Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 12.09.2026
Allahabad High Court: RERA Recovery Proceedings Cannot Be Challenged Directly Through Writ When Statutory Appeal Is Available
This Short Article has been prepared & written by Advocate Narendra Singh. The views expressed are based on his interpretation of the law. He can be reached at his email idamitnaren@outlook.com.
In an important ruling concerning the remedies available against orders and recovery proceedings initiated under the Real Estate (Regulation and Development) Act, 2016 (RERA), the Allahabad High Court has declined to interfere with a recovery certificate challenged directly under Article 226 of the Constitution. The Court held that the petitioners could approach the competent Appellate Tribunal under Section 43(5) of the RERA Act against the underlying order on which the recovery proceedings were founded.
Background of the Case
The writ petition was filed by M/s Singh Brothers, Kanpur Nagar, through its partner Amarpreet Singh and seven others against U.P. RERA and other respondents. The petitioners sought quashing of a recovery certificate dated 25 November 2023 issued by U.P. RERA to the District Magistrate, Kanpur Nagar. They also sought a direction restraining the authorities from taking coercive action pursuant to the recovery certificate.
According to the petitioners, they were owners and in legal possession of land situated at Govind Nagar, Kanpur. A builder agreement had been entered into on 30 July 2008 with M/s College Group Infrastructure Private Limited for development of the land, and a General Power of Attorney was also executed in favour of the builder for implementation of the agreement.
Petitioners Claimed They Were Not Co-Promoters
The builder subsequently launched a project known as βViva City Squareβ in Kanpur and registered itself on the U.P. RERA portal. Significantly, the petitioners contended that they were never registered as co-promoters of the project.
Certain allottees subsequently filed a complaint before U.P. RERA regarding the conduct of the builder. After adjudication of the complaint, a recovery certificate was issued. The petitioners’ grievance was that the recovery certificate was being sought to be enforced against them even though, according to them, they were neither registered as co-promoters nor proprietors of the project.
They further contended that the original RERA complaintβComplaint No. LKO157/07/55720/2020, Lalit Kumar Singh v. M/s College Group Infrastructure Private Limitedβwas not filed against them and that they had not been heard when U.P. RERA passed its order dated 1 April 2021.
Earlier High Court Direction for Execution of Recovery Certificate
U.P. RERA brought to the Court’s attention an earlier order dated 18 March 2024 passed by a coordinate Bench in Lalit Kumar Singh v. State of U.P. & Others, Writ-C No. 2557 of 2024.
In that proceeding, the High Court had directed the District Magistrate, Kanpur, to execute the recovery certificate dated 25 November 2023 within three months from the date on which a certified copy of the order was furnished.
RERA therefore argued that the authorities were merely acting in compliance with the earlier direction of the High Court and that the petitioners could have sought review of that order before the concerned Division Bench.
Alternative Remedy Under RERA
To overcome the objection regarding availability of an alternative statutory remedy, the petitioners relied upon the Supreme Court’s decision in Assistant Commissioner of State Tax & Others v. Commercial Steel Limited, Civil Appeal No. 5121 of 2021, decided on 3 September 2021.
The petitioners argued that existence of an alternative remedy does not automatically bar the High Court from exercising its writ jurisdiction under Article 226.
The High Court examined the Supreme Court judgment and noted that an alternative remedy is indeed not an absolute bar to maintainability of a writ petition. However, interference despite availability of a statutory remedy is ordinarily justified in exceptional situations such as:
breach of fundamental rights;
violation of principles of natural justice;
excess of jurisdiction; or
challenge to the vires of a statute or delegated legislation.
The Division Bench, however, concluded that the petitioners’ case did not fall within any of those recognised exceptional circumstances.
High Court Directs Petitioners Towards RERA Appellate Remedy
The Court took note of the petitioners’ contention that they were not named as proprietors, were not parties to the original complaint and had not been heard when U.P. RERA passed the underlying order dated 1 April 2021.
Nevertheless, instead of adjudicating these issues in the writ proceedings, the High Court held that if the petitioners were aggrieved by the order dated 1 April 2021, which formed the basis of the subsequent recovery certificate, they could approach the Appellate Tribunal under Section 43(5) of the RERA Act.
The writ petition was accordingly disposed of with the above observations.
Key Legal Takeaway
The ruling reiterates the principle that the constitutional jurisdiction of the High Court under Article 226 is wide, and availability of an alternative remedy is not an absolute prohibition against entertaining a writ petition. However, where an effective statutory appellate mechanism exists and the case does not fall within one of the recognised exceptional categories, the High Court may decline to exercise writ jurisdiction.
The judgment is particularly relevant in the RERA context because a person who claims to have been wrongly affected by an underlying RERA order cannot ordinarily bypass the statutory appellate mechanism merely by challenging the consequential recovery certificate through a writ petition. The appropriate course, as indicated by the Court in this case, is to challenge the foundational RERA order before the competent Appellate Tribunal under Section 43(5).
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
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Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 12.09.2026
Supreme Court Sets Aside Compulsory Retirement of Indian Trade Service Officer; Awards βΉ15 Lakh in Costs and Compensation
This Short Article has been prepared & written by Advocate Madhumita Jha. The views expressed are based on her interpretation of the law. She can be reached at her email idjhamadhumita27@gmail.com.
In a significant ruling concerning the Government’s power to compulsorily retire public servants under Fundamental Rule 56(j), the Supreme Court has set aside the premature retirement of former Indian Trade Service officer S.S. Das, holding that the action suffered from manifest contradiction and was vitiated by malice in law. The Court found the case to be one warranting judicial intervention on grounds of arbitrariness, perversity and mala fides.
The Supreme Court not only restored all service benefits that would have accrued to Das had he not been prematurely retired, but also directed payment of βΉ6 lakh as costs and βΉ9 lakh as compensation for loss of reputation.
Background of the Case
S.S. Das joined the Indian Trade Service (ITS) in 1989 and rose through the ranks, serving in senior positions including Deputy Director General of Foreign Trade, Joint Director General of Foreign Trade and Additional Director in the Directorate General of Anti-Dumping. He was placed in the Senior Administrative Grade at Joint Secretary level in November 2017 and was promoted on a regular basis on 27 February 2018.
However, barely a few months after his promotion, the Government passed an order dated 10 May 2018, compulsorily retiring him under FR 56(j) in public interest, before he reached his normal age of superannuation.
Das challenged the decision before the Central Administrative Tribunal. The CAT dismissed his application, reasoning that judicial review of an FR 56(j) decision did not extend to examining the adequacy or sufficiency of material before the competent authority. The Delhi High Court subsequently declined to interfere, leading to the appeal before the Supreme Court.
Supreme Court Examines Entire Service Record
The Supreme Court framed the central issue as whether the compulsory retirement was based upon material capable of sustaining the Government’s satisfaction and whether there was a rational nexus between the material relied upon and the conclusion that premature retirement was required in public interest.
A crucial aspect of the Court’s examination was Das’s service record. His ACRs/APARs showed that he had consistently received high assessments over a substantial part of his career.
The Court noted that the officer was consistently graded βOutstandingβ or βVery Goodβ from 1994 to 2008-09, followed by high numerical APAR gradings. Significantly, he had also been found suitable for promotion to the Senior Administrative Grade and promoted to the level of Joint Secretary shortly before the decision to compulsorily retire him.
This chronology assumed considerable importance because the Review Committee met on 27 November 2017, shortly after his promotion, and there was no identifiable intervening act of misconduct between his promotion and subsequent compulsory retirement that could reasonably explain the dramatic reversal in the Government’s assessment of his suitability for continued service.
Unsubstantiated Allegations Could Not Override Service Record
The Government relied substantially upon a confidential note dated 30 March 2017 relating to Das’s tenure in the Directorate General of Anti-Dumping. The note referred to allegations made by representatives of domestic industry regarding demands for favours.
However, the note itself acknowledged that there was no evidence supporting those allegations and not even a written complaint.
The Review Committee also relied upon an APAR entry for 2014-15 stating that there was βroom for improvementβ in relation to integrity and upon an earlier 1998-99 entry noting that complaints had been received.
The Supreme Court’s examination of the actual record, however, revealed that the 1998-99 entry itself recorded that βno substanceβ had been found in those complaints. The service records over the years otherwise contained favourable assessments regarding integrity and quality of work.
Promotion Does Not Automatically Wipe Out Past Adverse MaterialβBut It Matters
The judgment importantly clarifies the relationship between an officer’s promotion and the Government’s subsequent exercise of power under FR 56(j).
