Bombay High Court
Shreejee Buildcon Homes Llp vs Mulund Mrug Archana Co-Operative ... on 6 December, 2017
Bench: K.R. Sriram
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION APPLICATION NO. 106 OF 2017
WITH
COMMERCIAL ARBITRATION PETITION NO. 393 OF 2017
WITH
IN PERSON APPLICATION NO. 166 OF 2017
WITH
IN PERSON APPLICATION NO. 169 OF 2017
Shreejee Buildcon Homes LLP .. Petitioner/Applicant
Vs.
Mulund Mrug Archana Co-operative
Housing Society Limited & 3 Ors. .. Respondents
Mr.Piyush M. Shah and Ms. Meetal Savla i/b P.M. Shah for
petitioner/applicant.
Mr. Dishang Shah i/b Payal Shethia for respondent no.1.
Mr. Vikee Vaman Yelve for respondent no.2.
Mr.N.V. Sharma for respondent Nos.3 and 4.
Mr. Ritesh H. Thakker-Partner of petitioner present.
Mr. Prabhakar Mohit-Chairman of respondent no.1.
CORAM : K.R.SHRIRAM, J.
DATE : 6TH DECEMBER 2017
P.C.
COMMERCIAL ARBITRATION PETITION NO. 393 OF 2017
1. This petition is filed under Section 9 of the Arbitration and
Shraddha Talekar PS 1/27
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Conciliation Act, 1996 (The said Act) by petitioner and though prayers
appear to be in the nature of the mandatory final order, in the facts and
circumstances of the case, I do not find it wrong for petitioner to ask for and
for court to grant such a relief. Extraordinary situations require
extraordinary orders.
2. Petitioner carries on business of real estate developers. Respondent
no.1 is Co-operative Housing Society registered under the provisions of
Maharashtra Co-operative Societies Act, 1960 situated at Mulund Mrug
Archana CHS Ltd., Govind Nagar, Sarojini Naidu Road, Mulund (West),
Mumbai 400 080 (The said property). It must be noted that counsel for
respondent no.1-society stated that respondent no.1-society fully supports
petitioner in this petition. Respondent Nos. 2 to 4 are the members of
respondent no.1-society. Respondent Nos. 2 to 4 are dissenting members for
proposed redevelopment against the majority of 34 members of respondent
no.1-society. Respondent nos. 2 to 4 have right, title and interest in respect
of their respective flats being Flat Nos. A-15 (3 rd Floor), A-11 (2nd Floor)
and B-32 (3rd Floor) in the buildings of the society.
3. Respondent no.1-society situated on the said property is consisting of
two Wings, namely, 'A' Wing comprising of ground plus four upper floors
Shraddha Talekar PS 2/27
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and 'B' Wing comprising of ground plus four upper floors totally consisting
of 37 flats.
It is the case of petitioner, who is supported by respondent no.1 that
the said building "Mulund Mrug Archana" in general and the R.C.C.
framework in particular are in a weak and dilapidated condition and, over
the years, have been showing increasing signs of stress. With each passing
year, the condition of RCC framework has deteriorated further, cracks have
developed at several places, the steel reinforcements have corroded
extensively, and there is a discontinuity in the reinforcements. Besides the
aforesaid, there are leakages in several of the Members' existing flats in the
building and the water, which is constantly seeping into slabs/RCC
structure, is further compounding the problem. While the society has carried
out major works of repairs as well as maintenance works to the buildings
from time to time, the same have only provided temporary relief and in view
of the opinion of the Architects, Structural Auditors and Consultants such
repairs are only a temporary solution to the problem, and hence respondent
no.1-society unanimously decided to redevelop the said building instead of
carrying out any further repairs.
4. Petitioner further states that at the Special General Body meeting of
respondent no.1 society (wherein respondent Nos.2 to 4 were also present
Shraddha Talekar PS 3/27
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and signed the Register maintained by respondent no.1-society) the issues of
the condition of the building of the society were discussed at length and the
members were of the opinion that they should demolish the existing
buildings and construct a new building thereon. However, since neither the
society nor the members had the finance nor the expertise to carry out such
work, it was decided that the task of carrying out such demolition and
reconstructing flats for the members should be entrusted to professional
developers who could carry out the development work free of cost to the
members of the society and construct for the members new flats free of cost.
