Bombay High Court
Mp Space Dynamics Pvt Ltd vs Janardan Chavan And 4 Ors on 23 December, 2021
Bench: B.P. Colabawalla
7. ARBPL 17007-21.docx
LAXMI
SUBHASH
SONTAKKE IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Digitally signed by
LAXMI SUBHASH
SONTAKKE ORDINARY ORIGINAL CIVIL JURISDICTION
Date: 2021.12.24
16:09:33 +0530
ARBITRATION PETITION (L) NO. 17007 OF 2021
MP Space Dynamics Pvt. Ltd. .. Petitioner
Vs.
Janardan Chavan & Ors. .. Respondents
WITH
INTERIM APPLICATION (L) NO. 19660 OF 2021
IN
ARBITRATION PETITION (L) NO. 17007 OF 2021
Dattatraya W. Shevade & Ors. ..Applicants/
Interveners
IN THE MATTER BETWEEN
MP Space Dynamics Pvt. Ltd. .. Petitioner
Vs.
Janardan Chavan & Ors. .. Respondents
Mr. Karl Tamboly with Vachan Bodke, Pinky Sharma, Swati Kalatme
& Tushar Nagvekar i/b V. & M. Legal for the Petitioner.
Mr. Akash Rebello i/b Neha Choksi for the Applicants in IA(L)
19660/2021.
Mr. Joel Carloz i/b Rohan Mirpure for Respondent Nos.1 to 4.
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CORAM :- B. P. COLABAWALLA, J.
Reserved on :- OCTOBER 29, 2021.
Pronounced on :- DECEMBER 23, 2021.
JUDGEMENT:-
1. This is yet another case where the Petitioner - Developer
has been constrained to approach this Court seeking reliefs against four
dissenting members (Respondent Nos.1 to 4) who are holding up the
entire re-development by refusing to vacate the premises in their
occupation. Respondent No.1 is the occupant of Flat No.A/9;
Respondent No2 is the occupant of Flat No.A/20; Respondent No.3 is
the occupant of Flat No.A/21; and Respondent No.4 is the occupant of
Flat No.A/22 and Flat No.B/22 respectively. All the other members of
the 5th Respondent Society have vacated their respective premises. It is
the uncooperative attitude of these four members (Respondent Nos.1 to
4) that has led to the filing of the above Petition under Section 9 of the
Arbitration and Conciliation Act, 1996 (for short the "Arbitration
Act"), seeking the following reliefs:
(a) That this Hon'ble Court be please to appoint Court
Receiver, Bombay High Court with all powers under order
40 rule 1 of the Civil Procedure Code, 1908 to take
forceful possession of flats of the Respondent Nos. 1, 2, 3
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and 4 in the Respondent No.5 (wrongly mentioned as
Respondent No.4).
(b) That this Hon'ble Court be please to issue directions to
take forceful possession of respective flats of the
Respondent Nos. 1, 2, 3 and 4 through the office of the
Court Receiver High Court Bombay & if necessary to take
police protection to enable the Petitioner to start the
redevelopment work by demolishing the existing building
of the said society.
2. The above Interim Application has been filed by 28
members of the 5th Respondent Society seeking to intervene in the above
Petition. All these 28 members are supporting the Petitioner.
3. The brief facts giving rise to the present controversy are
this. The dispute pertains to re-development of the property of the 5th
Respondent Society being a building consisting of ground plus four
floors comprising of 33 flats situated at Plot No. 222 and 223, TPS. III,
51st TPS Road, Babhai, Borivali (West), Mumbai-400 091 (for short the
"said property"). Respondent Nos. 1, 3 and 4 are the legal heirs of the
original members of the 5th Respondent Society. As far as Respondent
No.2 is concerned, she is along with Swapnali Ranade, is a member of
the 5th Respondent Society.
4. On 6th March, 1981, Respondent No. 5 was registered as a
Society. The members of the Society are purchasers of the flats in the
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existing building constructed on the said property. As of today there are
33 members of the said Society. On 13th November, 1998, an Occupation
Certificate was issued in respect of the existing building constructed on
the said property and a deemed conveyance in respect of the said
property was also executed by the Competent Authority in favour of
Respondent No.5 on 22nd August, 2012.
5. On 25th August, 2013, an Annual General Meeting of the
Society was held wherein the Managing Committee of Respondent No.5
was appointed. According to Respondent Nos. 1 to 4 this meeting was
conducted without the proper coram and hence is invalid. Be that as it
may, between 2013 to 2015, the 5th Respondent Society resolved to
undertake re-development of its existing building by appointing a
Developer. In this regard, on 27th September, 2015, an Annual General
Meeting was conducted wherein the Petitioner was introduced to the
members of Respondent No.5 to develop the said property. After the
aforesaid Annual General Meeting, in October, 2015, majority of the
members of Respondent No.5 issued letters of consent authorizing the
Petitioner to undertake the re-development of the said property.
6. Thereafter, on 18th October, 2015, a General Body Meeting
of Respondent No. 5 was held wherein a resolution was passed inter-
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alia recording that the majority members of Respondent No.5 had
provided their written consent in favour of the Petitioner being
appointed as the Developer to re-develop the said property. Thereafter,
another Special General Body Meeting was also convened on 12th
December, 2015 wherein copies of a draft Development Agreement was
provided to the members of Respondent No.5.
7. After all this, on 9th August, 2016, a Development
Agreement was executed between the 5th Respondent Society and the
Petitioner (as the Developer) for re-development of the said property.
The Development Agreement categorically records that the existing
building is not in a sound condition and is incapable of being repaired.
It further stipulates that the members of the Society must vacate their
existing premises and hand over vacant and peaceful possession of their
respective premises within 30 days of receipt of the Petitioner's
intimation in that regard after obtaining IOD, failing which, every
defaulting member shall be liable to pay Rs. 50,000/- per day as
compensation to the Petitioner. This Development Agreement also
contains an arbitration clause between the parties as reflected in clause
36 thereof.
8. After entering into the aforesaid Development Agreement,
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minutes of the Special General Body Meetings held on 27th September,
2015 and 18th October, 2015 were approved on 26th September, 2016.