The Supreme Court did not hold that promotion automatically wipes out every earlier adverse entry. Instead, it held that the entire service record must be evaluated, with appropriate weight being given to the officer’s immediate past.
The Court observed that where the same departmental machinery had examined the officer’s record and found him fit for promotion to the higher position of Joint Secretary, a subsequent conclusion that his continuation in service was no longer in public interest required something more substantial than a general invocation of βquestionable integrity.β
Thus, a recent promotion does not grant immunity from review under FR 56(j), but it remains a highly relevant circumstance which the reviewing authority must meaningfully consider.
Supreme Court Criticises Selective Reliance on Precedents
Another notable aspect of the judgment is the Court’s criticism of the Review Committee’s approach to earlier Supreme Court decisions.
The Committee had relied upon precedents including State of Gujarat v. Umedbhai M. Patel, S. Ramachandra Raju v. State of Orissa, K. Kandaswamy v. Union of India, Shyam Lal v. State of U.P., Baikuntha Nath Das v. District Medical Officer, Union of India v. Col. J.N. Sinha and Shivcharan Singh v. State of Mysore.
The Supreme Court observed that these precedents had been invoked selectively. According to the Court, the authorities concentrated upon propositions permitting consideration of past adverse material while failing to meaningfully engage with the corresponding safeguardsβparticularly the requirement to examine the entire service record, give due weight to recent performance, and appropriately consider subsequent promotion.
FR 56(j) Power Cannot Be Exercised on Mere Suspicion
The Supreme Court reiterated that the Government undoubtedly possesses the power to compulsorily retire an officer in public interest under FR 56(j), and the scope of judicial review of such administrative satisfaction remains limited.
For instance, Baikuntha Nath Das v. District Medical Officer, (1992) 2 SCC 299, recognises that courts do not ordinarily act as appellate authorities over compulsory-retirement decisions. Nevertheless, judicial interference remains available where the decision is mala fide, unsupported by evidence or so arbitrary that no reasonable person could have formed the requisite opinion.
Applying those principles, the Supreme Court held that FR 56(j) βshould not be exercised lightly or in a casual manner.β The material supporting such action must be credible and cogent rather than based merely upon suspicion or conjecture.
The Court ultimately characterised the compulsory retirement order as suffering from a βmanifest contradictionβ and being βthoroughly vitiated by malice in law.β It further held that the case disclosed arbitrariness, perversity and mala fides sufficient to warrant judicial interference.
Delhi High Court and CAT Orders Set Aside
The Supreme Court held that the Delhi High Court had failed to properly exercise its constitutional power of judicial review by examining the relevant record from the correct perspective.
Consequently, the Court set aside three decisions: the Delhi High Court judgment, the CAT order, and the original compulsory retirement order dated 10 May 2018.
Since Das had already attained the age of superannuation, physical reinstatement was no longer possible. The Supreme Court therefore moulded the relief and directed that he should receive all service benefits available in law as though the compulsory retirement order had never been passed. This expressly includes notional promotion if any of his juniors had been promoted during the period he remained out of service.
Supreme Court Directs DGFT to Give Officer a Farewell With Full Honour
In an unusual and significant direction, the Supreme Court ordered that the Director General of Foreign Trade must call S.S. Das back to the office and accord him a farewell βwith full honourβ, in the manner he would have received upon normal superannuation but for his premature removal from service.
The direction reflects the Court’s concern not merely with the financial consequences of the unlawful compulsory retirement but also with restoring the dignity and professional standing of the officer.
βΉ6 Lakh Costs and βΉ9 Lakh Compensation for Loss of Reputation
The Supreme Court allowed the appeal with βΉ6 lakh in costs payable by the Union of India to S.S. Das.
Going a step further, the Court awarded an additional βΉ9 lakh as compensation for the loss of reputation suffered by him, taking the total costs and compensation component to βΉ15 lakh.
The Court directed that the service benefits, emoluments, compensation and costs be released within three months.
Significantly, the Supreme Court also granted liberty to the Union Government to recover the compensation and costs, in accordance with law, from the officers largely responsible for acting βarbitrarily and in a high-handed manner.β
Why the Judgment Is Significant
The ruling does not dilute the Government’s statutory power to weed out unsuitable officers under FR 56(j). Rather, it reinforces an equally important limitation: βpublic interestβ cannot operate as a formula that shields an arbitrary decision from judicial scrutiny.
A compulsory-retirement decision must bear a rational relationship with the officer’s actual service record. Old or adverse material can be considered, but it cannot be selectively extracted while ignoring a long record of strong performance, recent assessments and promotion to higher responsibility.
The judgment is therefore particularly important for civil-service jurisprudence because it demonstrates that although the threshold for judicial interference with an FR 56(j) order is high, constitutional courts canβand shouldβintervene where the record reveals arbitrariness, perversity, mala fides or absence of credible supporting material.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
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Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 12.09.2026
Karnataka High Court Upholds Section 138 NI Act Conviction; Says Unrebutted Statutory Presumption Supports Cheque Dishonour Liability
This Short Article has been prepared & written by Advocate G Sridharamurthy. The views expressed are based on his interpretation of the law. He can be reached at his email id sriadv3@gmail.com.
In an important ruling concerning cheque dishonour under Section 138 of the Negotiable Instruments Act, 1881, the Karnataka High Court has upheld the conviction of an accused after finding that the cheque admittedly belonged to him, his signature was undisputed, and he failed to rebut the statutory presumption available to the complainant under Section 139 of the NI Act.
The High Court, however, partly allowed the revision by setting aside the additional βΉ25,000 fine imposed towards defraying the expenses of the State, while leaving the conviction and the remainder of the sentence intact.
Background of the Case
The dispute arose from a complaint filed by M/s MABA Corporate Services Private Limited, a finance company, against G.B. Chandre Gowda under Section 138 of the Negotiable Instruments Act.
The trial court convicted the accused and sentenced him to pay a total fine of βΉ90 lakh. In default of payment, he was directed to undergo six months’ simple imprisonment. Out of the fine amount, βΉ89.75 lakh was directed to be paid to the complainant as compensation, while βΉ25,000 was ordered to go to the State.
The accused challenged the conviction before the First Appellate Court in Criminal Appeal No. 2149 of 2018. After re-appreciating the evidence, the appellate court dismissed his appeal and confirmed the trial court’s decision. He thereafter approached the Karnataka High Court in revision.
Accused Contended There Was No Legally Recoverable Debt
Before the High Court, the accused principally argued that the cheque in question did not represent any legally recoverable debt and therefore his conviction under Section 138 suffered from legal infirmity and factual error.
He additionally challenged the imposition of βΉ25,000 towards the expenses of the State and sought interference with the sentence to that extent. The complainant, on the other hand, supported the concurrent findings of the courts below.
Signature on Cheque Was Not Disputed
After examining the record, the Karnataka High Court found that the cheque marked as Ex.P2 belonged to the accused, had been dishonoured, and, importantly, the accused did not dispute his signature on the cheque.
According to the complainant, the cheque had been issued towards repayment arising out of loan transactions. The complainant had also produced substantial documentary material to support its claim.
This evidence included on-demand promissory notes marked Ex.P14 to Ex.P18, ledger account Ex.P19, statements of account Ex.P20 to Ex.P26 and acknowledgment letters Ex.P27 and Ex.P28. The High Court held that this material was sufficient for the trial magistrate to raise the statutory presumption under Section 139 of the NI Act in favour of the complainant.
Section 139 Presumption Is Rebuttable, But Accused Must Rebut It
The Court acknowledged that the presumption available under Section 139 is rebuttable. The crucial question, therefore, was whether the accused had produced sufficient material to rebut it.
The High Court found that he had not.
The accused neither entered the witness box nor produced documentary evidence to rebut the statutory presumption. Further, the cross-examination of the complainant’s witness, PW-1, did not bring out sufficient material capable of rebutting the presumption operating in favour of the complainant.
This aspect became central to the High Court’s decision to sustain the conviction.
High Court Refuses to Interfere With Concurrent Conviction
Justice V. Srishananda held that the trial magistrate was justified in convicting the accused and directing payment of compensation. The First Appellate Court had also properly re-appreciated the material and affirmed the conviction.
The High Court emphasised the limited scope of revisional jurisdiction and held that there was no ground warranting annulment of the concurrent orders of conviction.
