Bombay High Court
M/S. Calvin Properties And ... vs Green Fields Co-Operative ... on 19 November, 2013
Bench: R.D. Dhanuka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 638 OF 2013
M/s. Calvin Properties and Housing )
a partnership firm registered under the )
India Partnership Act, 1932, having its )
registered office at 14, Bandra Gitanjali, )
Plot No. 234, Patkar Wadi, S.V.Road, )
Bandra Mumbai - 400 050 ) ..... Petitioner
Versus
1. Green Fields Co-operative Housing
ig )
Society Limited, a society registered )
under the Maharashtra Co-operative )
Societies Act, 1960, having it's office at )
40, S.V.Road, Santacruz (W), Mumbai- )
400 054 )
2. Ashwin L. Shah )
3. Rekha A. Shah )
Both residing at Flat NO.18A, Green )
Fields Co-op. Housing Society Ltd., )
Plot No. 40, C.T.S.NO. G-505, S.V.Road, )
Santacruz (West), Mumbai - 400 054 )
4. Prakash C. Shroff )
5. Jyoti P. Shroff )
Both residing at Flat No. 9A, Green )
Fields Co-op. Housing Society Ltd., )
Plot No. 40, C.T.S.NO. G-505, S.V.Road, )
Santacruz (West), Mumbai - 400 054 )
6A. Sunil Mascarenhas )
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6B. Rohini Mascarenhas )
6C. Rohit Mascarenhas )
All residing at Flat NO. 2A, Green )
Fields Co-op. Housing Society Ltd., )
Plot No. 40, C.T.S.No. G-505, S.V.Road, )
Santacruz (West), Mumbai - 400 054 ) ..... Respondents
Mr.Sean Wasoodev for the Petitioner.
Mr.Santosh Shetty for Respondent No.1.
Mr.Mayur Khandeparkar, i/b. Mr.Yatin Shah for Respondent Nos. 2 and 3.
Mr.Vishal Kanade, a/w. Mr.Sandeep Bhimekar, i/b. DSK Legal for Respondent
Nos. 4 and 5.
Mr.Sunil Mascarenhas Respondent nos. 6(a) present in person.
CORAM : R.D. DHANUKA, J.
RESERVED ON : OCTOBER 21, 2013
PRONOUNCED ON : NOVEMBER 19, 2013
JUDGMENT :
By this petition filed under section 9 of the Arbitration and Conciliation Act,
1996 (for short 'Arbitration Act'), petitioner seeks appointment of the Court
Receiver in respect of the tenaments occupied by respondent nos. 2 to 5 and 6A to
6C viz. Flat Nos. 18-A, 9-A, 2-A and garage No.2B in the building of respondent
no.1 society viz. "Greenfields", situated on Plot No. 40, CTS NO. G-505, Village
Bandra, Taluka Andheri, Mumbai 400 054 with a direction to take physical
possession of the same from respondent nos. 2 to 5 and 6A to 6C and if necessary
with police help and by breaking open the locks. Petitioner also seeks mandatory
order and direction against respondent nos. 2 to 5 and 6A to 6C to handover
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tenaments in their possession to the petitioner to enable the petitioner to demolish
the same, reconstruct the new building and handover the flats to respondent nos. 2
to 5 and 6A to 6C and other members of the respondent no.1 society. Some of the
relevant facts for the purpose of deciding this petition are as under :-
2. Petitioner is a partnership firm and is a developer. Respondent no.1 is a co-
operative housing society registered under the Maharashtra Co-operative Societies
Act, 1960 (for short the said 'Societies Act'). Respondent nos. 2 to 6 are the
members of respondent no.1 society. Respondent nos. 2 and 3 are joint members
holding five shares and are in occupation of flat no. 18-A on the first floor of the
society building and also are in occupation of enclosed garage in the compound of
the society building. Respondent nos. 4 and 5 are joint members holding five
shares and are in occupation of flat no. 9-A on the ground floor of the building.
Original respondent no.6 was a member of the society holding five shares and was
in occupation of flat no. 2-A on the ground floor of the society building. On
demise of respondent no.6, her legal heirs are brought on record and are impleaded
as respondent nos. 6A to 6C. The building of the society consists of two wings,
each wing consisting of ground and three upper floors. There are 34 flats and four
enclosed garages and 34 members of the respondent no.1 society. Members of the
1st respondent society are occupying flats of different sizes described in paragraph
(3) of the petition. The buildings of the society standing on the said property are
48 years old and are stated to have been in deteriorated condition over the years.
It is the case of the petitioner and the society that the members of the society were
not financially capable of incurring huge expenses for the repairs of the buildings.
In the Special General Body Meeting of the society held on 30 th August, 2009
which was attended by 26 members in which a letter signed by 19 members of the
society was discussed. 25 members of the society voted in favour of the
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redevelopment of the property and decided to demolish the garage and to construct
flats of larger area.
3. On 4th October, 2009 another Special General Body Meeting of the society
came to be held in which the society decided to appoint M/s.V.V.Joshi and
Associates as a Project Management Consultant (PMC). After considering various
aspects, the said PMC drafted a project report and tender for the project which was
placed before management committee of the society on 10th March, 2010. The
managing committee of the society decided to hold a Special General Body
Meeting to consider and approve the same. In the Special General Body Meeting
of the society held on 28th March, 2010, society approved and accepted the project
report prepared by the said PMC and also the tender. Members who attended the
meeting also decided on the manner in which the offers would be invited from
interested developers and appointment of one of such developer for the project.
Accordingly, society invited offers from the developers. Members were also
called upon to suggest the names of reputed developers. Society received
proposals from various developers including the petitioner. Tenders received from
all the bidders were opened by the society in the meeting held on 11 th July, 2010
and were examined and tabulated by the said PMC. In the Special General Body
Meeting held on 15th September, 2010 petitioner was accepted as a developer for
the purpose of redevelopment. The said resolution was unanimously approved by
all 29 members present in the meeting which was presided over by the Deputy
Registrar, Co-operative Societies, H (West) Ward. Deputy Registrar issued an
order on 18th September, 2010 certifying that 29 members were present at the
special general meeting and the procedure had been meticulously followed.
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4. Respondent no.1 society issued a letter of intent to the petitioner on 17 th
September, 2010. Society resolved to execute a development agreement with the
petitioner and authorised its chair person, Honorary Secretary and treasurer to sign
the development agreement, power of attorney and all other documents required to
be signed by the society for the re-development of the property. At the meeting of
the managing committee held on 9th June, 2011 the draft of the development
agreement, power of attorney and other related documents were discussed. It was
decided to hold a special general body meeting to table the said documents and to
take decision thereon. That development agreement, power of attorney were
circulated amongst the members. At the special general body meeting held on 20 th
May, 2012, such draft documents were tabled and discussed. It is the case of the
petitioner and the society that after incorporating the suggestions of the members,
drafts were approved and it was resolved to execute the said documents.
