Arbitration Cannot Be Invoked By Individual Society Members When Development Agreement Is Between Developer & Housing Society: Bombay HC

The Court was hearing an application that has been filed by eleven members of a co-operative housing society, seeking to invoke Section 11 of the Arbitration and Conciliation Act, 1996 in connection with disputes and differences under an agreement for the re-development of a building they reside in.

The bench of Justice Somasekhar Sundaresan observed, “arbitration cannot be invoked by individual members or groups of members of the Society for resolving the disputes emanating from the conduct of the Developer, even if such disputes arise out of the import of the Development Agreement. This is for the simple reason that individual members are not parties to the arbitration agreement contained in the Development Agreement.”

Advocate Aadil Parsuramouria appeared for the Appellant and Advocate Rubin Vakil appeared for the Respondent.

Brief Facts-

The agreement in question is a Development Agreement executed between the Society and the Developer. The Applicants are among the 40 members of the Society. A notice from 13 members addressed to both the Society and the Developer, purporting to invoke arbitration, was issued by advocates for these members. The Society has not provided consent to the members on whose behalf the notice was issued, to invoke arbitration on its behalf. The Developer has questioned the authority of those on whose behalf the notice has been issued vide a reply.

The Court agreed with the view taken in the decision in Ketan Champaklal Divecha vs. DGS Township Pvt Ltd. and Another where according to the Court the Bombay High Court has declared the law on the subject and articulated it threadbare, including facets of how individual members give up their desires and identity by submitting to the collective will of a housing society.

The Court said that it is an admitted position that the individual members are not signatories to the arbitration agreement. According to the Court the fundamental requirement under Section 7 of the Arbitration Act, that the arbitration agreement has to be in writing among the parties to the arbitration proceedings, has also not been met.

Accordingly, the Court held that the applicants would not be able to invoke the jurisdiction of the Court under Section 11 of the Arbitration & Conciliation Act, 1996.

Finally, the Court rejected and disposed of the application.

Cause Title: Shankar Vithoba Desai v. Gauri Associates (Neutral Citation: 2024:BHC-OS:10366)

Appearance:

Appellant: Adv. Aadil Parsurampuria

Respondent: Adv.Rubin Vakil and Adv. Feroze Patel

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