Society Members Cannot Stall Majority-Approved Redevelopment: Bombay High Court Directs Them to Vacate Within Four Weeks
Facts
Rachana Cooperative Housing Society occupies approximately 5,000 square yards of land at Somnath Lane, off Hill Road, Bandra West, Mumbai. The land had been leased to the Society for 99 years under a registered lease deed dated 10 July 1960.
Polestar Realtors Private Limited claimed ownership of the underlying land. In 2014, it instituted eviction proceedings against the Society’s members before the Small Causes Court.
During those proceedings, Polestar offered to redevelop the property. The Society accepted the proposal at a Special General Body Meeting held on 8 January 2017. Consent terms were subsequently executed, and the eviction suit was disposed of by a consent decree dated 7 March 2017.
The Society later approved a proposed Development Agreement, which was formally executed with Polestar on 26 December 2023. The agreement contained an arbitration clause.
Polestar also entered into a separate development agreement concerning an adjoining property belonging to Meena Society. It proposed to redevelop both properties jointly under Regulations 33(10) and 33(11) of the Development Control and Promotion Regulations, 2034.
The Slum Rehabilitation Authority issued Intimations of Approval on 4 and 16 February 2026. Polestar thereafter called upon the Society’s members to vacate their flats so that demolition and redevelopment could begin.
The Society informed Polestar that declarations of consent had been received from 37 members. Five more members subsequently consented. According to Polestar, 42 out of 63 recognised members supported the redevelopment.
Respondent Nos. 2 to 26 refused to hand over possession. Their objections included:
- The Managing Committee lacked authority to execute the Development Agreement;
- Redevelopment through the Slum Rehabilitation Authority was materially different from the scheme originally approved;
- Amalgamation of the adjoining Meena Society plot required fresh approval;
- Permanent Alternate Accommodation Agreements had not been executed;
- Membership and ownership disputes remained pending;
- An earlier developer had instituted a commercial suit;
- Some flats and structures were not included in the petition; and
- The existing building was structurally sound and did not require redevelopment.
Polestar approached the Bombay High Court under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim directions compelling the respondents to vacate.
It alternatively sought the appointment of the Court Receiver to take possession, with police assistance if required, and hand over the flats for redevelopment.
M/s Saboo and Varun, the original developer of Building A, applied to intervene, claiming ownership of Flat Nos. A/804 and A/904. It argued that demolition would affect its independent ownership rights.
Issues
- Whether the Bombay High Court could direct dissenting members to vacate their flats as interim protection under Section 9 of the Arbitration and Conciliation Act.
- Whether objections concerning the Society’s resolutions, Managing Committee, membership and ownership defeated the developer’s request for interim relief.
- Whether redevelopment under Regulations 33(10) and 33(11), involving the Slum Rehabilitation Authority and amalgamation of an adjoining plot, amounted to a new project requiring fresh approval.
- Whether a minority of members could prevent implementation of redevelopment approved by the Society’s General Body.
- Whether the developer had to execute and register Permanent Alternate Accommodation Agreements and secure monetary benefits before requiring members to vacate.
- Whether the pending suit instituted by the previous developer prevented the present redevelopment.
- Whether M/s Saboo and Varun was a necessary party because it claimed independent ownership of two flats in the building.
- Whether the Court Receiver could take possession and execute agreements on behalf of members who continued to default.
Petitioner’s Arguments
Polestar argued that the Development Agreement dated 26 December 2023 authorised it to undertake redevelopment and contained a binding arbitration clause.
Under the agreement, the Society’s members were obligated to vacate their flats after the developer obtained the necessary approvals.
Polestar contended that 42 out of 63 recognised members had consented to the redevelopment. A small group of dissenting members could not be permitted to delay a project approved by the majority.
The Development Agreement conferred wide powers upon Polestar to:
- Use all legally available FSI and TDR;
- Obtain additional development potential;
- Amalgamate adjoining plots;
- Modify layouts and building plans;
- Adopt beneficial government schemes; and
- Obtain approvals from the competent planning authority.
Therefore, shifting from a municipal route to an SRA-approved redevelopment scheme did not create an entirely new project. The members’ agreed carpet area and contractual benefits remained protected.
Polestar further argued that disputes concerning the Managing Committee, membership, ownership and waitlisted members were internal disputes governed by the Maharashtra Cooperative Societies Act or other proceedings. They did not eliminate the arbitration agreement or prevent interim relief under Section 9.
