Bombay High Court
Messrs. Manratna Developers vs Megh Ratan Co-Operative on 23 October, 2008
Bench: A.P. Deshpande
1
IN THE HIGH OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 297 OF 2008
IN
NOTICE OF MOTION NO. 1966 OF 2008
IN
SUIT NO. 1698 OF 2008
MESSRS. MANRATNA DEVELOPERS,
a Partnership Firm registered under the
provisions of Indian Partnership Act,
having its Office at 12th Floor,
Krushal Commercial Complex
G.M. Road, Chembur (West),
Mumbai 400 089. ........... Appellants.
Versus.
1. MEGH RATAN CO-OPERATIVE
HOUSING SOCIETY LIMITED,
a co-operative housing society
Registered under the provisions of
The Maharashtra Co-operative Societies
Act, 1960 and having its Office at
Meghratan Building, Junction of Tilak and
Derasar Lane, Ghatkopar (East)
Mumbai 400 077.
2. MESSRS. RUSHABH RIKHAV
ENTERPRISES,a firm registered
under the provisions of
Indian Partnership Act, having Office
at present at 505, Churchgate Chambers,
5, New Marine Line, Mumbai 400 023.
3. NEELKANTH MANSIONS PVT. LTD.,
a company registered under the provisions
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2
of Companies Act, 1956,
having its office at Fine House,
Anandji Lane, Ghatkopar (east),
Mumbai 400 077
4. MUNICIPAL CORPORATION OF
GREATER MUMBAI,
A statutory Corporation having its
registered Office at Mahapalika Bhavan,
2nd Floor, Mahapalika Marg.,
Fort, Mumbai 400 001. ............. Respondents.
Dr. Virendra Tulzapurkar, Sr. Advocate a/w Mr. S. V. Doijode and Mr.
Meenaxi Iyer i/b. Doijode Associates for the appellants.
Mr. M. P. Vashi a/w. Mr. H.J. Topat i/b, M/s. M. P. Vasti & Associates
for the respondents.
CORAM : SWATANTER KUMAR , C.J., &
A.P. DESHPANDE, J.
Date of Reserving the Judgment :
12/9/2008
Date pronouncing the Judgment.:
23/10/2008
J U D G M E N T : (Per A.P. DESHPANDE, J.)
This appeal is directed against an ad interim order passed
by the learned Single Judge dated 25th June, 2008, restraining the
appellants from carrying on the construction in according with the
modified sanctioned plan dated 10th April, 2007 (Exhibit-L to the plaint)
till disposal of the Notice of Motion. The appellants are also restrained
by an order of injunction from removing existing underground water
tank and pump room.
2. The facts leading to the controversy in this appeal are
briefly stated herein below :
The original defendant No.1 was owner in possession of a
large plot of land which comprised of some vacant area, together with
various dilapidated old structures occupied by the tenants. As there
were many structures on the premises, defendant No.1 decided to
develop the entire plot in phased manner anticipating that in due
course of time the tenants would vacate the premises. Defendant
No.1 with the said object in mind, got the original plans sanctioned
from the Municipal Corporation of Mumbai in the year 1987. The
original plans proposed construction of two buildings i.e. Building "A"
and Building "B". Building "A" was in the form of letter "C", having 3
wings, the lower wing, middle wing and upper wing. Defendant No.1
did construct only the lower wing/arm of building "A"; whereas, the
other two parts of building "A" and the entire building "B" were not
constructed. This, according to defendant No. 1 was for the reason
that the tenants did not vacate the adjoining area and, hence, it was
not possible for defendant No.1 to carry out the construction in
accordance with the then sanctioned plans.
3. As stated hereinabove, the lower arm of building "A" is
already constructed and the same is consisting of ground plus 7
upper floors. The said constructed building is occupied by the flat
purchasers who are the members of the Plaintiff Co-operative
Housing Society. The suit has been filed by the co-operative
housing society, voicing the grievance of the Society and its Members
who are in occupation of their respective flats in the constructed
portion of building "A". The plaintiff has placed on record a specimen
of an agreement of sale entered into by defendant No.1 in favour of
one of its Members by name Smt. Vijayaben Sobhagchand Shah &
anr. dated 15.9.1988. It is not much in dispute that other agreements
entered into by defendant No.1 with other flat owners, during that
period, are akin to the agreement of which a copy has been filed along
with the plaint. Subsequent thereto, the defendant No.1 entered into
an agreement with defendant No.2 in respect of the development of
the property, which agreement, ultimately, culminated in execution of
a conveyance in favour of defendant No.2 on 21.6.06.