9. According to Respondent Nos. 1 to 4, the five year tenure of
the Managing Committee of Respondent No.5 lapsed as on 24th August,
2018. Since the tenure of the Managing Committee had lapsed,
according to Respondent Nos.1 to 4, the said Managing Committee had
no power to convene any meetings and consequently any resolutions
passed at any such meetings were also invalid, illegal and without any
proper authority. The reason I have mentioned this over here is because
it is the contention of Respondent Nos. 1 to 4 that all resolutions passed
by the 5th Respondent Society have been challenged before the
Cooperative Court, and pending that challenge, Respondent Nos. 1 to 4
cannot be asked to vacate their respective premises.
10. Be that as it may, on 1st September, 2018, the Development
Control and Promotion Regulation of 2034 (for short "DCPR 2034")
came into force. In view of the aforesaid DCPR 2034, an Annual General
Meeting was convened on 22nd September, 2019 wherein Respondent
No.5 allowed the Petitioner to take necessary steps to obtain the
approval of plans in accordance with DCPR, 2034. In fact, prior thereto,
on 23rd December, 2018, another Special General Body Meeting was
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convened wherein inter-alia a resolution was passed that two out of the
three office bearers of Respondent No.5 must be signatories for
executing deeds, documents, Permanent Alternate Accommodation
Agreements and/or any other documents in respect of the said property
and also to represent Respondent No.5 before the Sub Registrar of
Assurances for admitting execution of any of the abovementioned
documents. Thereafter, on 1st October, 2020, another Annual General
Meeting of Respondent No.5 was convened wherein inter-alia a
resolution was passed admitting seven slum dwellers as members of the
5th Respondent Society.
11. The Petitioner - Developer, thereafter, obtained the
Intimation of Disapproval (IOD) from the MCGM for re-development of
the said property under DCPR, 2034. This IOD was obtained on 22nd
January, 2021.
12. Since, there were certain internal disputes in the 5th
Respondent Society, complaints came to be filed before the Deputy
Registrar of Cooperative Societies inter-alia alleging that the ex-office
bearers of the Managing Committee were fraudulently representing
themselves as office bearers of Respondent No.5, even after expiry of
their tenure. Pursuant to the complaints filed, the office of the Deputy
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Registrar of Cooperative Housing Societies passed an order on 18th
February, 2021, dismissing the Managing Committee of Respondent
No.5 and appointed one Mr. Shashank Chowkidar, a Certified Chartered
Accountant, as the Authorized Administrator to oversee the daily work
of the Society. Thereafter, the office of the Deputy Registrar of
Cooperative Housing Societies passed an order on 16th September, 2021
whereby Mr. Shashank Chowkidar (as the Administrator) was replaced
by a 3 Member Administrator Board consisting of Mr. Mahindra D.
Kharat, Mr. Atul Govind Virkar and Mr. Vijay S. Soni, who are all
members of the 5th Respondent Society, to take charge of the records of
the society and initiate the process for conducting elections.
13. In the interregnum, on 26th July, 2021, the Petitioner
addressed a Letter to the Administrator appointed pursuant to the order
dated 18th February, 2021 stating that the Petitioner had acquired
development rights over the said property by following the guidelines as
prescribed under Section 79A of the Maharashtra Co-operative Housing
Societies Act, 1960 and also highlighted the dilapidated condition of the
building. Thereafter, the present Petition was filed on 3rd August, 2021.
14. When this matter had come up on the first occasion
namely, on 18th August, 2021, Respondent Nos. 1 to 4 sought time to file
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an affidavit-in-reply to the above Petition. Acceding to this request and
considering that the re-development was held up from 2016, the said
Respondents were directed to file their affidavit-in-reply on or before
25th August, 2021. However, before the aforesaid date, on 23rd August,
2021 (after filing of the present Petition and after it came up for the first
time), Respondent Nos. 1 to 4 filed Dispute No.162 of 2021 before the
IVth Cooperative Court at Mumbai challenging several resolutions
passed by the 5th Respondent Society, the details of which are as under:
Sr. Resolution Date Purpose
No
1. Resolution dated 25th October, Appointment of the earlier
2013 Managing Committee
2. Resolution dated 27th September, Introducing the Developer to the
2015 Committee.
3. Resolution dated 18th October, Appointment of MP Space for
2015 Redevelopment
4. Resolution dated 12th December, Approval to the sign the
2015 Development Agreement
5. Resolution dated 23rd December, Acceptance of the term of the
2018 Development Agreement.
6. Resolution dated 22nd September, Adoption of DPCR, 2034
7. Resolution dated 4th October, Admitting the seven slum
2020 dwellers to the Society as
Members
15. On the same date, (23rd August, 2021), the IVth Cooperative
Court passed a status quo order. Since, the aforesaid status quo order
was only an ad-interim order and pending the opponents in the said
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dispute to file a reply, I had on 24th September, 2021, directed the IVth
Cooperative Court to decide the Interim Application filed by
Respondent Nos. 1 to 4 herein within a period of two weeks from the
said date. Pursuant to the aforesaid directions, the Cooperative Court
passed an order in the Interim Application partly allowing the same
inter-alia directing the 5th Respondent Society not to act or implement
the resolutions dated 23rd December, 2018, 22nd September, 2019 and
4th October, 2020 as well as maintain status quo till the decision of the
dispute. This order is dated 8th October, 2021.
16. In this factual backdrop, Mr. Tamboly, the learned Counsel
appearing on behalf of the Petitioner, submitted that the aforesaid four
members, namely, Respondent Nos. 1 to 4 are the only members who
have refused to vacate their respective premises. He submitted that
these four members cannot stall the entire re-development. The
majority of the members have consented to the re-development and
have, in furtherance thereof, even vacated their respective premises for
which the Petitioner is paying them transit rent. It was the submission
of Mr. Tamboly that the minority has to bend to the will of the majority
and once the majority of the members of the Society have agreed to go
forward with the re-development of the said property, the minority
cannot hold up the entire re-development. He submitted that these four
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Respondents do not have any independent existence apart from that of
the Society and hence cannot hold the majority of the members of the
5th Respondent Society to ransom in this fashion. He therefore
submitted that this is a fit case where this Court ought to direct
Respondent Nos. 1 to 4 to vacate their respective premises in a time
bound manner, failing which, the Court Receiver ought to be appointed
who shall take physical possession of the premises in occupation of
Respondent Nos. 1 to 4, and thereafter, hand over the same to the
Petitioner so that re-development of the said property can continue
smoothly and in a timely fashion. In support of these submissions, Mr.
