Bombay High Court Upholds Arbitration Award in Developer-Landowner Dispute

Court Rules on Interpretation of Development Agreement Terms and Limits Scope of Judicial Review under Section 34 of Arbitration Act

In a significant ruling, the Bombay High Court has upheld an arbitral award concerning a dispute between a developer, Bhupatbhai Ravjibhailukhi Purchaser-Cum-Developer and his partners at Lukhi Associates, and the heirs of Tormal Dedraj Saini, regarding the terms of a development agreement. The court, presided over by Justice Somasekhar Sundaresan, delivered the judgment on November 25, 2025, dismissing a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the arbitral tribunal's award.

The dispute arose over the interpretation of "built-up area wall to wall" as "carpet area" in a development agreement executed in 2010. The developer argued that a shortfall in the land area reduced the development potential, justifying a reduction in the area of flats delivered to the landowners. However, the arbitral tribunal rejected this contention, and the High Court affirmed this decision, emphasizing that the term "built-up area wall to wall" reasonably meant "carpet area," aligning with a commercially sensible interpretation of the agreement.

The High Court highlighted that the discrepancy between the actual land area and the area recorded in the property card was known to the developer at the time of the agreement. The developer's claim of surprise regarding the development potential was dismissed, as the tribunal found no contemporaneous objection to the land measurement.

Furthermore, the court clarified the limited scope of judicial review under Section 34, reiterating that an arbitral award can only be set aside if the perversity in the award goes to the root of the matter. The court must respect the finality of arbitral awards and the autonomy of parties in opting for alternative dispute resolution.

The judgment also addressed the issue of non-joinder of parties, affirming that the core claims were pursued by the primary landowners and that other confirming parties to the agreement were not necessary for adjudication.

The Bombay High Court's decision underscores the importance of adhering to the terms of a development agreement and the limited grounds on which an arbitral award can be challenged, reinforcing the integrity of the arbitration process.

Bottom Line:

Arbitration - Interpretation of terms in Development Agreement - "Built-up area wall to wall" interpreted as "carpet area" - Developer's contention of reduced development potential due to shortfall in land area rejected - Scope of review under Section 34 of Arbitration and Conciliation Act, 1996 limited to grounds provided therein.

Statutory provision(s): Arbitration and Conciliation Act, 1996 Section 34

Bhupatbhai Ravjibhailukhi Purchaser-Cum-Developer v. Tormal Dedraj Sainik @ Mali, (Bombay) : Law Finder Doc Id # 2812669