Bombay High Court
Anand Villa Co Op Hsg Soc Ltd. And 8 ... vs Parinee Realty Pvt. Ltd. ... on 20 October, 2015
Bench: R.D. Dhanuka
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ARBP921.15
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 921 OF 2015
1. Anand Villa Co-Operative Housing Society )
Ltd., having its registered office at 65-Z, Linking)
Road, Santacruz (West), Mumbai 400054 )
2. Mrs.Indrani Satikant Basu )
of Mumbai Indian Inhabitant, residing at )
th
Flat No.601, 6 Floor, Anand Villa Co-Operative)
Housing Society Ltd., 65-Z, Linking Road, )
Santacruz (West), Mumbai 400054 ig )
3. Mr.Chetan Rasiklal Sheth )
of Mumbai Indian Inhabitant, residing at )
th
Flat No.402, 4 Floor, Anand Villa Co-Operative)
Housing Society Ltd., 65-Z, Linking Road, )
Santacruz (West), Mumbai 400054 )
4. Mrs.Sohini Ajay Doshi )
of Mumbai Indian Inhabitant, residing at )
th
Flat No.701, 7 Floor, Anand Villa Co-Operative)
Housing Society Ltd., 65-Z, Linking Road, )
Santacruz (West), Mumbai 400054 )
5. Mrs.Mrudul Manhar Vora )
of Mumbai Indian Inhabitant, residing at )
th
Flat No.801, 8 Floor, Anand Villa Co-Operative)
Housing Society Ltd., 65-Z, Linking Road, )
Santacruz (West), Mumbai 400054 )
6. Mrs.Indumati Taranath Padate )
of Mumbai Indian Inhabitant, residing at )
th
Flat No.401, 4 Floor, Anand Villa Co-Operative)
Housing Society Ltd., 65-Z, Linking Road, )
Santacruz (West), Mumbai 400054 )
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7. Mr.Janak Batuklal Desai )
of Mumbai Indian Inhabitant, residing at )
th
Flat No.902, 9 Floor, Anand Villa Co-Operative)
Housing Society Ltd., 65-Z, Linking Road, )
Santacruz (West), Mumbai 400054 )
8. Mr.Jayesh Natwarlal Barot Karta and )
Manager of Jayesh Barot HUF residing at )
th
Flat No.502, 5 Floor, Anand Villa Co-Operative)
Housing Society Ltd., 65-Z, Linking Road, )
Santacruz (West), Mumbai 400054 )
9. Mr.Jayesh Natwarlal Barota )
of Mumbai Indian Inhabitant, residing at )
th
Flat No.602, 6 Floor, Anand Villa Co-Operative)
Housing Society Ltd., 65-Z, Linking Road, )
Santacruz (West), Mumbai 400054 ) ..... Petitioners
Versus
1. Parinee Realty Private Limited, )
(erstwhile M/s.Green Bird Developers Private )
Limited), having its registered office at )
Parinnee Crescenzo, 1st Floor, Plot No.C38-39, )
"G" Block, Behind MCA, BKC, Bandra (East) )
Mumbai - 400 051 )
2. Mandhana Industries Ltd. )
A company formed and incorporated under the)
Companies Act, 1956 and carrying on business )
from Shop No.1, Anand Villa, Linking Road, )
Santacruz (West), Mumbai 400 054 and also )
having office at 205/214 Peninsula Centre, )
Dr.S.S.Rao Road, Parel, Mumbai 400 012 )
3. Matrix Sports Marketing Pvt. Ltd., )
A company formed and incorporated under )
The Companies Act, 1956 and carrying on )
business from Shop No.2, Anand Villa, Linking )
Road, Santacruz (West), Mumbai 400 054 )
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4. Arvind Lifestyle Brands P. Ltd., )
A company formed and incorporated under the)
Companies Act, 1956 and carrying on business )
from Shop No.3, Anand Villa, Linking Road, )
Santacruz (West), Mumbai 400 054 and also )
having its registered office at Arvind Mills )
Premises, Naroda Road, Railway Pura Post, )
Ahmedabad. )
5. Mrs.Bhadraben Mahendra Shah )
of Mumbai Indian Inhabitant, residing at )
th
Flat No.702, 7 Floor, Anand Villa Co-Operative)
Housing Society Ltd., 65-Z, Linking Road, )
Santacruz (West), Mumbai 400054 )
6. Mrs.Nalini Madhukar Desai
ig )
of Mumbai Indian Inhabitant, residing at )
th
Flat No.802, 8 Floor, Anand Villa Co-Operative)
Housing Society Ltd., 65-Z, Linking Road, )
Santacruz (West), Mumbai 400054 )
7. Mrs.Gunvanti Shashikant Desai )
of Mumbai Indian Inhabitant, residing at )
th
Flat No.901, 9 Floor, Anand Villa Co-Operative)
Housing Society Ltd., 65-Z, Linking Road, )
Santacruz (West), Mumbai 400054 )
8. Atul V.Madan, )
Indian Inhabitant of Mumbai, )
carrying on business as partner of )
M/s.M.S.Enterprises having office at )
Amar Wines, Shop No.4, Sumangal Garden )
Apartment, Indira Nagar Bus Stop, )
Bombay Highway, Nasik - 422 009 ) ..... Respondents
Mr.Mayur Khandeparkar, a/w. Mr.Murari Madekar, Mr.Akshay Kambhe, i/b.
Madekar & Co. for the petitioners.