Appropriate resolution was accordingly passed at the said meeting. In the annual
general body meeting held on 14th August, 2012 of the society, development
agreement togetherwith proposed plans were approved and accordingly
development agreement came to be executed on 31 st August, 2012 between the
petitioner and respondent no.1 society. All relevant resolutions passed by the
society from time to time for redevelopment have been recited in details in the said
development agreement. In the said agreement, details of the existing flats and
shares occupied by the members of the 1st respondent society are enclosed at Ex.B.
Petitioner paid a sum of Rs.50 lacs to the respondent no.1 society which payment
was duly acknowledged by the society.
5. Clause 41.1 provides for mediation. Clause 41.2 provides that in the event
that the parties are unable to resolve the dispute or difference by mutual discussion
within 45 days of it being referred for mediation, dispute shall be referred to
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arbitration which will be governed by the Arbitration and Conciliation Act, 1996.
The said development agreement is duly registered. Under the said development
agreement, the petitioner agreed to construct flat for members free of costs and
also agreed to pay consideration of Rs. 9,21,49,200/- to the members. Time was
made the essence of the contract. Area of each of the member's new flat as well as
other details were specified in the said agreement. Petitioner also agreed to pay
compensation at different rates in respect of the flats and commercial premises to
the members for temporary accommodation to be arranged by the members for
themselves. Petitioner also agreed to pay one time amount of Rs. 30,000/- towards
packing to and fro moving charges. It was provided that the members of the
respondent no.1 society shall handover possession of their existing premises within
45 days of the date of receipt of IOD and if any member commits delay in handing
over his existing premises to the petitioner, such member shall be liable to pay
penalty as per clause 20.3.2 of the said agreement. In case of completion of the
project by the petitioner, petitioner had agreed to pay the compensation to the
members at the rate provided in the said agreement. Society also executed power
of attorney dated 31st August, 2012 in favour of two of the partners of the
petitioner.
6. On 20th February, 2013, petitioner obtained IOD. On 25 th February, 2013,
petitioner forwarded certified copies of IOD, sanctioned plans and copies of D.R.
Certificate evidencing loading of TDR FSI on the property and conveyed their
readiness and willingness to pay for temporary accommodation, packing and
moving charges and compensation towards brokerage etc. The petitioner also
conveyed their readiness and willingness for payment of the balance consideration
payable to the members aggregating to Rs.8,29,34,282/- and the balance
consideration dues to the members aggregating to Rs.8,29,34,282/-. The petitioner
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also agreed to handover two separate bank guarantees of Rs. 3 crores each and
agreed to pay stamp duty on the individual agreements of the members' new flat
and to execute the same as per clause 20.3.2 of the said development agreement.
Petitioner called upon the society to handover a letter executed by all members for
vacating the premises in terms of clause 20.2 of the development agreement.
7. On 10th March, 2013 respondent no.1 society held a special general body
meeting. It was resolved that all members would vacate their respective flats on or
before 11th April, 2013 and handover the set of keys alongwith the letter of
surrender to the secretary of the society.
ig Vide letter dated 23 rd March, 2013,
respondent no.4 informed respondent no.1 society that he had not consented for
redevelopment and was taking legal advice and would respond within 30 days.
Vide letter dated 24th March, 2013 respondent no. 6 sought various information
and details from the society.
8. Vide letter dated 3rd April, 2013, society informed the petitioner that 31
members had signed the letter recording their agreement to vacate their flats on or
before 11th April, 2013 and three members had not yet confirmed the date of
vacating in writing. The petitioner was informed that though society had made
efforts to obtain such writing from remaining three members, the same was of no
avail. The society had given final limit of three days to these three members to
confirm the acceptance of the date for vacating in writing.
9. Vide letter dated 12th April, 2013, petitioner invoked arbitration clause and
nominated Mr.Sandeep Parikh, advocate as sole arbitrator and called upon the
society to concur in the appointment of the said advocate as sole arbitrator. Since
society did not handover possession of the flats and garages to the petitioner in
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view of respondent nos. 2 to 6 not handing over their respective premises,
petitioner filed this petition under section 9 of the Arbitration and Conciliation Act,
for appointment of Court Receiver and for mandatory order and injunction.
10. Mr.Wasoodev, learned counsel appearing for the petitioner submits that
pursuant to the resolution passed by respondent no.1 society, the said PMC had
prepared a draft tender stating the requirements of the society for redevelopment.
Tender submitted by the petitioner was accepted in the meeting held by 1 st
respondent society. Draft development agreement, power of attorney and various
other documents were approved after circulation of such documents to each of the
members in the meeting held by the society. Each of such resolution has been
approved by more than ¾ majority of the members. It is submitted that none of
these resolutions or the execution of development agreement in favour of the
petitioner by the society has been challenged by any of the members in any court
of law. These resolutions are thus binding on all the members of the society
including respondent nos. 2 to 6. It is submitted that some of the meetings were
attended by some of the respondents. Pursuant to execution of such agreement in
favour of the petitioner, petitioner has already paid Rs.50 lacs to the society as a
lumpsum consideration.
11. Petitioner has paid an amount of Rs.4,47,78,240/- towards purchase of TDR
for being loaded on the said property, Rs. 13,43,400/- towards stamp duty on the
purchase of the said TDR, premiums for Fungible F.S.I. to the Municipal
Corporation of Greater Mumbai aggregating to Rs.6,29,57,400/- fees of the
architects and legal fees amounting to Rs.11,13,300/-. Petitioner has also offered
to pay various amounts towards compensation to each of the member in
compliance with various provisions of the said development agreement. The
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petitioner has already received IOD and has got a sanctioned plan. TDR certificate
evidencing loading of TDR FSI on the property has been already furnished to the
respondent no.1 society. Petitioner also agreed to handover bank guarantee and
various other amounts as agreed under the development agreement. It is submitted
that though 31 members out of 34 members agreed and signed the letter recording
their agreement to vacate their flats by 11 th April, 2013, three members and/or
persons claiming through those members who are respondent nos. 2 to 5, 6A to 6C
have not confirmed the date of vacating their premises. Learned counsel submits
that in view of such obstructive attitude on the part of the three members of the
society, not only the petitioner is suffering but the majority of the members of the
society are also suffering. The petitioner has not able to commence demolition of
the existing structure and to commence redevelopment of the plot. The cost of the
project has gone up tremendously in view of the society and respondent nos. 2 to 5
and 6A to 6C not complying with their obligations to handover their respective
tenaments. Learned counsel submits that the petitioner has complied with their
part of the obligation and have further agreed to comply with the remaining
obligation but respondent no.1 society and respondent nos.2 to 5 and 6A to 6C
have failed to comply with their obligations. It is submitted that in view of
respondent nos. 2 to 5 and 6A to 6C which are in minority, entire project of the
society is held up causing tremendous hardship to the petitioner as well as other
members of the society. It is submitted that thus the Court Receiver shall be
appointed by this Court in respect of the premises occupied by respondent nos.2 to
5 and 6A to 6C with a direction to take physical possession from them with the
help of police if necessary and with a direction to handover the same to the
petitioner to enable the petitioner to demolish the same and to reconstruct the new
building and to handover respective flats and other tenaments to the members of
the society as per the terms of the development agreement.