In return for the same, the Developers could be granted the right to bring in
and utilize TDR/FSI and sell the remaining premises not earmarked for the
members and appropriate the sale proceeds into themselves. The members
took a unanimous decision and formed a special committee comprising of a
few chosen members for the purpose of inviting proposals from various
developers for development of the property of the society. The Managing
Committee has been empowered and was invested with the powers of
considering the various proposals/offers of developers, finalizing the best
available and putting the same before the General Body for its final
approval.
5. Respondent no.1-society held a General Body Meeting on 24th
Shraddha Talekar PS 4/27
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September 2009 in respect of the redevelopment of the building of the said
society, wherein respondent Nos. 2 to 4 were also present and have duly
signed the Minute Book/Register and have accepted the redevelopment
scheme and selected the process and the procedure followed by respondent
no.1-society. It is further stated that after following due compliance of the
required procedure in General Body Meeting with consent of all the
members including respondent Nos. 2to 4, respondent no.1-society had
appointed one Strut Consultants Pvt. Ltd. as their Project Management
Consultant.
6. Thereafter, respondent no.1-society invited offers from various
developers and pursuant to the negotiations and on perusal of various offers,
respondent no.1 society unanimously resolved to redevelop the said
property through one Rite Developers Pvt. Ltd. pursuant to Resolution dated
8th May 2011, passed in its Special General Body Meeting. This resolution is
discussed later in this order.
7. Thereafter, pursuant to a Development Agreement dated 29 th
November 2012 executed between respondent no.1 society and the said Rite
Developers Pvt. Ltd., respondent no.1-society granted redevelopment rights
in respect of the said property to the said Rite Developers Pvt. Ltd., and
Shraddha Talekar PS 5/27
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respondent no.1 society had also executed a Power of Attorney dated 1 st
February 2013, in favour of the said developer for effectually carrying out
the redevelopment work in respect of the said property. The said
Development Agreement and the said Power of Attorney are registered.
8. It is also stated in the petition that in the meanwhile, a Structural
Audit Report dated 18th August 2015 prepared by one M/s. ANA Consulting,
Structural Engineering was obtained by respondent no.1 society, wherein it
has been categorically stated that the building of respondent no.1- society is
in bad shape and given the age of the structure and seriousness of structural
damages, structural repairs do not seem to be a feasible option as the costs
of the repairs will run into huge amounts and it was opined to go for
demolition and reconstruction. A copy of this report is annexed to the
petition.
9. Petitioner stated that the said Rite Developers Pvt. Ltd., had complied
with all the terms and conditions of the said Development Agreement dated
29th October 2012 and with their confirmation, respondent no.1-society
agreed to appoint petitioner as the new developer for redeveloping the said
property.
Shraddha Talekar PS 6/27
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10. Petitioner stated that in meetings held between the representatives of
petitioner and members of respondent no.1-society, various issues were
discussed and logical answers and explanation to all the members were
given by the representatives of petitioner. It is also stated that even during
such meetings, respondent nos. 2 to 4 did not raise any specific issue either
with or the managing committee members of respondent no.1-society.
11. It is further stated that pursuant to a Resolution passed in the Special
General Body Meeting dated 24th July 2016, respondent no.1 society granted
its specific consent to execute a Joint Venture Development Agreement in
favour of petitioner and pursuant thereto, a Joint Venture Development
Agreement dated 18th October 2016 is executed between respondent no.1-
society, therein referred to as the society of the First Part, various members
of the society, therein referred to as the members of the Second Part, Rite
Developers Pvt. Ltd., therein referred to as the Old Developer (Confirming
Party) of the Third Part and M/s. Shreejee Buildcon Homes LLP (i.e.,
petitioner), therein referred to as the New Developer of the Fourth Part (the
Development Agreement). The Development Agreement is duly registered
with the office of the Sub-Registrar of Assurances at Kurla under Serial
No.KRL1-10631-2016. Respondent Nos.3 and 4 have also signed the said
Development Agreement in their capacity as members of respondent no.1-
Shraddha Talekar PS 7/27
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society in respect of their flats. A copy of the said Development Agreement
dated 18th October 2016 is annexed to the petition.