Mr.Simil Purohit, a/w. Mr.Gauraj Shah, Mr.Manish Doshi, i/b. Vimadalal & Co. for
Respondent No.1.
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Mr.Abhishek Bhadang, i/b. M/s. Chitnis & Co. for Respondent No.2.
Dr.Birendra Saraf, i/b.Mr.Tejas Shah for Respondent No.8.
CORAM : R.D. DHANUKA, J.
RESERVED ON : 15th SEPTEMBER, 2015
PRONOUNCED ON : 20th OCTOBER, 2015
JUDGMENT :
By this petition filed under section 9 of the Arbitration and Conciliation Act,
1996, the petitioners seek an order and direction against the respondent no.1 to
secure the claim of the petitioners by depositing a sum of Rs.16,46,33,116/-, seeks
injunction against the respondent no. 1 and respondent no.8 from creating any third
party rights in respect of three commercial shops, four flats on 10 th and 11th floors,
first floor and service floor of the suit property, order against respondent no.8 to
deposit the entire balance consideration of Rs.37,10,00,000/- under the alleged
Memorandum of Understanding dated 13th April, 2015 in this court and seeks
various other reliefs. Some of the relevant facts for the purpose of deciding this
petition are as under :-
2. The petitioner no.1 became the owner of a property situated at Santacruz
(West) described in development agreement by a deed of conveyance. On 3 rd
November, 2007, the petitioner and the respondent no.1 entered into a registered
development agreement in respect of the said property. All the members of the
petitioner no.1 society signed the said development agreement. It is the case of the
petitioner that the respondent no.1 surreptitiously put a design for extra mezzanine
floor and altered the plan without the approval of the petitioners. The respondent
no.1 increased the height of the commercial area of the building by approximately
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19 ft. thereby creating extra service floor and mezzanine floor. On 10 th December,
2012 the respondent obtained occupation certificate in respect of the redeveloped
building and handed over possession of the redeveloped premises to the petitioner
in the month of April 2013.
3. It is the case of the petitioner that after obtaining possession of the respective
premises from the respondent no.1, the petitioner noticed various breaches of the
development agreement and various deficiencies in the amenities and facilities. By
the letter dated 12th December, 2014, the petitioner no.1 addressed a letter to the
respondent no.1 alleging various illegalities and irregularities and called upon the
respondent no.1 to rectify and restore the suit property as per sanctioned plans and
to pay the damages to the petitioners.
4. On 3rd December, 2014, the prospective shop buyers of the respondent no.1
through their advocates issued a public notice in the newspapers inviting objections
for sale of the three shops in the building of the petitioner no.1. The petitioner no.1
lodged its objection on 16th December, 2014.
5. Under the said development agreement entered into between the petitioner
no.1 and the respondent no.1, the respondent no.1 claimed to be the owner of the
three commercial shops, four flats on 10th and 11th floors, first floor and service
floor. It is the case of the petitioner that the respondent no.1 has not paid various
amounts to the petitioner in respect of the said portion of the properties which
came to the share of the respondent no.1 to the petitioner no.1 society.
6. By their advocates' notice dated 12th May, 2015, the petitioners called upon
the respondent no.1 to pay a sum of Rs.16,46,33,116/- with interest thereof and
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suggested the name of an arbitrator. There was no response to the said notice.
7. Mr.Khandeparkar, learned counsel for the petitioners submits that though the
respondent no.1 had executed various agreements under the provisions of
Maharashtra Ownership Flats Act in respect of the flats sold by the respondent no.1
out of the sale component to third parties, the respondent no.1 has not executed
any agreement under the provisions of the said Act with the members of the
petitioner no.1 society in respect of eight individual units.
8. It is submitted that the respondent no.1 has added three shops on the ground
floor in the redeveloped building thereby offering three shops i.e. extra area at the
costs of the petitioners. The respondent no.1 has illegally increased the height in
respect of the service floor pursuant to the plan enclosed along with letter dated 2 nd
March, 2009 and added mezzanine floor thereto and first basement. He submits
that though the respondent no.1 was bound to install two car lifts and provide an
access to the parking at the podium level by way of ramp, the respondent no.1 after
obtaining occupation certificate on 10th December, 2012, dismantled both the car
lifts thereby creating a void in the car lift shaft. He submits that the petitioner no.1
by their letter dated 19th February, 2014 and 14th March, 2014 placed on record that
the car lifts were dismantled by the respondent no.1 without the consent of the
petitioner. The respondent no.1 replied the said letter by its letter dated 19 th March,
2014. The society in its extra ordinary general body meeting held on 3 rd April,
2014 placed these activities of the respondent no.1 on record. The said meeting
was attended by Mr.M.C.Shah of respondent no.1 who refused to install the
machinery to make the car lift functional. He submits that the respondent no.1 has
also closed the access of the members of the petitioner no.1 to the service floor
through the first floor which is in exclusive control and possession of the
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respondent no.1. The petitioner apprehended that the respondent no.1 may alienate
and commercially exploit the said service floor though it is meant for the utilities
and services of the members of the petitioner no.1 society.
9. Learned counsel appearing for the petitioner invited my attention to various
plans annexed to the arbitration petition. He submits that there was no FSI
consumed for parking space. He submits that the respondent no.1 has done away
with the demarcation wall and amalgamated the car parking area into office area.
