Bombay High Court

A. B. K. Dubhash vs Petit Towers Co-Operative ... on 19 November, 2010

Bench: Anoop V.Mohta

                                        1                ARBP 112 OF 08.sxw

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             IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                       ORDINARY ORIGINAL JURISDICTION




                                                                           
                ARBITRATION PETITION        NO.112 OF 2008
                                      IN




                                                   
                            SUIT NO.445 OF 2008




                                                  
    1. A. B. K. Dubhash

    2. F. N. Petit,

    3. Lady Laila Petit




                                          
    4. D.S. Cambatta        
          all are Indian inhabitants,
          being Trustees of the Framjee Dinshaw
          Petit Parsee Sanitorium
                           
          having office at: UCO Bank
          Building, 359, Dr. D. N.Road,
          MUMBAI 400 001.                     ..        Petitioners.
        


             -versus
     



    1. Petit Towers Co-Operative Housing Society
       Limited
       a registered society having its office at:





       Petit Towers, C.S. No.597 and 598, of Malabar
       Hill and Cubballa Hill Division,
       August Kranti Marg, Bomabji Petit Road,
       Mumbai 400 036.

    2. Pushpa C. Jain





       Indian inhabitant,
       residing at 901 Petit Towers,
       C.S. No.597 and 598, of Malabar
       Hill and Cubballa Hill Division,
       August Kranti Marg, Bomabji Petit Road,
       Mumbai 400 036.




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    3. Municipal Corporation of
       Greater Mumbai,
       Mahapalika Marg, Mumbai 400 001.




                                                                              
    4. Sir Dinshaw M. Petit.

    5. K. N. Suntook,




                                                      
    6. Sir Cawasji Jehangir                     ..        Respondents.




                                                     
    Mr. E. P. Bharucha, Senior Counsel with Mr. Sarosh Bharucha with
    Ms Ferzana Behram Kamdin i/b FZB and Associates , advocates for
    Petitioners.




                                       
    Mr. Snehal Shah a/w Deepti Panda i/b Raval Shah & Co for
    respondent Nos l & 2.
                          
                               CORAM: ANOOP V. MOHTA, J.

DATED: 19th November, 2010 Oral Judgment

1. By consent of the parties, Rule made returnable

forthwith. Heard finally. The others are formal parties.

2. The petition is u/s 8 of the Arbitration and Conciliation

Act, 1996 (for short "the Act"), filed by the petitioners, who are the

owners of the land on which a building for respondent No.1 a

Housing Society (for short "the Society"), has been constructed. All

the members of the Society have been occupying the respective

flats, based upon a occupation certificate, granted in their favour.

The prayers in the petition are as under:

a) That this Hon'ble Court be pleased to refer the parties

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to arbitration in respect of the disputes raised in Suit No. 445 of 2008, under Section 8 of the Arbitration and Conciliation Act, 1996.

b) that pending the hearing and final disposal of this petition the proceedings in Notice of Motion No.603 of

2008 and Suit No.445 of 2008 pending before this Hon'ble Court be stayed.

c) For interim and ad interim reliefs in terms of prayer

clause (b) above.

3. Suit No.445 of 2008 is filed by the society and one

member basically against the petitioners/owners for specific

performance based upon ig an agreement for sale (for short "the

agreement") dated 15.5.2002 between them.

4. This agreement in question provides following clauses.

1. The Promoters shall construct the said building

consisting of basement, stilt floor, plenum floor and 24 upper floors on the said property, in accordance with the

plans, designs and specifications approved and sanctioned by the concerned local authority and which have been seen and approved by the Purchaser/s with

only such amendments, alterations, variations, modifications and/or additions thereto therein as the Promoters may consider necessary or as may be

required by the concerned government/local authorities to be made in them or any of them.

40. All disputes or differences whatsoever (subject to the provisions of clause 13 herein) which shall at any time hereafter (whether during the continuance of this

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Agreement or upon or after its discharge or determination) arise between the parties hereto or their respective heirs, legal representatives, successors-in-

title, transferees and assigns (as the case may be), touching or concerning this Agreement or its construction

or effect, or as to the rights, duties, obligations, responsibilities or liabilities of the parties hereto or any of the, under or by virtue of this Agreement or otherwise,

or as to any other matter, in any way connected with or arising out of or in relation to the subject matter of this Agreement, shall be referred to arbitration in accordance

with and subject to the provisions of the Arbitration and

Conciliation Act, 1996, or any statutory modification or re-enactment thereof for the time being in force. The reference shall be made to one arbitrator if the parties

concur in the appointment of a single arbitrator, failing which each party shall appoint one arbitrator. In the even of there being an even number of arbitrators, the

arbitrators shall before entering upon the reference, in

turn appoint a presiding arbitrator. The award of the arbitrator/s shall be final and binding on the parties to the reference. The arbitration proceedings shall be held

in Mumbai only.