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12. Respondent no.1 society has no objection if the reliefs as claimed by the
petitioner is granted. Learned counsel appearing for the society submits that since
respondent nos.2 to 5 and 6A to 6C have not agreed to handover vacant possession
of the premises, Society could not comply with their part of the obligation. It is
submitted that remaining 31 members have already handed over possession and
such decision has been already communicated to the petitioner by the society. It is
submitted that because of the obstructive attitude of the respondent nos.2 to 5 and
6A to 6C, majority of the members are suffering. Learned counsel submits that
condition of the building is deteriorated and the requires immediate
redevelopment.
13. Mr.Khandeparkar, learned counsel appearing for respondent nos. 2 and 3
submits as as under :-
(a) There is no arbitration agreement between the
petitioner and respondent nos. 2 and 3 as contemplated
under section 7 of the Arbitration Act. There is no
dispute between the petitioner and respondent no.1
society in relation to development agreement. No
relief thus can be granted in this proceedings.
(b) Petitioner has not complied with various terms
and conditions of the development agreement. Bank
guarantee has not been executed as per clauses 20 and
21. Various payments are not made by the petitioner.
Building plans and/or IOD are not as per agreed terms
of the petitioner and the society. No notice under
section 164 of the Societies Act has been issued to the
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Registrar before filing arbitration petition. Clause 16
of the development agreement was not approved by
respondent nos. 2 and 3 or by the society prior to
execution thereof. Respondent nos. 2 and 3 have not
agreed to accept any compensation as recorded in the
development agreement for handing over vacant
possession of the garage in lieu of additional car
parking space. Dispute to arbitration cannot be
referred since no steps have been taken by the
petitioner to resolve the same by mutual discussion or
without first being referred to mediation. Precondition
to clause 41.2 is thus not complied with. In view of
clause 40 of the development agreement which
provides that in case of dispute during the
redevelopment, section 91 of the Arbitration Act shall
be applicable, this petition filed under section 9 of the
Arbitration Act is not maintainable.
(c) Under MOFA, garage is included within the
meaning of term "Flat" under section 2(a-1), and thus
the area of garage has to be included within the area of
flat. Petitioner is bound to provide the area of new flat
by adding 51% of the existing flat in case of residential
premises and 37% in respect of area in case of it being
used for non-residential purpose. The petitioner has
wrongly excluded the area of garage from being added
in relation to the flat. Respondent nos. 2 and 3 are
entitled to larger area than what is offered by the
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petitioner to respondent nos. 2 and 3.
(d) Managing Committee has not acted in good faith
and in the interest of the society.
14. Mr.Khandeparkar placed reliance on the judgment of the Supreme Court in
case of Nahalchand Laloochand Private Limited vs. Panchali Cooperative
Housing Society Limited reported in (2010) 9 SCC 536 in support of his
submission that the developer cannot separately sell the garage. Flat includes
garage. It is submitted that petitioner developer is under an obligation to consider
the area of garage alongwith area of flat.
15. Mr.Khandeparkar placed reliance on the judgment of the Supreme Court in
case of Indowind Energy Limited vs. Wescare (India) Limited and another
reported in (2010) 5 SCC 306 in support of his submission that since there is no
arbitration agreement between the petitioner and respondent nos. 2 and 3, no
reliefs under section 9 can be granted by this court against these respondents.
16. Mr.Khandeparkar submits that respondent nos. 2 and 3 would be entitled to
get 50% of 939 sq.ft. area and not 749 sq.ft.
17. Mr.Kanade, learned counsel appearing for respondent nos. 4 and 5 adopt the
submission made by Mr.Khandeparkar, learned counsel appearing for respondent
nos. 2 and 3 and would further submit that since petitioner has not taken any steps
for referring the matter for mediation which was one of the condition precedent
before invoking arbitration agreement, no relief under section 9 can be granted in
favour of the petitioner. It is submitted that reliefs sought by the petitioner in the
present proceedings would be final reliefs and thus cannot be granted under
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section 9. It is submitted that some of the members of respondent no.1 society are
given additional area which would amount to discrimination between respondent
nos. 4 and 5 and other members. It is submitted that in respect of shop no. 9A,
which is being used for commercial purpose, petitioner has offered compensation
offered for residential premises which is not acceptable to respondent nos. 4 and 5.
Learned counsel submits that though under the tender documents, it was provided
that bidder shall have to mutually discuss with the shop owner regarding location,
no such discussion ever took place between the petitioner and respondent nos. 4
and 5. Learned counsel submits that if structures are demolished at this stage and
if respondent nos. 4 and 5 succeeds in any proceedings, compensation would not
be adequate relief.
18. Respondent no. 6A who represents himself and respondent nos. 6B and 6C
submits that the managing committee member acted bias in allotment of flats to
various members of society. It is submitted that respondent no. 6 is entitled to
larger area than what was alloted to respondent no.6. Petitioner ought to have
given bank guarantee for securing performance as per terms of development
agreement which the petitioner has restrained. It is submitted that there is no
separate agreement signed between the petitioner and respondent no.6.
19. Mr.Wasoodev, learned counsel appearing for the petitioner in rejoinder
invited my attention to various resolutions passed by the society from time to time.