He submits that the respondent no.1 has done various alterations while carrying out
construction of the building which is not shown in the approved plan. He submits
that even service floor constructed by the respondent no.1 is without FSI and is
part of the common amenities. He submits that for basement area also which is for
parking, no FSI is consumed by the respondent no.1 and thus part of the common
amenities respondent no.1 has taken benefit of free FSI area. He submits that even
on podium level, there is a parking space.
10. Learned counsel for the petitioner placed reliance on recital (O) and clauses
(9), 10(l), (m), (n), (p) and clause 24(c), 25, 27 and submits that except the
tenaments in the new building constructed by the respondent no.1 as specified in
those provisions of the development agreement, the respondent no.1 had no claim
in respect of the remaining area including common amenities. He submits that
those construction which were without consumption of any FSI were forming part
of the common amenities and belong to the petitioner no.1 society for the benefit
of its members and no interest of any nature whatsoever could be claimed by the
respondent no.1 in respect of such common amenities and thus no third party rights
in respect thereof can be created by the respondent no.1. In support of this
submission, learned counsel placed reliance on the judgment of Supreme Court in
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case of Nahalchand Laloochand Private Limited vs. Panchali Cooperative
Housing Society Limited (2010) 9 SCC 536 and in particular paragraphs 54 to 65
and submits that the promoter has no right to sell any portion of the building which
is not a flat and the entire land and building has to be conveyed to the petitioner
no.1. The only right which remains with the respondent no.1 is to sell the unsold
flats and has no right to sell any stilt parking spaces or any area forming part of
common amenities exclusive parking area alloted to the respondent no.1 under the
said development agreement. He also placed reliance on the further judgments of
this court in support of the said submission.
11.
Insofar as premises on 10th and 11th floors are concerned, it is submitted that
though the petitioners have prayed for injunction in respect of those premises, the
petitioners are not pressing any relief of injunction in respect of those premises at
this stage.
12. Insofar as prayer clause (b) (1) is concerned, it is submitted that after
payment is made by the respondent no.8 to the bank, the respondent no.1 can
deposit the balance amount payable by the respondent no.8 to the respondent no.1
in this court. He submits that the respondent no.8 cannot claim any right in the
open area along with those three shops which are properties of the petitioner no.1
society.
13. Insofar as service floor area is concerned, learned counsel invited my
attention to a paragraph in the affidavit in reply at page 286 in which the
respondent no.1 has admitted that as per Municipal Corporation norms, the service
floor area is free of FSI and has to be maintained by the developer.
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14. My attention is also invited to the averments at page 301 in which the
respondent no.1 has admitted that service floor area is used for common amenities
whereas the pipeline and electricity arrangement for the entire building is routed
and is required for the benefit of the entire building.
15. Insofar as three shops are concerned, it is submitted by the learned counsel
for the petitioner that the petitioners are not seeking any injunction in respect of
those three shops but along with three shops, the respondent no.1 has also agreed
to sell part of the basement which cannot be sold by the respondent no.1 as the
same is forming part of the common amenities and belong to the petitioner no.1 for
the benefit of all its members. In support of this submission, learned counsel
invited my attention to the Memorandum of Understanding dated 13 th April, 2015
entered into between the respondent no.1 and the respondent no.8. He submits that
respondent no.1 is fully aware that the basement area is not accounted in FSI and
thus could not have entered into alleged writing in respect of basement area with
respondent no.1.
16. Insofar as issue in respect of car lift is concerned, learned counsel for the
petitioners invited my attention to the averments made by the respondent no.1 in its
affidavit in reply at page 285 in which it is alleged by the respondent no.1 that it
was only because the petitioners enclosed the podium level, the respondent no.1
was compelled to close car lift at intermediate level in order to ensure safety and
security and closed the lift shaft in order to avoid any accident. The respondent
no.1 are ready and willing to open the lift shaft upon the petitioners' reinstalling the
car lift as originally provided by the respondent no.1. He submits that the
petitioners have not removed the car lift as alleged by the respondent no.1.
17. It is submitted by the learned counsel for the petitioners that since the
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respondent no.1 has not paid the requisite amount of maintenance and property
taxes in respect of the area in their occupation and during the time, the
redevelopment work was in progress, the Municipal Corporation of Greater
Bombay by its notice dated 10th June, 2015 has attached the building of the
petitioner no.1 under section 203(5) of the Mumbai Municipal Corporation Act.
He submits that the respondent no.1 has also not paid the maintenance charges for
three financial years 2013-14, 2014-15, 2015-16 approximately amounting to
Rs.10 lacs in respect of four flats and three commercial shops held by the
respondent no.1. He invited my attention to the said notice dated 10 th June, 2015
issued by the Municipal Corporation.
18. It is submitted that according to the information of the petitioner no.1, all the
projects of the respondent no.1 are either stalled or not commenced at all and most
likely the respondent no.1 may wash its hand of this project by alienating three
commercial shops along with existing licenses and four flats, first floor and service
floor. It is submitted that if injunction is not granted, the petitioner would not be
able to recover those properties which came to the shares of the petitioner no.1 and
which belongs to them. He submits that the members of the petitioner no.1 society
are from middle class and earn livelihood by drawing their respective salaries.
Learned counsel submits that the petitioners are thus pressing reliefs in terms of
injunction in respect of the basement level of the three shops, first floor premises,
service floor premises, below the ground level and also prays that the respondent
no.1 shall be directed to secure the claim of the petitioner by depositing an amount
of Rs.16,46,33,116/- and the respondent no.8 shall be directed to deposit the
balance consideration amount in this court. Learned counsel also invited my
attention to the various averments made in the arbitration petition. He submits that
even after payment of some amount by the respondent no.1 to the Municipal
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Corporation for property taxes, the respondent no.1 is still liable to pay their
proportionate share in respect of taxes to the Municipal Corporation and in view of
their default, the property of the petitioner no.1 is under attachment.
