Bombay High Court
Mrs. Snehal Prabodh Kelkar And Ors vs Mr. Avinash Madhukarrao Yekhande ... on 29 April, 2016
Bench: R.D. Dhanuka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
ARBITRATION APPEAL NO. 6 OF 2015
ALONGWITH
CIVIL APPLICATION NO. 6 OF 2015
IN
ARBITRATION APPEAL NO. 6 OF 2015
M/s. Paranjape Schemes (Construction) Ltd., )
A Company incorporated and Register under )
Indian Companies Act, 1956 having its )
administrative office at PSC House, CTS NO. )
111 + 111/2, Anand Colony, Off.Prabhat Road, )
Pune - 411 004 ig )
Registered office at Somnath CTS 988, )
Rammandir Road, Next to Tilak Mandir, )
Vile Parle (E), Mumbai - 400 057 ) ..... Appellant
VERSUS
1. Mr.Avinash Madhukarrao Yekhande, )
Age : 42 years, Occ: Service, )
R/o. G-1002, Madhukosh, S.No.4/2, 16 and 17 )
Wadgaon Khurd Sinhagad Road, Pune - 411041)
2. Mr.Shrinivas Vijaykumar Dombe, )
Age : 37 years, Occ: Service, )
R/o. G-102, Madhukosh, S.No.4/2, 16 and 17 )
Wadgaon Khurd Sinhagad Road, Pune - 411041)
3. Mrs.Sangeeta Vikas Waskar, )
Age : 40 years, Occ: Housewife, )
R/o. G-401, Madhukosh, S.No.4/2, 16 and 17 )
Wadgaon Khurd Sinhagad Road, Pune - 411041)
4a. Mr.Prakash Parashuram Gosavi, )
Age : 45 years, Occ: Service )
4b. Mrs.Ashvini Prakash Gosavi, )
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Age : 38 years, Occ:Housewife, )
both R/o. G-702, Madhukosh, S.No.4/2, )
16 and 17 Wadgaon Khurd Sinhagad Road, )
Pune - 411 041 )
5. Mr.Avinash Shrihari Pawal, )
Age : 34 years, Occ: Service, )
R/o. C/o. Nanda Tukaram Gundalkar, )
S.No.36, Dhanakwadi, Pune - 411 043 )
6. Mr.Ranjit Surendra Deshmukh, )
Age : 51 years, Occ : Self Employed )
Walvekarnagar, Parvati, Pune - 411 009 )
7. Kailas Vasant Joshi,
Age : 31 years, Occ: Service,
ig )
)
R/o. 1457 B. Shukrawar Peth, )
Bhaumaharaj Lane, Pune - 411 002 )
8. Mr.Bhimrao Daji Ronge (HUF), )
Age : 51 years, Occ : Agriculture, )
R/o. Kanishka Plot No.9, Gat No.102/3, )
Karmayogi Nagar, Link Road, Pandharpur, )
Dist: Solapur - 413 304 )
9. Mr.Kedar Shrikrishna Khapare, )
Age:30 years, Occ : Self Employed, )
R/o. Saudamini Apartment, Flat No.4, )
Opp.Sarovar Hotel, 100 ft. Road, )
Vishrambaug, Sangli - 416 415 )
10. Mr.Abhijit Surendrarao Deshmukh, )
Age : 44 years, Occ: Doctor, )
R/o."Aastha" Hospital Rukhmini Nagar, )
Amravati Maharashtra ) ..... Respondents
ALONGWITH
CIVIL APPLICATION NO. 22 OF 2015
IN
ARBITRATION APPEAL NO. 6 OF 2015
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1. Snehal Prabodh Kelkar, )
Age : 33 years, Occ: Housewife, )
R/o.Raghunandan, Patwardhan Baug, )
Erandavane, Pune )
2. Prabodh Vikram Kelkar, )
Age : 35 years, Occ: service )
R/o.Raghunandan, Patwardhan Baug, )
Erandavane, Pune ) ..... Applicants
3. Jayant Digambar Sant, )
Age : Adult, Occ: service, )
R/o. 203, Sarita Englance, Navsha Maruti )
Mandir, Sinhagad Road, Pune - 411 030 )
4. Anand Digambar Sant,
ig )
Age : Adult, Occ: service, )
R/o. 203, Sarita Englance, Navsha Maruti )
Mandir, Sinhagad Road, Pune - 411 030 )
5. Vijay Chandrakant Bharte, )
Age:Adult, Occ.:profession )
R/o. 4, Nikhil Garden, Manik Baug, )
Sinhagad Road, Pune - 411 051 )
6. Rupali Vijay Bharte, )
Age:Adult, Occ.:Housewife )
R/o. 4, Nikhil Garden, Manik Baug, )
Sinhagad Road, Pune - 411 051 )
7. Shrikant Gulabrao Kale, )
Age:Adult, Occ.:Lawyer )
R/o. B,603, Isha Garden, Off.Mahesh Vidyalaya)
Near Gandhi Bhavan, Kothrud, Pune - 411 038)
8. Manisha Shrikant Kale, )
Age:Adult, Occ.:service )
R/o. B,603, Isha Garden, Off.Mahesh Vidyalaya)
Near Gandhi Bhavan, Kothrud, Pune - 411 038)
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9. Tushar Suresh Potphode, )
Age : 40 years, Occ.: LIC Agent, Kasba Peth, )
Pune - 411 011 )
10. Vidya Tushar Potphode, )
Age : Adult, Occ.: Service, Kasba Peth, )
Pune - 411 011 )
11. Manoj Ramesh Joshi, )
Age : Adult, Occ.: service, )
R/o. C2/14, Danmodar Vihar, Hingane (Khurd) )
Pune )
12. Mugdha Manoj Joshi, )
Age : Adult, Occ.: service,
ig )
R/o. C2/14, Danmodar Vihar, Hingane (Khurd) )
Pune )
13. Ravindra Madhukar Joshi, )
Age : Adult, Occ.: service, )
R/o. Intop Heights, Sector 19, Airoli, )
Navi Mumbai )
14. Manisha Ravindra Joshi, )
Age : Adult, Occ.: Housewife, )
R/o. Intop Heights, Sector 19, Airoli, )
Navi Mumbai )
15. Angad Sushila Ajgaonkar, )
Age : Adult, Occ.: employed, )
R/o. 4, Rupdarshini, Lt.Dilip Gupte Road, )
Mahim, Mumbai 400 016 )
16. Sayali Shirish Nimkar, )
Age : Adult, Occ.: service, )
78/31, Vrundavan Society, Majiwade, )
Thane (West) 421 600 ) ..... Applicants
IN THE MATTER BETWEEN
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M/s. Paranjape Schemes (Construction) Ltd., )
A Company incorporated and Register under )
Indian Companies Act, 1956 having its )
administrative office at PSC House, CTS NO. )
111 + 111/2, Anand Colony, Off.Prabhat Road, )
Pune - 411 004 )
Registered office at Somnath CTS 988, )
Rammandir Road, Next to Tilak Mandir, )
Vile Parle (E), Mumbai - 400 057 ) ..... Appellant
VERSUS
1. Mr.Avinash Madhukarrao Yekhande, )
Age : 42 years, Occ: Service, )
R/o. G-1002, Madhukosh, S.No.4/2, 16 and 17 )
Wadgaon Khurd Sinhagad Road, Pune - 411041)
2. Mr.Shrinivas Vijaykumar Dombe, )
Age : 37 years, Occ: Service, )
R/o. G-102, Madhukosh, S.No.4/2, 16 and 17 )
Wadgaon Khurd Sinhagad Road, Pune - 411041)
3. Mrs.Sangeeta Vikas Waskar, )
Age : 40 years, Occ: Housewife, )
R/o. G-401, Madhukosh, S.No.4/2, 16 and 17 )
Wadgaon Khurd Sinhagad Road, Pune - 411041)
4a. Mr.Prakash Parashuram Gosavi, )
Age : 45 years, Occ: Service )
4b. Mrs.Ashvini Prakash Gosavi, )
Age : 38 years, Occ:Housewife, )
both R/o. G-702, Madhukosh, S.No.4/2, )
16 and 17 Wadgaon Khurd Sinhagad Road, )
Pune - 411 041 )
5. Mr.Avinash Shrihari Pawal, )
Age : 34 years, Occ: Service, )
R/o. C/o. Nanda Tukaram Gundalkar, )
S.No.36, Dhanakwadi, Pune - 411 043 )
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6. Mr.Ranjit Surendra Deshmukh, )
Age : 51 years, Occ : Self Employed )
Walvekarnagar, Parvati, Pune - 411 009 )
7. Kailas Vasant Joshi, )
Age : 31 years, Occ: Service, )
R/o. 1457 B. Shukrawar Peth, )
Bhaumaharaj Lane, Pune - 411 002 )
8. Mr.Bhimrao Daji Ronge (HUF), )
Age : 51 years, Occ : Agriculture, )
R/o. Kanishka Plot No.9, Gat No.102/3, )
Karmayogi Nagar, Link Road, Pandharpur, )
Dist: Solapur - 413 304
ig )
9. Mr.Kedar Shrikrishna Khapare, )
Age:30 years, Occ : Self Employed, )
R/o. Saudamini Apartment, Flat No.4, )
Opp.Sarovar Hotel, 100 ft. Road, )
Vishrambaug, Sangli - 416 415 )
10. Mr.Abhijit Surendrarao Deshmukh, )
Age : 44 years, Occ: Doctor, )
R/o."Aastha" Hospital Rukhmini Nagar, )
Amravati Maharashtra ) ..... Respondents
Mr.P.S.Dani, Senior Advocate, i/b. Mr.Prasad Kulkarni for the
Petitioner/Appellant.