Tamboly relied upon the following decisions:
(a) Girish Mulchand Mehta and Anr. Vs. Mahesh
S. Mehta [2009 SSC OnLine Bom 1986]
(b) Calvin Properties and Housing Vs. Green
Fields Co-operative Housing Society Ltd and
Ors [2013 SCC OnLine Bom 1455]
(c) Westin Sankalp Developers Vs. Ajay Sikandar
Rana and Ors. [2021 SCC OnLine Bom 421].
17. On the other hand, Mr. Carloz, the learned Counsel
appearing on behalf of Respondent Nos. 1 to 4, submitted that all the
resolutions passed by the Society have been challenged by Respondent
Nos. 1 to 4 before the Cooperative Court. Since all the resolutions have
been challenged, including the one authorizing the Society to enter into
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the Development Agreement with the Petitioner and which is now sub-
judice before the Cooperative Court, no relief can be granted in favour of
the Petitioner. He submitted that under the scheme of the Maharashtra
Cooperative Societies Act, 1960, the resolutions passed by the Society
can only be challenged under Section 91 of the said Act before the
Cooperative Court and to the exclusion of all other Courts. Such a
challenge has been laid by Respondent Nos. 1 to 4 herein to the
resolutions passed by the Society. Mr. Carloz submitted that the
Cooperative Court No. IV at Mumbai has in fact passed an order dated
8th October, 2021, wherein certain resolutions passed by the Society
have been stayed and the Society has been asked to maintain status quo
till the decision of the dispute. This being the case, Mr. Carloz submitted
that no relief can be granted in favour of the Petitioner. Consequently,
there was no merit in the above Section 9 Petition and the same ought to
be dismissed with costs, was the submission of Mr. Carloz. I must
mention that though several other arguments and contentions have
been raised in the affidavit-in-reply filed by Respondent Nos. 1 to 4, Mr.
Carloz, in his usual fair manner, has only pressed the aforesaid point
into service to deny the Petitioner relief under Section 9 of the
Arbitration Act.
18. In light of the arguments canvassed by Mr. Carloz, I have to
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decide whether the Petitioner is entitled to the reliefs sought for in the
above Section 9 Petition. I have heard the learned Counsel for the
parties at great length and have perused the papers and proceedings in
the above Section 9 Petition. Before dealing with the arguments
canvassed by the respective parties, it would be relevant to set out how
this matter has progressed.
19. As mentioned earlier, the Petitioner filed the above Petition
on 3rd August, 2021. Thereafter, the first hearing in this Petition took
place on 18th August, 2021 when Respondent Nos. 1 to 4 sought time to
file an affidavit-in-reply. Acceding to this request, Respondent Nos. 1 to
4 were directed to file their affidavit-in-reply in this Court on or before
25th August, 2021. Before filing the aforesaid reply, on 23rd August, 2021
itself, Respondent Nos. 1 to 4 approached the Cooperative Court
challenging all the resolutions passed by the 5th Respondent Society
from the year 2013 onwards, a list of which is already set out earlier.
Considering that these resolutions were challenged, I had directed the
Cooperative Court to decide the Interim Application filed by
Respondent Nos. 1 to 4 herein within a period of two weeks from 24th
September, 2021. The above Interim Application was accordingly
decided by the Cooperative Court vide its order dated 8th October, 2021
and limited relief was granted only in relation to the resolutions dated
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23rd December, 2018, 22nd September, 2019 and 4th October, 2020
respectively.
20. Since, these three resolutions were stayed, to obviate any
additional complications and to ensure that Respondent Nos. 1 to 4
should have no further grievances, I had suggested to the parties that
the entire dispute relating to these resolutions could be resolved if the
parties agreed to a fresh meeting being called of all the members of 5th
Respondent Society, and which would be conducted under the
supervision of an officer of this Court. I made this suggestion as this
course of action has been previously adopted by several Division
Benches of this Court in similar matters. To this suggestion, the learned
Counsel appearing on behalf of the Petitioner, Respondent Nos. 1 to 4 as
well as the intervenors (who are 28 members of the 5th Respondent
Society and supporting the Petitioner), on instructions, all agreed to
have a fresh meeting to resolve the disputes with reference to the
resolutions challenged before the Cooperative Court and which
pertained to the re-development of the said property. In fact, I had even
made it clear to the learned Counsel appearing on behalf of the
Petitioner, that in the said meeting, if Respondent Nos. 1 to 4 wished to
bring any fresh Developer who would offer better terms, the same can
be considered by all members of the 5th Respondent Society. In the said
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hearing, all parties agreed to this course of action being adopted and it
was in these circumstances, that the matter was kept on 14th October,
2021 to enable the parties to put the aforesaid agreement in writing.
21. However, when the matter was called out on 14th October,
2021, much to my surprise, the previous advocate appearing on behalf
of Respondent Nos. 1 to 4, apologized to the Court and stated that
Respondent Nos.1 to 4 were brazenly reneging on the agreement
reached before this Court and therefore sought leave to withdraw from
the above proceedings. The conduct of Respondent Nos.1 to 4 itself
indicates that on one pretext or the other they want to stall the re-
development. Firstly, the timing of challenging the General Body
resolutions passed by the Society from 2013 to 2020 cannot be ignored.
All the resolutions (from 2013 to 2020) were challenged before the IVth
Co-operative Court only on 23rd August, 2021 (i.e. after the filing of the
present Petition). There is absolutely no explanation as to why
Respondent Nos.1 to 4 did not challenge the said resolutions earlier.
Secondly, the conduct of Respondent Nos. 1 to 4, of now reneging on the
agreement reached before this Court for holding a fresh meeting under
the supervision of this Court, also clearly indicates that they are in the
minority and will not succeed in thwarting the re-development. From all
this, it isn't difficult to discern that Respondent Nos. 1 to 4, under one
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pretext or the other, want to stall the re-development without having
any regard or concern that the other members of the Society have
vacated their respective premises and are anxious to move back into the
new premises that would be allotted to them under the re-development.