19. Learned counsel appearing for the petitioners also invited my attention to the
averments made in paragraph (q) at page 279 of the affidavit in reply in which the
respondent no.1 has alleged that under a registered indenture of mortgage dated
29th May, 2014, with the Bajaj Finance Ltd., the respondent no.1 has already
mortgaged the entire commercial premises being the 1st floor in the suit building
and the said mortgage is in existence. He submits that the respondent no.1 has also
alleged to have created incense by entering into a leave and license agreement
dated 26th November, 2011 read with supplemental agreement with the respondent
no.4 in respect of basement of shop no.2, basement and ground floor shop no.3 and
by leave and license agreement dated 15th September, 2014 with respondent no.3 in
respect of ground floor and mezzanine floor of shop no.2 and mezzanine floor of
shop no.3. The respondent no.1 also has alleged to have availed of loan facility of
Standard Chartered Bank by mortgaging various properties including common
amenities. He submits that respondent no.1 is thus heavily indebted and it is in the
interest of justice that the respondent no.1 shall be injuncted from creating further
third party rights and shall be directed to deposit the appropriate amount so as to
secure the claim of the petitioner no.1.
20. Dr. Saraf, learned counsel appearing for the respondent no.8 submits that the
MOU entered into between the respondent no.1 and respondent no.8 cannot be
challenged by the petitioner in the arbitral proceedings. The respondent no.8 not
being a party to the agreement between the petitioner no.1 and the respondent no.1,
no interim measures can be granted by this court against the respondent no.8. He
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submits that this court has thus no jurisdiction to grant any relief relating to which
would affect the rights of the respondent no.8. He submits that the respondent no.8
is a bonafide purchaser for value without notice of the shops together with the
licenses therein. The respondent no.1 has to discharge the dues to the Shyamrao
Vitthal Co-operative Bank and thereafter to pay the balance consideration of
approximately Rs.5 lacs to the respondent no.1. He submits that the respondent
no.8 has already made payment of Rs.50 lacs to the respondent no.1 as far back as
on 13th April, 2015 and has acquired interest in the property. In support of this
submission, learned counsel placed reliance on the judgment of Supreme Court in
case of Sukanya Holdings (P) Ltd. vs. Jayesh H.Pandya and another (2003) 5
SCC 531 and in particular paragraphs 13, 14 and 18.
21. Mr.Purohit, learned counsel appearing for the respondent no.1 on the issue as
to whether respondent no.1 was bound to execute any separate agreement with the
members of the petitioner no.1 society under the provisions of Maharashtra
Ownership Flats Act or not is concerned submits that the petitioner no.1 and
respondent no.1 were not governed under the provisions of Maharashtra
Ownership Flats Act but were governed by the development agreement entered
into between the parties. He submits that the petitioner no.1 society had granted
development rights to the respondent no.1. He placed reliance on the definition of
the promoter under section 2(c) of the said Maharashtra Ownership Flats Act and
would submit that the petitioner no.1 would be a promoter and not the respondent
no.1. He submits that in any event the petitioner no.1 is not seeking any
conveyance of land from the respondent no.1. He submits that under the
development agreement entered into between the parties, the respondent no.1 is
under obligation to execute a separate agreement under the Maharashtra
Ownership Flats Act only with the flat purchasers who are not members of the
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petitioner no.1 society. He submits that the petitioner no.1 society is already owner
of the land and its respective members are the owners of the flat alloted to them.
He submits that the provisions of the Maharashtra Ownership Flats Act thus does
not apply as canvassed by the petitioner.
22. Learned counsel placed reliance on clause 10(m) and (n) and submits hat the
entitlement of the respondent no.1 and also the petitioner no.1 society is setout in
the said provision. He submits that even if FSI is not consumed in respect of any
of the portion of the said building, that would not automatically become the
property of the petitioner no.1 society. He submits that the additional amenities
have come to the share of the respondent no.1 as indicated in the development
agreement and more particularly Annextures A5(II) and A5(III).
23. Learned counsel for the respondent no.1 submits that the hedged portion
reflected in the sketch annexed at Ex.A5(IV) belong to the respondent no.1. He
submits that the first level basement is included in the said portion given to the
respondent no.1. He submits that various portions given to the respondent no.1
under the said development agreement were by way of consideration of the
respondent no.1 for carrying out redevelopment of the building. In support of this
submission, learned counsel also placed reliance on recital 'O' at page 58 of the
arbitration petition. He submits that all the entitlements of the petitioner as well as
respondent no.1 are setout therein.
24. Learned counsel for the respondent no.1 placed reliance on the letter dated
5th January 2012 addressed by the petitioner no.1 to the Standard Chartered Bank
placing on record about the entitlement of the respondent no.1 under the
development agreement. He submits that the petitioner no.1 had also granted no
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objection in favour of the bank for creating mortgage of third level of basement.
He submits that the petitioner thus cannot be allowed to urge that the said third
level basement also would be part of common amenities and no third party rights
can be created by the respondent no.1.
