Justice Arif S. Doctor delivered the Judgement in the case of Arun Bhoomi Corporation vs. Jagruti Developers. The Bombay High Court recently heard an Arbitration Petition (No. 384 of 2024) filed under Section 37 of the Arbitration and Conciliation Act, 1996. The petition challenges an order dated June 21, 2024, issued by the Arbitral Tribunal in an ongoing dispute between Arun Bhoomi Corporation and Jagruti Developers regarding a real estate development project in Mira, Thane.
Arun Bhoomi Corporation, the petitioner, sub-licensed the development of a plot of land to Jagruti Developers under agreements signed in 2009 and 2011. Alleging material breaches by Jagruti, the petitioner issued a termination notice in 2015. However, Jagruti developers disputed the termination and continued asserting their rights over the project, leading to arbitration proceedings.
In 2019, Jagruti developers sought relief under Section 9 of the Arbitration Act to halt further construction and prevent third-party sales, which was dismissed by the Bombay High Court in 2020. However, in 2024, Jagruti developers filed an application under Section 17 seeking interim reliefs, including financial disclosures and the deposit of sale proceeds into an escrow account. The Arbitral Tribunal, by majority, allowed partial reliefs.
The petitioners, represented by Senior Advocate Mr Seervai, argued that the Tribunal's order contradicted the 2020 court ruling, which had restricted Jagruti developers from pressing similar reliefs in arbitration. They contended that the order would cause financial hardship, disrupt ongoing construction, and potentially violate RERA regulations. The petitioners relied on Union of India vs. N Murugesan(2022) and Raman Tech vs. Solanki Traders (2008), emphasising the importance of delay and financial hardships.
On the other hand, Jagruti developers, represented by Senior Advocate Mr Shah, defended the Tribunal's decision, asserting that substantial investments were made and that the petitioners had engaged in unauthorised sales. Jagruti developers argued that the interim reliefs were necessary to secure their interests pending a final award. Jagruti developers referred to Kewal Kiran Clothing Ltd. vs. Hasmukh Dedia (2019) and Raymonds Ltd. vs. A. Singhania (2019), arguing that delay alone should not defeat interim reliefs.
The High Court found that Jagruti developers’ delay of nearly nine years in filing the application was inexcusable and that the Tribunal had overlooked critical aspects, such as financial prejudice to the petitioners. Consequently, the court ruled in favour of Arun Bhoomi Corporation, setting aside the Tribunal's order.
The judgment underscores that an arbitral tribunal must carefully evaluate whether the claimant has established a clear case and assess the balance of convenience and potential prejudice to the respondent. Tribunals should avoid granting reliefs that may cause financial hardship, disrupt ongoing projects, or interfere with statutory obligations, as such failures can lead to the setting aside of their orders.