Buying the Developer's Share? Bombay HC Ruling Shows Where Your Rights Stop

A 20-flat building on Haji Bapu Road in Malad (East), about 50 years old, ground plus four floors. In December 2023 its housing society signed a registered development agreement with a developer to rebuild it, with members promised 25 percent more area, a corpus, hardship allowance and rent. The developer also got the right to sell additional flats to outside buyers, and registered the project under RERA in March 2025. Less than a year later, the society said the developer had missed timelines and made sales in breach of the agreement, and invoked arbitration.

On October 19, 2026, the Bombay High Court appointed an arbitrator. The order, in Union Bank of India Employees Durga Parmeshwari CHSL v. M/s Atharva Rise, Commercial Arbitration Application No. 203 of 2026, was passed by Justice Arun R. Pednekar. What makes it essential reading for Bengaluru buyers is not the arbitration point but what the court gathered from earlier cases about people who buy the developer's share of flats in a project built on someone else's land.

The short answer. The court held there is "no impediment" to referring the society and developer to arbitration under Section 11 of the Arbitration Act, even though the project is RERA-registered and third-party rights may have arisen, and appointed advocate Abhijeet A. Desai as sole arbitrator. In reaching that view it relied on decisions holding that there is "no privity of contract between the Society and the third-party purchasers," and that purchasers' rights are confined to the developer's rights and remain subject to termination of the development agreement. The trade-off for a buyer of a sale flat: RERA registration protects you against the developer, but it does not give you rights against the landowner beyond what the developer holds.

What was the dispute between the society and the developer?

According to the order, the society, registered in 1978 with 20 members, resolved to redevelop because of the building's structural condition. The land is CTS No. 12A/A/1A/1/5 in Pahadi Goregaon, Borivli Taluka. The redevelopment was proposed under Regulation 33(7), and the registered development agreement of December 21, 2023 granted the developer development-cum-sale rights.

The society alleged that the developer lacked capacity, missed written timelines and made sales in breach of the agreement. On January 28, 2026, it invoked clause 25.4, the arbitration clause, and proposed names for a sole arbitrator. The developer did not respond, so the society went to the High Court. The developer then argued that disputes had not arisen, that the society owed it dues, that it was not at fault, and that the dispute was not arbitrable because the project is registered under RERA.

Why did RERA registration not block arbitration?

Because, at the referral stage, the court only examines whether an arbitration agreement exists. Following the Supreme Court's seven-judge bench decision on Section 11, the order says the court must "leave everything else to the determination of the arbitral tribunal." The society had argued that RERA does not cover termination, eviction, corpus, penalties, damages or declaratory relief under a development agreement, and that its members are existing owners rather than allottees, holding permanent alternate accommodation agreements that are not agreements for sale.

The court did not decide the merits, including whether the developer defaulted or whether the society owes dues. All contentions were kept open for the arbitrator. PropNewz covered a related Bombay High Court larger bench ruling on arbitration and RERA in our report on the Rensar Infra decision.

What does the court say about outside buyers of sale flats?

This is the part that matters most to buyers. The order draws on a line of earlier decisions:

The court also noted that an owner who signs a development agreement is not liable for the developer's RERA obligations merely because the developer later sells flats to third parties. Kapilkunj, as recorded, also held that additional FSI benefits the society after a valid termination.

Why should a Bengaluru buyer care about a Mumbai redevelopment case?

Because the structure is the same in any project where a landowner gives development rights to a developer and the developer sells part of the flats, as in a joint development project. If you buy a flat from the developer's share, your rights depend on the developer's rights under its agreement with the landowner. The Bombay decisions in this order say that if that agreement is validly terminated, purchasers cannot claim more than the developer had.

The order puts this bluntly through the Kapilkunj decision, which it records as saying that "no different view can be taken by any authority, including MahaRERA" on purchasers' rights over the society's assets. In other words, a buyer of a sale flat in a Mumbai redevelopment cannot expect the regulator to give them more than the courts have said they hold. The practical protection lies in checking the developer's position before paying, not in expecting to fix it afterwards.

These are Bombay High Court decisions applying Maharashtra law, and Karnataka courts are not bound by them. But they show the question a Bengaluru buyer should ask before booking in any joint development project. PropNewz explained how such agreements work in our guide to joint development agreements.

What did the court order, step by step?

The application was disposed of with practical directions. The society's advocates must send the order to the arbitrator within one week of upload, with the parties' contact details. The seat and venue follow the parties' agreement. The arbitrator must send his disclosure statement under Sections 11(8) and 12(1) for filing in the Registry. The parties must appear on a date he fixes, and email communications will count as valid service. Arbitral costs and fees are to be shared equally at first, subject to the tribunal's final costs award.

For outside buyers who have already booked in this project, the order does not decide anything about their flats. But the arbitration between the society and the developer, which may include claims about termination, will run without them as parties to the arbitration agreement.

What did the order leave undecided?

A great deal, by design. The court did not decide whether the developer defaulted, whether the society owes the developer money, whether the development agreement can be or has been terminated, or what happens to any flats already sold. It also did not decide whether RERA or a civil court has jurisdiction over the merits. The developer had relied on the Bombay High Court's Rashmi Realty Builders decision of 2024 to argue that a RERA-registered project's disputes were not arbitrable; the court's answer was confined to the referral stage.

The society's members also took a position worth noting. They said they are existing owners, not allottees, and that their permanent alternate accommodation agreements with the developer are not agreements for sale. That distinction, between owners who receive new flats in exchange for their old ones and buyers who pay for the developer's flats, runs through the decisions the court cited. It will be for the arbitrator to apply it to this dispute.

For buyers, the lesson is that an order appointing an arbitrator can be the start of a long process between owner and developer. Your own position as a buyer of a sale flat may depend on how that process ends, even though you are not a party to it.

What should a buyer of a developer's share flat check?

Read the agreement behind your developer's rights, not just your own agreement for sale. The checklist below follows the risks the court's cited decisions describe.

1. Ask for the development agreement or joint development agreement and read its termination clause.
2. Check whether the landowner or society has issued any notice of default or termination.
3. Ask whether any arbitration or civil case between owner and developer is pending.
4. Check the RERA registration and whether the landowner is shown as a promoter.
5. Find out whether your flat is in the developer's share or the owner's share.
6. Check the timelines in the development agreement against actual progress on site.
7. Take legal advice on what happens to your booking if the development agreement ends.

Frequently asked questions

What did the Bombay High Court decide in the Atharva Rise case?

On October 19, 2026, Justice Arun R. Pednekar held there was no impediment to referring a Malad housing society and its redevelopment developer to arbitration under Section 11, even though the project is RERA-registered, and appointed advocate Abhijeet A. Desai as sole arbitrator, keeping all contentions open.

Does RERA registration stop arbitration between a landowner and developer?

Not at the referral stage in this case. The court said it only examines whether an arbitration agreement exists and must leave everything else to the arbitral tribunal. It did not decide whether the dispute is ultimately arbitrable on the merits or whether the developer defaulted.

What rights do outside buyers of sale flats have against the society?

The order relied on decisions holding there is no privity of contract between the society and third-party purchasers, that RERA made no difference to this, and that purchasers' rights are confined to the developer's rights and remain subject to termination of the development agreement. These are Bombay decisions on Maharashtra law.

What should a Bengaluru buyer check before buying a developer's share flat?

Read the joint development agreement and its termination clause, ask whether any default notice, arbitration or suit between owner and developer is pending, check the RERA registration and promoter details, confirm which share your flat falls in, and take advice on what happens if the agreement ends.

Last updated 2026-11-06. PropNewz Team.