My attention is also invited to the definition of garage defined under section 2(a-1)
of MOFA. It is submitted that there is no provision in the Development Control
regulation for enclosed garage. It is submitted that in this case, garage was not
attached to the flat and is not a part of the FSI. Even respondent nos. 2 and 3 had
paid stamp duty @ 25% of the market value in respect of such garage. Petitioner
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has agreed to give Rs.40 lacs plus open parking space in respect of such garage
occupied by respondent nos. 2 and 3 which has been also offered to the other
garage owners who have agreed to accept such compensation and open parking
space without any objection. It is submitted that petitioner is not selling any car
parking space. Learned counsel submits that respondent no.1 society appointed
PMC who had considered area occupied by each member and had incorporated the
same in the tender document. It is submitted that once development agreement has
been entered into between the parties, the said agreement would prevail and not
the tender document. It is submitted that there is no discrimination in making any
allotment in so far as petitioner is concerned. In respect of one of the member,
open terrace was enclosed to the flat having no independent excess. In so far as
respondent nos. 4 and 5 are concerned, it is submitted that the erstwhile members
had converted this flat meant for residential use into a shop. It is submitted that in
respect of commercial area as per development control regulation, FSI is less in
comparison to residential area and thus there is difference in the additional area
offered to the members of the society. It is submitted that in respect of shops, the
petitioner has not offered compensation of 110 sq.ft. per month but has agreed to
make payment at the rate of 250 per month per sq.ft. In so far as issue of referring
the dispute to the mediation before invoking arbitration agreement is concerned,
learned counsel submits that IOD was issued on 20 th February, 2013. On 25th
February, 2013, the petitioner had furnished copy thereof to the society with a
request to fix a date for vacating the premises by members. The society conveyed
to the petitioner that out of 34 members, 31 members were ready to vacate but
respondent nos. 2 to 5 and original respondent no.6 refused to vacate. It is
submitted that the society has thus waived their rights to refer the dispute to
mediation in view of the society not able to get the vacant possession from three of
its members.
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20. Mr.Wasoodev, placed reliance on the following judgments in support of his
submission :-
1 Girish Mulchand Mehta & Anr. vs. Mahesh
S.Mehta & Anr.
2010 (2) Mh.L.J. 657
2 Mohinder Kaur Kochar vs. Mayfair Housing Pvt.
Ltd. & Ors.
2012 (6) Bom.C.R.194
3 M/s.Sarthak Developers vs. Bank of India Amrut
- Tara Staff Co-operative Housing Society Ltd. in
Appeal (L) No. 310 of 2012 delivered on 5th December,
2012.
4 Bharat Infrastructure and Engineering Pvt. Ltd.
vs. Park Darshan CHS Ltd., delivered on 18th March,
2013 by Single Judge of this court in Arbitration
Petition No. 199 of 2013.
21. Mr.Wasoodev also distinguished the judgments relied upon by Mr.Kanade.
22. I have heard the learned counsel appearing for parties and respondent No.6A
appearing in person at length and have given anxious consideration to the rival
submissions made by the parties.
23. I shall first deal with the objections raised by respondent Nos.2 to 6C that in
view of the agreement between the parties that dispute if any arising out of
development agreement, Section 91 of the Maharashtra Co-operative Societies
Act, 1960 (hereinafter referred as The Societies Act for short) would be applicable
and this application under Section 9 is not maintainable. It is not in dispute that the
existing buildings are owned by respondent No.1 society. The object of the society
is not to carry on the business of redevelopment. In view of the building of the
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society having required heavy repairs which could not be carried out by the
members of the society, it was resolved by more than ¾ majority to demolish the
existing building and redevelop the plot for the benefit of the members.
Respondent No.1 society had accordingly passed an appropriate resolution
resolving to demolish the existing buildings and to appoint a developer for the
purpose of redevelopment of the property of the society. Since the object of
respondent No.1 society was not to carry on business of redevelopment, Section 91
of the Societies Act, would not be attracted to the dispute having arisen between
the parties arisen out of redevelopment agreement. It is not in dispute that
respondent No.1 society has not raised any such objection about the
maintainability of this petition on the ground that dispute between the petitioner
and respondent No.1 society arising out of redevelopment agreement can be filed
only before the Co-operative Court under Section 91 of the Societies Act and no
proceedings can be filed under Section 9 of the Arbitration Act against the society
arisen out of such agreement. Be that as it may, even if no such objection is raised
by the society, since the dispute arisen is not touching the business of society, such
dispute cannot be filed before Co-operative Court under Section 91 of the
Societies Act. Even if the agreement between the parties provides for application
of Section 91 to such dispute since Co-operative Court has not jurisdiction to
decide such dispute, in my view by agreement parties cannot confer jurisdiction on
such Court to decide such dispute which Court does not have jurisdiction.
24. Division Bench of this Court in case of Mohinder Kaur Kochar (supra) has
approved the Judgment delivered by learned single Judge of this Court in case of
Vardhaman Developers Limited Vs. Thailambal C-operative Housing Society Ltd.
& Ors. Learned single Judge of this Court in the Judgment of of Vardhaman
Developers (supra) has held that the process of re-development of the society by
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the developer does not constitute the business of the society within the meaning of
Section 91 and thus demolition of the existing building and the reconstruction of
the building of the society is not the business of the society and thus Section 91 is
not attracted. In my view, since it is not the business of respondent No.1 society
to redevelop the property of the society, for dispute arisen under the said
development agreement, Section 91 of the Societies Act would not be attracted. I
am respectfully bound by the Judgment of this Court in case of Mohinder K.
Kochar (supra) and in case of Vardhaman Developers (supra). There is thus no
merit in the submission of learned counsel appearing for respondent No.2 to 5 that
in view of the agreement between the parties recorded in Clause-40 of the
development agreement, this petition under Section 9 is not maintainable.
25. Next objection raised in affidavit in reply by the respondents is that notice
under Section 164 of the Societies Act was mandatory before filing arbitration
petition. In my view, arbitration petition under Section 9 of the Arbitration Act is
not a suit. Section 164 of the Societies Act is thus no attracted. In any event, since
the business of the society is not of redevelopment, Section 164 of the Societies
Act would not be applicable for filing proceedings against the Society. This issue
also has been dealt with by the division bench of this Court in case of Mohinder
Kaur Kochar (supra). It has been held by the division bench that Section 164 of
the Societies Act would not be applicable to a dispute which does not touch the
business of the society. I am respectfully bound by the judgment of division bench
of this Court in case of Mohinder K. Kochar (supra). Objection thus raised by the
respondent about maintainability of this petition on such ground is devoid of any
merits and is rejected.
26. The next objection raised by the respondents is that respondent Nos.2 to 6C
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are not party to the development agreement which contains arbitration clause and
thus no reliefs under Section 9 which is in aid of final relief can be granted against
those respondents. In support of this submission, the respondents have placed
reliance on the Judgment of Supreme Court in case of Indowind Energy Vs.
Wescare (I) Ltd. (2010) 5 Supreme Court Cases 306. Supreme Court has held
that an arbitration agreement can come into existence only in the manner
contemplated under Section 7. It is not in dispute that individual members of the
society have not signed the said development agreement. Question however that
arises for consideration of this Court is whether any interim measure can be
granted by this Court against respondent Nos.2 to 6C though they were not the
signatories to the development agreement between petitioner and respondent No.1
society.
