Bombay HC: Unstamped Development Agreement Cannot Support Specific Performance Claim

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 08.10.2026

Bombay HC: Unstamped Development Agreement Cannot Support Specific Performance Claim

The Bombay High Court has held that an undated, unstamped and unregistered development agreement, whose execution and enforceability remain disputed, cannot form the basis for granting specific performance or a consequential interim injunction in the circumstances of the case.

In Mantra Huizen LLP v. Shri Ananda Lakshman Balwadkar & Others, Justice Aarti Sathe dismissed an appeal challenging the refusal of an interim injunction in a property development dispute involving an alleged development agreement and a security deposit of ₹3 crore.

The Court observed that the payment of a refundable security deposit does not, by itself, establish consideration sufficient to confer enforceable development rights, particularly where the underlying agreement is not shown to be a concluded and executable contract.

The High Court further examined Section 14(b) of the Specific Relief Act, 1963, holding that an agreement requiring continuous obligations involving planning permissions, land amalgamation, subdivision and other development activities may be incapable of specific enforcement where such obligations cannot feasibly be supervised by the Court.

The judgment also reiterates the limited scope of appellate interference with discretionary orders granting or refusing interim injunctions under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908.

Background and Facts of the Case

• The dispute concerned land bearing Survey No. 43/2, admeasuring approximately 70 R out of a total area of 1 Hectare 40 R, situated in Pune.
• Following a registered partition among members of the Balwadkar family, the relevant property fell to the shares of three family members representing their respective Hindu Undivided Families.
• According to Mantra Huizen LLP, the landowners had agreed to grant development rights over the property because they were unable to undertake development themselves.
• The appellant claimed that a Development Agreement dated 10 February 2022 had been executed between the parties.
• Under the alleged arrangement, Mantra Huizen LLP was to undertake development of the property upon payment of ₹3 crore as a security deposit, against construction of approximately 49,500 square feet of saleable built-up area.
• The appellant contended that it had paid the entire ₹3 crore on 10 February 2022 and that the Development Agreement had been executed on the same date.
• It further relied upon a Power of Attorney dated 17 February 2022, which was registered before the Sub-Registrar.
• According to the appellant, these documents established a binding contractual arrangement granting it enforceable development rights.
• However, on 3 February 2024, the landowners issued a notice purporting to terminate the Power of Attorney.
• Subsequently, on 6 November 2024, the landowners executed two sale deeds in favour of Respondent No. 20.
• Aggrieved by these transactions, Mantra Huizen LLP instituted Special Civil Suit No. 495 of 2025 seeking specific performance and related reliefs.
• The appellant also sought an interim injunction restraining the respondents from creating third-party rights in respect of the disputed property.

Trial Court Rejects Interim Injunction

• The application for interim injunction was considered by the 6th Joint Civil Judge, Senior Division, Pune.
• By order dated 25 June 2025, the Trial Court rejected the application.
• The Trial Court found material deficiencies in the Development Agreement relied upon by the appellant, including the absence of an execution date and other formal requirements.
• The Trial Court also considered whether the agreement constituted a concluded and enforceable contract capable of supporting the relief of specific performance.
• Dissatisfied with the refusal of interim relief, Mantra Huizen LLP preferred Appeal from Order No. 539 of 2025 before the Bombay High Court.

Arguments Advanced by Mantra Huizen LLP

The appellant challenged the Trial Court’s decision on several grounds.

1. Payment of ₹3 Crore Established Contractual Consideration

• The appellant submitted that payment of ₹3 crore towards the security deposit was undisputed.
• It argued that the payment demonstrated the existence of a binding contractual arrangement and that the Trial Court had failed to appreciate the significance of this transaction.
• According to the appellant, the Development Agreement was executed on the same date on which the cheque was handed over.

2. Development Agreement and Power of Attorney Must Be Read Together

• The appellant contended that the Development Agreement and the registered Power of Attorney dated 17 February 2022 should be construed conjointly.
• It argued that the documents collectively demonstrated the parties’ intention to enter into a concluded contract.
• The appellant maintained that the registered Power of Attorney supported the validity and enforceability of the underlying development arrangement.

