Protective Measures Under Section 9 vis‑à‑vis Statutory Tenants: Privity and Equity in Redevelopment Disputes

Introduction

This commentary examines the Bombay High Court’s decision in Ambit Urbanspace v. Poddar Apartment Co‑operative Housing Society Limited & Ors. (Commercial Arbitration Petition (L) No. 38696 of 2024), delivered on April 1, 2025 by Justice Somasekhar Sundaresan. The Developer (Ambit Urbanspace) invoked Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim protective measures to evict or “temporarily displace” tenants occupying five enclosed garages on a redevelopment site. Key legal issues include:

Whether tenants without privity to the development and arbitration agreements can be subjected to Section 9 interim reliefs.
The interplay between Section 9 of the Arbitration Act and statutory protection afforded to tenants under the Maharashtra Rent Control Act, 1999.
Equitable considerations in granting or refusing interim eviction when no genuine arbitration dispute exists inter se the parties to the agreement.

The parties span the Developer, the Co‑operative Housing Society, the original landlords (successors to the vendor’s interest in the garages), and the protected tenants themselves.

Summary of the Judgment

The Court refused all reliefs sought by the Developer under Section 9. The key findings were:

The five enclosed garages were tenanted premises, enjoyed uninterrupted for decades, with water and electricity connections—usage known and tacitly accepted by the landlords.
The tenants never executed the Development Agreement or its Supplemental Agreement, and thus lack privity to the arbitration clause. No genuine arbitration dispute exists between Developer, Society and Landlords—they all align against the tenants.
Section 9 reliefs are meant to preserve the subject‑matter of an arbitration pending genuine arbitration proceedings; they cannot be used as a back‑door eviction device, especially against statutory tenants under the Rent Act.
Equity and statutory protection demand that tenants not be stripped of their existing rights and downgraded to open parking slots via Section 9 orders.
Consequently, the petition was disposed of with no interim measures granted. The Court did, however, direct the Developer and Society to ensure safe access and protection of the garages during redevelopment.

Analysis

Precedents Cited

Various decisions were analyzed and distinguished:

Shree Ahuja Properties / Rajesh Mishra – Garages were upgraded to larger residential units; tenants became members via collective agreement. Not analogous because here tenants get a downgrade and had no privity.
Calvin Properties, Choice Developers, Sarthak Developers – Cases involving dissentient members of co‑operative societies who were entitled to enhanced accommodation and financial benefits. In contrast, non‑member tenants here receive no equitable compensation.
Heritage Lifestyles, Ferrum Realtors – Tenants retained tenancy rights or had eviction decrees. In Ambit, no decree exists and Section 9 cannot decide mixed questions under the Rent Act.
Kankubai Jain – Writ petition on change of occupancy of a garage; distinct in procedure and forum from a Section 9 petition.
Shantilal Gandhi – Landlord obtained eviction under the Rent Act for illegal change of use. Here, landlords never pursued eviction for decades, undermining claims of illegality.

Legal Reasoning

The Court’s reasoning unfolded in several steps:

Privity and Arbitration: Only parties to an arbitration agreement can seek Section 9 reliefs. The tenants never signed the Development or Supplemental Agreements and thus fall outside the arbitration nexus.
Scope of Section 9: Limited to interim measures to preserve the subject‑matter of existing arbitration disputes. Here, no genuine dispute exists between Developer, Society, and Landlords; all three support eviction efforts against tenants.
Equity and Statutory Tenants: Tenants are protected under the Maharashtra Rent Control Act, with defined eviction procedures. Section 9 cannot be used to override these statutory protections or effect a permanent displacement.
Balance of Convenience: No reasonable proposal emerged from the Developer or Landlords to safeguard tenants’ interests. The Court’s call for interim arrangements (such as segregated redeveloped units) was rebuffed, demonstrating inequitable conduct.
Limited Relief Pursuant to Contract: The only potentially enforceable clause was the liquidated‑damages provision payable by defaulting “Members/Tenants.” Since tenants are not signatories and no invocation against landlords has been made, the petition did not require Section 9 intervention—any set‑off can be pursued independently.

Impact

This decision establishes important guidelines:

Section 9 interim reliefs cannot be misused to effect de facto evictions of statutory tenants lacking privity in development agreements.
Courts must ensure a genuine arbitration dispute exists between parties seeking Section 9 measures, and that all affected third parties (e.g., statutory tenants) are heard and factored into any equitable order.
The judgment underscores the supremacy of special tenancy legislation over arbitration procedure in eviction and redevelopment contexts.
Future petitions under Section 9 in redevelopment scenarios will need robust demonstration of privity, genuine arbitration invocation, and equitable balancing of all interests before courts grant protective reliefs.

Complex Concepts Simplified

Section 9, Arbitration and Conciliation Act, 1996 – Allows parties to an arbitration agreement to seek interim court orders to preserve assets or evidence until arbitration concludes.
Privity – Legal principle that only parties to a contract (or arbitration agreement) can enforce its terms.
Maharashtra Rent Control Act, 1999 – Provides special protection and eviction procedures for tenants; courts outside these procedures cannot override tenant rights.
Liquidated Damages – Pre‑agreed amount payable upon breach. Even if stipulated, enforceability depends on actual loss and party status.
Floor Space Index (FSI) – Regulatory measure of built‑up area; garages built pre‑1991 often do not yield FSI benefits, creating economic motives to exclude them from redevelopment calculations.

Conclusion

The Bombay High Court’s decision in Ambit Urbanspace v. Poddar Apartment Co‑operative Housing Society Limited clarifies that Section 9 of the Arbitration Act cannot be wielded as a shortcut to evict statutory tenants who lack privity to development and arbitration agreements. Courts must verify an actual arbitration dispute among contracting parties, preserve the equities of third‑party statutory protectees, and respect specialized eviction mechanisms under tenancy laws. This precedent will guide future redevelopment arbitration petitions, ensuring that interim measures are granted only when consistent with both contractual privity and broader statutory protections.