27. Division Bench of this Court in case of Girish Mulchand Mehta (supra) has
considered this issue in detail. Division Bench has held that Section 9 can be
invoked even against a third party who is not a party to arbitration agreement or
arbitration proceedings, if he was to be a person claiming under a party to the
agreement and accordingly to be affected by interim measure. Such party who is
likely to be affected by interim measure will have to substantiate that he was
claiming independent right in respect of any portion of the subject matter of the
arbitration agreement on his own and not claiming under a party to the arbitration
agreement. This Court has held that in absence of such situation, Court has
jurisdiction to pass appropriate order by way of interim measure even against such
party irrespective of the fact that they are not party to arbitration agreement or the
arbitration proceedings. This Court has also considered Rule 803E of the Bombay
High Court (Original Side) Rules, which provides that notice of filing application
has to be issued to all persons likely to be affected. Paragraphs 12 to 14 and 16 of
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the Judgment of division bench on this issue would be relevant which read thus :
12. The next question is whether order of formulating the interim
measures can be passed by the Court in exercise of powers under
Section 9 of the Act only against a party to an Arbitration Agreement or
Arbitration Proceedings. As is noticed earlier, the jurisdiction under
Section 9 can be invoked only by a party to the Arbitration Agreement.
Section 9, however, does not limit the jurisdiction of the Court to pass
order of interim measures only against party to an Arbitration
Agreement or Arbitration Proceedings; whereas the Court is free to
exercise same power for making appropriate order against the party to
the Petition under Section 9 of the Act as any proceedings before it.
The fact that the order would affect the person who is not party to the
Arbitration Agreement or Arbitration Proceedings does not affect the
jurisdiction of the Court under Section 9 of the Act which is intended to
pass interim measures of protection or preservation of the subject
matter of the Arbitration Agreement.
13. The Appellants, however, place reliance on the decision of the
Kerala High Court in the case of Shoney Sanil v. Coastal Foundations
(P) Ltd. and Ors. reported in MANU/KE/0036/2006 : AIR 2006 Kerala
(206). In that case the question considered was whether the writ-
petitioner, admittedly, a third party to an alleged Arbitral Agreement
between the Respondents inter se, and who had in his favour a
confirmed Court sale and certificate of such sale and delivery of
possession, following and arising under an independent decree, could
be dispossessed, injuncted or subjected to other Court proceedings
under Section 9 of the Act? The Kerala High Court held that orders
under Section 9(ii)(c) can be passed only in relation to subject matter
of dispute in arbitration which may be in possession of any party since
it is not the intention of the Act or any arbitration proceedings as
conceived by the law of Arbitration to interfere with or interpolate third
party rights. It concluded that on a plain reading of Section 9 of the Act
and going by the Scheme of the said Act, there is no room to hold that
by an interim measure under Section 9, the rights of third party holding
possession on the basis of Court sale could be interfered with,
injuncted or subjected to proceedings under Section 9 of the Act.
Instead, it held that Section 9 of the Act contemplates issuance of
interim measures by the Court only at the instance of party to
Arbitration Agreement with regard to the subject matter of the
Arbitration Agreement. The Court has, however, noted that such order
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can be only against the party to an Arbitration Agreement or at best
against any person claiming under him. The Principle expounded in
this decision is that if a third party has independent right in the subject
matter of the Arbitration Agreement, Section 9 cannot be invoked to
affect his rights. At the same time, the Kerala High Court has plainly
opined that it is possible to pass orders under Section 9 against a third
party if such person is claiming under the party to the Arbitration
Agreement. Thus understood, Section 9 can be invoked even against a
third party who is not party to an arbitration agreement or arbitration
proceedings, if he were to be person claiming under the party to the
arbitration agreement and likely to be affected by the interim measures.
The Appellants herein will have to substantiate that they were claiming
independent right in respect of any portion of the subject matter of the
Arbitration Agreement on their own and not claiming under the
Respondent No. 2 Society who is party to the Arbitration Agreement. In
absence thereof, the Court would certainly have jurisdiction to pass
appropriate order by way of interim measures even against the
Appellants herein, irrespective of the fact that they are not party to the
Arbitration Agreement or the Arbitration Proceedings.
14. Reliance was placed on another decision of the Delhi High
Court in the case of Impex Trading GMBH v. Anunay Fab. Ltd. and
Ors. reported in MANU/DE/8800/2007 : 2008 (1) Arb. LR 50 Delhi. In
this case relief was sought against the bankers of the Respondent No. 1
and Petitioner respectively. The Court found as of fact that the Bankers
(Respondents 2 to 4) were regulated in their working by various
articles of the UCP500. The liability of the Bank under the document
was independent of any dispute as to breach of contract between the
seller and the buyer. On this finding, the Court went on to hold that
Petition under Section 9 of the Act against the Bankers who are not
even party to the Consignment Agreement and the Arbitration Clause is
not maintainable and deserves dismissal qua them. Once again that
was not a case of person claiming under the party to the Arbitration
Agreement, unlike in the present case where the Appellants were
members of the Respondent No. 2 Society and would be therefore
bound by the Award against the Society. The fact that the Appellants
have proprietary rights in the flats occupied by them does not mean
that they were claiming such right dehors the rights of the Society in
the said flats. For, the Society is the owner of the land and structure
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standing thereon. The flats occupied by the Appellants are part thereof
and in fact, allotted to the Appellants in the capacity of members of the
Society. In that sense, the Appellants are persons claiming rights in the
flats situated in the property which is the subject matter of the
Arbitration Agreement, under the Respondent No. 2 Society who is
party to the said Arbitration Agreement. Accordingly, even this decision
will be of no avail to the Appellants.
16. In the present case, it is not in dispute that the General Body of
the Society which is supreme, has taken a conscious decision to
redevelop the suit building. The General Body of the Society has also
resolved to appoint the Respondent No. 1 as the Developer. Those
decisions have not been challenged at all. The Appellants who were
members of the Society at the relevant time, are bound by the said
decisions. The Appellants in the dispute filed before the Cooperative
Court have only challenged the Resolution dated 27/4/2008, which
challenge would merely revolve around the terms and conditions of the
Development Agreement. As a matter of fact, the General Body of the
Society has approved the terms and conditions of the Development
Agreement by overwhelming majority. Merely because the terms and
conditions of the Development Agreement are not acceptable to the
Appellants, who are in minuscule minority (only two out of twelve
members), cannot be the basis not to abide by the decision of the
overwhelming majority of the General Body of the Society. By now it is
well established position that once a person becomes a member of the
Cooperative Society, he looses his individuality with the Society and he
has no independent rights except those given to him by the statute and
Bye-laws. The member has to speak through the Society or rather the
Society alone can act and speaks for him qua the rights and duties of
the Society as a body (see Daman Singh and Ors. v. State of Punjab
reported in MANU/SC/0392/1985 : AIR 1985 SC 973). This view has
been followed in the subsequent decision of the Apex Court in the case
of State of U.P. v. Chheoki Employees Cooperative Society Ltd.