The decision therefore reinforces that revisional jurisdiction is not intended to provide another unrestricted opportunity to reassess factual findings when the trial and appellate courts have concurrently evaluated the evidence and the conclusions do not disclose a sufficient legal ground for interference.
βΉ25,000 Fine Payable to State Set Aside
Although the conviction was upheld, the High Court found merit in one limited aspect of the accused’s challenge.
The trial court had directed that βΉ25,000 out of the total fine should be paid towards defraying the expenses of the State. The High Court held that this part of the sentence required interference because the dispute was essentially private between the parties and no State machinery was involved.
Accordingly, the βΉ25,000 component payable to the State was set aside.
Conviction and βΉ89.75 Lakh Compensation Remain Intact
The Karnataka High Court consequently allowed the revision petition only in part.
The conviction of G.B. Chandre Gowda for the offence punishable under Section 138 of the Negotiable Instruments Act was maintained. Only the βΉ25,000 fine earmarked for State expenses was removed, while the rest of the sentence remained unaltered.
The Court further directed that the amount already deposited could be withdrawn by the complainant upon due identification.
Legal Significance
The judgment highlights an important practical aspect of Section 138 litigation. Once foundational facts are established and the statutory presumption under Section 139 becomes operative, merely asserting that no legally enforceable debt existed may not be sufficient. The accused must bring material capable of rebutting that presumption.
In the present case, the admitted signature on the dishonoured cheque, coupled with promissory notes, ledger records, statements of account and acknowledgment letters, supported the complainant’s case. In the absence of contrary evidence from the accused, the High Court found no justification for disturbing the concurrent conviction.
At the same time, the ruling demonstrates that a revisional court may still interfere with a specific and severable component of the sentence even where the underlying conviction is otherwise found to be legally sustainable.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
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Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 11.09.2026
Allahabad HC: RERA Application Pending Beyond 30 Days Results in Deemed Registration; UPRERA Cannot Insist on Landowner as Co-Promoter
This Short Article has been prepared & written by Advocate Narendra Singh. The views expressed are based on his interpretation of the law. He can be reached at his email idamitnaren@outlook.com.
In a significant ruling concerning the Real Estate (Regulation and Development) Act, 2016 (RERA), the Allahabad High Court has held that where the Real Estate Regulatory Authority neither grants nor rejects a complete project-registration application within the statutory period of 30 days, the project becomes deemed to be registered under Section 5(2) of the RERA Act.
A Division Bench comprising Justice Mahesh Chandra Tripathi and Justice Prashant Kumar delivered the judgment in a writ petition filed by Larsen & Toubro Limited (L&T) against the State of Uttar Pradesh and U.P. RERA.
Dispute Over Registration of L&Tβs βGreen Reserveβ Project
The dispute concerned L&T’s proposed βGreen Reserveβ residential project comprising four towers in Jaypee Greens Wish Town, Noida. L&T had acquired development rights pursuant to an Assignment Agreement dated 31 July 2017 executed with Jaypee Infratech Limited (JIL)/Jaiprakash Associates Limited (JAL). The judgment records that βΉ487.5 crore was paid in connection with the Assignment Agreement.
L&T applied to UPRERA for registration of Towers 1 and 2 and subsequently Towers 3 and 4. UPRERA, however, repeatedly required L&T to include JIL as a βpromoterβ, principally because the project land and sanctioned map were not in L&T’s ownership.
L&T maintained that the development, construction, marketing and sale rights had been assigned to it and that JIL was not required to be made a co-promoter.
Landowner Need Not Necessarily Be a βPromoterβ
One of the most important questions before the High Court was whether the landowner must necessarily be joined as a co-promoter for registration under RERA.
The Court examined the definition of βpromoterβ under Section 2(zk) and held that a person who does not own the land but constructs/develops the project for sale can independently fall within the statutory definition of promoter.
The Court observed that the person who constructs and sells can be the promoter even when construction is undertaken on land belonging to another person, provided there is a valid arrangement between the owner and developer. It consequently held that JIL did not fall within the category of promoter for this particular project.
Accordingly, UPRERA’s insistence that JIL/JAL must sign the registration application as co-promoter was held to be unsupported by the Act.
The High Court also found that L&T’s application was complete and accompanied by the documents contemplated under Section 4(2) of the RERA Act.
The Court held that once an application is in the prescribed format and contains the documents statutorily required, UPRERA cannot engage in a βhair-splitting exerciseβ by repeatedly demanding additional documents not contemplated under Section 4(2).
The Court therefore found no justification for UPRERA to keep L&T’s application pending beyond the statutory period.
Section 5(2): 30-Day Period Has a Statutory Consequence
The central issue in the judgment concerned the interpretation of Section 5 of the RERA Act.
Under Section 5(1), the Authority is required, within 30 days of receiving an application, either to grant registration or reject the application for reasons recorded in writing. Section 5(2) expressly provides that if the Authority fails to do either, the project βshall be deemed to have been registered.β
The Court emphasised that where legislation prescribes not only a time period for performance of a statutory duty but also expressly specifies the consequence of failure to act within that period, the statutory consequence must be given effect.
In L&T’s case, the applications remained pending despite the company having answered the objections and furnished the relevant documentation.
Project Deemed Registered After Expiry of 30 Days
The High Court consequently held that UPRERA had only two options: either grant registration within 30 days or reject the application within that period.
Keeping the application pending was not a third option available to the Authority.
The Division Bench categorically concluded that once the statutory 30-day period expired without rejection, L&T’s application became deemed registered under Section 5(2). UPRERA was thereafter required to provide the registration number, Login ID and password to the developer.
UPRERA Cannot Subsequently Reject a Deemed Registration
The Court went a step further and held that once deemed registration had taken effect, UPRERA no longer had jurisdiction to subsequently reject the original registration application.
According to the Court, once a project stands registered by operation of the deeming provision, any subsequent action against such registration would have to be taken in accordance with the mechanism contemplated under Section 7 of the RERA Act, rather than by belatedly rejecting the original application.
This is an important interpretation because it gives substantive effect to the statutory deeming fiction under Section 5(2).
High Court Sets Aside UPRERAβs Rejection
The High Court ultimately ruled substantially in favour of Larsen & Toubro.
It held that the objection requiring JIL to be included as co-promoter was βbaseless and incorrectβ, that L&T’s project-registration application acquired deemed-registration status after expiry of the mandatory period, and that UPRERA could not thereafter reject the application in the manner adopted by it.
The Court accordingly set aside UPRERA’s decision rejecting L&T’s applications.
Key Takeaway
The judgment establishes two significant principles under RERA. First, ownership of the project land is not by itself determinative of who must be treated as a promoter; a developer with valid development rights who constructs and sells the project may independently qualify as promoter under Section 2(zk).
Second, and more importantly, Section 5(2) creates a genuine statutory deeming fiction. RERA authorities cannot indefinitely keep a complete registration application pending. If the Authority neither grants nor rejects it within the prescribed 30 days, the consequence stipulated by Parliament followsβthe project is deemed registered.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
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Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 11.09.2026
Delhi High Court: Arbitral Award Can Be Partly Set Aside Where Invalid Claims Are Severable
This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email idshobhit.Ica23@gmail.com.
The Delhi High Court has partly set aside an arbitral award in favour of NCC Limited, holding that the award suffered from βpatent illegalityβ insofar as it related to two claims concerning contractual payment and prolongation costs. The Court, however, refused to interfere with the remainder of the award and upheld the arbitratorβs grant of interest.
The judgment was delivered by Justice Mini Pushkarna on 9 September 2026 in a petition filed by the Union of India under Section 34 of the Arbitration and Conciliation Act, 1996. The dispute arose from a contract dated 9 March 2010 between the Union of India, through the Director General, Married Accommodation Project (DG MAP), and NCC Limited.
Dispute Over Defence Housing Construction Project
NCC Limited had been awarded a contract for construction of dwelling units for officers of the Army, Navy and Air Force at Binnaguri and Cooch Behar in West Bengal, for a contract value of approximately βΉ190.58 crore. The project, originally scheduled for completion within two years, was ultimately delayed substantially and completed on 18 July 2016.
Disputes subsequently arose regarding payment of the final bill, leading NCC Limited to invoke arbitration. The sole arbitrator published an award on 18 March 2019, allowing wholly or partly 10 out of NCCβs 15 claims and awarding βΉ12,14,18,020 along with interest. The award also directed release of NCCβs performance bank guarantee of βΉ9.53 crore and rejected all four counterclaims raised by the Union of India.