3. Development Period Had Not Expired

• The appellant submitted that the Development Agreement contemplated a development period of 60 months.
• Accordingly, it argued that the landowners’ termination of the arrangement was premature and legally unsustainable.

4. Subsequent Purchaser Had Knowledge of Earlier Transaction

• The appellant further contended that Respondent No. 20 could not claim to be a bona fide purchaser without notice.
• It alleged that the subsequent purchaser had not undertaken adequate searches or issued public notices inviting objections before purchasing the property.
• The appellant also relied upon the filing of caveats by Respondent No. 20 as an indication of prior knowledge of the appellant’s claimed rights.

5. Development Agreement Was Capable of Specific Performance

• The appellant argued that the agreement was not merely a construction contract or works contract.
• It relied upon judicial precedents concerning the enforceability of development agreements, particularly where the developer acquires an interest in the property.
• The appellant also explained that project implementation had been affected by pending litigation, land amalgamation requirements and the need for planning approvals.

Arguments Advanced by Respondent No. 20

• Respondent No. 20 opposed the appeal and defended the Trial Court’s order.
• It submitted that the Development Agreement relied upon by Mantra Huizen LLP was merely a draft document rather than a concluded and executed agreement.
• The respondent pointed out that the appellant’s own plaint sought directions requiring the landowners to execute and register the Development Agreement.
• According to the respondent, these prayers demonstrated that the agreement had not yet been formally executed.
• It was further submitted that the Development Agreement was undated, unstamped and unregistered.
• Respondent No. 20 argued that the payment of ₹3 crore was merely a refundable security deposit and did not independently confer any enforceable interest in the property.
• The respondent also submitted that the appellant had acknowledged difficulties in undertaking development because the necessary land amalgamation and related processes had not been completed.
• Accordingly, it was argued that the appellant had failed to establish any prima facie enforceable contractual right warranting an interim injunction.

Bombay High Court’s Findings and Legal Principles

1. Undated, Unstamped and Unregistered Agreement Was Prima Facie Unenforceable

• The High Court examined the Development Agreement relied upon by the appellant.
• The Court found that the document was undated and unregistered.
• It also noted that no stamp duty appeared to have been paid and that the document did not bear the signatures of witnesses.
• The Court distinguished the situation from a case involving merely insufficient stamp duty.
• In the present case, the agreement was found to be entirely unstamped.
• The Court held that these deficiencies were material considerations in determining whether the document constituted a concluded and executable agreement.
• Considering the cumulative defects, the Court agreed with the Trial Court’s prima facie conclusion that the document was incapable of supporting the interim relief sought.
• Importantly, the judgment must be understood in its factual context. It does not establish that every unregistered development agreement is automatically incapable of being relied upon in a suit for specific performance.

2. ₹3 Crore Refundable Security Deposit Did Not Establish Enforceable Development Rights

• One of the central issues concerned the legal significance of the ₹3 crore paid by the appellant.
• The High Court agreed with the Trial Court that the payment was in the nature of a refundable security deposit.
• The amount was intended to secure due performance of the obligations contemplated under the development arrangement and was refundable upon completion of the work.
• Accordingly, the Court held that the payment could not, in the circumstances, be treated as consideration conferring an enforceable right to specific performance.
• The Court therefore rejected the proposition that payment of the security deposit, by itself, established a prima facie right to restrain further dealings with the property.
• The finding is significant because it distinguishes a refundable performance-security arrangement from consideration that may establish substantive contractual rights.

3. Section 14(b) Bars Specific Performance of Contracts Requiring Continuous Supervision

• The High Court examined Section 14 of the Specific Relief Act, 1963, which identifies categories of contracts that cannot be specifically enforced.
• In particular, Section 14(b) excludes contracts whose performance involves a continuous duty that the Court cannot supervise.
• The Court observed that the alleged Development Agreement required several continuing activities, including obtaining permissions from the competent planning authority, amalgamation and subdivision of land, and securing other approvals necessary for development.
• These obligations required an ongoing course of action.
• The Court concluded that supervising such activities would not be feasible.
• Consequently, it held that the agreement, in the circumstances of the case, was not capable of specific enforcement under Section 14(b).
• This finding should not be read as a blanket prohibition on specific performance of all development agreements. The Court’s conclusion depended upon the nature of the obligations and the particular deficiencies in the agreement before it.