12. Petitioner further stated that in or about December 2016 onwards
petitioner entered into individual Alternate Accommodation Agreement
from time to time with 34 members of respondent no.1-society, out of the
total 37 members, i.e., except with respondent Nos. 2 to 4. Petitioner also
started the process of amending the IOD and procured NOC of CFO and
EETC as per the new amended plan and also re-validate the Intimation of
Disapproval (IOD). The re-validated IOD is valid until February 2018.
Admittedly, respondent no.2 has not signed the Development
Agreement. The Development Agreement, however, has been signed by
respondent nos.3 and 4. The Development Agreement provides for
arbitration. The arbitration clause is clause No.41 and the same reads as
under :-
"41 All the disputes/differences between the parties hereto
arising out of any manner concerning or relating to this
agreement as to the true meaning of the recitals or covenants or
to the construction thereof, then the same shall be referred to the
arbitration of a sole Arbitrator if the parties can agree upon the
appointment of the sole Arbitrator. If the parties do not arrive at
a common sole Arbitrator, then, in that event, this arbitration
clause shall be deemed as if there is no arbitration then the
proceedings shall be covered under the provisions of Indian
Arbitration and Reconciliation Act, 1996."
Shraddha Talekar PS 8/27
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13. Therefore, petitioner has filed this petition and also an application
under Section 11 of the Arbitration and Conciliation Act, 1996 (the said
Act).
14. It is the case of petitioner, who is supported by respondent no.-1
society and counsel for respondent no.1 also agrees with the statements
made by Mr.Piyush Shah for petitioner, that 34 out of 37 members of
respondent no.1 society have vacated the building and the deadline of the
members to vacate the building was July 2017. Mr.Shah submitted that in or
about December 2016 onwards petitioner herein entered into Individual
Alternate Accommodation Agreement with 34 members of respondent no.1-
society out of total 37 members, i.e., except respondent Nos. 2 to 4. Mr.
Shah also submitted that Intimation Of Disapproval (IOD) was received on
22nd February 2017, Fire NOC was received 28 th April 2017, Traffic NOC
was received on 30th June 2017 but petitioner is unable to start demolishing
the building and take further steps because respondent Nos.2 to 4 are
obstructing and refusing to vacate the buildings. Mr. Shah also states that
petitioner has an obligation to give a bank guarantee in the sum of Rs. 2.85
crores to respondent no.1 on the date when all the 37 members of
respondent no.1-society vacate the buildings. Mr. Shah further states that
beginning March-2017, when the first of the members vacated, petitioner
Shraddha Talekar PS 9/27
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has been paying the alternate accommodation compensation of Rs.25,000/-
per month per member. This works out to about Rs.8.50 lakhs per month for
the members who have vacated.
15. When the counsel for petitioner made his opening submissions, the
Court asked the dissenting members, viz., respondent nos. 2, 3 and 4 what
their problem was with the other members of respondent no.1- society and if
this Court could assist them in resolving their disputes so that respondent
nos.2, 3 and 4 can also get the alternate accommodation and also get
possession of a new flat when the buildings are redeveloped. The counsel
for respondent no.2 and counsel appearing for respondent Nos.3 and 4 were
not interested in resolving the problem. Respondent no.2, husband of
respondent no.3 and, respondent no.4 were also present in Court and did not
evince any interest in resolving the issues.
16. I have considered the affidavits in reply on behalf of respondent
Nos.2, respondent nos. 3 and respondent no. 4 and also the letters sent on
behalf of respondent nos. 3 and respondent no.4, copies whereof are at Exh.
'K' and Exh.'L' to the petition. It is impossible to make out the reason for
their fight with all other 34 members of respondent no.1-society and why
they are objecting and refusing to vacate and abide by the Development
Shraddha Talekar PS 10/27
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Agreement. Even the counsel for respondent no.2, respondent no.3 and
respondent no.4 were of no assistance. I have, however, made an attempt to
decipher from the affidavits in reply their objections.