Ms.Gauri Godse, a/w. Mr.Dilip Athavale, Mr.Jaydeep Deo for the Respondents.
Mr.Atul Damle, Senior Advocate, i/b. Mr.Anant Vadgaonkar for the
Interveners/Applicants in Civil Application No.22 of 2015.
CORAM : R.D. DHANUKA, J.
RESERVED ON : 6th APRIL, 2016
PRONOUNCED ON : 29th APRIL, 2016
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JUDGMENT :
Admit. Learned counsel appearing for the respondents waive service. By
consent of parties, appeal is heard finally.
2. By this appeal filed under section 37 of the Arbitration and Conciliation Act,
1996, (for short the said 'Arbitration Act'), the appellant has impugned the order
and judgment dated 21st January, 2015 delivered by the learned District Judge - 14,
Pune allowing the application filed by the respondents partly filed under section 9
of the Arbitration Act and temporarily restraining the appellant from carrying out
construction of 'E' Building in terms of prayer clause (A) of the application, till
further orders. The appellant herein was the original opponent in the proceedings
before the learned District Judge - 14, Pune whereas the respondents herein were
the applicants.
3. Some of the relevant facts for the purpose of deciding this appeal are as
under :-
4. The respondents desired to acquire residential accommodation for
themselves and their family members. The appellant is a developer who has
proposed to construct various buildings in the city of Pune. On 31 st December,
2011 Pune Municipal Corporation granted approval to the building plans submitted
by the appellant for the Buildings E, F and G and issued a commencement
certificate. Insofar as the respondents are concerned, the respondents have
purchased various flats in Building G constructed by the appellant. On 31 st
December, 2011 the appellant published brochure of the scheme 'Madhukosh'.
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5. Sometime in the year 2012, the respondents executed separate agreements
with the appellant in respect of various flats purchased in building G under section
4 of the Maharashtra Ownership Flats(Regulation of the Promotion, Construction,
Sale, Management and Transfer) Act,1963 (for short 'MOFA'). It is the case of the
respondents that the appellant deferred the construction of the proposed Building E
which was near proposed DP Road due to delay in receiving tree cutting
permission. One of the members had made a complaint on 3 rd April, 2013 about
the proposed construction of the Building L originally sanctioned as Building E.
6. On 27th September, ig 2013, Pune Municipal Corporation issued
commencement certificate for revised Building E thereby shifting its position
abutting to Building G under Commencement Certificate No.CC/2000/13.
7. On 15th October, 2013 Pune Municipal Corporation issued a completion
Certificate bearing No.OCC/1029/13 for Buildings G and F. On 19 th December,
2013 the appellant started construction of plinth of Building E. On 4 th January,
2014, the appellant informed the respondents to take possession of their respective
flats in Building G and informed that if the possession was not taken by the
respondents of their respective flats in Building G, the penalty would be charged to
the respondents by the appellant on the overdues. Sometimes in the month of
January/February 2014 the respondents accordingly took possession of their
respective flats from the appellants in Building G.
8. On 20th September, 2014 some of the respondents herein entered into a Deed
of Apartment with the appellant. It is the case of the respondents that during the
period between February 2014 and October 2014, the appellant had convened
number of meetings with the flat purchasers including the respondents and
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promised to settle the dispute raised by the flat purchasers with regard to 22 flats in
Building G. During the said period, the appellant constructed RCC structures upto
second slab of Building E.
9. On 13th October, 2014, the respondents herein filed an application under
section 9 of the Arbitration Act against the appellant inter alia praying for interim
measures by way of an order of injunction from effecting further construction of
Building E to the layout of property described in paragraph 1A of the said
application in terms of the building plan approved by Pune Municipal Corporation
in terms of CC No. 2000/13 dated 27 th September, 2013 and also praying for an
order of perpetual injunction from creating any third party interests in respect of
flats in Building E.
10. The appellant herein filed an affidavit in reply in the said proceedings and
opposed the said application for interim measures on various grounds including on
the ground of maintainability of the said application and on the ground of
jurisdiction. It was contended by the appellant that the said application filed under
section 9 was de-hors the arbitration clause and was thus not maintainable. The
application was also opposed on the ground of alleged delay on the part of the
respondents in approaching the court. It was contended that the provisions of
MOFA being an special enactment would supersede the provisions of Arbitration
Act and thus the said application filed under section 9 was not maintainable on that
ground also.
11. By an order and judgment dated 21st January, 2015, the learned District
Judge - 14, Pune allowed the said arbitration application filed by the respondents
partly i.e. restraining the appellant by an order and injunction by effecting further
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construction of Building E in the layout of the property described in paragraph 1A
of the said application in terms of the building plan approved by the Pune
Municipal Corporation in terms of CC No.2000/13 dated 27 th September, 2013 till
further orders. This order of learned District Judge - 14, Pune is impugned by the
appellant in this appeal under section 37 of the Arbitration Act.
12. Civil application No.22 of 2015 is filed by the applicants who claims to be
the flat purchasers in Building 'E' by the appellant and seeks
intervention/impleadment as parties in the Arbitration Appeal No. 6 of 2015 filed
by the appellant. Civil application filed by the applicants is opposed by the
respondents on the ground that these applicants had never applied for
impleadment/intervention in the arbitration application filed by the respondents
before the learned District Judge - 14, Pune and thus cannot be allowed to be
impleaded/to intervene in the present appeal filed by the appellant. The
application is also opposed on the ground that these applicants were not parties to
the arbitration agreement entered into between the appellant and the respondents.
13. Mr.Dani, learned senior counsel for the applicant invited my attention to
some of the provisions of one of the agreement entered into between the appellant
and one of the respondents and also to the provisions of Deed of Apartment
executed between the appellant and some of the respondents. Reliance is also
placed on recital 'D' and 'H' of the agreement executed under section 4 of MOFA
and on clauses 6, 11(m), 13, 21(b) (d), 25 and 45. It is submitted by the learned
senior counsel that under clause 21 of the said agreement entered into between the
parties, it was agreed that the purchaser shall become member of the condominium
and shall co-operate the owner/developer in that regard in that respect. It was
agreed that the developer shall be entitled to form more than one condominiums by
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combining flat purchasers of one or more buildings together, at its sole discretion,
and the purchasers shall not be entitled to take any objections whatsoever thereto.
14. The developer and the consenting parties agreed to submit their respective
rights, title, interest, claims relating to the said property and the said buildings to
the provisions of the Maharashtra Apartment Ownership Act, 1970 by executing
and registering one or more Deeds of Declaration togetherwith the bye-laws under
section 2 thereof. Under clause 21(e) it was provided that if the developer form
more than one condominiums in the said project, the amenities/facilities/rights of
ways etc. shall be enjoyed by all the condominiums and members thereof jointly,
unless the developer has provided the same exclusively, in the concerned Deed of
Declaration.
15. Under clause 21(g), it was provided that the developer shall cause the
submission of the said property togetherwith the said buildings to the provisions of
the Maharashtra Apartment Ownership Act, 1970 by forming one or more
condominiums, within a period of one year of completion of the said
project/scheme. Under section 21(h), it was provided that the developer and the
concerned parties shall execute and/or cause to be executed the conveyance in the
nature of the Deed of Apartment relating to the concerned purchaser, within a
period of one year of date of registration of the said Deed of Declaration.
16. It is submitted by the learned senior counsel that under clause 26 of the said
agreement, the purchasers had agreed and declared that they had no claim save and
except in respect of the particular flat agreed to be sold to the purchasers under the
said agreement and subject to the terms and conditions appeared in the said
agreement.
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17. Clauses 45 and 46 of the said agreement which are relevant for the purpose
of deciding these appeals are extracted as under :-
45. The Parties to this Agreement have agreed that in case
any dispute or difference arises between the parties about the
meaning or interpretation of any one of the clause or any term
of the Agreement, the such dispute or difference shall first be
referred to the Arbitrator appointed by the Owner/Developer
as per the provisions of Arbitration and Conciliation Act,
1996.
46. Except otherwise mentioned and provided herein, this
Agreement shall always be subject to the provisions of
Maharashtra Ownership Flats (Regulation of the Promotion of
Construction, Sale, Management and Transfer) Act 1963.