The Union of India challenged the award under Section 34, raising several grounds including denial of adequate opportunity, violation of natural justice, questions concerning the arbitratorβs independence and mandate, excessive interest, and patent illegality in awarding damages.
Section 34 Court Cannot Re-Appreciate Evidence
The High Court reiterated the limited nature of judicial interference with arbitral awards. It observed that a court exercising jurisdiction under Section 34 does not sit in appeal over an arbitral tribunal and ordinarily cannot re-appreciate evidence merely to reach a different factual conclusion.
At the same time, the Court recognised that interference is permissible where an award suffers from patent illegality, including where an arbitrator ignores a clear contractual prohibition, reaches a conclusion based on no evidence, or adopts an interpretation of the contract that is not a plausible one.
No Denial of Natural Justice
One of the principal challenges raised by the Union of India was that it had not been afforded sufficient opportunity to present its case and that requests for adjournment and change of venue had been rejected.
The High Court rejected this challenge. It held that the requirement of a βfull opportunityβ under the Arbitration Act must be assessed on the standard of reasonableness, and every refusal of an adjournment does not automatically constitute denial of a fair hearing.
The Court found that sufficient notice and multiple opportunities had been afforded during the arbitral proceedings. Consequently, it found no infirmity in the award on grounds relating to natural justice, the independence or impartiality of the arbitrator, or the continuation of the arbitratorβs mandate.
Award Set Aside on Claim Nos. 7 and 9
The crucial relief granted to the Union of India concerned Claim Nos. 7 and 9.
Claim No. 7 concerned the difference in payment under Special Condition 19 of the contract vis-Γ -vis Condition 13 of the General Conditions of Contract. The arbitrator had awarded βΉ1,31,71,996 to NCC Limited.
Claim No. 9 concerned additional expenditure allegedly incurred because of prolongation of the contract, including overheads, site establishment and deployment of manpower beyond the stipulated completion period. NCC had claimed more than βΉ16.15 crore under this head, against which the arbitrator awarded approximately βΉ6.94 crore.
After examining the contractual provisions and the manner in which these claims had been adjudicated, the High Court concluded that the award suffered from patent illegality in respect of Claim Nos. 7 and 9.
Importantly, the Court held that these portions of the award were capable of being separated from the remainder. It therefore adopted the principle of severability and restricted the setting aside of the award only to those two claims, rather than disturbing the entire arbitral award.
12% Interest Upheld as Reasonable
The Union of India also challenged the award of 12% simple interest, but the High Court declined to interfere.
The Court held that Section 31(7) of the Arbitration Act gives an arbitral tribunal wide discretion in awarding interest. It found that the award of pendente lite and future interest at 12% per annum could not be regarded as arbitrary or punitive.
The Court further rejected the argument that pre-reference interest could not be granted without a notice under the Interest Act, 1978. It recognised the arbitratorβs statutory power under Section 31(7) to award interest, including on damages, subject to the contractual framework.
Section 34 Petition Partly Allowed
The Delhi High Court ultimately held that only the amounts awarded under Claim Nos. 7 and 9 were liable to be set aside for patent illegality, while the remaining portions of the arbitral award were left undisturbed.
The Court also vacated the interim stay on execution of the award granted on 26 November 2021 and all consequential orders. The connected enforcement proceedings were directed to be placed before the Roster Bench on 28 September 2026 for determination of the final amount payable under the surviving portions of the award, including interest.
Key Takeaway
The judgment reinforces two important principles governing challenges to arbitral awards. Section 34 does not permit a court to reassess an arbitral dispute as an appellate court, but judicial restraint does not protect an award where a particular claim suffers from patent illegality. At the same time, where the defective portion of an award is independently severable, the court may set aside only that part instead of nullifying the entire award.
The decision also reiterates the broad discretion available to arbitrators under Section 31(7) of the Arbitration and Conciliation Act in awarding reasonable pre-award, pendente lite and future interest.
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Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 11.09.2026
Bombay High Court: Temporary Access Over Government Land Cannot Be Converted Into Exclusive Private Right by Erecting Gates
This Short Article has been prepared & written by Advocate Madhumita Jha. The views expressed are based on her interpretation of the law. She can be reached at her email idjhamadhumita27@gmail.com.
The Bombay High Court has held that a housing society permitted to use Government land as an access route cannot convert such permission into an exclusive private right by erecting gates and restricting access to others. The Court upheld the State’s action directing removal of gates erected by The Deccan Co-operative Housing Society Limited, while protecting the Society’s continued right to use the access along with others.
Justice Arun R. Pedneker partly allowed the Society’s writ petition challenging the order dated 17 March 2026 passed by the Resident Deputy Collector, Mumbai Suburban District.
Dispute Over Gate and Access Road
The dispute concerned a strip of land being used as an access route by the petitioner-Society. The Society challenged the Collector’s direction to remove gates installed on Government land and the subsequent attempts by officials to remove the gate.
According to the Society, the gate and pathway had remained in its exclusive and uninterrupted possession and use for more than 45 years. It contended that the authorities could not remove the gate without notice, hearing or following due process of law.
The dispute also arose against the backdrop of Civil Suit No. 287 of 2025, instituted by the Society concerning its claimed rights over a garden/open space. The Bombay High Court had earlier granted interim protection against coercive action in relation to that suit property.
Access Was Originally Granted Only as a Temporary Arrangement
Examining historical documents, the High Court found that the Society’s plot had earlier been landlocked because a proposed 44-feet-wide Development Plan road had not yet been constructed.
The Municipal Corporation had therefore permitted a 30-feet-wide temporary access through Government land. Importantly, the permission was subject to a specific condition that the Society would discontinue the temporary access once the Development Plan road was constructed. The Society was also required to construct and maintain the temporary access at its own cost.
The Court noted that the 44-feet D.P. road had subsequently been completed and was being used by the Society.
Access Strip Belongs to Government, Not Housing Society
After considering the maps and communications placed on record, the High Court concluded that the disputed strip was Government-owned land and did not form part of the land allotted to the Society in 1959.
The Court found that the land had been maintained as an open access connecting the D.P. road on one side with the public road on the other. By installing a gate, the Society had attempted to use the access exclusively and exclude other persons.
The Court consequently rejected the Society’s claim to exclusive use of the access.
Constructing Road Does Not Create Exclusive Right Over Government Land
The High Court made an important distinction between a right to use an access and a right to possess the land exclusively.
The Society could not claim exclusive control merely because it had constructed a bitumen road over the strip. The Court held that Government land kept as an open access could not be appropriated for the Society’s exclusive use.
Justice Pedneker observed that the Society had no right to erect a gate over the access road because the land belonged to the Government and the original permission merely enabled the Society to use it as an access.
Removal of Gate Does Not Amount to Dispossession
The Society relied upon the requirement of notice and due process under Section 53 of the Maharashtra Land Revenue Code, arguing that even an unauthorised occupant of Government land could not be summarily dispossessed.
The High Court distinguished the precedent relied upon by the Society. It observed that the present case did not involve taking possession of land that had been granted to the Society. Rather, the Society had only been permitted to use Government land for access.
By removing the gate, the Collector had not terminated the Society’s access or dispossessed it from a granted property. The Society remained entitled to use the road; removal of the gate merely prevented it from excluding others.
The Court therefore held that the direction to remove the gate and keep the access open to everyone did not warrant interference.
Collector’s Finding of βUnauthorised Useβ Corrected
The High Court, however, did not accept every observation made by the Collector.
It specifically found incorrect the Collector’s observation that the Society was unauthorisedly using the road over Government land. The Court clarified that the road had, in fact, been used with the permission of the Municipal Corporation.
Thus, while the Society had no right to install gates and claim exclusive access, its underlying use of the access itself was not unauthorised.
Public Access Must Remain Open
The Court emphasised the importance of protecting public spaces and access routes, particularly in densely populated areas.
It held that the Government land should remain accessible both to the petitioner-Society and to other persons. Since the Society had never been granted exclusive possession, installation of gates could not be used to transform a limited access right into exclusive control over Government property.
At the same time, the High Court imposed an important safeguard: the State cannot grant exclusive use of the access road to any other party either.
The access must remain open to the Society as well as others. Further, if the State proposes any action interfering with the Society’s existing access, appropriate notice would have to be issued.
Writ Petition Partly Allowed
The Bombay High Court ultimately declined to interfere with the State’s direction for removal of the gates. However, it protected the Society’s continued non-exclusive access and clarified that the Government could not confer exclusive use of the road upon another party.