17. In the affidavit in reply of respondent no.2, four main
objections/allegations have been raised as to why he is opposing
redevelopment. Petitioner has relied upon a Resolution passed in the Special
General Body meeting held on 8th May 2011 of respondent No.1-Society
appointing earlier developer Rite Developers Pvt. Ltd. for redevelopment of
the buildings. The attendance sheet copy of the Special General Body
Meeting can be found at Page 594 of the affidavit in reply filed by
respondent no.2. Against Flat No.15, there is a signature, which according to
petitioner and respondent no.1, is the signature of respondent no.2 and that
respondent no.2 had attended the Special General Body Meeting in which
the Resolution as mentioned above was passed unanimously. This is
relevant to the first defence which I am going to mention of respondent
no.2. According to respondent no.2, this signature has been forged, he never
attended the meeting and he has lodged a criminal complaint against the
members of respondent no.1-society. Counsel for respondent no.2 relied
upon a letter dated 23rd August 2017, copy whereof is at Exh.'Y' to the
affidavit in reply which is a letter from Mulund Police Station to respondent
Shraddha Talekar PS 11/27
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no.2. Though English translation has not been provided, the counsel stated
that in this letter the police is stating that the complaint filed by respondent
no.2 is being investigated. As a copy of the complaint was not available, the
Court asked counsel for respondent no.2 as to when did respondent no.2
lodge the complaint. The counsel stated that the complaint was lodged
sometime in February 2016.
It should be noted that the complaint is basically challenging a
resolution passed on 8th May 2011 agreeing to the appointment of Rite
Developers Pvt. Ltd. as the Developer. It should also be noted that the
complaint has been lodged, as per respondent no.2 more than five years
after the resolution has been passed and his signature is alleged to have been
forged.
18. The second objection/defence of respondent no.2 is that there is some
suit pending before this Court being AO No.19 of 2015 and therefore this
arbitration petition is not maintainable and members of respondent no.1-
society do not have right to enter into third party agreement. There is no
description given as to what is the nature of the suit and if it is AO bearing
No.19 of 2015, it cannot be a suit. There is no explanation as to why this
petition is not maintainable.
The third objection is respondent no.2 has lodged Police complaint
Shraddha Talekar PS 12/27
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against the old Developer, new fake developer-petitioner regarding forged
documents for redevelopment of the society. Again there are no details
provided.
The fourth objection of respondent no.2 is that there are criminal
cases filed against society regarding fraud, for making forged document,
Fake membership, 80% B.M.C. Home loan Scam etc. Again there are no
details. Despite opportunities given, counsel for respondent no.2 was not
even able to assist the Court.
19. So far as respondent Nos.3 and 4 are concerned, there are three
affidavits on their behalf which can be found in the records and proceedings,
two of which are by Mr. Sharma, the Advocate on record for respondent
nos. 3 and 4. The first affidavit is dated 12th August 2017 which is affirmed
by Advocate Mr. Sharma. He is basically stating that he was unwell and
according to him, he has number of illegal records of petitioner. To the
affidavit are annexed photocopies of his hospital bills and nothing more.
There is another affidavit, again of Advocate Mr. Sharma, dated 7 th
September 2017 but affirmed on 8th September 2017. In this affidavit, it is
basically alleged that the petition which is being heard by this Court has
been taken out with mala-fide intention to cheat the advocate of respondent
nos. 3 and 4 and to pressurize respondent nos.3 and 4 to leave the premises.
Shraddha Talekar PS 13/27
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How the Advocate is personally involved is difficult to understand or
fathom. First of all an advocate on record cannot file such personal affidavit
on behalf of party or parties. Further to say that he was the advocate for the
society and he has various documents in his possession which he obtained
while advising society and that it can be used against the society aggravates
the misconduct. Even assuming he has the alleged documents, those are
privileged documents obtained from a client and it is improper to threaten to
use those documents against the client. This, in my view, amounts to
professional misconduct.
Moreover, there is nothing on record to show that Advocate Sharma
has been authorized to file any such affidavit on behalf of respondent nos.3
and 4. Therefore, a copy of this order be sent to Bar Council of Maharashtra
and Goa to consider whether any action against the Advocate Mr.
Nagabhushan Virupaxayya Sharma has to be taken.
Further, the documents annexed to the affidavit are absolutely
irrelevant inasmuch as they are again copies of medical bills of the
Advocate and a letter written by the Advocate to Chief Minister of
Maharashtra for taking action against the petitioner regarding alleged fraud
that petitioner is playing on respondent no.1-society and consequently
against respondent nos.3 and 4.