The earlier developer’s commercial suit did not contain any injunction restraining Polestar or the Society from proceeding with redevelopment. Mere pendency of that suit could not stall the project.
Regarding Saboo and Varun, Polestar submitted that its alleged ownership of two independent flats was not part of the dispute arising under the Development Agreement. Those rights could be pursued separately and did not justify dismissal of the entire Section 9 petition.
Respondent’s Arguments
The contesting members argued that Polestar was attempting to implement a redevelopment scheme materially different from the one approved by the Society.
According to them, the original proposal contemplated redevelopment through the Municipal Corporation, whereas Polestar subsequently obtained approval from the Slum Rehabilitation Authority and combined the Society’s property with an adjoining plot.
They argued that this change required:
- A fresh General Body resolution;
- An addendum to the Development Agreement;
- Fresh informed consent from the members; and
- Compliance with the applicable statutory redevelopment procedure.
Several respondents questioned the authority of the Managing Committee. They alleged that its tenure had expired before the Development Agreement was executed and that proceedings concerning the Committee were pending before the cooperative authorities.
The members also contended that Polestar could not require them to vacate before executing registered Permanent Alternate Accommodation Agreements, paying transit rent and hardship compensation, and securing the promised redevelopment benefits.
Some respondents raised competing claims relating to additional flats, commercial premises, Society membership and ownership. They argued that demolition could prejudice the rights of persons who had not been joined as parties.
The earlier developer and related respondents relied upon a pending commercial suit arising from the termination of the previous development arrangement.
It was also argued that the petition was defective because it sought possession from only selected occupants even though demolition would affect the entire building.
Saboo and Varun’s Arguments
Saboo and Varun claimed that it had constructed Building A and continued to own Flat Nos. A/804 and A/904 as unsold premises.
It alleged that it had remained in possession, paid maintenance and other outgoings, and licensed the flats since 2007.
It contended that demolition would directly affect its ownership rights and that it was therefore a necessary and proper party.
Saboo and Varun also claimed that Building A was structurally sound, less than 30 years old and did not require demolition.
Analysis of the Law
Limited Scope of Section 9
Section 9 permits courts to grant interim protection before or during arbitration. It is not intended to decide every underlying dispute finally.
In redevelopment proceedings, a Section 9 court may protect the subject matter of arbitration and prevent contractual obligations from being frustrated.
However, it should not finally determine complicated questions concerning:
- Ownership and title;
- Membership of a cooperative society;
- Validity of General Body resolutions;
- Legality of a Managing Committee;
- Independent rights of non-signatories; or
- Claims pending before specialised statutory authorities.
Such questions must be decided by the arbitral tribunal, cooperative authorities, civil courts or other competent forums.
Their mere existence does not necessarily deprive the Section 9 court of power to grant immediate protection.
Binding Effect of Majority Decisions
The decision to redevelop a cooperative housing society generally falls within the authority of its General Body.
Unless a competent forum sets aside the General Body’s resolutions, they continue to operate. Individual members cannot prevent their implementation merely because they disagree with the majority’s commercial or structural assessment.
Disputes concerning whether additional persons should be treated as members must first be decided by the cooperative authorities. Until then, every person claiming membership cannot automatically be included in the calculation of the majority.
Interpretation of the Development Agreement
The Development Agreement was drafted broadly. It permitted the developer to:
- Use the maximum legally permissible development potential;
- Avail itself of additional FSI and TDR;
- Amalgamate neighbouring plots;
- Modify plans and layouts;
- Adopt beneficial government schemes; and
- Undertake redevelopment in the manner considered appropriate.
The principal contractual safeguard was that the area and benefits promised to members could not be adversely affected.
Accordingly, obtaining approval from the Slum Rehabilitation Authority and combining the adjoining plot did not, at the interim stage, amount to an unauthorised replacement of the approved project.
Protection Before Vacating
Although the redevelopment could proceed, members could not be compelled to vacate without first receiving contractual protection.
Before seeking possession, the developer had to:
- Execute and register the Permanent Alternate Accommodation Agreement;
- Pay or secure transit rent;
- Pay or secure hardship compensation; and
- Tender every other monetary benefit payable under the Development Agreement.
This condition balanced the developer’s need to proceed with redevelopment against the members’ need for housing and financial security.
Independent Claims of Non-Signatories
A third party claiming ownership under an independent title cannot ordinarily have that claim adjudicated in Section 9 proceedings founded upon an arbitration agreement to which it is not a party.