Accordingly, Writ Petition No. 7981 of 2026 was partly allowed.
Key Legal Takeaway
The judgment draws a clear distinction between permission to use Government land as an access and possession or ownership of that land. Long-standing use, expenditure on constructing or maintaining a road, or physical installation of gates does not by itself convert a permissive access into an exclusive proprietary right.
At the same time, the ruling protects the legitimate access originally granted to the Society: the Government may keep the road open to the public, but it cannot arbitrarily stop the Society’s access or confer exclusive use upon another private party.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
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Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 11.09.2026
Karnataka High Court Sets Aside Bank Account Defreezing Order; Says Banks Must Be Heard Before Release of Frozen Funds
This Short Article has been prepared & written by Advocate G Sridharamurthy. The views expressed are based on his interpretation of the law. He can be reached at his email id sriadv3@gmail.com.
The Karnataka High Court has set aside an order directing Axis Bank Limited to defreeze a bank account and has remanded the matter to the jurisdictional Magistrate for fresh consideration after giving the Bank an opportunity of hearing.
Justice M. Nagaprasanna passed the order in a petition filed by Axis Bank under Section 482 of the Code of Criminal Procedure, 1973, challenging the order dated 10 August 2023 passed by the 1st Additional Chief Metropolitan Magistrate, Bengaluru in Crime No. 138/2023.
Axis Bank Challenged Direction to Defreeze Account
The impugned Magistrate’s order had directed Axis Bank to defreeze account No. 922020041646754 maintained with the Bank. Axis Bank approached the High Court contending that in similar matters, coordinate Benches had already held that a bank should be heard before orders are passed for defreezing accounts and releasing money to complainants.
The Bank relied upon earlier Karnataka High Court orders where matters had been remanded to Magistrates to reconsider applications under Sections 451 and 457 CrPC after permitting the concerned bank to file objections and participate in the proceedings.
Why Hearing the Bank Is Necessary
The High Court referred to an earlier coordinate Bench order which recognised the practical difficulty faced by banks where multiple criminal cases and multiple judicial orders concern the same accused or account.
In some cases, the amounts directed to be released may exceed the funds actually available in the account. The earlier order therefore held that before directing the bank to unfreeze an account and transfer money to a complainant, the Magistrate should first hear the bank.
The Court also relied upon another batch of petitions in which the Trial Courts had ordered defreezing and release of funds without hearing the petitioner-bank. The coordinate Bench held that such orders created serious compliance difficulties, especially where some customer accounts had insufficient or zero balances.
Karnataka High Court Sets Aside Magistrate’s Order
Following the earlier coordinate Bench decisions, Justice Nagaprasanna allowed Axis Bank’s petition and set aside the Magistrate’s order dated 10 August 2023.
The matter was remanded to the 1st Additional Chief Metropolitan Magistrate, Bengaluru to reconsider the application under Sections 451 and 457 CrPC afresh, after affording Axis Bank an opportunity of hearing.
Bank Restrained From Releasing Money Until Fresh Decision
Pending reconsideration of the application, the High Court restrained Axis Bank from releasing money from the subject account in favour of any person.
The Court further directed the concerned Magistrate to decide the application under Sections 451 and 457 CrPC as expeditiously as possible and in any event within eight weeks from receipt of the High Court’s order.
Key Legal Takeaway
The ruling reinforces an important procedural safeguard in cases involving freezing and defreezing of bank accounts during criminal investigations. Where a judicial order may require a bank to release or transfer funds from an account, the bank should ordinarily be afforded an opportunity of hearing, particularly where multiple claims, prior freezing directions, insufficient balances or competing judicial orders may exist.
The judgment does not finally decide who is entitled to the disputed funds. Instead, it requires the Magistrate to reconsider the matter after hearing the Bank and all concerned parties.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
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Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 10.09.2026
Failure to Register Project Under Section 3 Does Not Oust RERAβs Adjudicatory Jurisdiction Under Section 31
This Short Article has been prepared & written by Advocate Narendra Singh. The views expressed are based on his interpretation of the law. He can be reached at his email idamitnaren@outlook.com.
In an important ruling concerning the jurisdiction of the Real Estate Regulatory Authority (RERA) and the rights of homebuyers, the Punjab & Haryana High Court has held that a promoter cannot defeat an allotteeβs remedy under the Real Estate (Regulation and Development) Act, 2016 merely by contending that the concerned project was not registered with RERA.
A Division Bench comprising Justice Sureshwar Thakur and Justice Vikas Suri rejected the jurisdictional challenge raised by M/s Ramprastha Developers Pvt. Ltd. and others against an order passed by the Haryana Real Estate Regulatory Authority, Gurugram. The Court ultimately dismissed the writ petition and held that the petitioners could pursue the statutory appellate remedy available under the RERA Act.
Background of the Dispute
The writ petition challenged an order dated 26 July 2024 passed by the Haryana Real Estate Regulatory Authority, Gurugram on complaints instituted by Yuvraj Arora and Vivek Arora.
An important document before the Court was a receipt issued by Ramprastha Developers recording payment of βΉ2,49,37,500 in connection with a request for tentative registration of 6,500 square yards in its future potential projects.
The developers principally argued that RERA lacked jurisdiction because the subject project had not been registered under Section 3 of the RERA Act. According to them, registration of the project was a mandatory prerequisite before the provisions of the RERA Act could apply.
Developers Challenge RERAβs Jurisdiction
The petitioners contended that the RERA order suffered from an inherent jurisdictional defect and was effectively coram non judice.
Their argument was that no requisite registration/licence existed in respect of the project and, therefore, RERA could not entertain the complaints. They also questioned whether a payment relating to a prospective or future project could confer enforceable rights upon the complainants under the RERA Act.
The respondents, on the other hand, raised a preliminary objection to the maintainability of the writ petition because Section 43(5) of the RERA Act provides a statutory appeal before the Real Estate Appellate Tribunal against an order of the Authority or adjudicating officer.
High Court Examines Section 3 of the RERA Act
The Court considered Section 3, which generally prohibits a promoter from advertising, marketing, booking, selling or offering property in a real estate project without registration with the Real Estate Regulatory Authority.
The High Court, however, rejected the proposition that the promoterβs failure to secure the relevant registration could itself extinguish the rights of homebuyers to approach RERA.
The Court observed that non-issuance or absence of the relevant registration does not restrict the right of homebuyers to access remedies contemplated under the RERA Act.
This distinction became central to the judgment: the promoterβs statutory obligation to register a project cannot be converted into a jurisdictional defence against an aggrieved allottee.
Section 31 Is the Source of RERAβs Adjudicatory Jurisdiction
The High Court placed considerable emphasis on Section 31 of the RERA Act.
Section 31 permits any aggrieved person to file a complaint before the Authority or adjudicating officer for violation or contravention of the Act, rules or regulations against a promoter, allottee or real estate agent.
The Court held that the question of RERA’s adjudicatory jurisdiction is more directly governed by this statutory right to file a complaint than by whether every requirement relating to project registration under Section 3 had first been fulfilled.
The Court consequently reasoned that compliance with Section 3, or even action by the competent authority under the provisos to Section 3, is not a statutory precursor to the vesting of adjudicatory jurisdiction in RERA.
Promoter Cannot Benefit From Non-Registration
The judgment has an important consumer-protection consequence.
If non-registration of a project were treated as sufficient to oust RERA jurisdiction, a promoter could potentially rely upon its own failure to comply with registration requirements to prevent an aggrieved purchaser or allottee from approaching the regulatory authority.
The High Court’s interpretation avoids such a result.
The Court read the provisions of the RERA Act harmoniously and concluded that the statutory framework confers adjudicatory competence upon RERA to entertain complaints concerning alleged violations by promoters.
It therefore held that neither the filing of the complaints nor RERA’s exercise of jurisdiction suffered from an inherent jurisdictional defect or the vice of coram non judice.
RERAβs Powers Under Section 37
The Court also referred to Section 37 of the RERA Act, which authorises the Regulatory Authority to issue directions to promoters, allottees and real estate agents for the purpose of discharging its functions under the Act, Rules and Regulations.
The provision states that such directions are binding on all concerned.
This reinforced the Court’s conclusion regarding the breadth of RERA’s regulatory and adjudicatory authority.
Prospective Allottee Can Also Have Locus to Approach RERA
Another significant issue concerned the complainants’ status as allottees.
