Bombay High Court: Section 9 of the Arbitration Act protects a claim to specific performance, not just the land

The Bombay High Court has set aside a single judge's refusal to grant interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, to a group of doctors who had invested Rs. 60 lakh in 2005 under a Memorandum of Understanding with a builder and others for commercial premises to be constructed on a plot in Goregaon, Mumbai. The builder neither returned the money nor delivered the promised premises, and was negotiating to transfer development rights in the land to a third party. A Division Bench of Justices A. S. Gadkari and Kamal Khata held that interim protection under Section 9 exists to preserve the subject matter of a dispute pending arbitration, and that although the appellants had no direct right over the land itself, they were entitled to the commercial premises to be built on it; letting the respondents create third-party rights in the land would frustrate their claim for specific performance and leave them only a claim for damages.

The Bench found the respondents' conduct — using the appellants' money interest-free for over 21 years while claiming the agreement had lapsed — prima facie showed an intention to cheat within the meaning of Section 420 of the Indian Penal Code. It allowed the appeal and restrained the respondents from creating third-party rights in the land. As a Bombay High Court ruling, this binds courts in Maharashtra and Goa; it is not a Supreme Court precedent.