18. Under clause 49 of the said agreement, it was provided that the purchaser
and developer shall present the said agreement as well as the final conveyance or
any document in form of Deed of Apartment at the proper registration office for
registration within the time limit prescribed by the Registration Act and the
purchaser and the developer shall attend such office and admit execution thereof.
The said agreement was duly registered with the Sub Registrar.
19. Learned senior counsel for the appellant placed reliance on the Deed of
Apartment dated 20th September, 2014 executed between the appellant and one of
the flat purchaser and more particularly recital 'J', clauses 1, 19 and 20. It is
submitted that some of the respondents having executed Deed of Apartment and
having signed a separate Deed of Declaration under the provisions of Maharashtra
Apartment Ownership Act, 1970, all their rights, interest and title if any, under the
agreement entered into under section 4 of MOFA stood novated/superseded under
the said Deed of Apartment read with Deed of Declaration. He submits that mere
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execution of an agreement for sale under section 4 of MOFA itself would not
confer any title in the flat in favour of the flat purchasers by the appellant and title
deed could be conferred only by execution of the Deed of Apartment read with
Deed of Declaration.
20. It is submitted that in view of the parties having executed a Deed of
Apartment alongwith Deed of Declaration, agreement entered into between the
parties under section 4 of MOFA ceased to exist for all the purposes. He submits
that admittedly in the Deed of Apartment read with Deed of Declaration, there
existed no arbitration agreement between the parties in view of earlier agreement
executed under section 4 of MOFA stood novated/superseded by execution of
Deed of Apartment read with Deed of Declaration and thus the application filed by
the respondents under section 9 of the Arbitration Act itself was without
jurisdiction and not maintainable. He submits that the Deed of Declaration was
executed by more than five flat purchasers. The other seven flat purchasers have
registered Deed of Apartment during the period between July and September 2014.
Learned senior counsel for the appellant placed reliance on the judgment of
Supreme Court in case of Young Achievers vs. IMS Learning Resources Private
Limited (2013) 10 SCC 535 and in particular paragraphs 5 to 8 in support of his
aforesaid submission.
21. The next submission of the learned senior counsel for the appellant is that
the MOFA being a special enactment which was applicable to the parties when the
said agreement under section 4 of MOFA was executed, the respondents could not
have invoked the provisions of the Arbitration Act for filing any proceedings
against the appellant including the application for the interim measures under
section 9. He submits that the proceedings if any, which could be filed by the
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respondents under the said agreement entered into under section 4 of MOFA could
have been entertained only before a civil court and not under the provisions of
Arbitration Act.
22. Without prejudice to the aforesaid submission, it is submitted by the
learned senior counsel that even if clause 45 of the MOFA agreement is
invoked by the respondents for the purpose of referring the dispute to arbitration
and for filing an application for interim measures under Section 9 of the
Arbitration Act, the dispute and difference between the parties about the meaning
or interpretation of any one ig of the clause or any term of the said MOFA
agreement could only be referred to arbitration and not the dispute as proposed
to be referred by the respondents as is apparent from averments made in the
application filed for interim measures by the respondents under Section 9 of the
Arbitration Act. In support of this submission, learned senior counsel invited my
attention to paragraphs 3, 4, 7 to 11 and 21 of the arbitration application filed by
the respondents for interim measures. He submits that it is not the case of the
respondents that a new construction carried out by the appellant is contrary to
any of the provisions of the said MOFA agreement.
23. It is submitted that the claims proposed to be made by the respondents in
arbitration application are dehors the provisions of clause 45 of MOFA agreement
and thus none of the claims proposed to be made by the respondents in the
arbitral proceedings are arbitrable. He submits that the entire application under
Section 9 of the Arbitration Act filed by the respondents is based on the alleged
violation of the statutory provisions under MOFA and is not based on any
alleged violation of any of the provisions of the MOFA agreement. He submits
that under the said clause 45 of the MOFA agreement, the learned arbitrator has
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no jurisdiction to adjudicate upon the violation of any of the provisions of the
MOFA as alleged by the respondents. He submits that none of the averments
made by the respondents in the said arbitration application discloses any dispute
as to any meaning or interpretation of any of the clauses of the MOFA agreement.
He submits that on this ground, the dispute, if any, in respect of the new
construction carried out by the appellant is not arbitrable as invoked under the
MOFA agreement.
24. It is submitted that the scope of referring the dispute under clause 45 of
the MOFA agreement is thus ig very limited and any claim made by the
respondents which does not disclose any dispute requiring any interpretation of
any clause or meaning of any of the provisions of the MOFA agreement is thus
beyond the jurisdiction of the learned arbitrator. He submits that learned District
Judge thus had no jurisdiction to entertain the application filed under Section 9
of the Arbitration Act for interim measures on this ground alone. He submits that
the learned District Judge has exceeded his jurisdiction by entertaining, trying
and disposing of the arbitration application for interim measures under Section 9
of the Arbitration Act.
25. It is submitted by the learned senior counsel that in the arbitration
application filed by the respondents and in the correspondence addressed by the
respondents to the appellant, the respondents have made serious allegations of
fraud and misrepresentation against the appellant which allegations cannot be
adjudicated upon in the arbitral proceedings. He submits that the learned District
Judge, therefore, could not have granted any interim measures against the
appellant and in favour of the respondents based on such allegations of fraud
and misrepresentation made by the respondents against the appellant. He submits
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that since the said allegations of fraud and misrepresentation cannot be decided
by the arbitrator, the interim relief being in aid of final relief thus could not
have been granted by the learned District Judge under Section 9 of the Arbitration
Act.
26. It is submitted by the learned senior counsel that when the construction of
four buildings was going on, the respondents had also admittedly noticed that
the construction of building 'E' also had started. In support of this submission,
learned senior counsel invited my attention to paragraph 7 of the arbitration
application and would submit that ig the respondents were fully aware of
commencement of construction of building 'E'. The construction of building 'G'
was already over and the possession of various flats was handed over to the flats
purchasers including the respondents by the appellant. He submits that it was not
the case of the respondents that the respondents were not aware of the
amendment in the layout plan submitted by the appellant.
27. It is submitted that most of the respondents have already entered into a
final sale deed after personal visiting to the site. He submits that possession
receipt of the respondents would also show the numbers of plans having been
sanctioned by the local authority in favour of the appellant including the plan in
respect of the building 'E'. He submits that building 'E' is constructed upto the 6 th
floor. The third party rights are created by the appellant in favour of various flat
purchasers. He submits that in view of gross delay and latches on the part of the
respondents in applying the interim measures, the learned District Judge could
not have granted interim measures. It was not a fit case for grant of injunction. He
submits that the appellant has already spent substantial amount on carrying out
construction of portion of the building. It is submitted that the balance of
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convenience was in favour of the appellant and not the respondents.
28. It is submitted by the learned senior counsel for the appellant that in
paragraph 13 of the arbitration application, the respondents have alleged that the
construction of building 'E' was abutting to terraces and windows of flats in
building 'G' and was affecting the easementary rights of the respondents which
allegations cannot be referred to arbitration.
29. It is submitted by the learned senior counsel that prima facie finding of the
learned District Judge that there was no novatio in view of there being two
separate agreements i.e. MOFA agreement and Deed of Apartment is totally
erroneous and shows perversity. On the issue of balance of convenience, the
learned senior counsel for the appellant placed reliance on the judgment of this
Court in the case of Lodha Estate Private Limited Vs. Shri Kishan Waman
Bhoir & Ors., reported in 2012 (1) ALL MR 143 and in particular paragraphs
10 and 12 thereof. It is submitted by the learned senior counsel that even in the
arbitration application filed by the respondents, the respondents have averred that
they would make a claim for compensation against the appellant. He submits that
on this ground alone, the learned District Judge could not have granted any
injunction thereby stating further construction of 'E' building causing
tremendous hardship not only to the appellant, but also to various flat purchasers
in 'E' building.
30. Ms.Godse, learned counsel for the respondents, on the other hand, submits
that admittedly Deed of Apartment was not signed by the three flat purchasers out
of ten flat purchasers. She submits that the appellant had issued a brochure
showing the different locations of 'E' and 'G' buildings. She submits that even
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layout plan sanctioned by the Municipal Corporation and shown to the
respondents showed the same location.
31. In so far as the issue of existence of arbitration clause raised by the
appellant is concerned, it is submitted by the learned counsel for the respondents
that even upon execution of the Deed of Apartment, the rights and obligations
under the MOFA agreement were not superseded by the said Deed of Apartment
and the provisions of the MOFA agreement continued to subsist and binding
between the parties. She submits that the Deed of Apartment was executed for
the purpose of transferring ig the proportionate share in the land including
common amenities in favour of the flat purchasers and the said document is not
a title deed in respect of the flats purchased by the respondents. She submits that
the MOFA agreement is not restricted to the flats purchased by the respondents,
but it was in respect of the entire property including the land which was to be
developed by the appellant by constructing various buildings including 'G'
building. She submits that the dispute could not be restricted to only flats
purchased by the respondents, but was in respect of the entire property and thus
the dispute in respect of the entire property was arbitrable. In support of her this
submission, learned counsel invited my attention to clauses 45 and 46 of the
MOFA agreement.