Shraddha Talekar PS 14/27
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20. The third affidavit on behalf of respondent no. 3 and respondent no.4,
which is on record is dated 26th August 2017 filed by one Mr. Elangoven
Rathinam Mudaliar and one Mr. Rajkumar Prabhakar Borikar. Mr. Borikar
is respondent no.4 but he has not verified the affidavit. Respondent no. 3 has
not filed an affidavit, opposing the petition. Moreover, this affidavit also
does not state anywhere that Mr.Elangoven Rathinam Mudliar has been
authorized by respondent no.3 to file this affidavit. While this Court was
dictating, Mr. Sharma pointed out that Mr. Mudliar is the Associate Member
with respondent no.3. In this affidavit, it is stated that respondent nos. 3 and
4 have filed criminal complaints which are pending in 27 th MM Court
Mulund (W) and the criminal Revision petition before the Gr. Sessions
Court and therefore, unless those complaints are finally investigated and
disposed, redevelopment should not be permitted. No documents are
annexed to the affidavit and there is no explanation whatsoever in the
affidavit as to what these complaint and CRA relate to and why this Court
should not entertain this petition until the hearing and final disposal of those
criminal complaint/CRA. The documents annexed to this affidavit are again
photocopies of medical reports of advocate Sharma.
21. In my view, the attempt of respondent no.2, 3 and 4 is only to obstruct
the redevelopment of the society without any cogent or valid or acceptable
Shraddha Talekar PS 15/27
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reason. These three persons are only holding the society to ransom for some
perceived apprehensions by taking stand which is totally mala-fide,
unjustified, untenable and frivolous and only with an intention to cause
obstruction and interruption to the redevelopment project. Otherwise there is
no reason for respondent nos. 2, 3 and 4 not to co-operate and support the
redevelopment project. If they have problem regarding redevelopment, it
can be sorted out so that they can also live happily in the society. It should
be noted that 34 members out of 37 members, which will be more than 91%
of the society members have vacated the premises with a dream to move
back into a flat which will be better than what they were living in till now.
By the dishonest and mischievous stand of respondent nos. 2 to 4, more than
91% of the members are going to be affected and deprived of their
enjoyment of life. In effect, when one considers the affidavits in reply filed
on behalf of respondent nos. 2 to 4, there is no reason why this petition
should not be allowed.
22. The counsel appearing for respondent no.2 stated that respondent no.2
not having consented to the Development Agreement, no order can be
passed against respondent no.2.
I am afraid, this is not the correct position. Petition under Section 9 of
the said Act is maintainable even against parties who are not parties to the
Shraddha Talekar PS 16/27
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arbitration agreement. A Division Bench of this Court in Girish Mulchand
Mehta & Anr. Vs. Mahesh S. Mehta & Anr. 1, has held that Section 9 can be
invoked even against a third party who is not party to an arbitration
agreement or arbitration proceedings, if he was likely to be affected by the
interim measures. Paragraphs 12 and 13 of the said judgment read as under :
12 The next question is whether order of formulating the
interim measures can be passed by the Court in exercise of
powers under Section 9 of the Act only against a party to an
Arbitration Agreement or Arbitration Proceedings. As is noticed
earlier, the jurisdiction under Section 9 can be invoked only by a
party to the Arbitration Agreement.
Section 9, however, does not limit the jurisdiction of
the Court to pass order of interim measures only against party to
an Arbitration Agreement or Arbitration Proceedings; whereas
the Court is free to exercise same power for making appropriate
order against the party to the Petition under Section 9 of the Act
as any proceedings before it. The fact that the order would affect
the person who is not party to the Arbitration Agreement or
Arbitration Proceedings does not affect the jurisdiction of the
Court under Section 9 of the Act which is intended to pass
interim measures of protection or preservation of the subject
matter of the Arbitration Agreement.