25. It is submitted by the learned counsel for the respondent no.1 that the
petitioner cannot seek any injunction against the respondent no.1 in respect of any
part of the property since the petitioner has already quantified the alleged damages
in terms of money in correspondence exchanged between the parties. He submits
that the claim made by the petitioner no.1 in the notices is in the nature of
damages. He submits that the petitioner cannot seek an order against the
respondent no.1 to deposit any amount so as to secure the alleged claim of
petitioner no.1 for the damages by invoking the provisions of Order 38 Rule 5 of
the Code of Civil Procedure, 1908.
26. Insofar as issue regarding car lift is concerned, it is submitted that when the
respondent no.1 had applied for grant of occupation certificate to the Municipal
Corporation, the Municipal Corporation would not have granted occupation
certificate unless the car lift would have been already provided by the respondent
no.1 which itself would indicate that the car lift was in place when the occupation
certificate was granted by the Municipal Corporation. He submits that the society
was in charge of the car lift. The respondent no.1 has not removed the said car lift.
He submits that petitioner no.1 has removed the said car lift. He submits that the
petitioner no.1 did not make any such grievance till 2015. He submits that the
respondent no.1 had rightly rejected the request of the members of the petitioner
no.1 society to install the machinery in the meeting which was also attended by the
representative of the respondent no.1.
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27. Insofar as alleged arrears of payment of property taxes and maintenance
charges are concerned, it is submitted by the learned counsel for the respondent
no.1 that his client is not disputing the liability towards property taxes payable by
the respondent no.1 in respect of the property owned by them. He submits that the
respondent no.1has already made payment of Rs.40 lacs to the Municipal
Corporation. He submits that the respondent no.1 is not liable to make payment of
any common electricity charges or security charges to the petitioner no.1 society.
28. Insofar as issue in respect of car parking area is concerned, it is submitted by
the learned counsel for the respondent no.1 that the petitioner no.1 has already
quantified the claim for damages under different heads and thus no relief can be
granted by this court by way of injunction by this court by way of injunction in
respect of the said area. He submits that the injunction itself has been sought by
the petitioner on the basis of the money claim for damages against the respondent
no.1. He submits that injunction is not sought on the basis that common amenities
are allegedly taken away by the respondent no.1. Learned counsel for the
respondent no.1 makes an attempt to distinguish the judgment of Supreme Court in
case of Nahalchand Laloochand Pvt. Ltd. (supra) relied upon by the learned
counsel for the petitioners on the ground that the said judgment would not apply to
the facts of this case in view of the provisions of the development agreement
having been entered into between the parties in this case which are different than
the facts of that case. He submits that the provisions of the development control
regulations thus would not apply to the facts of this case insofar as portion of the
properties alleged to be forming part of the common amenities is concerned. He
submits that all the area which are alloted to the respondent no.1 under the said
development agreement are capable of being sold and thus the petitioner cannot
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seek any injunction in respect of any of such property.
29. Mr. Khandeparkar, learned counsel for the petitioner no.1 in rejoinder
submits that the provisions of Maharashtra Ownership Flats Act applies to the
premises below podium even according to the respondent no.1. The respondent
no.1 thus cannot create any third party rights in respect of the land, building in
question and open amenities. He submits that any premises below podium has to
be conveyed to the petitioner society by the respondent no.1. Learned counsel
placed reliance on the definition of promoter under the provisions of MOFA and
submits that since the respondent no.1 had constructed the building, the respondent
no.1 would be a promoter. He submits that respondent no.1 was bound to disclose
the common amenities to the petitioner no.1 and its members. He placed reliance
on the judgment of this court in case of Phoenix Tower Co-op. Housing Society
Ltd. & Ors. vs. Phoenix Construction Company & Ors. delivered on 15th
December, 2011 in Notice of Motion No. 1004 of 2011 and in particular
paragraphs 23, 36, 39, 40, 44 to 52.
30. Learned counsel appearing for the petitioner placed reliance on clause 27(b)
and clause 58 of the development agreement and would submit that execution of
another agreement was contemplated under the said provisions of the development
agreement which indicates that the respondent no. 1 was bound to execute a
separate and individual agreement with the members of the petitioner no.1 society
under the said provisions of MOFA. He submits that as a matter of fact, the draft
agreement under the provisions of MOFA were also exchanged between the
parties. Learned counsel invited my attention to one of such writing annexed to the
rejoinder. He submits that in any event it is the statutory liability of the promoter
to execute such agreements under MOFA and cannot be taken away by any alleged
agreement.
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31. Learned counsel appearing for the petitioner invited my attention to various
parts of the petition and more particularly pages 26, 30 and 31 to show the specific
averments made by the petitioner alleging breaches on the part of the respondent
no.1 regarding common amenities. He submits that the respondent no.1 has
constructed two additional floors which were not constructed as per the sanctioned
plan.
32. Insofar as submission of the learned counsel for the respondent no.8 is
concerned, learned counsel appearing for the petitioner submits that the petitioner
is not challenging the transaction between the respondent no.1 and respondent no.8
in respect of the shops but has challenged the alleged sale in respect of the
common amenities. He submits that since the respondent no.8 is admittedly
claiming through respondent no.1 who is party to a arbitration agreement and
would be affected if any order is passed by this court in this petition under section
9 in respect of the part of the property claimed by the respondent no.8, the
petitioner has rightly impleaded respondent no.8 as a party respondent to this
petition. In support of this submission, learned counsel appearing for the petitioner
placed reliance on the judgment of this court in case of Girish Mulchand Mehta
and another vs. Mahesh S.Mehta and another, 2010 (2) Mh.L.J. 657 and in
particular paragraphs 16 and 17.
