Court restrains transfer of disputed land amid allegations of fraud and failure to deliver promised property, preserving appellants' right to specific performance under Arbitration and Conciliation Act
In a significant ruling dated October 21, 2026, the Bombay High Court (Division Bench) allowed an appeal filed by a group of doctors led by Dr. Devidas R. Sheregar against Zeenal Constructions Pvt. Ltd. and others. The Court set aside a prior order refusing interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, and granted an injunction restraining the respondents from creating any third-party rights or dealing with the disputed land situated at Dave's Estate, S.V. Road, Goregaon (West), Mumbai.
The dispute arose from a Memorandum of Understanding (MoU) dated June 27, 2005, under which the appellants paid Rs. 60 lakhs to the respondents for allotment of commercial premises measuring 4360 square feet in the proposed Krishna Ambika Arcade to be constructed on the said land. The respondents were contractually obligated to deliver the premises within 24 months of receiving the Intimation of Development (IOD). However, the respondents failed to obtain the IOD and have neither returned the money nor delivered the promised commercial property for over 21 years.
The appellants contended that the respondents were attempting to transfer the disputed land rights to third parties, which would frustrate their contractual claim for specific performance, leaving them only with a claim for damages. The respondents argued that the MoU had terminated by conduct of the parties, a claim the Court found prima facie bald and baseless.
Justice Kamal Khata, delivering the judgment, emphasized that interim protection under Section 9 is intended to preserve the subject matter of the dispute. The Court noted that if the respondents were allowed to transfer the land rights, the appellants' claim for specific performance would be rendered ineffective. The Court also observed prima facie evidence of fraud and cheating against the respondents, who have been using the appellants' money interest-free for over two decades.
While the Court was instinctively inclined to initiate suo motu criminal proceedings against the respondents under Article 226 of the Constitution of India, it refrained from doing so, hoping that the parties would settle the dispute amicably.
The Court's decision underscores the judiciary's role in protecting contractual and arbitration rights and preventing misuse of property transactions to the detriment of rightful claimants.
Bottom Line:
Arbitration and Conciliation Act, 1996 Section 9 Interim protection - Where respondents received money under MoU, failed to return it or deliver promised commercial premises, and were attempting to create third party rights in the land, injunction restraining transfer/dealing with property was necessary to preserve subject matter of dispute and protect claim for specific performance.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 Section 9; Indian Penal Code Sections 215, 420; Constitution of India Article 226
