Rakeysh Omprakash Mehra gets relief from Bombay High Court in redevelopment dispute

Bollywood director Rakeysh Omprakash Mehra was recently granted relief by the Bombay High Court, which dismissed an application filed for return of suit to a co-operative court or arbitral tribunal (Nissa Hoosain Nensey v. Pali Hill Neptune CHSL & Ors).

Mehra, PS Bharathi and Nissa Hoosain Nensey (plaintiffs) had approached the High Court with a suit in a dispute which arose from a development agreement between Pali Hill Neptune Co-operative Housing Society and Avenue Seasons Properties LLP, the developer. The Society comprised 2 buildings and 2 bungalows; Mehra and Nensey were owners of the bungalows.

The dispute arose when the agreement stipulated that after the redevelopment process, the bungalow owners will be provided apartments. The plaintiffs claimed they were being arbitrarily treated at par with flat owners.

The suits sought a declaratory order from the High Court that they are owners of their respective bungalows, and challenged the resolutions passed by the Society for redevelopment.

Relying on an arbitration clause in the agreement, the developer filed an application under Section 8 of the Arbitration and Conciliation Act seeking return of plaint to the co-operative court and/or for reference of disputes to arbitration. Another application was filed under Section 9 seeking appointment of a court receiver to take possession of the premises.

The developer argued that the plaintiffs were members of the society, thus party to the development agreement and were bound by the arbitration clause in the agreement.

Opposing the applications, the plaintiffs submitted that the agreement was limited to the disputes between the society and developer only. The plaintiffs on the other hand were not signatories or parties to the agreement.

Justice Gautam Patel observed that an arbitration agreement is an "expression of volition and consensus ad idem of the contracting parties." He Patel concluded that in the case at hand, there were certain members who had signed the agreement and some members had not. Hence, the non-signatory members cannot be bound by it. The application was accordingly dismissed.

Consequently, since the Court held that the arbitration clause contained in development agreement does not bind plaintiffs, the application under Section 9 also stood dismissed.

The plaintiffs were represented by Senior Advocate Snehal Shah and Advocate Nausher Kohli, briefed by a team from DSK Legal comprising Managing Partner Anand Desai, Partner Chandrima Mitra, Associate Partner Parag Khandhar and Principal Associate Prachi Garg.

Senior Advocate Virag Tulzapurkar appeared for the Society.

[Read order]