33. A perusal of the development agreement entered into between the petitioner
no.1 and the respondent no.1 indicates that the respondent no.1 was granted rights
to demolish the existing building of the petitioner no.1 society and to carry out
redevelopment on the said plot and to handover possession of the property to the
petitioner no.1. Under the said development agreement, the respondent no.1
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however was allowed to sell some of the flats and commercial area specified in the
said development agreement. The respondent no.1 has already entered into a
separate agreement with some of the third parties to whom the respondent no.1 had
sold the flats and the commercial tenaments out of the free sale components which
could be dealt with by the respondent no.1.
34. It is one of the grievance of the petitioner no.1 that similar agreement under
the provisions of the Maharashtra Ownership Flats Act ought to have been
executed with the members of the petitioner no.1 society in respect of the flats
alloted to the members of the petitioner no.1 society in the new building. Both the
parties have made their submissions on this issue. A perusal of the prayers in the
arbitration petition however indicates that the petitioners have not prayed for
execution of any such individual agreement with the petitioner no.1 society by the
respondent no.1 nor could such reliefs in my view even otherwise be claimed in
this petition filed under section 9 of the Arbitration and Conciliation Act, 1996. In
my view this court thus need not go into the issue whether the respondent no.1
ought to have entered into any individual agreement with the members of the
petitioner no.1 society in respect of the flat alloted to them under the provisions of
the Maharashtra Ownership Flats Act or not and the same can be decided by the
arbitral tribunal.
35. Similarly whether the respondent no.1 had actually provided the car lifts
initially or not or whether dismantled by the petitioner no.1 or respondent no.1, this
issue also need not be gone into by this court at this stage since the petitioners have
not sought any such relief in these proceedings. In my view even this issue can be
agitated before the arbitral tribunal and if agitated, can be decided by the arbitral
tribunal on its own merits.
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36. Insofar as premises on 10th and 11th floor are concerned, though the
petitioners have prayed for injunction in respect of those premises in the arbitration
petition, in view of the statement made by the learned counsel for the petitioners
that no such reliefs is being pressed at this stage in respect of the said premises,
this court need not go into the issue whether respondent no.1 could create any third
party rights in respect of such premises on 10 th and 11th floor at this stage and the
said issue if pressed before the arbitral tribunal, the same can be decided by the
arbitral tribunal.
37.
Insofar as three shops alleged to have been purchased by the respondent no.8
from respondent no.1 on the ground floor is concerned, since the petitioners have
made a statement that the petitioners have no objection if the said transaction is
completed except in respect of the portion of the basement which according to the
petitioners is forming part of the common amenities and cannot be sold is
concerned, this court need not go into the validity of the transaction between the
respondent no.1 and the respondent no.8 insofar as three commercial shops on the
ground floor are concerned excluding the basement which issue is being separately
dealt with.
38. Insofar as issue raised by the learned counsel for the respondent no.8 that
since the respondent no.8 is not a party to the arbitration agreement and since no
reliefs can be claimed by the petitioners against the respondent no.8 in the arbitral
proceedings and thus no interim measures can be granted against the respondent
no.8 is concerned, a perusal of the alleged agreement entered into between the
respondent no.1 and the respondent no.8 indicates that the respondent no.8
admittedly claims alleged rights in respect of the said three shops and the basement
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area through the respondent no.1 who is a party to the arbitration agreement
admittedly. If any order is passed in respect of the said portion of the property
claimed by the respondent no.8 in these proceedings, the respondent no.8 would be
affected and thus before passing any order against respondent no.8, impleadment
of respondent no.8 for that limited period would be necessary in this proceeding
filed under section 9 of the Arbitration and Conciliation Act, 1996. In my view the
reliance placed by the learned counsel for the respondent no.8 on the judgment of
Supreme Court in case of Sukanya Holdings (P) Ltd. (supra) does not assist the
case of the respondent no.8 insofar as their impleadment to this petition under
section 9 of the Arbitration and Conciliation Act is concerned.
39. The next issue which arises for consideration of this court is whether
respondent no.1 has created third party rights and/or has intended to create third
party rights in respect of some of the properties including common amenities and
whether prima facie the respondent no.1 could at all create any third party rights or
can be allowed to create third party rights in respect of such properties or is liable
to be restrained from creating any third party rights in respect thereto or not.
40. Though the petitioners have prayed for injunction in respect of large portion
of the property of the redeveloped building in this petition filed under section 9,
during the course of the argument, the learned counsel appearing for the petitioners
made a statement that the petitioners were praying reliefs in terms of injunction in
respect of the basement level of three shops, first floor premises, service floor
premises, below the ground level and seeks an order of deposit against the
respondent no.1 of Rs.16,46,33,116/- and for an order and direction against
respondent no.8 to deposit the balance consideration amount payable to the
respondent no.1 in this court. It is also one of the grievance of the petitioner that
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the petitioner no.1 has not paid the maintenance charges and other outgoing in
respect of the premises occupied by the respondent no.1 which resulted in the
attachment of the property of the petitioner no.1 by the Municipal Corporation of
Greater Mumbai. The petitioners have applied for an order of deposit also on the
ground that the financial condition of the respondent no.1 is not such that if the
petitioners succeed in the arbitral proceedings, the petitioners would be able to
recover their legitimate dues against the respondent no.1. I shall now deal with the
aforesaid submissions in the later part of the judgment.
41. A perusal of the record prima-facie indicates that the respondent no.1 has
created extra mezzanine floor and has added the same to the three shops on the
ground floor of the redeveloped building and has offered three shops extra area.
