High Court Dismisses Arbitration Petition Challenging Award Under Arbitration and Conciliation Act, 1996 -- MOU Found Not Amenable to Specific Performance Due to Third-Party Litigation

Sub Category: Bombay High Court Bench: BOMBAY

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2026-03-01 09:55:35

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Case Note & Summary

The High Court dismissed an Arbitration Petition challenging an Arbitral Award that rejected claims for specific performance of a Memorandum of Understanding (MOU) dated December 7, 2006. The MOU concerned transfer of 4.1 acres of land from Respondents (Jolly Family members) to Petitioner Company. The Arbitral Tribunal found the MOU was not subsisting due to litigation initiated by third party Jaycee Homes and Hotels Ltd., which claimed an oral agreement for the same land. The Court held that interference under Section 34 of Arbitration and Conciliation Act, 1996 is limited and found no grounds to set aside the Award. The Court upheld the dismissal of both specific performance and damages claims.

Headnote

The High Court of Judicature at Bombay dismissed an Arbitration Petition filed under Section 34 of Arbitration and Conciliation Act, 1996 (the Act) -- The Petition challenged an Arbitral Award dated October 10, 2015 which dismissed the Petitioner's claim for specific performance of a Memorandum of Understanding (MOU) -- The MOU concerned transfer of 4.1 acres of land from Respondents to Petitioner Company -- The Arbitral Tribunal found the MOU was not subsisting due to litigation initiated by third party Jaycee Homes and Hotels Ltd. -- The Court held that interference under Section 34 of the Act is limited to grounds specified in the Act -- The Court found no perversity or patent illegality in the Arbitral Tribunal's findings -- The Court upheld the Award rejecting both specific performance and damages claims

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Issue of Consideration: The Issue of Consideration was whether the Memorandum of Understanding dated December 7, 2006 was subsisting and amenable to specific performance

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Final Decision

The High Court dismissed the Arbitration Petition and upheld the Arbitral Award dated October 10, 2015

2026 LawText (BOM) (02) 125

Arbitration Petition No. 785 of 2016

2026-02-24

Somasekhar Sundaresan, J.

2026:BHC-OS:5043

Mr. Zal Andhyarujina, Senior Advocate a/w Mr. Chirag Kamdar, Ms. Ishani Khanwilkar, Ms. Sameeksha Yadav, Mr. Tanish Amin i/b MDP Associates for Petitioner, Mr. Nitin Thakkar, Senior Advocate a/w A. S. Pal, Siddharth Mehta, Midhunkumar Allu, Sanjana Das i/b Siddharth Mehta for Respondent Nos.1A, 1C, 2 and 3, Mr. Ranit Basu a/w Maitri Malde, Dua Shaikh, Harshada Nirmal i/b Bridgehead Law Partners for Respondent No. 1B

Jolly Brothers Pvt. Ltd.

Surendra Nath Jolly And 2 Ors.

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Nature of Litigation: Arbitration Petition challenging Arbitral Award under Section 34 of Arbitration and Conciliation Act, 1996

Remedy Sought

Petitioner seeking setting aside of Arbitral Award that dismissed claims for specific performance of MOU and damages

Filing Reason

Petitioner contended that MOU dated December 7, 2006 was subsisting and amenable to specific performance, which was rejected by Arbitral Tribunal

Previous Decisions

Arbitral Award dated October 10, 2015 dismissed Petitioner's claims, Learned Single Judge order dated April 29, 2016 held condonation request unnecessary

Issues

Whether the Memorandum of Understanding dated December 7, 2006 was subsisting and amenable to specific performance Whether the Arbitral Award suffered from perversity or patent illegality warranting interference under Section 34 of Arbitration and Conciliation Act, 1996

Submissions/Arguments

Petitioner argued MOU was subsisting and Termination Notice was illegal, Respondents argued MOU was not capable of performance due to third-party litigation and status quo orders

Ratio Decidendi

Interference under Section 34 of Arbitration and Conciliation Act, 1996 is limited to grounds specified in the Act -- The Arbitral Tribunal's finding that MOU was not subsisting due to litigation impediments was not perverse or patently illegal -- Specific performance requires the contract to be capable of being performed, which was not possible due to third-party claims and court orders

Judgment Excerpts

This is a Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (the Act), impugning an Arbitral Award dated October 10, 2015 The Company sought a declaration that the MOU is subsisting and that the Termination Notice was illegal The Impugned Award came to be passed, rejecting the claim for specific performance and damages

Procedural History

MOU executed on December 7, 2006 -- Jaycee filed Suit No. 1075 of 2007 claiming oral agreement -- Status quo orders passed from July 27, 2007 -- Jollys issued Termination Notice on July 6, 2012 -- Arbitral Tribunal constituted -- Arbitral Award passed on October 10, 2015 dismissing claims -- Arbitration Petition filed in 2016 -- Condonation of delay application disposed by order dated April 29, 2016 -- Petition heard and dismissed on February 24, 2026