13 The Appellants, however, place reliance on the
decision of the Kerala High Court in the case of Shoney Sanil
v/s. M/s. Coastal Foundations (P) Ltd. & Ors. reported in AIR
2006 Kerala (206). In that case the question considered was
whether the writ-Petitioner, admittedly, a third party to an
alleged Arbitral Agreement between the Respondents inter se,
and who had in his favour a confirmed Court sale and
certificate of such sale and delivery of possession, following and
arising under an independent decree, could be dispossessed,
injuncted or subjected to other Court proceedings under Section
9 of the Act? The Kerala High Court held that orders under
Section 9 (ii)(c) can be passed only in relation to subject matter
of dispute in arbitration which may be in possession of any party
since it is not the intention of the Act or any arbitration
proceedings as conceived by the law of Arbitration to interfere
with or interpolate third party rights. It concluded that on a plain
1 2010 (1) Bom.C.R.31
Shraddha Talekar PS 17/27
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reading of Section 9 of the Act and going by the Scheme of the
said Act, there is no room to hold that by an interim measure
under Section 9, the rights of third party holding possession on
the basis of Court sale could be interfered with, injuncted or
subjected to proceedings under Section 9 of the Act. Instead, it
held that Section 9 of the Act contemplates issuance of interim
measures by the Court only at the instance of party to Arbitration
Agreement with regard to the subject matter of the Arbitration
Agreement. The Court has, however, noted that such order can be
only against the party to an Arbitration Agreement or at best
against any person claiming under him. The Principle
expounded in this decision is that if a third party has independent
right in the subject matter of the Arbitration Agreement, Section
9 cannot be invoked to affect his rights. At the same time, the
Kerala High Court has plainly opined that it is possible to pass
orders under Section 9 against a third party if such person is
claiming under the party to the Arbitration Agreement. Thus
understood, Section 9 can be invoked even against a third party
who is not party to an arbitration agreement or arbitration
proceedings, if he were to be person claiming under the party to
the arbitration agreement and likely to be affected by the interim
measures. The Appellants herein will have to substantiate that
they were claiming independent right in respect of any portion of
the subject matter of the Arbitration Agreement on their own and
not claiming under the Respondent No. 2 Society who is party to
the Arbitration Agreement. In absence thereof, the Court would
certainly have jurisdiction to pass appropriate order by way of
interim measures even against the Appellants herein, irrespective
of the fact that they are not party to the Arbitration Agreement or
the Arbitration Proceedings.
The Court has held that under Section 9 of the said Act, parties who
would be incidentally affected by grant of any interim measure, are required
to be impleaded in view of Rule 803E of the Bombay High Court (Original
Side) Rules. This has also been followed by a Single Judge of this Court in
Calvin Properties & Housing Vs. Green Fields Cooperative Housing &
Ors.2
2 2014 (2) Bom.CR.398
Shraddha Talekar PS 18/27
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23. Mr. Shah relied upon Bharat Infrastructure and Engineering Pvt.
Ltd. Vs. Park Darshan CHS Ltd. & Ors.3 to submit that it is now well
established position that once a person becomes a member of the Co-
operative Society, he looses his individuality with the Society and he has no
independent rights except those given to him by the statute and Bye-laws.
The member has to speak through the Society or rather the Society alone
can act and speak for him qua the rights and duties of the Society as a body.
Counsel also submitted that respondent nos. 2 to 4 will be getting the flats
having same area, facilities and fixtures etc. as the other 34 members of the
society are going to get. Mr. Shah stated petitioner is ready and willing to
undertake to perform its obligations under the Development Agreement.
Counsel assures that notwithstanding non-co-operation shown by
respondent nos. 2 to 4, they will not be discriminated against and they will
also get all benefits of respondent no.1-society. The counsel further assures
to this Court, on instructions from the Chairman of the society who is
present in Court, that respondent Nos. 2 to 4 will not be discriminated
against or targeted for their objections and non-co-operation till date. It
should be noted that petitioner has also spent a substantial amount of money
in this project and at least from July 2017 has been paying Rs. 8.50 lakhs
per month to the members of the society towards compensation for
3 2013 SCC On Line BOM 466
Shraddha Talekar PS 19/27
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individual alternate accommodation. Any further delay would cause further
loss to petitioner and also to the society as well as other 34 members of the
society, who have already vacated their respective flats and they would not
be able to go back to their new flats upon reconstruction of the building. Mr.