The petitioners have raised the dispute in respect of this extra area which according
to the petitioners belong to the petitioner no.1 society and no third party rights in
respect thereof could be created by the respondent no.1 in favour of the respondent
no.8.
42. A perusal of the record prima-facie indicates that the net plot areas which
were disclosed to the petitioners by the respondent no.1 was found larger, which
was not disclosed to the petitioners. It is the case of the petitioners that in view of
such non-disclosure of the additional area and TDR thereon, the petitioners had
suffered loss to the extent of deficit area of 31.88 sq. mtrs. plus 100% TDR thereon
and also deficit of corpus fund. It is the apprehension of the petitioners that if the
respondent no.1 is not restrained from creating at least any third party rights in
respect of the first floor area, service floor and common amenities at this stage, the
petitioners would not be able to recover any amount from the respondent no.1 and
any such property from third parties. It is also the case of the petitioners that the
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respondent no.1 has made an attempt to create third party rights also in respect of
various common amenities and open areas which belonged to the petitioner no.1
exclusively and no third party rights in respect thereof can be created by the
respondent no.1.
43. Learned counsel for the petitioners invited my attention to the recital "o" of
the Development Agreement and would submit that under the said provisions, the
respondent no.1 has not been given any right to create any third party rights in
respect of open areas or common amenities.
44.
Learned counsel for the petitioners placed reliance on clause 10(m) and it is
submitted that under the said provisions, respondent no.1 was under an obligation
to construct and hand over without any cause to the petitioner no.1 a new building
with common amenities and flats as specified in Annexure "A-10" and one
ordinary car parking space as added amenities to each flat for each of the existing
members of the society listed at Annexure "A-3(i)".
45. Clause 10(p) of the development agreement provided that the developer
shall not be entitled to handover or create any right in respect of the car parking
space to any outsider and the same shall be available for the benefit of the existing
or proposed members of the petitioner no.1 only or their notified assignees/lessees.
Clause 52 of the agreement provided that the respondent no.1 shall not sell, lease,
give on leave and license or any other basis and/or encumber in any manner the
common terrace and all common areas, open land, compound, compound wall as
the same shall remain the property of the society. The developer however shall be
entitled to two pocket terrace attached to flats on 8 th residential floor and 11th floor
both in total comprising of not more than 520 sq.ft.
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46. A perusal of the aforesaid provisions prima facie indicates that the
respondent no.1 has not been permitted by the petitioner no.1 to sell or create any
third party rights and/or encumber, common terrace area, open land compound,
compound wall which would remain the property of the petitioner no.1. I am not
inclined to accept the submission of the learned counsel for the respondent no.1
that various common amenities or open areas were given to the respondent no.1
under the said development agreement and/or was permitted to be dealt with by the
respondent no.1. There is no dispute that prior to the execution of the development
agreement between the petitioner no.1 and the respondent no.1, the petitioner no.1
was already the owner of the existing land and the structure then standing thereon
and all the open common amenities and open land which were required to be kept
open under the provisions of the Development Control Regulations. The learned
counsel appearing for the respondent no.1 could not point out any provisions in the
development agreement which permitted the respondent no.1 to claim the
ownership of the common amenities including the service floor or to exclusively
use and/or deal with the same or to create third party rights in respect thereof.
47. Insofar as service floor is concerned, in the affidavit in reply filed by the
respondent no.1, it is admitted that as per the Municipal Corporation norms, the
service floor area was to be maintained by the developer. I am not inclined to
accept the submission of the learned counsel for the respondent no.1 that the
respondent no.1 could dealt with the said service area. A perusal of clause 52 read
with other provisions of the development agreement prima facie indicates that all
such common areas including service floor area belongs to the petitioner no.1
society and for benefit of the members of the petitioner no.1. Any structure for
which there was no consumption of any FSI was not alloted to the respondent no.1
but continued to be remained the property of the petitioner no.1. In my view the
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respondent no.1 thus cannot be allowed to deal with and/or create any third party
rights in respect of the service floor. In paragraph 8(d) (iv) of the affidavit in reply
filed by the respondent no.1, it is admitted that the service floor is an area used for
common amenities wherein pipeline and electricity arrangement for the entire
building is routed and is required for the benefit of the entire building. The
respondent no.1 thus cannot be allowed to deal with the said service floor and/or
create any third party rights in respect thereof as is apparent from the affidavit of
the respondent no.1 themselves.
48. Learned counsel for the petitioner has placed reliance on the judgment of
Supreme Court in case of Nahalchand Laloochand Private Limited (supra) and
also judgment of this court in the same matter in support of the submission that the
promoter/developer has no right to sell any portion of the building which is not a
flat within the meaning of section 2(a-1) and the entire land and the building has to
be conveyed to the society and the only right which remains with the promoter is
to sell unsold flats. The Supreme Court has interpreted the definition of the
common areas and the facilities under section 3(f) of MAOA which provides that a
common areas and facilities would include the basements, cellars, yards, gardens,
parking areas and storage spaces. Supreme Court has also held that considering
the scheme and object of MOFA, there being no indication to the contrary, there
was no justifiable reason to exclude parking areas open to the sky or stilted portion
from the purview of common areas and facilities under MOFA. In my view the
said judgment of Supreme Court in case of Nahalchand Laloochand Private
Limited (supra) and delivered by this court between the said parties squarely
applies to the facts of this case. The respondent no.1 in my view thus cannot be
allowed to create any third party rights in respect of the service floor and all other
common amenities in the building which in my view prima facie exclusively
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belong to the petitioner no.1 and is for the benefit of its members.
