The Supreme Court of India has clarified that an arbitration clause contained in an earlier redevelopment agreement can become binding in later agreements if those agreements clearly adopt all terms of the original contract.
The Court set aside a Bombay High Court order that had refused to appoint an arbitrator in a redevelopment dispute involving Hirani Developers and members of a housing society.
Background of the Case
The dispute arose after Hirani Developers entered into a redevelopment agreement with Nehru Nagar Samruddhi Co-operative Housing Society in 2011 for redevelopment of a dilapidated property. The agreement included an arbitration clause under Clause 36 for resolving disputes through a sole arbitrator.
Years later, the developer executed Permanent Alternate Accommodation Agreements with individual society members in 2023 and 2024. These later agreements stated that all terms and conditions of the original development agreement would form part of the new agreements and would remain binding on the parties.
The dispute escalated after some society members approached the consumer commission with complaints against the developer. Hirani Developers then invoked arbitration and issued notices under the Arbitration and Conciliation Act, 1996. However, the members refused to participate in arbitration proceedings.
The Bombay High Court had dismissed the developer’s applications seeking appointment of an arbitrator. The High Court held that the later accommodation agreements did not contain a separate arbitration clause and that a general reference to the earlier development agreement was not enough to bind individual society members to arbitration.
According to the High Court, the society members were not parties to the original arbitration clause in their individual capacity, and there was no clear commitment in the later agreements to resolve disputes through arbitration.
A bench of Justice Sanjay Kumar and Justice K. Vinod Chandran disagreed with the High Court’s interpretation of Section 7(5) of the Arbitration and Conciliation Act.
The Court referred to earlier rulings, including M.R. Engineers and Contractors Pvt. Ltd. vs. Som Datt Builders Ltd., and explained the difference between a “mere reference” to another document and complete incorporation of its terms into a later contract.
“The later agreements unequivocally recorded that all terms and conditions of the Development Agreement shall form part of the agreements and all clauses would bind the parties,” the bench observed.
The Court held that this language clearly showed the intention of the parties to incorporate the earlier development agreement “body and soul” into the later agreements, including the arbitration clause.
Setting aside the Bombay High Court’s order dated June 26, 2025, the Supreme Court allowed the appeals and held that a valid arbitration agreement existed between the parties through incorporation by reference.
The Court appointed Advocate Vishal Kanade as the sole arbitrator to resolve disputes between Hirani Developers and the respondent members.
The arbitrator was directed to make the statutory disclosure under Section 12 of the Arbitration Act within 15 days.
Case Details
Case Title: Hirani Developers v. Nehru Nagar Samruddhi CHS Ltd. and Another
Case Number: Civil Appeal Nos. arising out of SLP (C) Nos. 38407-38411 of 2025
Judges: Justice Sanjay Kumar and Justice K. Vinod Chandran
Decision Date: May 13, 2026