The developers argued that the complainant had merely paid money in respect of prospective projects and that no such project had actually been floated at the relevant stage. On this basis, they questioned whether any cause of action or locus standi existed.
The High Court rejected this contention.
It reasoned that the statutory concept of an allottee could encompass potential or prospective allottees in relation to projects proposed to be undertaken in the future, and considered the receipt/documentary arrangement sufficient in the circumstances to reject the challenge to the complainants’ locus.
This aspect of the judgment may have particular significance in cases involving advance bookings, pre-launch payments, tentative registrations and payments made for future projects.
Alternative Remedy Under Section 43(5)
Having concluded that RERA had not exercised jurisdiction that was inherently non-existent, the High Court addressed the developers’ attempt to invoke writ jurisdiction directly.
The Court found no merit in the argument that the statutory appellate remedy was ineffective merely because the petitioners alleged that RERA’s original order was without jurisdiction.
Since the jurisdiction assumed by RERA was neither non-est nor coram non judice, the developers were required to pursue the statutory remedy of appeal against the impugned order.
Section 43(5) is particularly significant for promoters because an appeal by a promoter is subject to the statutory pre-deposit requirement prescribed by the proviso to that provision.
Relief Regarding Limitation for Statutory Appeal
While dismissing the writ petition, the High Court provided an important procedural safeguard.
It observed that if the statutory appeal filed by the petitioners was time-barred, they could file an application under Section 14 of the Limitation Act, 1963.
The appellate body was directed to pass a reasoned decision on such application and thereafter, where appropriate, register and decide the appeal after hearing all affected parties.
Key Principles Emerging From the Judgment
The judgment establishes several important propositions for RERA disputes:
First, non-registration of a real estate project does not, by itself, deprive an aggrieved homebuyer or allottee of the statutory remedy available under RERA.
Second, the promoter’s obligation to register a project under Section 3 must be distinguished from RERA’s adjudicatory jurisdiction under Section 31.
Third, failure to comply with project-registration requirements cannot automatically be used by the promoter to defeat a complaint brought by an aggrieved person.
Fourth, RERA enjoys statutory powers under Section 37 to issue binding directions to promoters, allottees and real estate agents.
Fifth, the Court recognised, in the factual setting before it, the standing of a person who had paid substantial consideration towards a prospective project to pursue remedies under the Act.
Sixth, where RERA possesses jurisdiction, a promoter challenging its order should ordinarily pursue the statutory appeal under Section 43(5) instead of bypassing that remedy through a writ petition.
Significance for Homebuyers and Developers
The ruling strengthens the remedial character of the RERA framework.
For homebuyers, it indicates that a developer’s failure to complete statutory registration formalities does not necessarily leave purchasers without a remedy under RERA. This is especially relevant to disputes involving pre-launch bookings, tentative allotments, advance payments and projects whose regulatory status is disputed.
For developers, the judgment highlights that non-registration cannot safely be treated as a jurisdictional shield. The obligation to register and the jurisdiction of RERA to address grievances operate within the broader statutory framework and must be interpreted harmoniously.
Conclusion
In M/s Ramprastha Developers Pvt. Ltd. & Ors. v. State of Haryana & Ors., the Punjab & Haryana High Court rejected the developers’ contention that absence of RERA registration deprived the Authority of jurisdiction over the homebuyers’ complaints.
The Court held that the statutory right of an aggrieved person to approach RERA under Section 31 is central to the Authority’s adjudicatory competence, while non-compliance with Section 3 does not automatically extinguish that remedy. Finding no inherent jurisdictional defect in the proceedings before Haryana RERA, the High Court dismissed the writ petition, leaving the developers to pursue their statutory appellate remedy. It also permitted them to seek the benefit of Section 14 of the Limitation Act if limitation became an issue before the appellate forum.
Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
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Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 10.09.2026
Bombay High Court Clarifies Scope of Arbitration Against Non-Signatories
This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email idshobhit.Ica23@gmail.com.
In an important ruling on the binding effect of arbitration agreements upon non-signatories and subsequent holders of property rights, the Bombay High Court has held that a person does not become bound by an arbitration clause contained in an earlier development agreement merely because that person subsequently acquires leasehold rights or an interest in the property.
Justice Amit Borkar, while deciding an application under Section 11 of the Arbitration and Conciliation Act, 1996, drew a clear distinction between an assignment of property rights and an assignment of contractual rights and obligations. The Court held that a subsequent lessee can be brought within an arbitration agreement only where there is sufficient material demonstrating assignment, incorporation, consent, acceptance of contractual obligations, or unequivocal conduct adopting the underlying agreement and its arbitration clause.
At the same time, the Court held that disputes between the applicants and the original contracting Respondent Nos. 2 to 4 could proceed to arbitration. Their objection that the claims were barred by limitation was left for determination by the Arbitral Tribunal under Section 16 of the Arbitration Act.
Background of the Dispute
The dispute arose from a registered Assignment of Development Agreement dated 12 November 2007.
Shree Satguru Developers and the other applicants were appointed as developers by the owners of the land. Under the agreement, development rights in the subject property were assigned to the applicants and an irrevocable Power of Attorney was also executed in their favour.
The consideration payable to the owners was fixed at βΉ5.5 crore, of which βΉ2.25 crore had already been paid at the relevant stage. The applicants claimed that they ultimately paid approximately βΉ5.21 crore to the owners.
The agreement also contained Clause 39, providing a dispute-resolution mechanism culminating in arbitration.
The controversy became complicated when the development arrangement was subsequently terminated and rights in the property underwent further transactions.
Termination of Development Rights
The applicants were served with a notice dated 18 December 2015, whereby Respondent Nos. 3 and 4 purported to terminate the Assignment of Development Rights.
The applicants disputed the termination and replied on 16 January 2016, maintaining that the delays in redevelopment were attributable to various external issues and failures on the part of the owners.
According to the applicants, discussions nevertheless continued. In 2017, the applicants requested recall of the termination and subsequently paid another βΉ10 lakh, which was accepted by Respondent Nos. 3 and 4.
These later events eventually became important to the question of limitation.
Subsequent Assignment of Leasehold Rights
A major issue arose after Respondent No. 1 acquired leasehold rights in the property under an Indenture of Assignment dated 13 August 2024.
The applicants contended that Respondent No. 1, being an assignee of Respondent Nos. 3 and 4, should also be treated as bound by the arbitration clause contained in the 2007 Development Agreement.
Respondent No. 1 disputed this contention.
His case was that he had acquired only the leasehold rights in the land and had never taken an assignment of the Development Agreement itself. It was argued that the Development Agreement created personal contractual rights and obligations between its parties and that those contractual obligations did not automatically travel with the land.
This raised the central legal question before the Bombay High Court:
Can a subsequent acquirer of leasehold/property rights be treated as an assignee of an earlier development agreement and thereby be compelled to arbitrate under its arbitration clause?
Arbitration Invoked in April 2026
The applicants issued a notice dated 30 April 2026, invoking arbitration.
Respondent No. 1 replied on 7 May 2026 and denied the existence of any arbitration agreement between himself and the applicants.
Respondent Nos. 2 to 4, meanwhile, contended that the applicants’ appointment had already been terminated and that the claims sought to be raised were barred by limitation.
The applicants thereafter approached the Bombay High Court seeking appointment of an arbitrator under Section 11.
Scope of Inquiry Under Section 11
The High Court first examined the extent of judicial scrutiny permissible while deciding a Section 11 application.
Relying upon the Supreme Court’s decision in Ajay Madhusudan Patel v. Jyotrindra S. Patel, (2025) 2 SCC 147, the Court reiterated the restricted scope of a referral court after insertion of Section 11(6-A).
The Court noted that the statutory enquiry is principally directed towards the existence of an arbitration agreement, rather than a full-scale adjudication of the underlying dispute.
The judgment also referred to the Supreme Court authorities in:
National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267; and
Duro Felguera S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729.
However, the Court recognised that a distinct question arises when arbitration is sought against a person who never signed the underlying agreement.
What Did Clause 39 Provide?
Clause 39 of the Development Agreement referred specifically to disputes βbetween the parties hereto.β
It initially contemplated reference of disputes to a three-member committee consisting of representatives from the assignors, developers and owners/confirming parties. If the committee failed to resolve the dispute, the matter was to be referred to a sole arbitrator jointly nominated by the βparties hereto.β
The language of this clause became decisive.