The conduct of Respondent Nos.1 to 4 speaks volumes of their motives.
Be that as it may, despite their conduct, I have heard Mr. Carloz on the
merits of the matter. As mentioned earlier, Mr. Carloz has only argued
that since all the resolutions passed by the Society are challenged before
the Co-operative Court and the Co-operative Court has passed an order
dated 8th October, 2021 staying the effect and implementation of certain
resolutions, no relief can be granted to the Petitioner in the above
Section 9 Petition.
22. Firstly, I must mention that the law on the subject is quite
well settled. This Court has time and again held that the minority
members are bound by the decisions taken by the majority and cannot
hold up re-development of the entire project in this fashion. Merely
because some terms and conditions of the Development Agreement are
not acceptable to the minuscule minority, cannot be the basis for
refusing to abide by the decision of the overwhelming majority of the
General Body of the Society. In this regard, the reliance placed by Mr.
Tamboly on the decisions of this court in the matter of (i) Girish
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Mulchand Mehta and Anr. Vs. Mahesh S. Mehta (supra); and
(ii) Calvin Properties and Housing Vs. Green Fields Co-
operative Housing Society Ltd and Ors (supra) is well founded.
The relevant portion of Girish Mulchand Mehta and Anr. Vs.
Mahesh S. Mehta (supra) reads thus:
"3. As a counter blast to the abovesaid Petition filed by the
respondent No. 1 under section 9, the appellants filed dispute
dated 25th June, 2009 before the Cooperative Court, Mumbai
being Case No. AVN/CC-II/207 of 2009 praying for following
reliefs:--
"a) that it be declared that the convening and holding of the
purported Special General Meeting dated 27-4-2008 of
the Opponent Society and all its proceedings, including
Resolutions passed therein, are illegal, bad in law, null
and void ab-initio and not binding upon the Disputants.
(b) it be declared that the purported Development
Agreement dated 7-5-2008 between the Opponent
Society and the Developer, being Ex-A hereto is illegal,
bad in law, null and void ab-initio and not binding upon
the Opponent Society nor any of its members, including
the Disputants.
(c) the Opponent Society, its office bearers, agents and
servants be permanently restrained by an order of
injunction of this Hon'ble Court from, in any manner,
implementing and/or acting upon any of the purported
Resolutions passed in the purported Special General
Meeting held on 27-4-2008 and the purported
Development agreement dated 7-5-2008 being Ex-A
hereto.
(d) the Opponent Society, its office bearers, agents and
servants be permanently restrained by an order of
injunction of the Hon'ble Court from disconnecting
and/or causing the disconnection of (i) the water supply
and the common electric supply to the Society's building
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and (ii) the electric meter for the common lights,
staircase lights, water pump etc. and the electricity
meters in respect of the suit flats No. 1 and 3 in the
building of the Opponent Society at 257, R.N. Narkar
Marg, Ghatkopar (E), Mumbai- 400 077.
(e) that pending the hearing and final disposal of this
dispute, the Opponent Society, its office bearers, agents
and servants be restrained by an order of injunction of
this Hon'ble Court from, in any manner, implementing
and/or acting upon (i) any of the purported Resolutions
passed in the purported Special General Meeting held
on 27-4-2008 and (ii) the purported Development
agreement dated 7-5-2008 being EX-A hereto.
(f) That pending the hearing and final disposal of this
dispute, the Opponent Society, its office bearers, agents
and servants be restrained by an order of injunction of
this Hon'ble Court from disconnecting and/or causing
the disconnection of (i) the water supply and the electric
supply to the building and (ii) the electric meter in
respect of common lights, staircase lights, water-pump
and the electricity meters of the suit flats No. 1 and 3 in
the building of the Opponent Society at 257, R.N. Narkar
Marg, Ghatkopar (E), Mumbai-400 077.
(g) for urgent Ad-Interim orders in terms of prayers (e) and
(f) above.
(h) for costs.
(i) for such other and further reliefs as the nature and
circumstances of the case may require".
***************
5. Be that as it may, the respondent No. 1 instituted Petition
under section 9 essentially against the respondent No. 2
Society with whom the respondent No. 1 had entered into
Development Agreement on the assertion that the Society has
failed to perform its part of the obligation under the said
Agreement and it was just and convenient to grant the relief as
prayed in section 9 Petition. Since the grant of the proposed
relief was to incidentally affect the appellants herein, they
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were also impleaded as respondents 2 and 3. The said
respondents were required to be impleaded also because of
Rule 803-E of the Bombay High Court (Original Side) Rules. The
respondent No. 2 Society, however, did not resist the relief
claimed in the said Petition. In fact, the respondent No. 2
Society took the stand that in spite of its willingness to
perform its part of the obligation under the agreement, it was
unable to do so because of the untenable obstruction caused
by the appellants herein (who were its members till they came
to be expelled by the General Body). The Petition, however,
was mainly resisted by the appellants. The Principal grievance
of the appellants (Original respondents 2 and 3) was that they
could not be made party in the Petition under section 9, as
they were not party to the Arbitration Agreement. The Court
had no jurisdiction to pass any direction or order against the
appellants since they were not party to the Arbitration
Agreement. In any case, the Court cannot order their
dispossession in exercise of power under section 9 of the Act.
The appellants justified their obstruction mainly on the ground
that they did not approve of the terms and conditions
specified in the Development Agreement executed in favour of
the respondent No. 1. It was their case that the offer given by
the respondent No. 1 was prejudicial to the interest of the
members of the Society. In that, the Developer was not only
obliged to provide bigger alternative reconstructed flats but
also obliged to provide additional corpus to the Society. In the
first place, the Learned Single Judge found that there was an
Arbitration Agreement in the shape of clause 49 of the
Development Agreement executed between the respondent
No. 1 and respondent No. 2. Thus, it was open to the
respondent No. 1 to invoke section 9 of the Act being party to
the Arbitration Agreement. Further, section 9 can be invoked
in aid to the main relief/claim pending before the Arbitral
Tribunal. The Learned Single Judge then considered the
grievance of the appellants and found that the Resolutions
passed by the overwhelming majority of members of the
Society were not challenged till the filing of the Petition under
section 9. Besides, the majority decision of the General Body
of the Society would not only bind the Society but also the
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appellants. It is further held that essentially the relief claimed
under section 9 by the respondent No. 1 Petition was against
the respondent No. 2 Society who was obliged to comply with
the obligation under the Development Agreement without
which the respondent No. 1 would not be able to get
Commencement Certificate thereby stalling the
redevelopment of the building. The Learned Single Judge also
noticed that it is only the two members-appellants herein, who
were causing obstruction which was resulting in delay.