reported in MANU/SC/0332/1997 : AIR 1997 SC 1413. In this decision
the Apex Court further observed that the member of Society has no
independent right qua the Society and it is the Society that is entitled to
represent as the corporate aggregate. The Court also observed that the
stream cannot rise higher than the source. Suffice it to observe that so
long as the Resolutions passed by the General Body of the Respondent
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No. 2 Society are in force and not overturned by a forum of competent
jurisdiction, the said decisions would bind the Appellants. They cannot
take a stand alone position but are bound by the majority decision of
the General Body. Notably, the Appellants have not challenged the
Resolutions passed by the General Body of the Society to redevelop the
property and more so, to appoint the Respondent No. 1 as the
Developer to give him all the redevelopment rights. The propriety
rights of the Appellants herein in the portion (in respective flats) of the
property of the Society cannot defeat the rights accrued to the
Developer and/or absolve the Society of its obligations in relation to
the subject matter of the Arbitration Agreement. The fact that the relief
prayed by the Respondent No. 1 in Section 9 Petition and as granted by
the Learned Single Judge would affect the propriety rights of the
Appellants does not take the matter any further. For, the propriety
rights of the Appellants in the flats in their possession would be
subservient to the authority of the General Body of the Society. Moreso,
such rights cannot be invoked against the Developer (Respondent No.
1) and in any case, cannot extricate the Society of its obligations under
the Development Agreement. Since the relief prayed by the Respondent
No. 1 would affect the Appellants, they were impleaded as party to the
proceedings under Section 9 of the Act, which was also necessitated by
virtue of Rule 803E of the Bombay High Court (Original Side) Rules.
The said Rule reads thus:
R803E. Notice of Filling Application to persons likely to be
affected.-Upon any application by petition under the Act, the
Judge in chambers shall, if he accepts the petition, direct notice
thereof to be given to all persons mentioned in the petition and to
such other persons as may seem to him to be likely to be affected
by the proceedings, requiring all or any of such persons to show
cause, within the time specified in the notice, why the relief
sought in the petition should not be granted.
28. On perusal of the prayers in the arbitration petition, it is clear that petitioner
seeks appointment of Court Receiver and mandatory injunction against respondent
Nos.2 to 6C in respect of the premises in their occupation. It is thus clear beyond
reasonable doubt that any order if passed in this petition as prayed, respondent
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Nos.2 to 6C would be affected. Such parties are thus rightly impleaded as parties
to the present petition and are given an opportunity of being heard and to oppose
this petition. Without going into the larger issue whether respondent No.2 to 6C
are party to the arbitration agreement or not, not being signatories to the
development agreement, in view of the fact that each of these respondents are
claiming through respondent No.1 society in respect of the properties of the
society in which these members have subservient rights and in view of the fact that
any orders that would be passed in these proceedings would seriously affect the
rights of the respondent Nos.2 to 6C, such interim measure can be granted by this
Court under Section 9 of Arbitration Act against such parties even if they are not
parties to the arbitration agreement. In my view there is no merit in the
submission made by the learned counsel appearing for respondent Nos.2 to 5 and
reliance placed by the learned counsel appearing for the respondents on the
Judgment of Supreme Court in case of Indowind Energy (supra) would be thus of
no assistance to the respondents.
29. The next question that arises for consideration of this Court is whether
individual members of Society can oppose the reliefs sought by the petitioner
under Section 9 of Arbitration Act for seeking interim measures in view of the
dispute having arisen between the petitioner and the society under development
agreement pursuant to the resolution passed by more than ¾ of majority of the
members without challenging such resolutions in Court of law. On perusal of
resolutions passed by the society in various Special General Body Meetings some
of which were also attended by one or the other party who are parties to these
proceedings, it is clear that more than 3/4th majority of the members have resolved
that the existing buildings and the premises occupied by the members shall be
demolished and the property be redeveloped by appointment of a developer.
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Society had appointed a Project Management Consultant for the purpose of
preparing a report and draft tender. Tender document prepared by the said PMC
appointed by the Society disclosed the area in possession of each member. Based
on such tender document prepared by the society, various bidders including the
petitioner submitted their bid. All these bids were opened by the society. It was
resolved by the society to appoint the petitioner as developer. Draft development
agreement and Power of Attorney was circulated to all the members including
respondent Nos.2 to 6. There was some suggestion given by some of the member.
Perusal of the record indicates that some of the suggestions were also incorporated
in draft development agreement.
ig Draft development agreement and other
documents were thereafter approved by the members of the society in one of the
Special General Body Meeting by more than ¾ majority. Some of the office
bearers of the society were authorised to execute such agreement and the other
documents with the petitioner developer. It is not in dispute that any of these
resolutions which were passed by more than ¾ majority as well as development
agreement entered into between the petitioner and society have been impugned by
any of the members in any Court of law. These resolutions, in my view are thus
binding on all the members of the society under the provisions of Societies Act and
bye-laws of the society.
30. Division Bench of this Court in case of Girish Mulchand Mehta (supra) has
also considered this issue at length. Paragraphs 18 of this Judgment which is
relevant for the purpose of deciding this issue reads thus :
"18. We have no hesitation in taking the view that since the Appellants
were members of the Society and were allotted flats in question in that
capacity at the relevant time are bound by the decision of the General
Body of the Society, as long as the decision of the General Body is in
force. As observed earlier, the Appellants have not challenged the
decisions of the General Body of the Society which is supreme, in so far
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as redevelopment of the property in question or of appointment of the
Respondent No. 1 conferring on him the development rights. The
Appellants have merely challenged the Resolution which at best would
raise issues regarding the stipulations in the Development Agreement.
The General Body of the Society has taken a conscious decision which
in this case was after due deliberation of almost over 5 years from
August 2002 till the Respondent No. 1 came to be finally appointed as
Developer in terms of Resolution dated 2nd March, 2008. Moreover,
the General Body of the Society by overwhelming majority not only
approved the appointment of Respondent No. 1 as developer but also
by subsequent Resolution dated 27th April, 2008 approved the draft
Development Agreement. Those terms and conditions have been finally
incorporated in the registered Development Agreement executed by the
Society in favour of Respondent No. 1. That decision and act of the
Society would bind the Appellants unless the said Resolutions were to
be quashed and set aside by a forum of competent jurisdiction. In other
words, in view of the binding effect of the Resolutions on the
Appellants, it would necessarily follow that the Appellants were
claiming under the Society, assuming that the Appellants have
subsisting proprietary rights in relation to the flats in their possession.