5. The main prayers of the suit are as under.

a) That this Hon'ble Court be pleased to grant specific

performance of the said agreement at Exhibit "A" hereto as well as enforce the obligation under Section 10 of the Maharashtra Ownership Flats Act, l963 for an order and decree and direction to the Defendants to specifically perform the said agreement and comply with the obligation under Section

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11 of the Maharashtra Ownership Flats Act, l963 for the purpose of conveying the building and grant necessary lease of that portion of the land app.6000 sq. mts. , which is

necessary for the purpose of covering the FSI which is also consumed by the Defendants/Promoters for construction of the

said building.

b) That this Hon'ble Court be pleased to direct the Defendants to enforce the obligations which are contained under various

provisions of the Maharashtra Ownership Flats Act, l963 as well as under the contract entered into by and between the parties being Exhibit "A" hereto.

c) That this Hon'ble Court be pleased to cancel the said so

called condominium constituted by the Defendants in respect of the 8 flats and 32 parking spaces and a declaration filed under Section 2 of the Maharashtra Apartment Ownership Act,

l970 be declared as null and void and cancel the same.

d) That this Hon'ble Court be pleased to pass an order and decree in favour of the Plaintiffs and against the Defendants

directing the Defendants by mandatory permanent order and

injunction to hand over possession of the entire recreational ground and area in accordance with the provisions of the sanctioned plan.

e) that this Hon'ble Court be pleased to issue a permanent mandatory injunction directing the defendant No.8 to enforce the sanctioned plan and direct the defendant nos 1 to7 to comply with the requisition contained inthe said letter dated

30.7.2005 (being Exhibit H hereto).

6. The learned counsel, appearing for the respondent has

strongly relied upon the Supreme Court Judgment in Sukanya

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Holdings Pvt. Ltd -vs- Jayesh H. Pandya and anr (AIR 2003

SUPREME COURT 2252) and a judgment of this Court, in

Bombay Isle Developers Pvt. Ltd -vs- Kamladevi Jagdish

Diwan and anr (2006 (4) Mh L. J. 115), contending that in view

of the prayer clauses itself and in view of the averments made in

the suit, it is difficult to dissect these averments as well as the

prayer clauses so made. The reliefs are not only against the

petitioners but also against the Municipal Corporation, a local

sanctioning authority, respondent No.3, who can only direct or take

action against the petitioners for non compliance or breaches of the

clauses and no-one else, though there exists the agreement of

arbitration between the parties. Therefore, the petition as filed is

liable to be dismissed.

7. Clause (1) of the agreement as reproduced above itself

provides the obligations of the petitioners to get the building

constructed in accordance with the plan, design and specifications,

approved and sanctioned by the concerned authorities. The

averments in the suit itself show alleged breaches of the

agreement. Therefore, the main reliefs for the specific

performances are sought. If there are breaches of agreement

clauses, the clear clause of arbitration as reproduced above, which

is binding not only to the parties to the agreement but also to the

successors-in-title, transferees, as agreed by them, as reflected in

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clause 40 of the agreement and same should be resorted to first. I

see there is no reason to allow respondent Nos l & 2/original

plaintiffs to continue with the suit in view of these agreed and

binding clauses .

8. It is settled that the mandate of section 8 of the Act,

needs to be respected by all the parties to the arbitration

agreement. It is mandatory. There is no dispute about the

existence of arbitration clause in the agreement between the

parties. The arbitration agreement is annexed to the petition.

The arbitrator is competent and empowered to decide the issues

arising out of the contract between the parties. The parties cannot

ignore such clauses without getting their disputes/issues settled

through the arbitration proceedings. The arbitration agreement is

valid, binding, operative and enforceable. In these background and

as subject matters of the suit are covered by the arbitration

agreement, it is necessary to refer the matter to the arbitrator. The

arbitration must go on first. In my view, it is in consonance with the

object of the Act for encouraging resolution of disputes

expeditiously.