4. At a later point of time, defendants No.1 and 2 together,
further conveyed the property to defendant No.3. Defendant No.3, in
turn, submitted amended/modified plans to the Municipal Corporation
and the Municipal Corporation has sanctioned the modified plans as it
found the same to be in conformity with the Development Control
Rules/Building Buy-laws. The modified sanctioned plans obtained by
defendant No.3 from the Corporation forms the subject-matter of
dispute in this suit instituted by the plaintiff. The modified plans
have been sanctioned by the Corporation on 10.4.07. One of the
prayers made by the plaintiff is that the said modified plans are
contrary to law and not enforceable. In short, the case of the plaintiff
is that in the first place the modified plans reduced the area of
recreation ground meant for the use of the flat owners. Secondly, by
the modified plans which are sanctioned, the area of FSI largely
increases and the same could not have been permitted by the
Corporation, as what was represented to the flat purchasers was
lesser FSI. Lastly, it was contended that without the consent of the flat
purchasers, no modification of the building plan can be sanctioned
which permits construction of additional structure which was not
shown in the original sanctioned plan, relying on which the flat
purchasers had agreed to purchase the flats.
5. Before we deal with the contentions raised by the learned
Advocates appearing for the respective parties, it would be
appropriate to refer to the factual premise on which the learned
Single Judge has proceeded to grant the ad interim relief.
The learned Single Judge has held that in the new
modified plan at Exhibit L the area of the recreation ground is kept
blank; whereas the plan at Exhibit J dated 26.8.87 shows the area of
the recreation ground to be 315.93 sq. metres. On this factual
premise, the learned Single Judge concludes that the proposed
modification which reduces or eliminates the common area would go
to deprive the members of the plaintiff of the amenities provided and
represented to them under the original sanctioned plan. In para 15 of
the order, the learned Single Judge observes thus : "In the
circumstances, prima facie it appears that the amenities of the flat
holders would be reduced if the building is allowed to be constructed
in accordance with the modified plan at Exh. "L". In the
circumstances, in my view the plaintiffs are entitled to an injunction,
restraining the defendants from carrying on construction in
accordance with the modified plan dated 10th April, 2007." The said
observation is factually incorrect. We have perused the modified plan
which has been sanctioned by the Corporation, of which a copy is also
placed on record by the Commissioner. Perusal of the said
documents clearly indicates that the area of the recreation ground
has not been reduced, but has been increased to some extent. The
area of the recreation ground under the modified plan is shown to be
367.85 sq. metres as against an area of 315.93 sq. metres shown in
the original plans. This factual position is not disputed by the learned
Counsel appearing for the respondents/plaintiffs. Thus, the finding
recorded by the learned Single Judge about non-stipulation of the
recreation ground area in the modified plain is wholly unsustainable
being contrary to the fact situation. This appears to be the main
reason to prompt the learned Single Judge to grant ad interim
injunction, as in the opinion of the learned Single Judge the said
modification in regard to the recreation area has deprived the flat
purchasers of the amenities represented under the original plan.
6. Coming to the question as to whether the consent of the
flat owners is required by the developer/promoter for raising the
additional structure/ building, the change in position of law will have to
be addressed to. Section 7 of Maharashtra Ownership Flats Act,
1963 ("MOFA" for short") was interpreted by the Bombay High Court
in Kalpita Enclave Co-operative Housing Society vs. Kiran Builders
Pvt. Ltd., reported in 1986 MLJ 110 holding that a promoter was not
entitled to put up additional structure not shown in the original lay out
plan without consent of the flat purchasers. The said interpretation
of Section 7 by the High Court prompted the legislature to amend
Section 7. Section 7 was amended with retrospective effect and
Section 7-A was newly inserted which was of a clarificatory nature.
By amending Section 7, the words "or construct any additional
structures" were deleted. Section 7-A which was newly added,
clarifies the position that the consent of flat holders in a building is not
necessary in respect of construction in the scheme or lay out, after
obtaining approval of the local authority in accordance with the
building buy-laws or Development Control Rules. Section 7-A, thus,
does not enable the flat purchasers to prevent construction of the
additional structures once the plan is modified and sanctioned under
the building bye-laws or Development Control Rules.
