Court grants interim protection to Hemlata Ajay Ramani, citing registered Deed of Cancellation and dishonoured post-dated cheque as prima facie evidence; Respondent's financial disputes raise concerns over recoverability
In a significant interim relief order dated October 5, 2026, the Bombay High Court, presided over by Justice Amit Borkar, directed Alag Property Constructions Pvt Ltd. to deposit Rs.58,97,600 before the court within four weeks. This amount corresponds to a refund claimed by petitioner Hemlata Ajay Ramani under a registered Deed of Cancellation executed between the parties concerning the sale of Flat No.1001 in the "Alag Endeavour" building.
Background:
The petitioner had entered into an Agreement for Sale on March 31, 2021, for the purchase of the flat, with possession promised by December 31, 2025. Due to the respondent's failure to deliver possession and ongoing disputes in related redevelopment projects, Ms. Ramani sought cancellation of the agreement and refund of amounts paid along with interest. This culminated in the execution of a registered Deed of Cancellation on March 28, 2026, under which the respondent agreed to refund Rs.58,97,600. The respondent issued a post-dated cheque towards this amount dated June 30, 2026, which was dishonoured on presentation due to "Funds Insufficient."
Legal Proceedings and Contentions:
The petitioner approached the Court under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim measures to secure the refund amount pending arbitral adjudication. The petitioner relied on the registered Deed of Cancellation and the dishonoured cheque as strong prima facie evidence of the claim.
The respondent disputed the claim, denying the existence of any legal liability or the validity of the Agreement for Sale and the amount claimed. The respondent also highlighted ongoing disputes and insolvency proceedings involving related parties, questioning the bona fides of the petitioner's claim.
Court's Analysis and Findings:
The Court acknowledged that while the respondent disputed liability, the petitioner's claim was not a mere oral assertion but supported by a registered document and a cheque issued in connection with the refund. The dishonour of the cheque for insufficient funds raised a genuine concern about the recoverability of the amount.
The Court emphasized that the power under Section 9 to secure the amount in dispute must be exercised cautiously and not mechanically. It considered the broader context, including the respondent's multiple disputes in redevelopment projects, statements about negligible funds in disclosed accounts during execution proceedings, interim awards against the respondent, and recent transfers of redevelopment rights.
Balancing these factors, the Court found a prima facie case and a balance of convenience favoring interim protection by securing the claimed amount. The Court clarified that directing the deposit did not amount to an admission of liability and that all substantive disputes, including liability and interest claims, would be adjudicated by the arbitral tribunal.
Order:
The Court ordered the respondent to deposit Rs.58,97,600 in a fixed deposit with a nationalized bank for one year, renewable as required, with the amount kept subject to the final arbitral award. The respondent was also directed to provide deposit receipts to the petitioner, and all contentions of the parties were kept open for determination in arbitration.
Significance:
This order underscores the Bombay High Court's approach towards safeguarding monetary claims in arbitration by balancing the need for interim protection with the rights of parties to contest liability. It illustrates judicial caution in granting interim relief under Section 9, requiring supporting documentary evidence and real concerns regarding enforceability of eventual awards.
Bottom Line:
Arbitration and Conciliation Act, 1996 Section 9 Interim protection for monetary claim - Where petitioner's refund claim was supported by a registered Deed of Cancellation and a post-dated cheque annexed thereto, which was dishonoured for "Funds Insufficient", and surrounding circumstances showed genuine concern regarding recoverability of amount, Court held that a prima facie case and balance of convenience existed for securing the amount in dispute by directing deposit, without treating the claim as admitted and without deciding final rights of parties.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Section 9
Hemlata Ajay Ramani v. Alag Property Constructions Pvt Ltd., (Bombay) : Law Finder Doc Id # 2990657