9. The breaches, if any, fall within the ambit of the

agreement which provides to settle such differences, whatsoever,

by the process of arbitration. The basic reliefs and even otherwise

after considering the merits of the matter, and considering the

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rival disputed questions and facts, the Arbitrator can decide and/or

give specific order or direction accordingly. Even otherwise, the

Arbitrator is empowered to grant specific performance. Such suit by

joining Municipal Corporation as respondent No.3 as party and

seeking same relief or direction against the petitioners upon the

clauses of the agreement, in my view is nothing but to overlook the

mandate of section 8 of the Act. Let the Arbitrator decide and/or

resolve the dispute if any first. The overall and the totality of the

pleadings and prayers need to be considered to decide all the

aspects of Section 8 of the Act. The third party to the suit and the

arbitration agreement itself cannot be the sole criteria to reject

petition under section 8 of the Act. In the agreement with the

builder or owner, the society or its member, by joining local

authority or third person, wants to frustrate the object of arbitration

process though specifically agreed by them to follow the same in

case of disputes.

10. The prayer clause (a) even if considered as a basic relief

which the society and the member are seeking against the local

authority for enforcement of the sanctioned plan and direction

against the petitioners, still that itself cannot be the reason to

permit such members or the society, who are admittedly in

occupation of the respective flats, based upon the occupation

certificate granted by the local authority by its letter dated 30 th July,

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2005, to continue with the suit. The demand/representation was

already made by the society for compliances of agreement and

specially of the clause (1) as produced above. All the pleadings and

prayers revolve around the agreement between the parties. The

petitioners may able to comply with the given directions and/or

settle the grievances or conflicts, even by negotiations. There is no

reason that the suit at the instance of such members or the society

be permitted to continue, as done in the present case, to settle

their personal grudges or conflicts. Their intent and purpose should

11.

be the completion of the building as agreed.

The case of Bombay Isle Developers Pvt.Ltd (supra), was

of termination of development agreement itself. Admittedly, the

Corporation was not a party to the same and as such arbitration

clause could not have been utilized, the learned Single has passed

the order by observing as under:

"Having considered the rival submissions, I have no hesitation in taking the view that this Appeal is devoid of

merits. I am in agreement with the conclusion reached by the Trial Court that all the issues raised in the plaint are not governed by the arbitration agreement between the plaintiff and the defendant No.1; and that the cause of

action for instituting the suit against defendant No.2- Corporation who is not party to the Arbitration agreement is inseparable".

In that case there was non compliance of conditions of

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I.O.D., and inspite of that commencement certificate was issued by

the Corporation. The construction was commenced based upon the

same. Therefore, the arbitrator could not have passed any order

with that regard in the arbitration proceedings. The facts and

circumstances are totally different. In the present case the

respondent members after construction of the building, which they

have been occupying, want the specific performance of the

agreement, by alleging breaches. The arbitrator in the present

case can direct the parties to perform their part of the contract.

There is no question of 'stop work notice' and/or a prayer to revoke

the commencement certificate, at the instance of the society and

its members, who are admittedly enjoying the possession since

long.

12. The parties, therefore, if approached the Arbitrator and

place their submissions and documents and in a given case the

compliances can be directed, I see, there is no reason for such

society and its members to agitate such issues further, except to

see that the other party comply with the basic requirement. Any

such action or permitting the suit to be filed or continue will be

contrary to the scheme of the arbitration act.

13. The law laid down in case of Sukanya Holdings Pvt. Ltd

(supra), needs no discussion. The submissions so made by the

learned counsel appearing for the respondent opposing the present

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petition are unacceptable in view of the facts and circumstances of

the present case.

In view of above, the submission so raised by the

learned counsel for the respondents referring for the local authority

being third party to the agreement and on that ground itself such

dispute/differences cannot be agitated before the Arbitrator even

though there is clear arbitration clause is unacceptable. If basic

averments read with the agreement between parties, itself is

sufficient to consider the case of referring the matter to the

Arbitrator in view of the agreed clauses between the parties which

is mandate of the act, I see, there is no reason that such arbitration

clause need not be resorted to first. The matter needs to be

decided by the Arbitrator in accordance with law and in view of the

agreed clause itself. Making some third person or party to such suit

and by overlooking the basic facts and the agreement between

the parties, the respondent society wants to frustrate the whole

purpose of such arbitration agreement. I am of the view that the

present petition needs to be allowed in terms of prayer clause (a)

which reads thus:

(a) that this Hon'ble Court be pleased to refer the parties

to arbitration in respect of the disputes raised in Suit No. 445 of 2008, under Section 8 of the Arbitration and Conciliation Act, l996;"