Shah states petitioner has no objection to pay compensation to respondent
no.2 to respondent no.4, as noted above, at the same rate being paid by
petitioner to the other 34 members, in accordance with the Individual
Accommodation Agreement/Tripartite Agreement entered into between
petitioner and respondent no.1 and other 34 society members. Mr.Shah also
states that he has no objection if respondent no.2 joins in the arbitration
proceedings to be commenced. Mr. Shah states his statement may be
recorded as undertaking of petitioner's partner Mr. Ritesh H. Thakker, who
is present in Court and Mr. Shah identifies him.
24. Counsel for petitioner also submitted that if respondent nos. 2, 3 and
4, who have occupied their flats, are deliberately not handing over their flats
to the society with an intention to obstruct the redevelopment work, it would
amount to a breach on the part of respondent no.1-society as the society
would not be able to hand over possession of 37 flats.
Mr. Dishang Shah for respondent no.1-society submitted that
respondent no.1-society has no objection if the relief as claimed by
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petitioner is granted and petitioner is allowed to commence redevelopment
of the property which would be in the interest of the society and its
members.
25. The society has passed a resolution to invite tenders for
redevelopment of the said property and has executed agreement for
redevelopment in favour of petitioner in view of the dilapidated condition of
the building. Respondent nos. 3 and 4 have also signed this Development
Agreement. This Court in Bharat Infrastructure (supra) has held that merely
because the terms and conditions of the development agreement are not
acceptable to the members who are in minuscule minority, cannot be the
basis not to abide by the decision of the overwhelming majority of the
General Body of respondent no.1- society.
This Court has held that once a person becomes a member of the Co-
operative Society, he looses his individuality with the Society and he has no
independent rights except those given to him by the statute and Bye-laws.
26. Perusal of the records indicates that resolutions have been passed by
the Society by overwhelming majority of members of respondent no.1-
society and 34 out of 37 members have already handed over possession of
their respective flats to the society and society, in turn, has handed over
Shraddha Talekar PS 21/27
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possession of the same to petitioner. Respondent Nos. 2 to 4, who are
members of respondent no.1-society, are bound by the resolution passed by
respondent no.1-society which in this case was passed unanimously to
appoint petitioner as developer and to execute development agreement with
petitioner.
Thus, even if respondent no.2 is not party to any arbitration
agreement, the agreement between petitioner and respondent-no.1 would be
binding on him and reliefs can be granted by this Court against the said
respondent.
27. Petitioner has to commence redevelopment on the plot of the society
after demolition of the two buildings and hand over possession of the
respective flats to the members of the society under the Development
Agreement. Respondent Nos. 2 to 4 cannot be permitted to obstruct the
redevelopment of the building under the Development Agreement.
In my view, if the said 3 members, i.e., respondent no.2 to respondent
no.4, have any claim for larger area from petitioner-Developer of the
buildings or have any monetary claim, the same may be raised in the
arbitration proceedings. I add respondent no.2 also because advocate for
respondent no.2, on instructions from respondent no.2, has agreed to join in
the arbitration proceedings to be commenced by petitioner as a party
Shraddha Talekar PS 22/27
23 35.carap.106.2017===.doc
respondent and an arbitrator has already been appointed under separate
order passed in Arbitration Application No. 106 of 2017.
28. In my view, few members of respondent no.-1 society who are only
three against an overwhelming 34 members, cannot be allowed to obstruct
the development project agreed by majority members of the society by
passing the resolution and said members having acted upon the said
resolution by handing over possession of their respective flats to the society
and the society in turn handing over the same to petitioner to enable
petitioner to commence redevelopment.
29. In my view, balance of convenience is also in favour of petitioner
and respondent no.1-society and if the reliefs as sought by petitioner are not
granted, the entire redevelopment project would be at standstill and the
members who have already handed over their flats and are out of possession
of the flats, would not be able to be provided with possession of new flats
proposed to be constructed by petitioner. Petitioner has also spent
substantial amount pursuant to the Development Agreement, which fact,
cannot be overlooked by this Court.
