Dalmia.