Moreover, it was causing serious prejudice not only to the
respondent No. 1 (petitioner) in terms of recurring cost as the
respondent No. 1 has already acted upon the agreement and
incurred substantial amount towards consideration of the
agreement and other expenses, but even the remaining 10
members of the Society have already acted upon the
agreement by vacating their respective flats and have shifted
to transit accommodation for which they have been duly
compensated by the respondent No. 1 as per the terms of the
Agreement. The Learned Single Judge also noted that the
appellants herein were not in a position to secure the amount
invested and incurred including the future expenses and cost
of the respondent No. 1 in case the project was stalled at their
instance. Taking overall view of the matter, the Learned Single
Judge not only thought it just and convenient to appoint Court
Receiver but also accepted the request of the respondent No.
1 to allow the Court Receiver to take possession of all the flats
in the said building and hand over vacant possession of the
entire building to the respondent No. 1 so as to enable the
respondent No. 1 to complete the project in terms of
Development Agreement and discharge his obligation of
providing duly constructed accommodation/premises to all
members including appellants herein (original respondents 2
and 3) within the prescribed time. The Learned Single Judge
also noticed that the relief sought would only require the
appellants herein to shift to another accommodation till the
redevelopment of the property of the Society whereafter they
would be once again accommodated in the newly constructed
accommodation in lieu of their existing flats. Accordingly, the
Petition was made absolute in terms of prayer clause (a).
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*******************
13. The appellants, however, place reliance on the decision of
the Kerala High Court in the case of Shoney Sanil v. Coastal
Foundations (P) Ltd., 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 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
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herein will have to substantiate that they were claiming
independent right in respect of any portion of the subject-
matter of the Arbitration Agreement on their own and not
claiming under the respondent No. 2 Society who is party to
the Arbitration Agreement. In absence thereof, the Court
would certainly have jurisdiction to pass appropriate order by
way of interim measures even against the appellants herein,
irrespective of the fact that they are not party to the
Arbitration Agreement or the Arbitration Proceedings.
14. Reliance was placed on another decision of the Delhi High
Court in the case of Impex Trading GMBH v. Anunay Fab. Ltd.,
reported in 2008 (1) Arb. LR 50 Delhi. In this case relief was
sought against the bankers of the respondent No. 1 and
petitioner respectively. The Court found as of fact that the
Bankers (respondents 2 to 4) were regulated in their working
by various articles of the UCP500. The liability of the Bank
under the document was independent of any dispute as to
breach of contract between the seller and the buyer. On this
finding, the Court went on to hold that Petition under section 9
of the Act against the Bankers who are not even party to the
Consignment Agreement and the Arbitration Clause is not
maintainable and deserves dismissal qua them. Once again
that was not a case of person claiming under the party to the
Arbitration Agreement, unlike in the present case where the
appellants were members of the respondent No. 2 Society and
would be therefore bound by the Award against the Society.
The fact that the appellants have proprietary rights in the flats
occupied by them does not mean that they were claiming such
right de hors the rights of the Society in the said flats. For, the
Society is the owner of the land and structure standing
thereon. The flats occupied by the appellants are part thereof
and in fact, allotted to the appellants in the capacity of
members of the Society. In that sense, the appellants are
persons claiming rights in the flats situated in the property
which is the subject-matter of the Arbitration Agreement,
under the respondent No. 2 Society who is party to the said
Arbitration Agreement. Accordingly, even this decision will be
of no avail to the appellants.
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****************
16. In the present case, it is not in dispute that the General
Body of the Society which is supreme, has taken a conscious
decision to redevelop the suit building. The General Body of
the Society has also resolved to appoint the respondent No. 1
as the Developer. Those decisions have not been challenged at
all. The appellants who were members of the Society at the
relevant time, are bound by the said decisions. The appellants
in the dispute filed before the Cooperative Court have only
challenged the Resolution dated 27-4-2008, which challenge
would merely revolve around the terms and conditions of the
Development Agreement. As a matter of fact, the General
Body of the Society has approved the terms and conditions of
the Development Agreement by overwhelming majority.
Merely because the terms and conditions of the Development
Agreement are not acceptable to the appellants, who are in
minuscule minority (only two out of twelve members), cannot
be the basis not to abide by the decision of the overwhelming
majority of the General Body of the Society. By now it is well
established position that once a person becomes a member of
the Co-operative Society, he loses his individuality with the
Society and he has no independent rights except those given
to him by the statute and Bye-laws. The member has to speak
through the Society or rather the Society alone can act and
speaks for him qua the rights and duties of the Society as a
body (see Daman Singh v. State of Punjab, reported in (1985) 2
SCC 670 : AIR 1985 SC 973). This view has been followed in the
subsequent decision of the Apex Court in the case of State of
U.P. v. Chheoki Employees Co-operative Society Ltd., reported in
(1997) 3 SCC 681 : AIR 1997 SC 1413. In this decision the Apex
Court further observed that the member of Society has no
independent right qua the Society and it is the Society that is
entitled to represent as the corporate aggregate. The Court
also observed that the stream cannot rise higher than the
source. Suffice it to observe that so long as the Resolutions
passed by the General Body of the respondent No. 2 Society
are in force and not overturned by a forum of competent
jurisdiction, the said decisions would bind the appellants. They
cannot take a stand alone position but are bound by the
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majority decision of the General Body. Notably, the appellants
have not challenged the Resolutions passed by the General
Body of the Society to redevelop the property and more so, to
appoint the respondent No. 1 as the Developer to give him all
the redevelopment rights. The proprietary rights of the
appellants herein in the portion (in respective flats) of the
property of the Society cannot defeat the rights accrued to the
Developer and/or absolve the Society of its obligations in
relation to the subject-matter of the Arbitration Agreement.