4. Supreme Court’s Exceptions for Enforceable Development Agreements Were Not Satisfied

• The appellant relied upon the Supreme Court’s decision in Sushil Kumar Agarwal v. Meenakshi Sadhu & Others, (2019) 2 SCC 241.
• In that judgment, the Supreme Court recognised that the enforceability of a development agreement depends upon the nature of the contractual arrangement and the interest created in favour of the developer.
• The Supreme Court also identified circumstances in which a construction-related agreement may be specifically enforced.

These include:

• The construction work must be described with sufficient precision.
• The plaintiff must possess a substantial interest in performance, such that monetary compensation would be inadequate.
• The agreement must satisfy the relevant requirement concerning possession of the land upon which construction is contemplated.

The Bombay High Court held that the appellant had failed to establish the requisite conditions for invoking these exceptions.

Furthermore, the underlying Development Agreement itself was found to be prima facie non-executable.

Accordingly, the Court held that the decision in Sushil Kumar Agarwal did not assist the appellant.

5. Unregistered Documents May Be Admissible, but Admissibility Is Different from Enforceability

• The appellant also relied upon R. Hemalatha v. Kashthuri, (2023) 10 SCC 725.
• That decision concerned the proviso to Section 49 of the Registration Act, 1908.
• The proviso permits certain unregistered documents affecting immovable property to be received as evidence of a contract in a suit for specific performance or as evidence of a permissible collateral transaction.
• The Bombay High Court distinguished the precedent.
• It observed that the Development Agreement before it was not merely unregistered but was also undated and unstamped.
• The Court therefore concluded that the principle recognised in R. Hemalatha did not assist the appellant on the facts.
• The distinction is important: the admissibility of an unregistered document for a specified evidentiary purpose does not necessarily establish that the document represents a concluded and enforceable contract.

6. Other Judicial Precedents Distinguished

• The appellant relied upon Rahul Ganesh Mehta & Others v. Narayan Ganpat Gaikwad & Others.
• The High Court observed that the earlier decision involved a materially different factual situation in which execution of the Development Agreement had been accepted by the Trial Court.
• In the present case, execution and enforceability of the agreement were themselves disputed.
• The appellant also relied upon A.A. Estates Pvt. Ltd. v. Kher Nagar Sukhsadan Co-operative Housing Society Ltd. & Others, 2025 SCC OnLine SC 2579, concerning unilateral cancellation of registered documents.
• The High Court distinguished that decision because the Development Agreement relied upon by Mantra Huizen LLP was not registered.
• Accordingly, the Court held that the principles relied upon from those judgments were not applicable to the present facts.

7. Appellate Courts Should Not Routinely Interfere with Interim Injunction Orders

• The Bombay High Court further considered the principles governing appellate interference with orders granting or refusing temporary injunctions.
• Referring to Wander Ltd. v. Antox India (P) Ltd., 1990 Supp SCC 727, the Court reiterated that an appellate court should not ordinarily substitute its own discretion for that exercised by the court of first instance.
• Interference may be justified where the discretion has been exercised arbitrarily, capriciously or perversely, or where settled principles governing interlocutory injunctions have been ignored.
• In the present case, the High Court found that the Trial Court had passed a reasoned order after considering the relevant facts and legal principles.
• The Trial Court’s conclusion was regarded as a plausible exercise of judicial discretion.
• Accordingly, the High Court declined to interfere.