7. Interpreting the relevant provisions of the MOFA, the
Supreme Court in the case of M/s. Jayantilal Investments vs.
Madhuvihar Co-op. Housing Society & Ors. reported in 2007(2) All
MR 398, held in paragraph 15, thus :
" 15. ... Consequently, reading Section 7 and
Section 7-A, it is clear that the question of taking
prior consent of the flat takers does not arise after
the amendment in respect of any construction of
additional structures. However, the right to make
any construction of additional structures/buildings
would come into existence only on the approval of
the plan by the competent authority. That, unless
and until, such a plan stood approved, the
promoter does not get any right to make additional
construction. This position is clear when one
reads the amended Section 7(1)(ii) with Section 7-
A of the MOFA as amended. Therefore, having
regard to the Statement of Objects and Reasons
for substitution of Section 7(1)(ii) by the
Amendment Act 36/86, it is clear that the object
was to make legal position clear that even prior to
the amendment of 1986, it was never intended
that the original provision of Section 7(1)(ii) of
MOFA would operate even in respect of
construction of additional buildings. In other words,
the object of enacting Act No.36/86 was to change
the basis of the judgment of the Bombay High
Court in Kalpita Enclave case (supra). By insertion
of Section 7-A vide Maharashtra Amendment Act
36/86 the legislature had made it clear that the
consent of flat takers was never the criteria
applicable to construction of additional buildings by
the promoters. The object behind the said
amendment was to give maximum weightage to
the exploitation of development rights which
existed in the land. Thus, the intention behind the
amendment was to remove the impediment in
construction of the additional buildings, if the total
layout allows construction of more buildings,
subject to compliance of the building rules or
building by-laws or Development Control
Regulations."
Thus, it is clear that the contention of the plaintiff that in the absence
of the consent of flat purchasers that the developer/promoter cannot
raise additional structure or building despite sanction of the modified
plan by the local authority, is illfounded.
8. The learned Single Judge has placed emphasis on the
observations made by the Supreme Court in M/s. Jayantilal
Investments case in para 17 of the Judgment. It is observed therein
that clauses 3 and 4 of prescribed Form V is statutory and mandatory
and shall be retained in individual agreements between the promoter
and the flat taker. However, while reproducing clause 4 in the
impugned order, the learned Single Judge has also reproduced the
deleted portion from the said clause and it appears to have relied
upon the deleted portion as well. The following portion which has
been extracted as part of clause 4 has been deleted by a Notification
issued in that regard : "Whereas after the registration of the Society
the residual F.A.R.(F.S.I.) shall be available to the Society". Clauses
3 and 4 oblige the promoter under MOFA to make true and full
disclosure even after inclusion of Section 7A. It will have to be seen
with reference to the terms of the agreement as to whether the
promoter/developer has made true and full disclosure.
The main grievance of the plaintiffs is that the FSI revealed
in the agreements entered into in the year 1988 with the flat
purchasers clearly reveals the FSI proposed to be consumed to be
2490.84 sq. metres; whereas the modified plan shows the FSI to be
4460 sq. metres. This increase is obviously by utilising the floating
FSI/transferable development rights (for short "TDR") of another
property to the extent of 1970 sq. metres. According to the plaintiffs,
this use of floating FSI/TDR has not been stated and/or represented to
the flat purchasers. According to the defendants, the concept of TDR
was not prevailing in the year 1988 when defendant No.1 had entered
into agreement with the flat purchasers and the same has been
introduced for the first time in the year 1991 on account of changes
brought about in the Development Control Rules. According to the
learned Counsel for the appellants, the promoter/developer cannot be
blamed for the so called non-disclosure of their intention to use the
TDR in the year 1988, as such loading of TDR was for the first time
permitted in the year 1991. It cannot, thus, be said to be a non-
disclosure because the same was then not even known to the
builder/promoter. The said submission deserves consideration. This
issue, with respect to the learned Single Judge, has not been
addressed.
9. Let us now examine the various clauses in the specimen
agreement, to find out as to what was represented by defendant No.1
to the flat purchasers when the agreement was executed in the year
1988.
