In a landmark ruling that could protect thousands of dissenting flat owners across Maharashtra, the Bombay High Court has refused to appoint a private arbitrator in a high-stakes redevelopment dispute, declaring that a member who consciously refuses to sign the main redevelopment agreement cannot be dragged into arbitration.
The case revolves around Mulund Sandhyaprakash Cooperative Housing Society Limited, a small 11-flat society in Mulund (West), Mumbai. The society’s building had become old, and in April 2017, the general body passed a resolution to redevelop it. After negotiations, M/s. Space Master Realtors (the developer) was selected. On July 2, 2021, the society signed a Redevelopment Agreement (DA) with the builder, promising bigger flats, transit rent, and other benefits in exchange for extra FSI rights.
The DA included an arbitration clause (Clause 38), meaning any disputes would go to a private arbitrator instead of regular courts. Nine members signed or consented, but one resident — Neeta Sawant, owner of Flat No. 10 — strongly opposed the project from the start. She filed complaints, refused to vacate, and deliberately never signed the DA.
The builder obtained Intimation of Disapproval (IOD) in November 2023 and asked members to vacate. Ten families complied, but Neeta Sawant refused. The builder then approached the Bombay High Court under Section 9 of the Arbitration Act and got an order in August 2024 directing her to vacate (with a Court Receiver appointed to take possession if she didn’t). Possession was handed over via the Court Receiver on November 15, 2024.
Only after losing her flat did Neeta Sawant sign a Permanent Alternate Accommodation Agreement (PAAA) on November 14, 2024 (registered later), agreeing to Flat No. 8001 in the new building named Chandan Heights, plus transit rent. This PAAA had its own limited arbitration clause, but only for disputes related to rent, flat size, etc. — not the main DA.
The builder later claimed massive losses (over ₹13.13 crore) due to the delay caused by her refusal to vacate earlier. On July 28, 2025, the builder sent a legal notice demanding payment and invoking the arbitration clause from the DA (which she never signed). When she refused, the builder filed an application under Section 11 of the Arbitration Act before Justice Sandeep V. Marne, asking the court to appoint an arbitrator against her.
After detailed arguments (including help from senior lawyers Mayur Khandeparkar for the builder and Karl Tamboly for the resident), the court delivered its judgment on March 6, 2026.
Justice Marne ruled:
- Arbitration requires explicit written consent from both sides.
- A dissenting member who refuses to sign the DA is not bound by its arbitration clause.
- Being a beneficiary of redevelopment (getting a new flat/rent) or signing PAAA later does not automatically make someone a party to the DA’s arbitration clause.
- The builder can sue for money in a normal civil court, but cannot force private arbitration against someone who never agreed to it.
The application was dismissed — a clear win for Neeta Sawant and, by extension, any flat owner who says “no” to redevelopment and refuses to sign the main agreement.
Legal experts say this judgment strengthens the position of dissenting members: builders can get interim relief (like possession orders) against them, but cannot shortcut disputes through private arbitration if the member never consented in writing to that mechanism.
For society members worried about being pressured by builders during redevelopment — this ruling sends a strong message: If you don’t sign the main deal, you keep your right to fight in open court.
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