Important Judicial Precedents Considered

Judicial precedent	Citation	Relevance
Sushil Kumar Agarwal v. Meenakshi Sadhu & Others	(2019) 2 SCC 241	Circumstances in which development or construction agreements may be specifically enforced
R. Hemalatha v. Kashthuri	(2023) 10 SCC 725	Evidentiary use of unregistered documents under Section 49 of the Registration Act
Nirav Deepak Modi v. Najoo Behram Bhiwandiwala & Others	AIR 2012 Bombay 50	Cited by the appellant in support of its submissions
A.A. Estates Pvt. Ltd. v. Kher Nagar Sukhsadan Co-operative Housing Society Ltd. & Others	2025 SCC OnLine SC 2579	Principle concerning unilateral cancellation of registered documents
Rahul Ganesh Mehta & Others v. Narayan Ganpat Gaikwad & Others	Appeal from Order No. 548 of 2024, Bombay High Court	Distinguished because execution of the development agreement was accepted in that case
Wander Ltd. v. Antox India (P) Ltd.	1990 Supp SCC 727	Limited scope of appellate interference with discretionary injunction orders

Final Decision of the Bombay High Court

• The Bombay High Court upheld the Trial Court’s refusal to grant interim injunction.
• The Court concluded that the Development Agreement relied upon by the appellant was prima facie not an executable document and that no enforceable contractual right had been established for the purpose of obtaining interim relief.
• The Court further held that the Trial Court had exercised its discretion in accordance with the applicable legal principles.

Accordingly, the High Court:

1. Dismissed Appeal from Order No. 539 of 2025.
2. Upheld the Trial Court’s order dated 25 June 2025 rejecting the interim injunction application.
3. Directed the Trial Court to dispose of Special Civil Suit No. 495 of 2025 expeditiously.
4. Made no order as to costs.
5. Disposed of the pending interim applications as a consequence of dismissal of the appeal.

The underlying civil suit therefore remained pending for adjudication before the Trial Court.

Legal Significance and Implications

The judgment carries important implications for developers, landowners, real estate investors and parties entering into property development arrangements.

• First, development agreements must clearly establish the parties’ contractual obligations and intention to create enforceable rights. An incomplete or disputed draft agreement may not provide a sufficient foundation for obtaining interim protection.
• Second, payment of a refundable security deposit does not automatically create development rights. The nature and purpose of the payment must be examined in the context of the contractual arrangement.
• Third, registration and stamping requirements require careful attention. Parties should ensure that development documents satisfy the applicable statutory requirements and accurately record their execution.
• Fourth, specific performance depends upon the nature of the obligations involved. Contracts requiring continuous duties that cannot feasibly be supervised by a court may attract Section 14(b) of the Specific Relief Act.
• Fifth, interim injunctions require a legally sustainable prima facie foundation. The existence of negotiations, payments or preliminary documents does not necessarily establish an enforceable right to restrain property transactions.
• Sixth, appellate interference with interim orders remains limited. An appellate court will not ordinarily interfere merely because another view of the evidence is possible.

Practical Lessons for Real Estate Developers and Landowners

• The judgment underscores the importance of careful legal documentation before substantial payments are made or development rights are asserted.
• Parties entering into development arrangements should ensure that the agreement is properly executed, dated, stamped and registered wherever required.
• The agreement should clearly identify the property, development rights, construction obligations, financial consideration, treatment of security deposits, allocation of built-up area, possession arrangements, permissions, timelines and termination provisions.
• Developers should also distinguish between a refundable security deposit and consideration intended to create substantive rights in immovable property.
• Where project implementation depends upon amalgamation, subdivision, planning permission or the outcome of pending litigation, these contingencies should be expressly addressed in the agreement.
• Proper documentation can reduce uncertainty concerning the existence and enforceability of development rights and may help avoid disputes involving subsequent purchasers.

Conclusion

The Bombay High Court’s decision in Mantra Huizen LLP v. Shri Ananda Lakshman Balwadkar & Others highlights the importance of legally enforceable documentation in real estate development transactions.

The Court declined to interfere with the refusal of interim injunction where the alleged Development Agreement was undated, unstamped and unregistered, its execution was disputed, and the payment of ₹3 crore was characterised as a refundable security deposit.

The judgment also clarifies the significance of Section 14(b) of the Specific Relief Act in cases involving development obligations requiring continuous supervision.

By distinguishing earlier Supreme Court precedents and applying the principles governing appellate review of interlocutory orders, the High Court reaffirmed that interim relief must rest upon a sustainable prima facie contractual right. The decision serves as a reminder that substantial financial payments and preliminary contractual arrangements cannot substitute for a properly concluded and legally enforceable development agreement.

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Source: Bombay High Court

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