In a significant interim order that restricts a developer’s ability to freely sell units in an ongoing project, the Bombay High Court has refused to interfere with a temporary injunction that freezes around 1,400 sq. ft. of carpet area in a Ghatkopar East building. The freeze is meant to secure the monetary claim of a contractor who says he completed substantial construction work but remains unpaid.

Justice Aarti Sathe, while dismissing the appeal filed by DKP Designers and Creators Private Limited and its directors, upheld the City Civil Court’s order dated 15 July 2026. The injunction restrains the developer side from alienating or creating any third-party interest in the specified area until the main suit is decided.

Background of the Dispute

The case arises out of a work order dated 25 April 2017 under which Majestic Construction and Developers (a sole proprietary concern of Lalit Satia) undertook construction of a building known as “Kailas” / Kailas Nagar at M.G. Road, Ghatkopar East. The project was planned as a multi-storey residential building with basements, parking floors and residential floors on Final Plot No. 23 (part) of TPS III, CTS No. 5955 (part), Village Ghatkopar Kirol.

According to the contractor, work began in 2017. After negotiations and a quotation, excavation and structural work progressed. The contractor claims that by the time disputes intensified, more than 12 floors had been completed and over 95% of the building work stood done. He has sought recovery of approximately ₹3.19 crore towards unpaid bills, along with return of movable property and equipment valued at about ₹1.64 crore, taking the total claim to roughly ₹4.84 crore.

The developer side terminated the work order in May 2020, citing delays and quality issues. The contractor disputed the termination and alleged that third-party contractors were later brought in to complete remaining work. After earlier proceedings and a Court Commissioner’s inspection (which recorded construction up to the 12th floor), the matter reached the City Civil Court, where the contractor sought interim protection.

Trial Court Freezes Part of the Project

On 15 July 2026, the City Civil Court partly allowed the contractor’s interim application. It restrained DKP Designers and its directors from alienating or creating any third-party interest in and around 1,400 sq. ft. of carpet area in the project — an area described as proportionate to the value of the construction executed by the contractor.

The developer challenged this order before the Bombay High Court in Appeal from Order No. 737 of 2026, arguing that the suit was essentially a money claim for unpaid work and did not relate to title or interest in immovable property. They contended that an owner cannot be routinely restrained from dealing with its own property, that Order XXXVIII Rule 5 (attachment before judgment) conditions were not satisfied, and that quality and delay objections had been raised against the contractor.

High Court’s Reasoning

Justice Sathe rejected the challenge and held that the Trial Court’s order did not require interference. The Court observed that although the primary claim is monetary, Order XXXIX Rules 1 and 2 of the Code of Civil Procedure expressly permit temporary injunctions where a defendant threatens to dispose of property with a view to defrauding creditors.

The High Court noted that construction up to the 12th floor by the contractor remained an undisputed position and was corroborated by the Court Commissioner’s report appointed earlier by the High Court itself. Quality objections, the Court observed, appeared to have been raised at a belated stage after substantial work was already complete, and were treated by the Trial Court as a prima facie afterthought.

Importantly, the Court took note of agreements for sale already executed by the developer side for commercial shops in the project (including transactions involving consideration of ₹13.5 crore and ₹7 crore). This demonstrated that units were being sold and third-party rights were being created while the contractor’s claim remained pending, raising a real risk that the entire saleable area could be alienated before the suit is decided.

The High Court held that restraining only about 1,400 sq. ft. — an area proportionate to the contractor’s claim based on the rates in the original work order — does not cause serious prejudice to the developer, while unrestricted sales could prejudice the contractor’s ability to realise any decree that may ultimately be passed. The balance of convenience and the risk of irreparable injury were found to lie in favour of maintaining the injunction.

The Court also clarified that the Trial Court had correctly proceeded under Order XXXIX Rules 1 and 2, and that arguments seeking to equate the order with the stricter requirements of attachment before judgment under Order XXXVIII Rule 5 were misplaced in the facts of the case.

Implications and Next Steps

The order effectively means that the developer cannot freely sell or create third-party rights in the earmarked 1,400 sq. ft. carpet area until the main recovery suit is decided by the City Civil Court. The High Court has directed the Trial Court to dispose of the suit expeditiously.

While the dispute is primarily between a contractor and the developer entities, it illustrates how courts can secure money claims in construction contracts by ring-fencing a portion of the project itself. For homebuyers or allottees in the project, the restraint on a limited area may slow or complicate certain sales, though the bulk of the project remains unaffected by this particular order. The final outcome will depend on the merits of the contractor’s recovery claim when the suit is fully tried.

The Appeal from Order has been dismissed with no order as to costs. Pending interim applications, if any, have also been disposed of.

Also Read: Bombay High Court Rules BMC Permission Not Required for Tenantable Repairs

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