49. A perusal of the record indicates that the respondent no.1 has created
mortgage in respect of some part of the common amenities illegally. In my prima
facie view the respondent no.1 has also attempted to create third party rights in
respect of the basement area along with three commercial shops in favour of the
respondent no.1 which in my prima facie view is contrary to the development
agreement and the provisions of development control regulations and thus the
respondent no.1 cannot be permitted to create any third party rights in respect of
the said basement area.
50. A perusal of the record indicates that the respondent no.1 has not paid the
Municipal Corporation taxes and substantial amount of outgoing in respect of the
tenaments occupied by the respondent no.1 and/or allowed to be sold under the
said development agreement. There was huge arrears of municipal taxes in respect
of the construction carried out and for the period prior to the respondent no.1
handing over such redeveloped portion to the petitioner no.1. The respondent no.1
however has paid only part of the amount to the Municipal Corporation against
such arrears of municipal taxes. In view of the arrears of payment of municipal
taxes, the Municipal Corporation has already levied attachment in respect of the
entire building of the petitioner no.1. I am inclined to accept the submission of the
learned counsel for the petitioner no.1 that the members of the petitioner no.1
society belonged to middle class and in view of the default committed by the
respondent no.1, their flats including the property of the society are already
attached by the Municipal Corporation they would further suffer hardship. The
respondent no.1 has also defaulted in making payment of monthly outgoings to the
petitioner no.1.
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51. Learned counsel appearing for the respondent no.1 does not dispute that the
respondent no.1 has to pay part of the municipal taxes and the entire liability of the
municipal taxes has not been cleared by the respondent no.1. The only submission
made before this court by the respondent no.1 is that the respondent no.1 is not
liable to pay common security charges or common electricity charges. In my
prima facie view since some of the tenaments were allowed to be sold by the
respondent no.1 in the reconstructed building and are occupied by the third parties
who have purchased such tenament from the respondent no.1, it was obligation of
the respondent no.1 to pay outgoings in respect of such tenaments to the petitioner
no.1 society.
52. A perusal of the record clearly indicates that the respondent no.1 has
borrowed substantial amount from various banks and has already created mortgage
in respect of most of the properties. Even in respect of some of the tenaments in
the new building constructed under the development agreement, the respondent
no.1 has already created alleged rights by executing leave and licence agreement or
other writings. In my view the apprehension of the petitioner no.1 that if the
respondents are not restrained from creating any third party rights in respect of
some of the properties and atleast in case of service floor and first floor at this
stage and the basement, the petitioner no.1 would not be able to recover any
amount or such property from the respondent no.1 or from third party. In my
prima facie view the petitioner has good chances of succeeding in the arbitral
proceedings.
53. Insofar as submission of the learned counsel for the respondent no.1 that the
petitioners cannot be granted any relief in the nature of any attachment before
judgment under Order 38 Rule 5 of the Code of Civil Procedure in view of the
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petitioner no.1 being in the nature of the damages is concerned, a perusal of the
record indicates that the entire amount claimed by the petitioner no.1 is not in the
nature of the damages. The petitioners have alleged various breaches on the part
of the respondent no.1 of their obligation under the development agreement and
have also alleged violation of various provisions of development control
regulations. The petitioners have filed this petition alleging such violation and
have applied for protection of their rights in those properties under the
development agreement.
54. Since the petitioners have good chances in succeeding arbitral proceedings,
it would be appropriate if the respondent no.1 is restrained from creating any third
party rights in respect of the first floor premises, service floor and the basement,
till the disposal of the arbitral proceedings filed by the petitioners and for further
period of three months till such award is executed.
55. A perusal of the record prima facie indicates that the respondent no.1 is
heavily indebted and has committed default in making payment of outgoings and
municipal taxes.
56. Insofar as other breaches alleged by the petitioner in the arbitration petition
in respect of which no reliefs are pressed at this stage by the petitioner or no reliefs
are claimed in the prayer clauses are concerned, this court has not expressed any
views and thus as and when such reliefs are claimed by the petitioner before the
learned arbitrator, the same can be dealt with by the learned arbitrator on its own
merits.
57. In my view the petitioners have made prima facie case for grant of interim
measures. I, therefore, pass the following order :-
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(a) The respondent no.1, their servants, agents and/or
representatives and/or any other claiming by, from, through or
under them are restrained by an order of injunction of this
court from in any manner transferring, encumbering,
alienating, or creating any third party right, title and interest in
respect of the first floor and service floor of Anand Villa
situated at Linking Road, Santacruz (West), Mumbai 400 054
and also the basement area which is alleged to have been
transferred in favour of the respondent no.8 along with three
shops bearing nos. 1, 2 and 3 on the ground floors of Anand
Villa.
(b) The respondent no.8 is directed to deposit a sum of
Rs.One Crore out of the balance consideration payable to the
respondent no.1 under the Memorandum of Understanding
dated 13th April, 2015 in this court within two weeks from
today on behalf of the respondent no.1. Upon deposit of the
said amount, the Prothonotary and Senior Master shall invest
the said amount in a fixed deposit of a nationalized bank
initially for a period of two years and to renew it after
obtaining further orders from this court.
(c) Arbitration petition is disposed of in the aforesaid terms.
There shall be no order as to costs.
(R.D. DHANUKA,J.)