The fact that the relief prayed by the respondent No. 1 in
section-9 Petition and as granted by the Learned Single Judge
would affect the proprietary rights of the appellants does not
take the matter any further. For, the proprietary rights of the
appellants in the flats in their possession would be subservient
to the authority of the General Body of the Society. Moreso,
such rights cannot be invoked against the Developer
(respondent No. 1) and in any case, cannot extricate the
Society of its obligations under the Development Agreement.
Since the relief prayed by the respondent No. 1 would affect
the appellants, they were impleaded as party to the
proceedings under section 9 of the Act, which was also
necessitated by virtue of Rule 803-E of the Bombay High Court
(Original Side) Rules. The said Rule reads thus:--
"R. 803-E.Notice of Filling Application to persons likely to be
affected.-- Upon any application by petition under the
Act, the Judge in chambers shall, if he accepts the
petition, direct notice thereof to be given to all persons
mentioned in the petition and to such other persons as
may seem to him to be likely to be affected by the
proceedings, requiring all or any of such persons to
show cause, within the time specified in the notice, why
the relief sought in the petition should not be granted".
***********************
18. We have no hesitation in taking the view that since the
appellants were members of the Society and were allotted
flats in question in that capacity at the relevant time are bound
by the decision of the General Body of the Society, as long as
the decision of the General Body is in force. As observed
earlier, the appellants have not challenged the decisions of the
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General Body of the Society which is supreme, insofar as
redevelopment of the property in question or of appointment
of the respondent No. 1 conferring on him the development
rights. The appellants have merely challenged the Resolution
which at best would raise issues regarding the stipulations in
the Development Agreement. The General Body of the Society
has taken a conscious decision which in this case was after
due deliberation of almost over 5 years from August, 2002 till
the respondent No. 1 came to be finally appointed as
Developer in terms of Resolution dated 2nd March, 2008.
Moreover, the General Body of the Society by overwhelming
majority not only approved the appointment of respondent
No. 1 as developer but also by subsequent Resolution dated
27th April, 2008 approved the draft Development Agreement.
Those terms and conditions have been finally incorporated in
the registered Development Agreement executed by the
Society in favour of respondent No. 1. That decision and act of
the Society would bind the appellants unless the said
Resolutions were to be quashed and set aside by a forum of
competent jurisdiction. In other words, in view of the binding
effect of the Resolutions on the appellants, it would
necessarily follow that the appellants were claiming under the
Society, assuming that the appellants have subsisting
proprietary rights in relation to the flats in their possession. It
is noticed that as of today the appellants have been expelled
from the basic membership of the Society. Their right to
occupy the flat is associated with their continuance as
member of the Society. It is a different matter that the
decision of expelling the appellants from the basic
membership of the. Society will be subject to the outcome of
the decision of the superior authority where the appeals are
stated to be pending. If the decision of the Society to expel the
appellants is to be maintained, in that case, the appellants
would have no surviving cause to pursue their remedy even
before the Co-operative Court much less to obstruct the
redevelopment proposal. As a matter of fact those
proceedings will have to be taken to its logical end
expeditiously. Even if the appellants were to continue as
members, they would be bound by the decision of the General
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Body whether they approve of the same or otherwise. In any
case, keeping in mind that the Development Agreement does
not absolutely take away the rights of the appellants in the
flats in question, as after demolition of the existing building,
the appellants would be accommodated in the newly
constructed flats to be allotted to them in lieu of the existing
flats, on the same terms as in the case of other members,
provided the appellants continue to remain members of the
Society. Under the Development Agreement, the respondent
No. 1 is obliged to complete the project within 18 months from
the date of receipt of full Commencement Certificate from the
Corporation. The full Commencement Certificate would be
issued only upon the vacant possession of the entire building
is delivered to the respondent No. 1 who in turn would
demolish the same with a view to reconstruct a new building
in its place. Significantly, out of twelve (12) members, ten (10)
members have already acted upon the Development
Agreement as well as have executed separate undertaking-
cum-agreement with the respondent No. 1 Developer. They
have already vacated flats in their occupation to facilitate
demolition of the existing building and have shifted to
alternative transit accommodation as back as in February,
2009. The project has been stalled because of the obstruction
created by the appellants herein who are in minuscule
minority. The said ten members of the Society who have
already shifted their premises, they and their family members
are suffering untold hardship. At the same time, the
respondent No. 1 who has already spent huge amount
towards consideration of the Development Agreement and
incurred other incidental expenses to effectuate the
Development Agreement in addition will have to incur the
recurring cost of paying monthly rent to the ten members who
have already shifted to transit accommodation. The learned
Single Judge has noted that the appellants are not in a position
to secure the amount invested and incurred including the
future expenses and costs of the respondent No. 1 herein in
case the project was to be stalled in this manner. Even before
this Court the appellants have not come forward to
compensate the respondent No. 1 herein and the other ten
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members of the Society for the loss and damage caused to
them due to avoidable delay resulting from the recalcitrant
attitude of the appellants. Considering the impact of
obstruction caused by the appellants to the redevelopment
proposal, not only to the respondent No. 1 Developer but also
to the overwhelming majority of members (10 out of 12) of the
Society, the learned Single Judge of this Court opined that it is
just and convenient to not only appoint the Court Receiver but
to pass further orders for preservation as well as protection
and improvement of the property which is subject-matter of
Arbitration Agreement. We have already noticed that the
Court's discretion while exercising power under section 9 of
the Act is very wide. The question is whether in the fact
situation of the present case it is just and convenient to
appoint Court Receiver coupled with power conferred on him
to take over possession of the entire building and hand over
vacant and peaceful possession thereof to the respondent No.
1 who in turn shall redevelop the property so as to provide
flats to each of the members of the Society in lieu of the
existing flats vacated by them as per the terms and conditions
of the Development Agreement, as ordered by the learned
Single Judge. For the reasons noted by the Learned Single
Judge which we have reiterated in the earlier part of this
decision, we find that it would be just and convenient to not
only appoint Court Receiver to take over possession of the
property but also pass further order of empowering the Court
Receiver to hand over vacant possession of the suit building to
the respondent No. 1 to enable him to complete the
redevelopment work according to the terms and conditions of
the Development Agreement.
