After nearly sixteen years of uncertainty for displaced residents, the Bombay High Court has stepped in to protect a co-operative housing society whose redevelopment project never took off despite repeated promises. In a detailed order, the court restrained the original developer from interfering with the property and directed that possession be handed over to a court-appointed receiver, clearing the path for fresh redevelopment efforts.
Background of the Case
The dispute arose from a redevelopment agreement signed in 2009 between Phalke Niketan Co-operative Housing Society Ltd. and Adit Enterprises. The society’s building, constructed in the 1970s under a MHADA low-income housing scheme, was demolished in October 2009. Members vacated their homes on assurances of new flats, monthly rent, and corpus payments.
Those assurances remained largely on paper.
A supplementary agreement in 2011 increased the promised flat size, rent, and added penalties for delay. Yet, even the basic municipal approvals failed to materialise. Payments to members stopped, cheques bounced, and by 2016 the society formally terminated the agreement. Matters grew more complex when the society went under administrative control, prompting four members to file a civil suit to safeguard members’ interests.
Years passed. No construction began. Residents continued to live in transit accommodation.
In 2023, the society regained control through a newly elected managing committee and appointed a new developer. However, access to the property was allegedly blocked by security deployed by the original developer. The society then approached the High Court under Section 9 of the Arbitration and Conciliation Act, seeking urgent protection.
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The developer opposed the plea, arguing that the society had “abandoned” arbitration by allowing its members to pursue a civil suit and that the petition was delayed.
Court’s Observations
Justice Somasekhar Sundaresan rejected the developer’s objections in clear terms.
The court drew a sharp distinction between a co-operative society and its individual members. It held that only the society, acting through its managing committee, could waive or abandon an arbitration agreement.
“The actions of individual members cannot be treated as the actions of the society itself,” the bench observed, noting that the earlier civil suit was filed when the society was under an administrator’s control.
On delay, the court found no merit in the developer’s argument. It pointed out that the developer had not challenged the termination of the agreement for years and had failed to show any serious effort to revive the project.
“The developer cannot squat on the property forever when there is no sign of redevelopment,” the judge remarked, highlighting that residents had been without their homes since 2009.
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Decision and Directions
Allowing the society’s petition, the High Court passed a series of protective directions:
- The developer is restrained from creating any third-party rights over the property.
- Within four weeks, the developer must hand over vacant physical possession to the Court Receiver.
- All original documents, including the development agreement and title papers, must also be deposited with the receiver.
- The society is free to proceed with redevelopment through its newly appointed developer, without obstruction.
- The order will operate until an arbitral tribunal is appointed, after which interim protection will be governed by the tribunal.
With these directions, the court disposed of the petition, emphasising that the developer may still pursue claims for damages before the arbitral tribunal, but cannot block the society’s long-delayed redevelopment.
Case Title: Phalke Niketan Co-operative Housing Society Ltd. vs Adit Enterprises
Case No.: Arbitration Petition No. 29 of 2025
Decision Date: 19 December 2025