It is noticed that as of today the Appellants have been expelled from the
basic membership of the Society. Their right to occupy the flat is
associated with their continuance as member of the Society. It is a
different matter that the decision of expelling the Appellants from the
basic membership of the Society will be subject to the outcome of the
decision of the superior authority where the appeals are stated to be
pending. If the decision of the Society to expel the Appellants is to be
maintained, in that case, the Appellants would have no surviving cause
to pursue their remedy even before the Co-operative Court much less to
obstruct the redevelopment proposal. As a matter of fact those
proceedings will have to be taken to its logical end expeditiously. Even
if the Appellants were to continue as members, they would be bound by
the decision of the General Body whether they approve of the same or
otherwise. In any case, keeping in mind that the Development
Agreement does not absolutely take away the rights of the Appellants in
the flats in question, as after demolition of the existing building, the
Appellants would be accommodated in the newly constructed flats to be
allotted to them in lieu of the existing flats, on the same terms as in the
case of other members, provided the Appellants continue to remain
members of the Society. Under the Development Agreement, the
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Respondent No. 1 is obliged to complete the project within 18 months
from the date of receipt of full Commencement Certificate from the
Corporation. The full Commencement Certificate would be issued only
upon the vacant possession of the entire building is delivered to the
Respondent No. 1 who in turn would demolish the same with a view to
reconstruct a new building in its place. Significantly, out of twelve (12)
members, ten (10) members have already acted upon the Development
Agreement as well as have executed separate undertaking-cum-
agreement with the Respondent No. 1 Developer. They have already
vacated flats in their occupation to facilitate demolition of the existing
building and have shifted to alternative transit accommodation as back
as in February 2009. The project has been stalled because of the
obstruction created by the Appellants herein who are in minuscule
minority. The said ten members of the Society who have already shifted
their premises, they and their family members are suffering untold
hardship. At the same time, the Respondent No. 1 who has already
spent huge amount towards consideration of the Development
Agreement and incurred other incidental expenses to effectuate the
Development Agreement in addition will have to incur the recurring
cost of paying monthly rent to the ten members who have already
shifted to transit accommodation. The learned Single Judge has noted
that the Appellants are not in a position to secure the amount invested
and incurred including the future expenses and costs of the Respondent
No. 1 herein in case the project was to be stalled in this manner. Even
before this Court the Appellants have not come forward to compensate
the Respondent No. 1 herein and the other ten members of the Society
for the loss and damage caused to them due to avoidable delay
resulting from the recalcitrant attitude of the Appellants. Considering
the impact of obstruction caused by the Appellants to the
redevelopment proposal, not only to the Respondent No. 1 Developer
but also to the overwhelming majority of members (10 out of 12) of the
Society, the learned Single Judge of this Court opined that it is just and
convenient to not only appoint the Court Receiver but to pass further
orders for preservation as well as protection and improvement of the
property which is subject matter of Arbitration Agreement. We have
already noticed that the Court's discretion while exercising power
under Section 9 of the Act is very wide. The question is whether in the
fact situation of the present case it is just and convenient to appoint
Court Receiver coupled with power conferred on him to take over
possession of the entire building and hand over vacant and peaceful
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possession thereof to the Respondent No. 1 who in turn shall redevelop
the property so as to provide flats to each of the members of the Society
in lieu of the existing flats vacated by them as per the terms and
conditions of the Development Agreement, as ordered by the learned
Single Judge. For the reasons noted by the Learned Single Judge which
we have reiterated in the earlier part of this decision, we find that it
would be just and convenient to not only appoint Court Receiver to
take over possession of the property but also pass further order of
empowering the Court Receiver to hand over vacant possession of the
suit building to the Respondent No. 1 to enable him to complete the
redevelopment work according to the terms and conditions of the
Development Agreement."
31.
It has been held by the division bench of this Court that merely because
terms and conditions of development agreement are not acceptable to the members
who are in minuscule minority, cannot be the basis not to abide by the decision of
the overwhelming majority of the General Body of the society. It is held that once
a person becomes a member of the co-operative society, he loses his individuality
with the society and he has no independent rights except those given to him by the
stature and Bye-laws. The member has to speak through the society or rather the
society alone can act and speaks for him qua the rights and duties of the society as
a body. This Court has also adverted to the Judgment of Supreme court in case of
Ramesh Himmatlal Shah vs. Harsukh Jadhavji Joshi (AIR 1975 SC 1470 ) in
which it is held that the right so enjoyed by the member is the species of the
property namely the right to occupy a flat, which assumes significant importance
and acquires under the law a stamp of transferability in furtherance of interest of
commerce. This Court has held that a member cannot be allowed to say that his
rights in the flat occupied by him were de hors the rights of the society therein
and that he is not claiming through society at all. Division Bench of this Court
has held that a member is bound by the decision of the General Body of the society
till it is in force.
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32. In the facts of this case, it is clear that more than ¾ of the majority of the
society have passed a resolution to get the existing buildings demolished and to
get the same redeveloped by appointment of the petitioner as developer.
Respondent No.2 to 6C who are in minority occupying three flats and few garages
cannot be permitted to obstruct the society or majority members from
implementing the project of redevelopment. In my view, since these respondents
have not challenged the resolution passed by the society in its Special Annual
General Meeting, each of such resolution is binding on the respondents. These
respondents cannot be allowed to act contrary to the resolution passed by the
general body of the society and are bound to follow such resolutions. This Court
thus at this stage while hearing application under Section 9 of the Arbitration Act
1996 cannot consider any arguments of the members of the society contrary to
such resolutions which are binding on them since such resolutions are not
challenged by any of these members and are in force. Decision taken by the
General Body of the society which is supreme confirming the development rights
in favour of the petitioner are final and binding on all the members including
respondent No.2 to 6C.
33. On perusal of the record, it is clear that out of 34 members, 31 members
have signed letters showing their willingness to hand over the possession to the
petitioner for re-development. Only respondent No.2 to 6C who have refused to
vacate the premises in their occupation on one or the other grounds by not
following the resolution passed by the society by ¾th majority.
34. On perusal of record it is revealed that petitioner has taken various steps in
furtherance of the execution of development agreement and has spent incurred
huge amounts on the project. Members of the society were liable to vacate their
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respective premises in the month of April 2013 which have not been vacated so
far. In view of the obstructive attitude on the part of respondent Nos.2 to 6C, the
entire project is held up. Plans are sanctioned. IOD has been issued. Petitioner
has already got the TDR loaded on the property and has spent substantial amount
for acquisition of TDR. Under the development agreement, petitioner is under an
obligation to construct the entire building within the time specified, time having
been made the essence of the contract. Because of the obstructive attitude of
respondent Nos.2 to 6C, existing buildings could not be demolished and
development process could not commence.