10. Clause (1) of the agreement records the fact that a
building consisting of ground and 7 upper floors has been constructed
in accordance with the approved plans and the relevant portion of
clause (1) reads as under :
" The Promoters also intend to commence in due
course, further development of the said property in
accordance with the said sanctioned Plans phase
wise or any variation or modification or any
amendments thereof, as may be approved by the
concerned authorities, from time to time."
Clause 4 declares the FSI to be approximately 27,540 sq. feet and it
further records that "the said Floor Space Index is to be
utilized/developed phase wise as per sanctioned plans or further
amendment thereof and that no part of the said floor space index has
been utilized by the Promoters elsewhere for any purpose
whatsoever. In case the said floor space index has been utilised by
the Promoters elsewhere then the Promoters shall furnish to the
Purchaser all the detailed particulars in respect of such utilization of
the said floor space index by him. In case while developing the said
property the Promoters utilized any floor space index of any other land
or property by way of floating floor space index etc. then the
particulars of such floor space index shall be disclosed by the
Promoters to the Purchaser. The Purchaser shall have no
right/Title/interest in the said FSI of the Plot for Present and Future
and only Promoters are entitled for the same. The residual F.S.I. in
the plot or the layout not consumed will be available to the Promoters
till the conveyance of the said property in favour of the Society."
11. From the agreement it is revealed that the parties had
agreed that the promoters would be developing the property in phased
manner and in accordance with the sanctioned plans or modified
sanctioned plan as approved by the concerned authority. The entire
FSI/TDR was to be used by the Promoter to the exclusion of the flat
purchasers or the Society that they would form. The disclosure only
in regard to TDR is not made in the agreement, as according to the
appellant the very concept of TDR was non-existent in the year 1988.
Thus, on that count, it could not be said that the appellants have not
made true and full disclosure, as is obliged to be made by them under
under clauses 3 and 4 of the agreement.
12.
Taking over all view of the matter whats surfaces is that the
defendants have constructed only one wing of a building which is very
small portion even according to the original sanctioned plan. Rest of
the property could not be developed though was intended to be
developed in phased manner, as according to the appellants, the
premises were not vacated by the tenants. However, after a portion
of the plot was vacated by the tenants residing in the dilapidated
structures, it became feasible for the defendants to develop the
property upto its permissible full potential and thus modified plans in
accordance with the building bye-laws were submitted to the
Corporation. The local authority, on being satisfied that the
defendants were not constructing anything in excess of what is
permissible according to the potential of the property, sanctioned the
modified plan and after approval of the modified plans, the appellant
was proceeding to carry out the construction which was objected to by
the flat purchasers of erstwhile lower arm of Building "A". The
amenities in the form of recreation ground are, in no way, reduced.
The consent of the flat purchasers after amendment of Section 7 and
insertion of Section 7A is not necessary if additional
structures/buildings are to be raised after obtaining approvals or
sanction
from the Municipal Corporation. The balance of
convenience lies in favour of the defendants, as restraining them from
carrying out the proposed construction which has been sanctioned by
the Municipal Corporation, would cause undue hardships and
inconvenience and lock the property for years. We are also of the
view that the agreements entered into with the flat purchasers clearly
postulate the development of the property in phased manner,
according to the sanctioned plans or modified plans sanctioned in due
course of time. Thus, prima facie, the appellants/defendants appear
to have complied with the requirement of true and full disclosure as
envisaged by Clauses 3 and 4. There could not have been disclosure
in regard to TDR, as the very concept of TDR was not prevailing when
the agreement was entered into in the year 1988 and had been
introduced by the Development Control Rules in the year 1991.
Hence, the appellants/defendants cannot be blamed on that count.
13. Having regard to these and other relevant factors, we are
of the view that the plaintiff had failed in making out a prima facie case
for grant of an injunction. The modified plans do not, in any manner,
affect the individual flats or the existing building wherein the flat
holders are residing. The modified plans also do not reduce the area
of recreation ground represented way back in the year 1988. On the
contrary, the area is increased.
14. In this view of the matter, it is not possible to hold that any
irreparable loss would be caused to the plaintiff if ad interim injunction
is refused. In the result, and for the reasons stated herein above, we
are constrained to interfere with the impugned order. The appeal,
thus, succeeds and the impugned order passed by the learned Single
Judge dated 25/6/2008 in Notice of Motion No.1966 of 2008 in Suit
No.1698 of 2008 is quashed and set aside.
CHIEF JUSTICE
A.P. DESHPANDE,
ssm