32. It is submitted by the learned counsel for the respondents that under the
provisions of the MOFA, the title in respect of the flats purchased by the
respondents already stood transferred in favour of the flat purchasers. The Deed
of Apartment which was executed by some of the respondents was not executed
for conferring any title in respect of the flats purchased by the respondents. She
submits that even after execution of such Deed of Apartment, the breaches of the
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MOFA agreement committed by the appellant could still be adjudicated upon by
referring such dispute to the arbitration by invoking clause 45 of the agreement.
Without prejudice to the aforesaid submission, it is submitted that even if Deed of
Apartment is executed, the provisions of MOFA agreement did not come to an
end in toto. The dispute having arisen under the said agreement thus can be
referred to arbitration under clause 45 of the MOFA agreement.
33. In so far as the submission of the appellant that the dispute or difference
arising out of meaning or interpretation of any of the clauses or any of the
provisions of the said MOFA agreement only could be referred to arbitration and
not the dispute as proposed to be referred by the respondents is concerned, learned
counsel for the respondents placed reliance on clauses 6, 13, recital (b) i.e. "entire
property." Learned counsel also invited my attention to various averments made
in the arbitration application filed under Section 9 for interim measures by the
respondents including paragraphs 7 & 8. It is submitted by the learned counsel
that the dispute raised by the respondents thus also relates to the meaning or
interpretation of various clauses of the MOFA agreement and thus such dispute
raised by the respondents are arbitrable.
34. It is submitted by the learned counsel for the respondents that the
respondents have not made any allegations of fraud or misrepresentation as
canvassed by the appellant. She submits that even if any allegations of fraud or
misrepresentation are made by the respondents, there is no bar under the
provisions of the Arbitration Act for referring such dispute to arbitration. She
submits that the respondents have only explained their understanding about
possession of land in the arbitration application.
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35. It is submitted by the learned counsel for the respondents that Section 4 of
the MOFA provides for a format of the agreement that is required to be entered
into by a developer/promoter in favour of the flat purchasers. It further provides
for mandatory requirements of providing for a common area/facilities and for
disclosure of the property card of the entire property. Under Section 5 of the
MOFA, the promoter is required to maintain a separate account. Role and powers
of the Competent Authority are prescribed under Section 5A of the MOFA.
Under Section 10 of the MOFA, the promoter has to form a Society. Under
Section 11 of the MOFA, the promoter has to convey title in respect of the land to
the Society or the apartment owners in favour of group of flat purchasers.
36. It is submitted that under Section 11 of the MOFA, there is no individual
transfer of property in favour of the flat purchasers. Even if, the Deed of
Declaration/Deed of Apartment is executed in respect of the land and for common
amenities agreement would still survive in so far as the purchase of flats is
concerned. Learned counsel placed reliance on the judgment of this Court in the
case of Vrindavan (Borivali) Co-operative Housing Society Limited Vs.
Karmarkar Brothers & Ors., reported in 1982 Mh. L.J. 607. It is submitted
that even if the dispute for enforcement of any provision of the MOFA
agreement and/or alleging violation of the provisions of the MOFA in view of the
arbitration agreement between the parties, such dispute cannot be tried by a
Civil Court. In view of the arbitration agreement between the parties, arbitral
proceedings are not barred. It is submitted that the arbitral proceedings for
enforcement of the provisions of the MOFA agreement or even for the
enforcement of the statutory rights provided under the MOFA, such
proceedings/action cannot construed as an action in rem but would only be an
action in personam. She submits that the claims thus proposed to be made by the
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respondents are arbitrable and can be adjudicated upon in the arbitral
proceedings. The parties can always enter into an agreement referring such
dispute to arbitration under the provisions of the Arbitration Act.
37. Learned counsel for the respondents placed reliance on the judgment of the
Supreme Court in the case of Booz Allen & Hamiltan Inc. Vs. SBI Home
Finance Ltd. & Ors., reported in 2011 (5) SCC 532 and in particular
paragraphs 34 to 39 thereof in support of her submission that the claims
proposed to be made by the respondents are in personam and are not in rem
and thus arbitrable.
38. Learned counsel for the respondents placed reliance on the judgment of
the Supreme Court in the case of Ashapura Mine-chem Ltd. Vs.Gujarat
Mineral Development Corporation, reported in 2015 (8) SC 193 and in
particular paragraphs 19 and 21 thereof. She submits that there is no question of
any novation of the MOFA agreement by Deed of Apartment and/or Deed of
Declaration. She submits that both the agreements are independent agreements
and are not overlapping or Deed of Apartment cannot be superseded of the
MOFA agreement since the appellant had committed the breaches under the
provisions of the MOFA agreement still survives.
39. Learned counsel for the respondents placed reliance on clause 21(d) of the
MOFA agreement and would submit that merely because the parties had agreed to
submit their respective rights, title and interest claims relating to the entire
property and the said buildings to the provisions of the Maharashtra Apartment
Ownership Act, 1970, the said provisions would not apply in respect of the
individual flat. She submits that the terms "the said building and the said property"
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would not apply to the individual flat. My attention is also invited to the
Schedules I and II to the Deed of Apartment and it is submitted that even the
said Schedules would indicate that the reference is made to the entire property
and not to the individual flat. Reliance is also placed on Schedule V of the said
Deed of Apartment. She submits that under the said Deed of Apartment, the flat
purchaser is given 0.7% individual share in the common area in the building and
the land. She submits that the Deed of Apartment is only a consequential
document and not a document entered into a substitution for sale i.e. MOFA
agreement.
40.
It is submitted by the learned counsel for the respondents that for the
purpose of resolving the dispute between parties, arbitration clause would
continue to survive even if performance of the obligations under the MOFA
agreement does not survive. In support of this submission, learned counsel
placed reliance on the judgment of the Supreme Court in the case of Damodar
Valley Corporation Vs.K.K. Kar, reported in 1974 (1) SC 141 and more
particularly paragraphs 7, 9 and 11 thereof. Reliance is also placed on the
judgment of this Court in the case of Lloyds Steel Industries Limited Vs. Oil
& Natural Gas Corporation Ltd., reported in AIR 1997 Bombay 337 and in
particular paragraphs 15 and 16 thereof. It is submitted that all the disputes
proposed to be referred by the respondents to the arbitration are the disputes
under the MOFA agreement and are not under the Deed of Apartment.
41. It is submitted by the learned counsel that the relief claimed in the
arbitration application filed under Section 9 of the Arbitration Act is in aid of
final relief proposed to be claimed by the respondents in the arbitral proceedings.
The respondents have not filed any statement of claim till date. The respondents
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were thus entitled to seek interim measures under Section 9 of the Arbitration
Act in aid of final relief proposed to be claimed by the respondents in the
arbitral proceedings.
42. It is submitted by the learned counsel for the respondent that the appellant
had proposed to construct 'E' building which was originally located on the front
side and location whereof has been now shifted adjoining to the 'G' building
occupied by the respondents hereto and others. The appellant could not have
carried out such construction without obtaining individual and informed consent
of the flat purchasers. In support of this submission, learned counsel for the
respondents placed reliance on the judgment of Supreme Court in the case of
Lakeview Developers Vs.Eternia Co-operative Housing Society Ltd., reported
in 2015 SCC OnLine Bom 3824 and more particularly paragraphs 25, 33 to
36, 42 to 45, 51 and 61 to 67 thereof.
43. It is submitted by the learned counsel for the respondents that whether the
appellant could have been permitted to change the user or could be permitted to
shift the location of 'E' building from its original location to the location
adjoining to the 'G' building is concerned, the same would also be a dispute
arising out of the interpretation of the provisions of the agreement for sale and
more particularly clauses 6, 9 and 13 which will have to be read with clauses
45 and 46 of the MOFA agreement. She submits that if the appellant is allowed
to develop building 'E' during the pendency of the arbitral proceedings, nothing
will survive in the arbitral proceedings commenced by the respondents and the
claims of the respondents would be frustrated and would become infructuous.
She submits that the respondents have already explained the alleged delay in the
application filed under Section 9 of the Arbitration Act. She submits that the
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respondents were already ready and willing and are even now ready and willing
to go to the arbitration as per the agreement for sale entered into between the
parties. She submits that the claims in the arbitral proceedings would be for
compliance of the statutory obligations under the provisions of the MOFA and
for compliance of the obligations of the appellant under the agreement for sale
including removal of structure not constructed by the appellant as per the
original layout which would be within the provisions of the arbitration
agreement. She submits that there is no bar in the arbitral proceedings to decide
the issue on violation of the statutory obligations under the provisions of the
MOFA and also the violationig of the agreement for sale under the MOFA
agreement. She submits that balance of convenience is thus in favour of the
respondents and not in favour of the appellant.