35.
On perusal of the record, it appears that the grievance made by respondent
Nos.2 to 6C is regarding the area offered by the petitioner to respondent Nos.2 to
6C in lieu of existing area in their occupation. The dispute has been raised also in
respect of the compensation in lieu of the garage occupied by one of the member.
In support of this submission, respondent Nos.2 to 5 placed reliance on the
Judgment of Supreme Court in case of Nahalchand Laloochand Pvt. Ltd. Vs.
Panchali Co-operative Housing Society Ltd. (supra) on the issue whether flat
includes a garage or not. In my view, 31 members of the society not having
disputed the provisions of development agreement and the society not opposing
the reliefs prayed by the petitioner, dispute if any interse between respondent
Nos.2 to 6C with the developer or with the society will have to be decided finally
in appropriate proceedings. During the course of argument upon making enquiry
from the learned counsel appearing for respondent No.2 to 5 as to whether they
were agreeable to appear before the arbitral tribunal and make their claim if any in
arbitration proceedings against the developer or the society, respondent Nos.2 to 5
did not agree to appear before arbitral tribunal and to seek redressal of their
grievance against the developer or the society. In my view, in these proceedings
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under Section 9 of Arbitration and Conciliation Act, this Court cannot adjudicate
upon the merits of individual claims of the respondents members of the society and
the same can be adjudicated only in appropriate proceedings. In these
proceedings only interim measures can be granted by this Court. This Court is
thus not adjudicating on the issue raised by respondent Nos.2 to 6C whether they
are entitled to any larger area as claimed. In view of the fact that more than 3/4 th
majority of members have passed resolution and have agreed to appoint the
petitioner as developer on the terms and conditions agreed upon and recorded in
development agreement, in my view, respondent Nos.2 to 6C cannot stop the
redevelopment project.
36. As far as submission of respondent Nos.2 to 6C that even if arbitration
agreement exists, since no steps were taken by the petitioner for settling the
dispute by mediation which was condition precedent before invoking arbitration
agreement, no relief under Section 9 can be granted in this proceedings is
concerned, on perusal of record it is clear that 31 members out of 34 have agreed
for redevelopment. Society is not opposing granting of any relief as it would
affect majority members of the society. Three members of the society had refused
to vacate though society has passed a resolution to vacate within the time
specified. Such refusal on the part of respondent Nos.2 to 6C was already
communicated to the petitioner. It is thus clear that procedure to refer the dispute
to mediation before invoking arbitration agreement has been waived by the
society and its member. In any event, respondent Nos.2 to 6C having refused to
abide by the resolution of the society and to implement is in teeth of the resolution
passed by more than 3/4th majority and not having challenged such resolution in
Court of law cannot be allowed to raise such plea. Society has not raised such
plea. There is thus no merit in this submission made by respondent Nos.2 to 6C.
37. This Court has in case of Raja Construction Co. V/s Sahara Co-op. Hsg.
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Ltd. & Ors., in its Judgment dated 31st August 2009 in Notice of Motion No.2753
of 2007 has held that Court Receiver can be appointed in this type of situation with
a direction to ask the members to vacate the suit premises and if necessary with
the help police assistance to dispossess the occupants.
38. Division Bench of this Court in case of M/s Sarthak Developers V/s Bank
of India Amrut - Tara Staff Co-operative Housing Society Ltd. has considered
this aspect and has held that dissenting minority members cannot be heard or
cannot be allowed to obstruct the development project agreed by the developer
having spent large amounts. It is held that appointment of a receiver is warranted
having due regard to the fact that majority of the members of the society are
supporting the redevelopment and have vacated their flats and if Court Receiver is
not appointed, such majority members would be left in lurch at the behest of a
miniscule minority. Paragraphs 16 and 17 of the said Judgment would be relevant
which read thus :
" 16. The material before the Court is sufficient to indicate that the
Appellant has a strong prima facie case for the appointment of a receiver,
having invested valuable consideration towards and in execution of the
agreement. But most significantly, the appointment of a Receiver is warranted
having due regard to the fact that unless such an order were to be passed,
149 members of the society, who are supporting the redevelopment and of
whom 143 have vacated their flats, would be left in the lurch at the behest of
a miniscule minority.
17. The appointment of a receiver is undoubtedly a drastic order, but the
Court is empowered to do so on well-established principles of it being just
and convenient. There are several reasons which must weigh in favour of the
appointment of a receiver. Firstly, the condition of the property in question is
a matter of importance in the City of Mumbai which is affected by a high
degree of saline corrosion. The buildings are admittedly dilapidated and in
urgent need of repair or redevelopment. The Society was not in a position to
carry out repairs having regard to the fact that in August 2007 the cost of
repair was estimated at Rs.1.65 crore by its structural consultant. Hence, the
option of redevelopment which has been accepted in the resolution passed by
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the Society would have to be respected. Secondly, in the present case, an
overwhelmingly large proportion of the members of the Society have
consented to the scheme of redevelopment and have in fact vacated their
premises. The interests of those 149 members who are supporting
redevelopment and of whom 143 have vacated are of paramount concern.
Thirdly, unless a receiver was to be appointed, it will be open to a dissenting
minority of a few members to obstruct and defeat the will of the large
majority. Fourthly, each of the dissenting members is also, like all the
members of the Society, entitled to permanent alternate accommodation free
of cost in the redeveloped building. An enhancement of the existing areas in
occupation is envisaged in the redeveloped building. In the meantime, each of
the members shall be entitled to compensation for transit accommodation as
agreed with the Co-operative Society and as paid to all other members. This
is not a case where a scheme of redevelopment is oppressive to the legitimate
interests of a minority nor has any such submission been urged."
39. In my view, petitioner has made out a case for appointment of Court
Receiver in terms of prayer clauses (a) and (b) as prayed. In view of such
obstructive attitude on the part of respondent Nos.2 to 6C, petitioner deserves the
relief of appointment of Court Receiver with further directions as prayed.
40. Arbitration petition is made absolute in terms of prayer clauses (a) and (b).
Till Court Receiver takes possession, ad interim order passed by this Court to
continue.
41. No order as to costs.
(R.D. DHANUKA, J.)
Learned counsel appearing for respondent nos. 2 and 3 prays for stay of
operation of this order for a period of six weeks from today which is vehemently
opposed by the learned counsel appearing for the petitioner. Operation of this
order is stayed for the period of three weeks from today. It is made clear that no
further extension will be granted.
(R.D. DHANUKA, J.)