*******************
20. It was also argued that the property was in good condition
and there was no need to redevelop the existing building. In
the first place, as noted earlier, the decision of the General
Body of the Society to redevelop the suit property has not
been challenged at all. Besides, no provision in the Co-
operative Societies Act or the rules or any other legal provision
has been brought to our notice which would curtail the right of
the Society to redevelop the property when the General Body
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7. ARBPL 17007-21.docx
of the Society intends to do so. Essentially, that is the
commercial wisdom of the General Body of the Society. It is
not open to the Court to sit over the said wisdom of the
General Body as an Appellate Authority. Merely because some
members in minority disapprove of the decision, that cannot
be the basis to negate the decision of the General Body, unless
it is shown that the decision was the product of fraud or
misrepresentation or was opposed to some statutory
prohibition. That is not the grievance made before us. In the
present case, the General Body took a conscious decision after
due deliberations for over five years to redevelop its property.
Even with regard to the appointment of the respondent No. 1
as the Developer, the record shows that it was decided by the
General Body of the Society after examining the relative merits
of the proposals received from the developers and
interviewing them. Even the proposed development
agreement to be entered with the Developer (respondent No.
1) was approved by the General Body. The appellants raised
untenable pleas to cause obstruction and have belatedly filed
proceedings in the Co-operative Court as a counter blast only
to protract the redevelopment work to be carried out by the
respondent No. 1 herein."
(emphasis supplied)
23. Similarly, the relevant portion of Calvin Properties and
Housing Vs. Green Fields Co-operative Housing Society Ltd
and Ors (supra) reads thus:
"27. Division Bench of this Court in case of Girish Mulchand
Mehta (supra) has considered this issue in detail. Division Bench has
held that Section 9 can be invoked even against a third party who is
not a party to arbitration agreement or arbitration proceedings, if
he was to be a person claiming under a party to the agreement and
accordingly to be affected by interim measure. Such party who is
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7. ARBPL 17007-21.docx
likely to be affected by interim measure will have to substantiate
that he was claiming independent right in respect of any portion of
the subject matter of the arbitration agreement on his own and not
claiming under a party to the arbitration agreement. This Court has
held that in absence of such situation, Court has jurisdiction to pass
appropriate order by way of interim measure even against such
party irrespective of the fact that they are not party to arbitration
agreement or the arbitration proceedings. This Court has also
considered Rule 803E of the Bombay High Court (Original Side)
Rules, which provides that notice of filing application has to be
issued to all persons likely to be affected. Paragraphs 12 to 14 and
16 of the Judgment of division bench on this issue would be
relevant which read thus:
12. The next question is whether order of formulating the
interim measures can be passed by the Court in exercise of
powers under Section 9 of the Act only against a party to an
Arbitration Agreement or Arbitration Proceedings. As is
noticed earlier, the jurisdiction under Section 9 can be
invoked only by a party to the Arbitration Agreement. Section
9, however, does not limit the jurisdiction of the Court to pass
order of interim measures only against party to an
Arbitration Agreement or Arbitration Proceedings; whereas
the Court is free to exercise same power for making
appropriate order against the party to the Petition under
Section 9 of the Act as any proceedings before it. The fact
that the order would affect the person who is not party to the
Arbitration Agreement or Arbitration Proceedings does not
affect the jurisdiction of the Court under Section 9 of the Act
which is intended to pass interim measures of protection or
preservation of the subject matter of the Arbitration
Agreement.
13. The Appellants, however, place reliance on the decision of
the Kerala High Court in the case of Shoney Sanil v. Coastal
Foundations (P) Ltd. reported in MANU/KE/0036/2006: AIR
2006 Kerala (206). In that case the question considered was
whether the writ-petitioner, admittedly, a third party to an
alleged Arbitral Agreement between the Respondents inter se,
and who had in his favour a confirmed Court sale and
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7. ARBPL 17007-21.docx
certificate of such sale and delivery of possession, following
and arising under an independent decree, could be
dispossessed, injuncted or subjected to other Court
proceedings under Section 9 of the Act? The Kerala High
Court held that orders under Section 9(ii)(c) can be passed
only in relation to subject matter of dispute in arbitration
which may be in possession of any party since it is not the
intention of the Act or any arbitration proceedings as
conceived by the law of Arbitration to interfere with or
interpolate third party rights. It concluded that on a plain
reading of Section 9 of the Act and going by the Scheme of
the said Act, there is no room to hold that by an interim
measure under Section 9, the rights of third party holding
possession on the basis of Court sale could be interfered
with, injuncted or subjected to proceedings under Section 9
of the Act. Instead, it held that Section 9 of the Act
contemplates issuance of interim measures by the Court only
at the instance of party to Arbitration Agreement with regard
to the subject matter of the Arbitration Agreement. The Court
has, however, noted that such order 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
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7. ARBPL 17007-21.docx
measures even against the Appellants herein, irrespective of
the fact that they are not party to the Arbitration Agreement
or the Arbitration Proceedings.
14. Reliance was placed on another decision of the Delhi High
Court in the case of Impex Trading GMBH v. Anunay Fab. Ltd.
reported in MANU/DE/8800/2007: 2008 (1) Arb. LR 50 Delhi.
In this case relief was sought against the bankers of the
Respondent No. 1 and Petitioner respectively. The Court
found as of fact that the Bankers (Respondents 2 to 4) were
regulated in their working by various articles of the UCP 500.
The liability of the Bank under the document was
independent of any dispute as to breach of contract between
the seller and the buyer. On this finding, the Court went on to
hold that Petition under Section 9 of the Act against the
Bankers who are not even party to the Consignment
Agreement and the Arbitration Clause is not maintainable
and deserves dismissal qua them. Once again that was not a
case of person claiming under the party to the Arbitration
Agreement, unlike in the present case where the Appellants
were members of the Respondent No. 2 Society and would be
therefore bound by the Award against the Society. The fact
that the Appellants have proprietary rights in the flats
occupied by them does not mean that they were claiming
such right dehors the rights of the Society in the said flats.
For, the Society is the owner of the land and structure
standing thereon. The flats occupied by the Appellants are
part thereof and in fact, allotted to the Appellants in the
capacity of members of the Society. In that sense, the
Appellants are persons claiming rights in the flats situated in
the property which is the subject matter of the Arbitration
Agreement, under the Respondent No. 2 Society who is party
to the said Arbitration Agreement. Accordingly, even this
decision will be of no avail to the Appellants.