44. Learned counsel for the respondents distinguishes the judgment of this
Court in the case of Lodha Estate Private Limited (supra) relied upon by the
learned senior counsel for the appellant on the ground that the facts before this
Court in the said judgment were totally different. She submits that in this case,
the respondents are litigating in the bonafide manner and balance of
convenience lies in their favour. She submits that the appellant having
committed violation of the provisions of the MOFA and have illegally got the
layout amended cannot seek any equity from this Court. Learned counsel also
distinguishes the judgment of the Supreme Court in the case of Young
Achievers Vs.IMS Learning Resources Private Limited (supra) on the ground
that Deed of Apartment executed between the appellant and some of the
respondents did not supersede or novate the agreement for sale executed
between the parties and thus the agreement for sale as well as the arbitration
agreement contained therein survives even after execution of Deed of Apartment
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read with Deed of Declaration. She submits that the agreement for sale entered
into between the parties under Section 4 of the MOFA and Deed of Apartment
read with Deed of Declaration executed between the appellant and some of the
respondents are for different purposes and both the agreements survive.
45. Learned counsel for the respondents placed reliance on the judgment of
the Supreme Court in the case of Veena Hasmukh Jain Vs. State of
Maharashtra, reported in 1999 (5) SCC 725 and in particular paragraphs 3 to
6 and 8 thereof in support of her submission that since there was an obligation
on the part of the appellant to hand over possession of the respective flats to the
respondents by the appellant even before execution of conveyance under the said
MOFA agreement, the said MOFA agreement itself was a conveyance of flat
and conferred title therein. She submits that till the appellant implements the
entire layout of the entire property, the agreement entered into under Section 4 of
the MOFA would not come to an end and the arbitration clause recorded therein
would still survive. Learned counsel placed reliance on clause 6 and 29 of the
MOFA agreement and would submit that the appellant had undertaken to carry
out construction of the entire property as per the layout sanctioned. She submits
that whether the developer can shift 'E' building which was originally located
in the layout on the front side to the location adjoining to the building 'G' itself is
an issue of interpretation under the provisions of the MOFA agreement is thus
arbitrable.
46. Mr.Dani, learned senior counsel for the appellant also placed reliance on
some of the paragraphs of the judgment of the Supreme Court in the case of
Booz Allen & Hamiltan Inc.(supra) and would submit that the dispute under
the provisions of the MOFA agreement and for adjudication of the statutory
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violation under the MOFA would be the proceedings in rem and thus are not
arbitrable. He submits that the averments made in the arbitration application
itself would indicate that the claims proposed to be made by the respondents on
the basis of which the respondents have applied for interim measures would not
be arbitrable. He submits that the claims proposed to be made by the respondents
are not based on the alleged interpretation of any of the clauses of the MOFA
agreement. Learned senior counsel made an attempt to distinguish the judgment of
the Supreme Court in the case of Ashapura Mine-chem Ltd. (supra) on the
ground that the facts before the Supreme Court in the said judgment were totally
different than the facts of this case. He submits that the MOFA agreement was
not a stand alone agreement.
47. Learned senior counsel for the appellant placed reliance on the judgment of
the Supreme Court in the case of Damodar Valley Corporation (supra) and
would submit that in view of the MOFA agreement having been substituted by
Deed of Apartment, it amounted to novation under Section 62 of the Indian
Contract Act, 1872 and thus the arbitration clause which existed in the MOFA
agreement perished along with the said agreement in view of the said agreement
having been substituted by Deed of Apartment which did not contain any
arbitration agreement. Learned senior counsel for the appellant distinguishes the
judgment of this Court in the case of Lloyds Steel Industries Limited (supra) on
the ground that the facts before this Court in the said judgment were totally
different than the facts of this case.
48. In so far as the submission of the learned counsel for the respondents that
under the Deed of Apartment executed between the appellant and some of the
respondents, title of the flats was not conveyed but only portion of the share in
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the land was conveyed in favour of some of the respondents in concerned,
learned senior counsel placed reliance on the covenant (p) of the Deed of
Apartment and would submit that the said Deed of Apartment also conveyed the
title in respect of the flats.
49. Learned senior counsel for the appellant distinguishes the judgment of the
Supreme Court in the case of Veena Hasmukh Jain (supra) on the ground that
the agreement for sale executed under Section 4 of the MOFA itself cannot be
construed as Deed of Conveyance conferring title in respect of the flats but the
same is to be treated as a Conveyance only for the purpose of payment of stamp
duty under the provisions of the Maharashtra Stamp Act, 1958.
REASONS AND CONCLUSIONS :-
50. It would be appropriate to refer to some of the provisions of agreement to
sale dated 18th June, 2012, executed between the appellant developer, consenting
parties and also one of the flat purchaser. In the said agreement for sale, the
petitioner had clarified that the petitioner had got executed and registered in its
favour the sale deed/deed of assignment, development agreements in respect of the
said property which compromised of right to develop, construct and sale of
ownership flats/apartments to be constructed on the said property. The appellant
had commenced construction of the buildings to be developed on the said property.
The Municipal Corporation of the City of Pune had sanctioned layout of building
plan. The Corporation had sanctioned the plan for construction of buildings A to G
on the said property. The appellant had disclosed the copies of Village Form
No.VII/VIIA/XII in respect of the said property and also the title certificate in
respect thereof issued by an advocate. Insofar as flat purchasers who are parties to
the present proceedings are concerned, they have purchased the flats under
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different agreements in the 'G' Building.
51. In paragraph (6) of the said agreement, the appellant agreed to construct on
the said property the buildings in accordance with plans, designs and specifications
seen and approved by the purchasers prior to the execution of the agreement and
duly approved by Municipal Corporation with such variations and modifications as
the appellant in their absolute authority may consider expedient. It is further
provided that the appellant shall be entitled to change the sanctioned layout plan,
to add and construct one or more buildings/wings in the said property and
complete the said project/scheme as per altered layout sanctioned plan without any
consent of the purchasers. It is provided that the purchasers had expressly agreed
and undertaken not to raise any objection in that behalf as long as the total area
thereafter being agreed to be sold to the purchasers was not reduced by any such
changes.
52. In my view it is thus clear that the appellant had obtained blanket consent
from the flat purchasers which is not permissible in law. Under clause 10 of the
said agreement, the purchasers had agreed to take possession of the said flat within
seven days of the owner giving written notice to the purchasers intimating that the
said flat is ready for use and occupation. Upon obtaining possession of the flat
from the developer, the purchaser agreed to maintain the said flat at his cost alone.
53. Under clause 11(j) of the said agreement, it is provided that the purchaser
had inspected the sanctioned building plans of the said project and the conditions
stipulated therein by the Pune Municipal Corporation and the purchasers and/or the
association/condominium to be formed of the flat purchasers shall not raise any
complaint/objections of whatsoever nature and shall abide by the same all time,
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and after having covenanted to that effect in favour of the developer, the purchaser
had agreed to purchase the said flat from the developer.
54. Under clause 11(m) of the said agreement it was provided that the developer
had reserved the right to delete the items or specifications or amenities from
broachure of the said project which was given/supplied to him on the basis of site
conditions and liabilities of carrying out of the said items, specifications and
amenities and in given situation, if the developer opts for or deletes the same, then
the purchaser shall not raise any complaint/objections and shall not be entitled to
receive any compensation monitory or otherwise.
55. Under clause 13 of the said agreement, it was provided that the developer
shall be entitled to change the user of any portion of the said property and/or any
structures thereon for any other purposes at the absolute discretion of the
developer but subject to the rights of the purchasers in respect of the said flat
hereby agreed to be sold and subject to the rules and regulations for the time being
in force in that behalf.
56. Under clause 19 of the said agreement, it was provided that the only rights
being conferred upon the purchaser under the said agreement were the rights in
respect of the particular flat specified in the said agreement. The rights of the
developer in respect of not only of the rest of the structures proposed as aforesaid
to be constructed on the said property but also of all the open spaces remaining on
the said property and the right to utilize inherent and unutilized FSI or applicable
TDR in respect of the said property in future and shall even after execution thereof
remain unaffected and for the rest of the structures proposed to be constructed on
the said property.
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57. In clause 21 of the said agreement, a provision was made for conveyance of
title as envisaged under Maharashtra Ownership Flats (Regulation of Promotion of
Construction, Sale, Management and Transfer) Act, 1963 in respect of the said flat.
Under clause 21(d), it was provided that the owner/developer and consenting
parties shall submit their respective rights, title, interest, claims relating to the said
property and the said buildings to the provisions of the Maharashtra Apartment
Ownership Act, 1970 by executing and registering one or more Deeds of
Declaration. The purchaser shall give his no objection if any change or
modifications are made in the draft bye laws of the condominium as may be
required by concerned authority. Under clause 21(e) it was provided that the said
condominiums shall have to share all their amenities/facilities/rights of way etc.
with other flat purchasers/other condominiums pertaining to adjacent properties
developed by the developer or any of its sister concern including association of
persons, in the vicinity of the said property. Under clause 21(h) it was provided
that the developer and the consenting parties shall execute and/or cause to be
executed the conveyance in the nature of the Deed of Apartment relating to the
concerned purchaser within a period of one year from the date of the registration
of the said Deeds of Declaration.