However, such an independent claim does not automatically render the entire Section 9 petition non-maintainable.
The third party remains free to establish its rights before the competent forum. Redevelopment itself does not extinguish a valid ownership right that may later be proved.
Precedent Analysis
Pranav Constructions Ltd. v. Priyadarshini Cooperative Housing Society Ltd.
The Bombay High Court’s Division Bench held that objections by individual members regarding:
- General Body resolutions;
- Appointment of the developer;
- Additional area;
- Implementation of redevelopment; and
- Internal Society disputes
cannot ordinarily be finally decided in Section 9 proceedings.
Such disputes must be pursued under the Maharashtra Cooperative Societies Act or before the competent civil forum.
At the same time, where members are bound by a Development Agreement and refuse to perform their obligations, the Section 9 court may grant interim protection in aid of arbitration.
The Court applied this distinction in the present case. It declined to decide the members’ independent disputes finally but held that their pendency did not justify stalling the redevelopment.
Court’s Reasoning
The Bombay High Court found that the redevelopment had been approved by the Society and supported by a majority of its recognised members.
The Development Agreement granted Polestar broad authority to avail itself of government schemes, development potential, FSI, TDR and amalgamation benefits. It did not restrict redevelopment exclusively to the Municipal Corporation.
Therefore, redevelopment under the SRA scheme and the proposed amalgamation of the adjoining plot were prima facie within the contractual framework.
The Court rejected the argument that expiry of the Managing Committee’s tenure automatically made every subsequent decision void. The General Body had approved the material redevelopment decisions, and disputes concerning the Committee had to be decided by the cooperative authorities.
Similarly, pending membership, title and ownership disputes did not destroy the contractual relationship created by the Development Agreement. Those claims were expressly kept open for decision by the competent forums.
The previous developer’s pending commercial suit also did not bar redevelopment because no injunction restraining the Society or Polestar had been granted.
Saboo and Varun’s claim over two flats arose from an independent source and could not be decided in the Section 9 petition. Its alleged rights would not automatically be extinguished by redevelopment, and it remained free to establish them separately.
The Court held that the existence of unresolved disputes did not justify allowing a minority of occupants to stall the entire project.
However, it imposed significant safeguards. Polestar could obtain possession only after executing registered Permanent Alternate Accommodation Agreements and paying or securing all contractual monetary benefits.
If any occupant continued to refuse possession after these protections were provided, the Court Receiver could take possession with police assistance and, if necessary, break open the locks.
Conclusion
The Bombay High Court partly allowed Polestar’s petition.
Respondent Nos. 2 to 26 were directed to hand over vacant possession of the 21 flats identified in the order within four weeks after Polestar:
- Executed and registered Permanent Alternate Accommodation Agreements;
- Paid or secured transit rent;
- Paid or secured hardship compensation; and
- Tendered all other contractual monetary benefits.
If any respondent failed to comply, the Court Receiver was authorised to:
- Issue seven days’ notice;
- Take physical possession;
- Seek police assistance;
- Break open locks if necessary; and
- Hand over possession to Polestar for redevelopment.
Where a member refused to execute the Permanent Alternate Accommodation Agreement despite the developer’s compliance, the Court Receiver was authorised to execute and register it on that member’s behalf.
Disputed monetary benefits could be deposited with the Court Receiver. After redevelopment, the new flats of defaulting or disputed occupants would be delivered to the Court Receiver and ultimately handed over to the persons found legally entitled.
The respondents were restrained from creating third-party rights in the existing or replacement flats.
All disputes concerning membership, ownership, Society resolutions, the Managing Committee, additional flats and pending proceedings were expressly kept open.
Polestar was directed to invoke arbitration within 90 days.
Case Details
Case: Polestar Realtors Private Limited v. Rachana Cooperative Housing Society Limited & Others, with M/s Saboo and Varun as Applicant
Court: High Court of Judicature at Bombay, Ordinary Original Civil Jurisdiction
Case Number: Arbitration Petition (L) No. 15468 of 2026 with Interim Application (L) No. 23252 of 2026; CNR No. HCBM020232532026
Judge: Justice Amit Borkar
Reserved On: 10 July 2026
Date: 17 July 2026
Result: Arbitration petition partly allowed. The identified occupants were directed to vacate after execution of registered alternate-accommodation agreements and payment or security of transit benefits. The Court Receiver was authorised to take possession upon default, while all independent membership, title and ownership disputes were kept open.