The High Court found nothing in Clause 39 indicating that every subsequent person obtaining an interest in the property would automatically become a party to the arbitration agreement.
Bombay High Court: Property Interest Is Not the Same as Contractual Assignment
The Court drew an important distinction between acquiring an interest in property and acquiring contractual rights and obligations.
It held that where a person is actually assigned the rights and obligations of a contracting party, that person mayβdepending upon the terms of the assignmentβbecome bound by the arbitration agreement forming part of that contract.
But the position is different where the person merely acquires some interest in the property that formed the subject matter of the original contract.
The Court held that this fact, by itself, does not make the subsequent acquirer an assignee of the Development Agreement.
This distinction has considerable significance for property-development transactions involving multiple successive developers, lessees, assignees and transferees.
A Lessee Does Not Automatically Become an βAssigneeβ
The Court explained that a lease or sub-lease gives the lessee a right to occupy or use property. It does not, merely by its existence, transfer the earlier Development Agreement or the arbitration clause contained in it.
Therefore, a person seeking to rely uponβor sought to be bound byβan arbitration clause as a subsequent lessee must demonstrate something more, such as:
contractual privity;
a valid assignment of the relevant agreement;
express incorporation of the earlier agreement;
written consent accepting the arbitration clause;
acceptance of the contractual obligations; or
unequivocal conduct demonstrating adoption of the Development Agreement and its arbitration clause.
The Court therefore treated the expressions βlesseeβ and βassigneeβ as describing legally distinct relationships, even though a particular transaction may, depending upon its terms, produce both effects.
Non-Signatories Can Still Be Bound in Appropriate Cases
Importantly, the Bombay High Court did not hold that a non-signatory can never be referred to arbitration.
The Court considered the Supreme Court’s landmark decision in Cox & Kings Ltd. v. SAP India Pvt. Ltd., (2024) 4 SCC 1.
Cox & Kings recognises that whether a non-signatory has become a genuine party to an arbitration agreement may involve complex factual and legal questions. The referral court must examine whether there is at least a prima facie basis for treating the non-signatory as a party; complex questions may thereafter appropriately be determined by the Arbitral Tribunal.
Thus, the decisive consideration is not simply whether the person physically signed the original contract.
The real question is whether there is a legally sustainable basis for concluding that the non-signatory became a party to or accepted the arbitration agreement.
No Prima Facie Material Against Respondent No. 1
On the facts before it, the Court found no such material.
Respondent No. 1 had obtained an assignment of lease/leasehold rights, but the applicants could not demonstrate a corresponding assignment of the Development Agreement dated 12 November 2007.
There was also no subsequent agreement under which Respondent No. 1 accepted Clause 39.
The fact that Respondent No. 1 had acquired leasehold rights and subsequently submitted a redevelopment proposal was insufficient to establish an agreement to arbitrate.
Similarly, knowledge of the applicants’ claimed development rights could not be equated with consent to arbitration.
The Court therefore declined to treat Respondent No. 1 as a party to Clause 39.
Knowledge of an Arbitration Clause Is Not Consent to Arbitration
One of the judgment’s particularly useful commercial propositions is the distinction between knowledge and consent.
A subsequent purchaser, lessee or developer may know that another party claims rights under an earlier agreement. That knowledge does not mean that the subsequent party has accepted the arbitration clause contained in that agreement.
Arbitration is fundamentally consensual.
Accordingly, the existence of a property dispute between two persons cannot, by itself, create an arbitration agreement between them.
This distinction is particularly relevant in redevelopment projects where multiple layers of title, leasehold rights, development rights, assignments and tenant agreements coexist.
Limitation: Referral Court Should Not Conduct Intricate Evidentiary Inquiry
The second major issue concerned limitation.
Respondent Nos. 2 to 4 argued that the Development Agreement had been terminated in December 2015, whereas arbitration was invoked only on 30 April 2026.
The applicants relied upon subsequent negotiations, the payment of βΉ10 lakh in 2017, redevelopment-related activities and later conduct to contend that their rights and disputes continued.
The Bombay High Court relied upon the Supreme Court’s decision in SBI General Insurance Co. Ltd. v. Krish Spinning, (2024) 12 SCC 1.
The Supreme Court had clarified that, at the Section 11 stage, the referral court should not undertake an intricate evidentiary enquiry into whether the substantive claims are time-barred. Such questions should ordinarily be left to the arbitrator.
The judgment also referred to Arif Azim Co. Ltd. v. Aptech Ltd., (2024) 5 SCC 313 and In Re: Interplay Between Arbitration Agreements under the Arbitration Act, 1996 & the Stamp Act, 1899, (2024) 6 SCC 1 in explaining the limited enquiry permissible at the referral stage.
Ten-Year Gap Did Not Lead Court to Decide Claim Limitation at Section 11 Stage
The High Court acknowledged that there was a substantial period between the termination of the agreement and invocation of arbitration.
Nevertheless, the applicants relied on subsequent events and conduct, including negotiations and payment.
The Court therefore declined to finally determine whether those circumstances extended, revived, acknowledged or otherwise affected the applicants’ claims.
It held that these questions required consideration by the Arbitral Tribunal under Section 16.
This is an important distinction: the Court was not holding that the claims were within limitation. Rather, it held that the substantive limitation objection remained open for adjudication by the arbitrator.
Arbitration Allowed Against Original Contracting Parties
As regards Respondent Nos. 2 to 4, there was no dispute about the existence of Clause 39 between the contracting parties.
The High Court therefore found that the applicants had established a case for appointment of an arbitrator against those respondents.
The limitation objection was expressly preserved for determination by the Arbitral Tribunal.
The Court accordingly partly allowed the arbitration application and referred the disputes between the applicants and Respondent Nos. 2 to 4 arising from the Assignment of Development Agreement dated 12 November 2007 to arbitration.
Sole Arbitrator Appointed
The Bombay High Court appointed Mr. Amrut Joshi, Advocate, as the Sole Arbitrator to adjudicate the disputes between the applicants and Respondent Nos. 2 to 4.
The appointment was made subject to the statutory disclosure requirements under Section 12 of the Arbitration and Conciliation Act, 1996, and absence of circumstances giving rise to justifiable doubts concerning the arbitrator’s independence or impartiality.
The Court also directed the arbitrator to forward the statutory disclosure under Section 11(8) read with Section 12(1), and directed the parties to appear before the arbitrator for further procedural directions. The arbitration costs and tribunal fees were to be borne equally in the first instance, subject to the final award on costs.
Key Legal Principles Emerging from the Judgment
The Bombay High Court’s ruling provides useful guidance on three interrelated areas of arbitration law.
First, acquisition of property rights does not automatically amount to assignment of contractual rights. A subsequent lessee does not become an assignee of a development agreement merely because it acquires leasehold rights in the property covered by that agreement.
Second, arbitration remains consent-based. A non-signatory may be bound in appropriate circumstances, but there must be at least prima facie material showing assignment, incorporation, acceptance, consent or conduct sufficient to connect that person with the arbitration agreement.
Third, knowledge is not consent. Awareness of an earlier development agreement or of another person’s claimed rights cannot by itself make a subsequent property-holder a party to its arbitration clause.
Fourth, the Section 11 enquiry remains limited. The referral court should determine whether the requisite arbitration agreement exists, but ordinarily should not conduct an intricate evidentiary trial on the substantive limitation of individual claims.
Fifth, limitation remains fully open before the tribunal. Referral to arbitration does not amount to a judicial finding that the claims are within limitation.
Important Supreme Court Authorities Referred to
The judgment considers a substantial line of Supreme Court authority governing Section 11 and non-signatories, including:
Judgment
Citation
Relevance
SBI General Insurance Co. Ltd. v. Krish Spinning
(2024) 12 SCC 1
Scope of limitation enquiry under Section 11
Ajay Madhusudan Patel v. Jyotrindra S. Patel
(2025) 2 SCC 147
Limited scope of Section 11 enquiry
Cox & Kings Ltd. v. SAP India Pvt. Ltd.
(2024) 4 SCC 1
Non-signatories and arbitration agreements
Duro Felguera S.A. v. Gangavaram Port Ltd.
(2017) 9 SCC 729
Existence of arbitration agreement under Section 11
SBP & Co. v. Patel Engineering Ltd.
(2005) 8 SCC 618
Historical scope of referral-court enquiry
National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd.
(2009) 1 SCC 267
Pre-amendment Section 11 jurisprudence
Arif Azim Co. Ltd. v. Aptech Ltd.