58. Clause 45 of the said agreement provided for arbitration. Clause 46 of the
said agreement provided that except otherwise mentioned and provided in the said
agreement, the said agreement shall always be subject to the provisions of
Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale,
Management and Transfer) Act, 1963. Clause 49 provided that the purchaser and
the owner shall present the said agreement as well the final conveyance or any
document in form of Deed of Apartment at the proper registration office. The
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schedule appended to the said agreement provided for the entire property and not
only the flats agreed to be sold in favour of the flat purchasers.
59. In so far as the Deed of Apartment dated 20th September 2014 executed
by the appellant and some of the respondents is concerned, clause 1 of the said
document records that the vendor conveyed a flat mentioned therein having
0.65% undivided right, title, share and interest in common areas and facilities
forever and discharge the same unto the use of the purchaser. It also records that
the vendor thereby agreed to transfer full ownership right and to grant, sell,
convey, assure and transfer the said flat together with all the fittings, fixtures,
proportionate undivided share and interest in the general common areas and
facilities and also in the restricted areas and facilities as described in the Deed
of Declaration along with the undivided impartible and proportionate interest in
the said property.
60. In clause 20 of the said document, it is recorded that the the persons
occupying the flat in the Madhukosh Apartment (Buildings A,B, C & D)
condominium and/or the future schemes which the developer may implement
on the balance land or adjacent property shall have perpetual uninterrupted
right to enter, pass, re-pass, ingress, egress etc. on the said property described
in Schedule IV of the Madhukosh Apartment (Building F & G) condominium. It
further provided that the persons occupying the flat in the Madhukosh
Apartment (Building F & G) condominium shall have perpetual uninterrupted
right to enter, pass, re-pass, ingress, egress etc. on the said property described
in Schedule IV of the Madhukosh Apartment (Building A, B, C & D) and/or the
future schemes which the developer may implement on the balance land and on
the adjacent property.
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61. In clause 32 of the said document, it is provided that the purchaser had
already paid stamp duty at the time of agreement as per the then rates, date and
amount mentioned therein. In Schedule V of the said agreement, the
description of the flat/shop/apartment is mentioned together with proportionate
0.65% undivided share in common areas and facilities described in the Deed of
Declaration of the said property.
62. A perusal of the reminder letter dated 4 th January 2014 addressed to one
of the respondents by the appellant indicates that the appellant had called upon
the flat purchaser to take possession of the flat sold to him by making final
payments and to complete the formalities on or before 12 th January 2014 and
threatened to charge penalty on overdues. On 10 th October 2014, the appellant
once again called upon the flat purchaser to pay the dues immediately and
threatened to charge interest against overdue payments. Similar letters giving
threats to charge interest/penalty against the overdue payments were addressed by
the appellant to the flat purchaser which are forming part of the record.
63. In so far as the submission of the learned senior counsel for the appellant
that the parties having executed a separate Deed of Declaration and also a Deed of
Apartment under the provisions of the Maharashtra Apartment Ownership Act,
1970, and thus their right, title and interest, if any, under the agreement entered
into under Section 4 of the MOFA, stood novated/superseded under the said
Deed of Apartment read with Deed of Declaration is concerned, a perusal of the
Deed of Apartment executed between the appellant and some of the respondents
herein does not indicate that by executing such a Deed of Apartment along with
a Deed of Declaration, they had superseded the agreement for sale entered into
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under Section 4 of the MOFA or that the said agreement for sale stood merged
with the said Deed of Apartment along with Deed of Declaration. A perusal of
the said Deed of Apartment, on the other hand, indicates that the said Deed of
Apartment was executed for the purpose of transferring share in the common
amenities and the land by the appellant in favour of the flat purchasers.
64. A perusal of the clause 46 in the agreement for sale read with clause 45 of
the said agreement clearly indicates that the said agreement for sale is made
subject to the provisions of MOFA, except otherwise mentioned and provided
therein. The appellant-developer and the consenting parties under the said
agreement had agreed to submit their respective rights, title, interest and claims
relating to the said property and the said building to the provisions of the
Maharashtra Apartment Ownership Act, 1970 by executing and registering
one or more Deeds of Declaration. In my prima facie view, the Deed of
Apartment was not executed between the parties for the purpose of conferring
any title in favour of the purchasers in respect of flats agreed to be sold under
the agreement for sale, but was only for the purpose of transferring shares in the
common amenities in the land and buildings constructed by the appellant-
developer.
65. In my view, though there is a reference in the Deed of Apartment to the
flats agreed to be sold in favour of the respondents, the said document would
not convey any title in respect of the flats agreed to be sold to the respondents
but it was for limited purpose for transferring proportionate shares in the
common amenities. Be that as it may, it is a common ground that all the
respondents with whom the appellant had entered into an agreement for sale
were not parties to the Deed of Apartment. Under Section 11 of the MOFA, it
is provided that the promoter has to take all necessary steps to complete his title
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and convey to the organization of persons, who take flats, which is registered
either as a Co-operative Society or as a Company or to an association of the flat-
takers or apartment owners his right, title and interest in the land and building and
to execute all relevant documents therefor in accordance with the agreement
executed under Section 4 of the MOFA.
66. It is thus clear that the parties had executed a Deed of Apartment in view
of Section 11 of the MOFA so as to transfer the share of the flat purchasers in
the land and the building and common amenities. In my view, merely because a
Deed of Apartment is executed in furtherance of an agreement of sale in view of
Section 11 of the MOFA, the rights and obligations of the parties existing under
the provisions of the MOFA are not taken away. In my view, there is no
substance in the submission of the learned senior counsel for the appellant that the
agreement for sale which was entered into by and between the appellant and the
flat purchasers under Section 4 of the MOFA no more exists and is novated
and/or superseded in view of execution of the Deed of Apartment along with
Deed of Declaration between the parties.
67. Be that as it may, since some of the respondents have admittedly not
entered into Deed of Apartment or also the Deed of Declaration with appellant,
the effect of such execution of the Deed of Apartment along with Deed of
Declaration only with some of the flat purchasers will have to be considered at
the time of hearing of the arbitral proceedings before the learned arbitrator.
68. A perusal of the provisions of the agreement for sale and also Deed of
Apartment does not indicate that it was the intention of the flat purchasers to
give up their right, title and interest in the flats under the said agreement for sale
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by executing Deed of Apartment and Deed of Declaration. If the parties had
intended to supersede the agreement for sale in toto by execution of Deed of
Apartment, the same ought to have been specifically provided in the said Deed of
Apartment which admittedly is not provided. In my view, since the Deed of
Apartment does not supersede the agreement for sale, the arbitration agreement
existed in the agreement for sale is not perished as canvassed by the learned
senior counsel for the appellant and continued to exist for the purpose of
adjudication of the dispute between the parties.
69. It is a common ground that in the application filed by the respondents
under Section 9 of the Arbitration Act, the respondents had intended to refer the
dispute to the arbitration in respect of subject matter of the said agreement for sale
and not under a Deed of Apartment or a Deed of Declaration. In my view,
clause 45 of the agreement for sale has to be read with clause 46 thereof. A
conjoint reading of both the provisions clearly indicates that except otherwise
provided in the said agreement, the said agreement for sale shall always be
subject to the provisions of the MOFA. It is not provided either in the said
agreement for sale or in the Deed of Apartment that after the said execution of
the Deed of Apartment along with the Deed of Declaration, rights and
obligations of the parties under the agreement for sale executed under Section 4
of the MOFA would come to an end and/or stand substituted by the provisions
of the said Deed of Apartment along with the Deed of Declaration.
70. In my view, there is thus no substance in the submission of the learned
senior counsel for the appellant that there was no arbitration agreement between
the parties in view of execution of Deed of Apartment along with the Deed of
Declaration or that the application filed by the respondents under Section 9 of the
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Arbitration Act before the learned District Judge was not maintainable on that
ground or otherwise.
71. In my view, learned counsel for the respondents is right in her submission
that even if for the sake of argument, it is construed that MOFA agreement would
not survive in view of execution of the Deed of Apartment, arbitration clause
which is an independent agreement would continue to survive till all the
obligations of the parties under the said agreement for sale were performed. In
my view, learned counsel for the respondents has rightly placed reliance on the
judgment of the Supreme Court in the case of Damodar Valley Corporation
(supra) and more particularly paragraphs 7 and 9 to 11 thereof which would
assist the case of the respondents. In my view, the learned District Judge has
rightly held that the agreement for sale entered into between the parties and the
Deed of Apartment executed between the appellant and some of the respondents
are two separate documents and were executed for different purposes. In my
prima facie view, the learned District Judge was right in holding that the
agreement for sale is not substituted by execution of Deed of Apartment
between the parties and both subsist.
