The Supreme Court has held that an arbitration clause contained in an earlier development agreement would become binding on parties to subsequent agreements when the later contracts clearly state that all terms and conditions of the earlier agreement shall form part of the later agreements.
The bench of Justices Sanjay Kumar and K. Vinod Chandran set aside the Bombay High Court’s order which had refused to appoint an arbitrator in disputes arising out of a redevelopment project.
The dispute arose from a redevelopment project undertaken by Hirani Developers with a cooperative housing society under a Development Agreement executed in 2011 and registered in 2012. The agreement contained a dispute resolution clause providing that disputes would be resolved through arbitration under the Arbitration and Conciliation Act, 1996.
Subsequently, the developer entered into separate Permanent Alternate Accommodation Agreements with individual members of the society in 2023 and 2024. These later agreements contained a clause clarifying that all terms and conditions of the earlier Development Agreement would form part of the later agreements and that all clauses of the Development Agreement would be binding on the parties.
When disputes arose, some society members approached the Consumer Disputes Redressal Commission. The developer then invoked arbitration by issuing notices under Section 21 of the Arbitration Act and sought appointment of an arbitrator after the members refused to participate in arbitration proceedings.
The Bombay High Court, however, rejected the applications under Section 11 of the Arbitration Act. The High Court held that although the Development Agreement contained an arbitration clause, the later Permanent Alternate Accommodation Agreements did not specifically provide for arbitration. According to the High Court, a mere reference to an earlier document was insufficient to incorporate the arbitration clause unless there was a clear and independent commitment to arbitration in the later agreements themselves.
The Supreme Court disagreed with this interpretation and held that the High Court had incorrectly applied Section 7(5) of the Arbitration Act. The Court explained that Section 7(5) recognizes incorporation of an arbitration clause by reference when the contract clearly demonstrates an intention to make the earlier document part of the later contract.
Relying upon its earlier decisions in M.R. Engineers and Contractors Pvt. Ltd. v. Som Datt Builders Ltd. and NBCC (India) Ltd. v. Zillion Infraprojects Pvt. Ltd., the Supreme Court reiterated the distinction between a mere reference to another document and incorporation of the entire document into a contract. The Court observed that where a contract specifically states that all terms and conditions of another document shall form part of the agreement, the entire document, including its arbitration clause, stands incorporated.
The Court noted that Clause 14 of the Permanent Alternate Accommodation Agreements unequivocally stated that all terms and conditions of the Development Agreement would form part of the later agreements and all clauses would bind the parties. The bench held that this language clearly demonstrated the parties’ intention to incorporate the earlier agreement “body and soul” into the later agreements.
The Supreme Court therefore concluded that the arbitration clause contained in Clause 36 of the Development Agreement stood validly incorporated into the Permanent Alternate Accommodation Agreements. It ruled that the High Court erred in refusing to recognize the existence of an arbitration agreement between the parties.
Allowing the appeals, the Supreme Court appointed Advocate Vishal Kanade as the sole arbitrator to adjudicate the disputes between the developer and the respondent members. The Court directed the arbitrator to make the disclosure required under Section 12 of the Arbitration Act within fifteen days.
Case Details
Case Title: Hirani Developers Versus Nehru Nagar Samruddhi CHS Ltd.
Citation: JURISHOUR-1248-SC-2026
Case No.: SLP (C) Nos. 38407-38411 of 2025
Date: 13/05/2026