(2024) 5 SCC 313
Limitation concerning Section 11 proceedings
In Re: Interplay Between Arbitration Agreements under the Arbitration Act, 1996 & the Stamp Act, 1899
(2024) 6 SCC 1
Referral-stage principles
The Court specifically relied upon Cox & Kings while considering when a non-signatory can be regarded as a party to an arbitration agreement.
Commercial Significance for Real Estate and Redevelopment Transactions
The ruling has implications extending beyond arbitration law.
Development projects frequently involve a succession of transactionsβdevelopment agreements, conveyances, leases, assignments, redevelopment proposals, permanent alternate accommodation agreements and transfers of ownership or leasehold rights.
Parties should therefore avoid assuming that an arbitration clause automatically βruns with the land.β
If parties intend a subsequent purchaser, lessee, transferee, successor or assignee to be bound by an existing dispute-resolution mechanism, transaction documents should expressly address:
assignment of contractual rights and obligations, assumption of liabilities, incorporation of the original agreement, succession provisions and express adoption of the arbitration clause.
Clear drafting at the transactional stage can significantly reduce jurisdictional disputes when arbitration is later invoked.
Conclusion
The Bombay High Court’s ruling in Shree Satguru Developers & Ors. v. Chandrashekhar Champalal Hingarh & Ors., 2026:BHC-OS:19815, provides an important clarification on the relationship between property rights, contractual assignment and arbitration agreements. The case was decided by Justice Amit Borkar on 7 September 2026 in an application seeking appointment of an arbitrator under Section 11.
The Court’s central message is that mere acquisition of leasehold rights in a property does not make the subsequent lessee an assignee of an earlier development agreement or bind it to the arbitration clause contained therein. There must be a demonstrable legal connection to the contractual rights and obligations themselves.
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Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 10.09.2026
Bombay High Court Quashes βΉ1.22 Crore EPFO Demand Against Corporate Debtor; PF Assessment During IBC Moratorium Held Impermissible
This Short Article has been prepared & written by Advocate Madhumita Jha. The views expressed are based on her interpretation of the law. She can be reached at her email idjhamadhumita27@gmail.com.
The Bombay High Court has quashed an Employeesβ Provident Fund Organisation (EPFO) demand of βΉ1,22,48,716 raised against Dolphin Offshore Enterprises (India) Limited, holding that continuation of proceedings under Section 7A of the Employeesβ Provident Funds and Miscellaneous Provisions Act, 1952 during the moratorium imposed under the Insolvency and Bankruptcy Code, 2016 (IBC) was impermissible.
Justice Sharmila U. Deshmukh held that the subsequent demand and recovery proceedings could not survive after approval of the resolution plan, particularly in light of Sections 14, 31(6) and 32A of the IBC.
Background of the Case
Corporate Insolvency Resolution Process (CIRP) against Dolphin Offshore Enterprises was initiated by the NCLT on 16 July 2020. Following a public announcement inviting claims, EPFO submitted a claim of βΉ2,24,98,772, which was verified and admitted in full by the Resolution Professional.
The Committee of Creditors subsequently approved the resolution plan submitted by Deep Industries Limited, and the NCLT approved the plan on 29 September 2022. Under the approved resolution plan, EPFO was paid βΉ2,250 in full and final settlement of its claim.
However, EPFO had separately initiated an inquiry under Section 7A of the PF Act concerning provident fund contributions for the period April 2018 to September 2019. Despite being informed about the CIRP and moratorium, the inquiry continued.
Eventually, on 24 February 2023, after approval of the resolution plan, EPFO passed an order assessing PF dues at βΉ1,22,48,716 and directed the corporate debtor to make payment.
Can EPFO Continue Section 7A Proceedings During IBC Moratorium?
The principal issue before the High Court was whether EPFO could continue assessment proceedings under Section 7A of the PF Act after a moratorium had come into operation under Section 14 of the IBC.
The Court observed that commencement of CIRP triggers the statutory moratorium. Once the moratorium is imposed, proceedings which have the effect of creating new liabilities against the corporate debtor cannot continue.
In the present case, EPFO was aware that CIRP had commenced. Despite such knowledge, it continued with the Section 7A inquiry and ultimately passed the impugned order after the resolution plan had already been approved.
EPFO Order Was Not Merely an AssessmentβIt Was in the Nature of Recovery
A significant aspect of the judgment is the Court’s distinction between mere assessment of dues and proceedings that effectively seek recovery.
The EPFO order not only assessed βΉ1.22 crore as outstanding dues but directed payment within 15 days, failing which recovery proceedings under Sections 8B to 8G of the PF Act were to follow. It also contemplated damages, interest and prosecution.
The High Court therefore held that the order was βnot merely an assessment proceedingβ but a proceeding in the nature of recovery, which was impermissible during the moratorium.
Section 31(6) of IBC Extinguishes Pre-Resolution Claims
The Court placed substantial reliance upon the newly introduced Section 31(6) of the IBC, inserted through the Insolvency and Bankruptcy Code (Amendment) Act, 2026, notified on 26 May 2026.
The provision stipulates, inter alia, that unless otherwise provided in the resolution plan, claims against the corporate debtor and its assets arising prior to approval of the plan stand extinguished, and proceedingsβincluding assessment proceedingsβcannot be continued or instituted on the basis of such claims.
Importantly, the Court noted that Explanation III gives retrospective operation to Section 31(6) in respect of resolution plans approved from the commencement of the IBC, except matters that have already attained finality.
Accordingly, the Court held that the amount recognised in the approved resolution plan was protected, but the separate amount subsequently determined through the impugned Section 7A order was not.
The post-resolution quantification therefore stood extinguished and could not be recovered.
EPFO Had Filed Its Claim but Did Not Challenge the Resolution Plan
Another important consideration was that EPFO had actually participated in the insolvency process by lodging its claim with the Resolution Professional.
The resolution plan ultimately recognised EPFO’s claim at βΉ2,250, and EPFO was informed about approval of the plan and forwarded the amount. The Court observed that EPFO had the opportunity to challenge the resolution plan before the NCLAT and seek full payment of its provident fund dues.
Instead, EPFO did not challenge the approved resolution plan and continued with its Section 7A inquiry.
The High Court also considered the earlier Bombay High Court decision in Dalmia Cement (Bharat) Limited v. Central Board of Trustees, EPFO.
The Court distinguished that decision on the facts and observed that, following the 2026 legislative amendment to the IBC, the effect of Dalmia Cement had been βconsiderably watered down.β The issue in the present caseβcontinuation of a Section 7A inquiry during the moratoriumβhad also not arisen for consideration in Dalmia Cement.
More importantly, the Court observed that the βclean slateβ principle laid down by the Supreme Court in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. has now received legislative effect through the introduction of Section 31(6) of the IBC.
Protection Under Section 32A of IBC
The High Court further relied upon Section 32A of the IBC, which grants immunity in respect of offences committed prior to commencement of CIRP once the resolution plan is approved and results in the prescribed change in management or control.
Since the EPFO order contemplated recovery against the corporate debtor’s assets as well as prosecution, the Court found that such action was also inconsistent with the protection afforded by Section 32A.
Four Reasons Why the EPFO Order Was Unsustainable
The Bombay High Court crystallised its findings into four grounds: the Section 7A inquiry was impermissibly continued during the Section 14 moratorium; the resultant recovery claim stood extinguished under Section 31(6) after approval of the resolution plan; EPFO had itself lodged a claim which was dealt with under the resolution plan but never challenged that plan; and Section 32A protected the corporate debtor and its assets following the qualifying change in ownership and control.
High Court Quashes βΉ1.22 Crore Demand
On these findings, the Bombay High Court held that the EPFO order dated 24 February 2023 was clearly unsustainable and consequently quashed and set it aside, allowing Dolphin Offshore Enterprises’ writ petition.
Key Takeaway
The ruling is significant for companies undergoing or emerging from CIRP because it reinforces the clean-slate principle under the IBC. Statutory authorities cannot disregard an IBC moratorium, participate in the resolution process, accept treatment of their claim under an approved resolution plan, and thereafter seek to impose a separate pre-resolution liability against the revived corporate debtor.
The judgment is particularly important after the 2026 amendment introducing Section 31(6), which the Bombay High Court has treated as giving legislative effect to the principle that pre-resolution claims, unless preserved under the approved plan, stand extinguished and cannot subsequently form the basis of fresh assessment or recovery proceedings.
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Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.
Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.