72. Supreme Court in case of Damodar Valley Corporation (supra) has held that
a contract is the creature of an agreement between the parties and where the parties
under the terms of the contract agree to incorporate an arbitration clause, that
clause stands apart from the rights and obligations under that contract, as it has
been incorporated with the object of providing a machinery for the settlement of
disputes arising in relation to or in connection with that contract. It is not the case
of the appellant that the agreement for sale entered into between the parties was a
void, illegal or fraudulent agreement.
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73. The Supreme Court has held that if the original contract has no legal
existence, the arbitration clause also cannot operate and for along with the original
contract, it is also void. In the latter case, as the original contract is extinguished
by the substituted one, the arbitration clause of the original contract perishes with
it and between the two falls many categories of disputes in connection with a
contract, such as the question of repudiation, frustration, breach etc. In those cases
it is the performance of the contract that has come to an end, but the contract is
still in existence for certain purposes in respect of disputes arising under it or in
connection with it. It is held that as the contract subsists for certain purposes, the
arbitration clause operates in respect of those purposes. It is held that in those
cases, it is the performance of the contract that has come to an end but the contract
is still in existence for certain purposes in respect of disputes arising under it or in
connection with it. It is held that as the contract subsists for certain purposes, the
arbitration clause operates in respect of those purposes.
74. In my view, the judgment of Supreme Court in case of Damodar Valley
Corporation (supra) supports the case of the respondents. In my view the
arbitration agreement recorded in clause 45 of the agreement for sale would
survive for adjudication of disputes through arbitration.
75. Insofar as judgment of Supreme Court in case of Young Achievers (supra)
relied upon by the learned senior counsel for the appellant is concerned, Supreme
Court has held that the arbitration clause in an agreement cannot survive if the
agreement containing arbitration clause has been superseded/novated by a later
agreement. A perusal of the said judgment indicates that the party in the said
proceedings, in the later agreement had agreed for full and final settlement of all
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their claims and had provided that any violation of points mentioned therein will
attract legal course of action and penalties ranging from forfeiture of the security
deposit and pending claims. The Supreme Court on interpretation of the later
agreement held that it was a mutually agreed document containing comprehensive
terms and conditions which admittedly did not contain an arbitration clause and
the original agreement stood novated by fresh agreement.
76. In my view, the said judgment would not assist the case of the appellant. The
facts before the Supreme Court in the said matter were totally different. In this
case there is no provision in the Deed of Apartment that after execution of the said
Deed of Apartment, the agreement for sale entered into between the parties ceased
to exist or was superseded by the said Deed of Apartment or was cancelled. On
the contrary clause 46 of the agreement for sale categorically provides that except
otherwise mentioned and provided in the said agreement, the said agreement shall
always be subject to the provisions of Maharashtra Ownership Flats (Regulation of
the Promotion of Construction, Sale, Management and Transfer) Act, 1963.
77. Insofar as submission of the learned senior counsel that there were serious
allegation of fraud and misrepresentation made by the respondents and such
allegations cannot be referred to arbitration is concerned, the respondents have
clarified this issue before the learned District Judge and also before this court that
there were no such allegation of fraud or misrepresentation made by the
respondents against the petitioner. The respondents had clarified only their
understanding about letter of possession signed by the respondents. The learned
District Judge has dealt with this issue in paragraph 14 and paragraph 24 and has
held that there was no specific case made out as to the fraud or misrepresentation.
A perusal of the application filed by the respondents under section 9 of the
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Arbitration Act indicates that there are no allegation of fraud as canvassed by the
learned senior counsel for the appellant.
78. In my view even if there are allegations of fraud made by the respondents,
there is no bar under the provisions of Arbitration Act from referring disputes
containing such allegations to arbitration. In my view there is thus no merit in the
submission made by the learned senior counsel for that there were any allegation
of fraud or misrepresentation made by the respondents or that the same could not
be referred to arbitration.
79.
Insofar as submission of the learned senior counsel that even if clause 45 of
the MOFA agreement which provides for arbitration agreement exists, none of the
dispute raised by the respondents in the application for interim measures under
section 9 filed by the respondents would fall within the ambit of the said
arbitration clause is concerned, it is not in dispute that the respondents have not
filed any statement of claim till date. Be that as it may, a perusal of various
averments made in the application for interim measures filed under section 9 by
the respondents clearly indicates that there are disputes or differences having
arisen between the parties about the meaning or interpretation of various clauses of
the said agreement for sale.
80. In my view whether under various clauses of the agreement, the appellant
could have obtained blanket consent from the respondents from carrying out any
changes in the plan or could carry out construction after obtaining sanction from
the Municipal Corporation on the same plot would be a dispute or difference about
the meaning or the interpretation of this provision. The question as to whether the
appellant could change the location of a building after showing layout plan to the
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flat purchaser or not would also be a dispute or difference arising out of
interpretation of the provisions of the said agreement for sale.
81. Be that as it may, since the respondents have not filed any statement of
claim till date, the exact nature of the claims proposed to be made by the
respondents in the arbitral proceedings can be known only after such statement of
claim is filed. The Supreme Court as well as this court in catena of decisions has
taken a view that the court has to construe an arbitration agreement liberally so as
to encourage the party to arbitration agreement to resolve their disputes through a
mechanism of the arbitral process. In my view there is thus no substance in the
submission of the learned senior counsel for the appellant that the nature of dispute
raised in the application for interim measures under section 9 would indicate that
none of those disputes would fall within the purview of arbitration agreement
recorded in clause 45 of the agreement for sale. Clauses 6, 13 and recital (b)
referred to the entire property agreed to be developed by the appellant under the
said agreement for sale. In my view the respondents thus can raise a dispute even
if the appellant carry out any development on the entire property in breach of the
provisions of the said agreement for sale though the respondents may not have
purchased the flats in other buildings proposed to be constructed by the appellant
and more particularly in 'E' building, if the construction of 'E' building would
affect their right, title and interest in the 'G' building. In my view there is thus no
substance in the submission of the learned senior counsel that the dispute in
respect of construction in 'E' building would not be arbitrable under clause 45 of
the MOFA.
82. Supreme Court in case of Booz Allen & Hamiltan Inc.(supra) has carved
out the categories of disputes which would be in the nature of action in rem or in
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personam. In my view the disputes for enforcement of the statutory provisions
under MOFA or under specific performance of the provisions of MOFA agreement
would not be an action in rem but would be an action in personam. I am not
inclined to accept the submissions made by the learned senior counsel for the
appellant that the allegation of statutory violation under MOFA cannot be referred
to arbitration either on the ground of the same being alleged to be in the nature of
action in rem or on the ground that the same can be decided only by the civil court.
83. In my view since the parties had entered into an arbitration agreement,
disputes arising out of statutorily violation of the MOFA or for specific
performance of the provisions of MOFA agreement can be decided in the arbitral
proceedings. If there would not be any arbitration agreement between the parties,
such disputes arising out of alleged statutory violation of MOFA or for specific
performance of obligations under MOFA agreement could be tried by a civil court.
In my view there is thus no substance made by the learned senior counsel for the
appellant that such issue could be decided only by a civil court and not in the
arbitral proceedings. In my view judgment of Supreme Court in case of Booz
Allen & Hamiltan Inc.(supra) relied upon by the learned senior counsel for the
respondents would apply to the facts of this case and would assist the case of the
respondents.
84. Insofar as judgment of Supreme Court in case of Ashapura Mine-Chem
Limited (supra) relied upon by both the parties is concerned, the Supreme Court
considered an argument whether the arbitration clause contained in the MOU was
a stand alone agreement or not. In my view the arbitration agreement recorded in
clause 45 of the agreement for sale would survive for the purpose of referring the
dispute arising under the said agreement for sale. It is not in dispute that the
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respondents have proposed to refer their disputes arising out of the said MOFA
agreement only.
85. In my view the learned counsel for the respondents is right in a submission
that merely because the party had agreed to submit their respective right, title,
interest or claims relating to the entire property and the said building under the
provisions of Maharashtra Apartment Ownership Act, 1970, in view of clause
21(d) of the MOFA agreement and other related provisions thereof, the provisions
of Maharashtra Apartment Ownership Act, 1970 would not apply in respect of the
individual flat. In my view the arbitration agreement thus recorded in clause 45 of
the MOFA agreement would subsist and the said MOFA agreement is not
substituted by a Deed of Apartment. The judgment of this court in case of Lloyds
Steel Industries Limited (supra) would also assist the case of the respondents.
86. A perusal of the record prima-facie indicates that originally the appellant
had proposed to construct two buildings i.e. "E" which was located on the front
side which location was shown all through out in the plan shown to the flat
purchasers, which has been now shifted admittedly adjoining to "G" building
occupied by the respondents thereto and others. There was neither any informed
consent obtained by the appellant from the flat purchasers for shifting of location
of "E" building from the front side to the location adjoining to "G" building nor
such disclosure was made by the appellant to the respondents in writing or
otherwise before getting any amendment to the plan sanctioned from Pune
Municipal Corporation. This Court in case of Lakeview Developers (supra) has
held that unless there was informed consent and full disclosure of the amendment
proposed by the developer before the same is carried out, the developer could not
have carried out any such amendment to the original sanctioned plan or to the lay
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out. The judgment of the Division Bench of this Court in case of Lakeview
Developers (supra) would squarely apply to the facts of this case. I am respectfully
bound by the said judgment.
