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2026 Arbitration Legal

Development Agreement – LoI and exchange of drafts do not bind Housing Society

August 15, 2026 legaldeli

Judgment dated 7.8.2026 of the High Court of Bombay (OS) in Commercial Arbitration Petition (L) NO.19177 of 2026 of Rishabraj Estate Developers Ltd Vs. Heeramani Ratan Cooperative Housing Society Ltd

The petitioner developer filed section 9 petition for temporary protection and interim reliefs till Arbitral Tribunal is constituted.

On 19.9.2023, the society issued the Letter of Intent to the petitioner developer for redevelopment and started the procedure required under Section 79A of the MC Societies Act.

Clause 15 of the tender provides: “The Society shall enter into a Redevelopment Agreement with the Developer selected and appointed by the General Body of the Society.” 38. This clause indicates that after appointment of the developer, execution of the Redevelopment Agreement was still contemplated between the parties.

Clause 8.2(e) assumes significance. It requires the successful 17 carbpl19177-2026-J.doc bidder to execute the redevelopment agreement within three months from issuance of the Letter of Intent, “containing mutually agreed conditions.” 40. The words “mutually agreed conditions” indicate that parties contemplated agreement before final execution of the Development Agreement. Clause 10.20 requires the developer to submit drafts of the Development Agreement and Power of Attorney

Looking to the tender conditions, the Letter of Intent, subsequent correspondence, repeated exchange of Development Agreement drafts, the petitioner’s own communication dated 18 April 2026 and the legal principles explained in Kollipara, Kalpataru Properties, Kalpataru Ltd., Kher Nagar Sai Prasad, Sunteck Realtors, MSEDCL and BSNL, this Court is unable to hold, even prima facie, that execution of the Development Agreement in 23 carbpl19177-2026-J.doc the present facts was formality. On the contrary, the contractual documents indicate that approval and execution of the Development Agreement formed one essential part of the arrangement contemplated between the parties.

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