30. In my view, petitioner has also made out a strong prima-facie case for
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24 35.carap.106.2017===.doc
grant of interim measure. I see no reason why prayer clause (a) as claimed
in the petition be not granted. I find support for granting such an order from
the judgment of the Division Bench of this Court in Nimbus
Communications Ltd. Vs. BCCI 4
31. In the circumstances, the following order is passed :-
(a) Commercial Arbitration Petition allowed in terms of
prayer clause (a) which reads as under :
"(a) Pending the arbitration proceedings and making of an
Arbitral Award by the Arbitral Tribunal and subject to interim
order and directions by the Arbitral Tribunal, this Hon'ble Court be
pleased to issue a mandatory order and injunction directing the
Respondent Nos. 2 to 4, their servants, agents or any person/s
claiming through or under him to quit, vacate and hand over the
quite, vacant and peaceful possession of their respective premise
occupied by them in the respondent no.-1 society to the petitioner
or to the Court Receiver, High Court, Mumbai as this Hon'ble
Court deem fit and proper, and thereby to comply with the terms
and conditions of the said Joint Venture Development Agreement
dated 18.10.2016."
(b) Respondent Nos. 2 to 4 are directed to vacate their
respective premises within four weeks from today.
(c) If respondent Nos. 2 to 4 refuse to vacate, the Court
Receiver of this Court will take physical possession of Flats of
respondent Nos. 2 to 4 being being Flat No.A-15 (3rd Floor), A-11
(2nd floor) and B-32 (3rd floor) and evict respondent Nos. 2 to 4
4 2012[(4) Arb. L.R. 113 (Bombay) (DB)]
Shraddha Talekar PS 24/27
25 35.carap.106.2017===.doc
and if necessary use Police assistance. The concerned Police
Station shall provide all assistance.
(d) If respondent nos. 2 to 4 refuse to enter into Individual
Permanent Alternate Accommodation Agreement, all amounts
payable to respondent nos. 2 to 4 will be deposited with the Court
Receiver and that amount will be invested from time to time in
fixed deposit with a nationalized bank.
Respondent Nos.2 to 4, however, will be permitted to
withdraw those amounts upon signing their respective Individual
Permanent Alternate Accommodation Agreement. It is clarified
that whoever signs will be permitted to withdraw.
(e) Commercial Arbitration Petition disposed.
COMMERCIAL ARBITRATION APPLICATION NO. 106 OF 2017
32. In view of the observations made above in the commercial arbitration
petition No.393 of 2017 filed under Section 9 of the said Act, there is an
arbitration clause between petitioner and respondent nos. 3 and 4. Petitioner
has invoked arbitration as per the letter dated 17th June 2017. Mr. Shah for
petitioner, on instructions, stated that petitioner has no objection if
Shraddha Talekar PS 25/27
26 35.carap.106.2017===.doc
respondent no. 2, who is not a signatory to the arbitration agreement, joins
as respondent in the arbitration proceedings. Mr. Yelve for respondent no.2,
on instructions from respondent no.2, who is present in Court, states that
respondent no.2 is ready and willing to participate as respondent in
arbitration proceedings.
33. In view of this consent, the following order is passed :
(i) Mr.Mahesh Menon, an Advocate practicing in this
Court having office at : 4, Gayatri, 2nd floor, Opp. Chembur
Post Office, D.K. Sandu Marg, Chembur, Mumbai 400 071;
Telephone No. 22-4311 200 (100 Lines); Mobile
No.9821056508/9821256508, is appointed as Sole Arbitrator
to arbitrate on disputes and differences including
counterclaim, if any, arising out and/or in connection with
and relating to Joint Venture Development Agreement dated
18th October 2016.
(ii) Respondent Nos.2 Mr. Sudesh Sudhakar Sule be added
as respondent and is permitted to participate in the arbitral
proceedings.
(iii) The fees, administrative expenses, typing charges and
venue expenses of the Arbitrator shall be shared equally
between parties, i.e., 50% by petitioner and 50% by
respondents (12.5% each) and the same will be costs in the
arbitration proceedings.
Shraddha Talekar PS 26/27
27 35.carap.106.2017===.doc
(iv) Within three weeks of receiving a communication from
the advocate for petitioner and/or respondents, the Arbitrator
shall give in writing, directly to parties, disclosure as
required under Section 11(8) read with Section 12(1) of the
said Act.
(v) All rights and contentions of parties are kept open,
except, questioning existence of arbitration agreement.
34. Commercial Arbitration Application accordingly disposed.
(K.R. SHRIRAM, J.)
Shraddha Talekar PS 27/27