87. In my view, learned counsel for the respondent is right in the submission
that dispute as to whether the appellant could have been permitted to change the
user or could be permitted to shift the location of "E" building from its original
location to the location adjoining to "G" building would be a dispute arising out of
the interpretation of the provisions of the Agreement For Sale and more
particularly clauses 6, 9 and 13 which dispute can be adjudicated upon under the
arbitration agreement recorded in clause 45 read with clause 46 of MOFA
agreement.
88. In my view, the learned District Judge has rightly observed in paragraph 20
of the impugned order that admittedly the construction of "E" building was not on
the place which was shown in the brochure issued by the appellant. It is held that
when there is a change in the location of the building "E", which was shown in the
brochure at the time of the agreement dated 13th March, 2012, the respondents
herein have every right to raise their objection and such change of location could
not be as per the whims and wishes of the appellant. It is rightly held that even for
making such changes, the consent of the flat purchasers was necessary.
89. Insofar as the submission of the learned senior counsel for the appellant that
the respondents themselves had averred in the application for interim measures
that they would claim compensation against the appellant and thus cannot seek
specific performance of the MOFA agreement and consequently no injunction
under section 9 could have been granted by the learned District Judge is
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concerned, in my view along with a claim for specific performance, a claimant can
also seek compensation also in addition to a claim for specific performance.
Merely because the respondents had reserved their right to make a claim for
compensation, on that ground the plea of specific performance cannot be rejected.
Be that as it may the respondents have not yet filed their statement of claim so far
in the arbitral proceedings and thus this plea of the learned senior counsel for the
appellant deserves to be rejected at this stage.
90. Insofar as the submission of the learned senior counsel for the appellant that
there was delay on the part of the respondents in filing the application for interim
measures is concerned and that the appellant already having constructed about six
storeys of the building "E" and on that ground itself no interim measures could be
granted by the learned District Judge is concerned, a perusal of the application
filed by the respondents under section 9 of the Arbitration & Conciliation Act,
1996 indicates that the respondents had explained the alleged delay in filing the
arbitration application. The construction of "G" building was over in which
various flat purchasers including the respondents herein had purchased the flats.
There were several letters addressed by the appellant to the flat purchasers to pay
the balance consideration and to take possession of their respective flats
immediately and had threatened to levy penalty / interest in case of any delay in
obtaining possession of those flats. Some of the flat purchasers had borrowed
money for purchasing the flats. The flat purchasers had held various meetings in
which the Directors of the appellant had alleged to have given various assurances
to look into the complaints made by the respondents. It is not in dispute that when
the respondents filed an application under section 9 of the said Act before the
learned District Judge, the appellant had commenced construction in full speed.
When the application was filed by the respondents, the appellant had not
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constructed six storeys as canvassed by the appellant at this stage.
91. During the pendency of the application under section 9 of the Arbitration
Act, the appellant increased the speed of the construction at their own risk. In my
view, the respondents had sufficiently explained the delay, if any, in filing the
application under section 9 of the said Act before the learned District Judge. I have
also perused the photographs produced by both the parties showing the stage of the
construction of the building "E". A perusal of these photographs indicates that the
said construction now put up by the appellant are just adjoining the building "G"
by which western side terraces have been completely blocked. The appellant has
removed the safety grills on the western side windows of building "G". The
respondents may suffer health hazardous due to construction of building "E"
which may result in noise, air pollution or excessive vibration. The air and light
which would could been available to the flat purchasers of "G" building also
would be seriously affected. It is averred by the respondents in the said application
under section 9 of the said Act that when the respondents noticed construction of
"E" building, the same was completed upto second floor by the appellant and only
when the construction of RCC structure reached second floor, the appellant had
offered possession of flats in the building "G" in the month of December, 2013 and
January, 2014 to the flat purchasers although the completion certificate thereof was
issued in favour of the appellant by the Pune Municipal Corporation in the month
of October, 2013.
92. In my view, learned counsel for the respondents is right in his submission
that if the appellant is allowed to complete the construction of "E" building
adjoining "G" building, in these circumstances, the reliefs proposed to be claimed
by the respondents in the arbitral proceedings would become infructuous and
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serious prejudice would be caused to the flat purchasers. In my view, the balance
of convenience is thus in favour of the respondents and not in favour of the
appellant. The respondents have already shown their readiness and willingness to
refer their disputes to arbitration in accordance with arbitration clause. The
statement made by the learned counsel for the respondent is accepted.
93. Insofar as the judgment of this Court in case of Lodha Estate Private
Limited (supra) relied upon by the learned senior counsel for the appellant is
concerned, in my view the facts before the Division Bench of this Court in the said
matter were totally different. In this case the respondents have been litigating in
bona-fide manner alleging breach of statutory obligations of the developer and for
seeking specific performance of the provisions of MOFA agreement. The said
judgment of the Division Bench of this Court in case of Lodha Estate Private
Limited (supra) would thus not assist the case of the appellant. The facts in the said
matter are clearly distinguishable in the facts of this case. In my view, the appellant
has prima-facie violated the provisions of MOFA and also MOFA agreement
cannot seek any equity from this Court.
94. The Supreme Court in case of M/s.Gujarat Bottling Co. Ltd. & Ors. vs. The
Coca Cola Co. & Ors. (1995) 5 SCC 545 has held that the Court while granting
interim injunction has to consider whether the plaintiff has prima-facie case,
whether balance of convenience was in his favour and whether the plaintiff will
suffer any irretrievable injury if relief by way of injunction is not granted. In my
view the respondents (original claimants) in this case have satisfied all three tests
for granting injunction as laid down by the Supreme Court in case of M/s.Gujarat
Bottling Co. Ltd. & Ors. (supra). The said judgment, in my view, would squarely
apply to the facts of this case. The learned District Judge has rightly adverted to
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the said judgment and has applied the principles thereof in the facts of this case.
95. Insofar as the submission of the learned senior counsel for the appellant that
the judgment of the Supreme Court in case of Veena Hasmukh Jain (supra) would
not apply to the facts of this case on the ground that in the said judgment the
Supreme Court had considered the provisions of the Bombay Stamp Act and not
the provisions of MOFA and even if a document can be construed as a conveyance
for the purpose of payment of stamp duty, the same cannot be construed as a
conveyance under the provisions of MOFA is concerned, in my view, there is no
merit in this submission of the learned senior counsel for the appellant. The flat
purchasers in this case had fully paid the consideration to the appellant and were
also handed over possession of their respective flats by the appellant. Admittedly,
the said agreements were entered into under section 4 of MOFA. In my prima-
facie view, the Deed of Apartment was executed between the appellant and some
of the flat purchasers in furtherance of the provisions made in the said MOFA
agreement. In my prima-facie view, the Deed of Apartment was executed for the
purpose of transferring the share of the flat purchasers in the common amenities
and land and the building. The judgment of the Supreme Court in case of Veena
Hasmukh Jain (supra) would apply to the facts of this case.
96. Insofar as Civil Application No.22 of 2015 filed by some of the alleged flat
purchasers in building "E" seeking intervention in the present appeal is concerned,
it is not in dispute that these applicants had not applied for intervention before the
learned District Judge in the application filed by the respondents under section 9 of
the said Act. In my view, these applicants cannot be allowed to intervene in these
proceedings filed under section 37 of the said Act. The applicants can adopt
independent proceedings in respect of their alleged cause of action in appropriate
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Court in accordance with law. I am thus not inclined to grant any relief in the said
civil application filed by the intervenors.
97. A perusal of the order passed by the learned District Judge clearly indicates
that the learned District Judge has dealt with all the submissions, pleadings and the
documents and has adverted to several judgments of the Supreme Court and this
Court and applied the principles thereof in the facts of this case. I do not find any
infirmity with the order passed by the learned District Judge.
98. Learned senior counsel for the appellant in his initial argument had though
urged that the impugned order passed under section 9 of the said Act by the
learned District Judge-14, Pune was without jurisdiction on the ground that the
said application could be heard, entertained and disposed of only by the Principal
District Judge, Pune, after such initial argument, learned senior counsel did not
press the said issue. This Court thus need not consider the said issue raised by
learned senior counsel for the appellant in this order. In my view, the appeal is
devoid of merits.
99. I therefore, pass the following order :-
i). Arbitration Appeal No.6 of 2015 is dismissed.
ii). In view of dismissal of the arbitration appeal, Civil
Application No.6 of 2015 for stay does not survive and is
disposed of.
iii). Civil Application No.22 of 2015 for intervention filed
by the applicants is dismissed.
iv). No order as to costs.
v). The respondents are directed to take steps to apply for
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appointment of the learned arbitrator within six weeks from
today, failing which interim order passed by the learned
District Judge to stand vacated without further reference to the
Court.
[R.D. DHANUKA, J.]