16. In the present case, it is not in dispute that the General
Body of the Society which is supreme, has taken a conscious
decision to redevelop the suit building. The General Body of
the Society has also resolved to appoint the Respondent No.
1 as the Developer. Those decisions have not been challenged
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at all. The Appellants who were members of the Society at the
relevant time, are bound by the said decisions. The
Appellants in the dispute filed before the Cooperative Court
have only challenged the Resolution dated 27/4/2008, which
challenge would merely revolve around the terms and
conditions of the Development Agreement. As a matter of
fact, the General Body of the Society has approved the terms
and conditions of the Development Agreement by
overwhelming majority. Merely because the terms and
conditions of the Development Agreement are not acceptable
to the Appellants, who are in minuscule minority (only two
out of twelve members), cannot be the basis not to abide by
the decision of the overwhelming majority of the General
Body of the Society. By now it is well established position that
once a person becomes a member of the Cooperative Society,
he looses his individuality with the Society and he has no
independent rights except those given to him by the statute
and Bye-laws. The member has to speak through the Society
or rather the Society alone can act and speaks for him qua
the rights and duties of the Society as a body (see Daman
Singh v. State of Punjab reported in MANU/SC/0392/1985:
AIR 1985 SC 973). This view has been followed in the
subsequent decision of the Apex Court in the case of State of
U.P. v. Chheoki Employees Cooperative Society Ltd. reported
in MANU/SC/0332/1997: AIR 1997 SC 1413. In this decision
the Apex Court further observed that the member of Society
has no independent right qua the Society and it is the Society
that is entitled to represent as the corporate aggregate. The
Court also observed that the stream cannot rise higher than
the source. Suffice it to observe that so long as the
Resolutions passed by the General Body of the Respondent
No. 2 Society are in force and not overturned by a forum of
competent jurisdiction, the said decisions would bind the
Appellants. They cannot take a stand alone position but are
bound by the majority decision of the General Body. Notably,
the Appellants have not challenged the Resolutions passed by
the General Body of the Society to redevelop the property
and more so, to appoint the Respondent No. 1 as the
Developer to give him all the redevelopment rights. The
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propriety rights of the Appellants herein in the portion (in
respective flats) of the property of the Society cannot defeat
the rights accrued to the Developer and/or absolve the
Society of its obligations in relation to the subject matter of
the Arbitration Agreement. The fact that the relief prayed by
the Respondent No. 1 in Section 9 Petition and as granted by
the Learned Single Judge would affect the propriety rights of
the Appellants does not take the matter any further. For, the
propriety rights of the Appellants in the flats in their
possession would be subservient to the authority of the
General Body of the Society. Moreso, such rights cannot be
invoked against the Developer (Respondent No. 1) and in any
case, cannot extricate the Society of its obligations under the
Development Agreement. Since the relief prayed by the
Respondent No. 1 would affect the Appellants, they were
impleaded as party to the proceedings under Section 9 of the
Act, which was also necessitated by virtue of Rule 803E of the
Bombay High Court (Original Side) Rules. The said Rule reads
thus:
R803E. Notice of Filling Application to persons likely to be
affected.-Upon any application by petition under the Act, the
Judge in chambers shall, if he accepts the petition, direct
notice thereof to be given to all persons mentioned in the
petition and to such other persons as may seem to him to be
likely to be affected by the proceedings, requiring all or any
of such persons to show cause, within the time specified in
the notice, why the relief sought in the petition should not be
granted.
28. On perusal of the prayers in the arbitration petition, it is clear
that petitioner seeks appointment of Court Receiver and mandatory
injunction against respondent Nos. 2 to 6C in respect of the
premises in their occupation. It is thus clear beyond reasonable
doubt that any order if passed in this petition as prayed,
respondent Nos. 2 to 6C would be affected. Such parties are thus
rightly impleaded as parties to the present petition and are given
an opportunity of being heard and to oppose this petition. Without
going into the larger issue whether respondent No. 2 to 6C are
party to the arbitration agreement or not, not being signatories to
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the development agreement, in view of the fact that each of these
respondents are claiming through respondent No. 1 society in
respect of the properties of the society in which these members
have subservient rights and in view of the fact that any orders that
would be passed in these proceedings would seriously affect the
rights of the respondent Nos. 2 to 6C, such interim measure can be
granted by this Court under Section 9 of Arbitration Act against
such parties even if they are not parties to the arbitration
agreement. In my view there is no merit in the submission made by
the learned counsel appearing for respondent Nos. 2 to 5 and
reliance placed by the learned counsel appearing for the
respondents on the Judgment of Supreme Court in case of Indowind
Energy (supra) would be thus of no assistance to the respondents.
29. The next question that arises for consideration of this Court is
whether individual members of Society can oppose the reliefs
sought by the petitioner under Section 9 of Arbitration Act for
seeking interim measures in view of the dispute having arisen
between the petitioner and the society under development
agreement pursuant to the resolution passed by more than ¾ of
majority of the members without challenging such resolutions in
Court of law. On perusal of resolutions passed by the society in
various Special General Body Meetings some of which were also
attended by one or the other party who are parties to these
proceedings, it is clear that more than 3/4th majority of the
members have resolved that the existing buildings and the
premises occupied by the members shall be demolished and the
property be redeveloped by appointment of a developer. Society
had appointed a Project Management Consultant for the purpose
of preparing a report and draft tender. Tender document prepared
by the said PMC appointed by the Society disclosed the area in
possession of each member. Based on such tender document
prepared by the society, various bidders including the petitioner
submitted their bid. All these bids were opened by the society. It
was resolved by the society to appoint the petitioner as developer.
Draft development agreement and Power of Attorney was
circulated to all the members including respondent Nos. 2 to 6.
There was some suggestion given by some of the member. Perusal
of the record indicates that some of the suggestions were also
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incorporated in draft development agreement. Draft development
agreement and other documents were thereafter approved by the
members of the society in one of the Special General Body Meeting
by more than ¾ majority. Some of the office bearers of the society
were authorised to execute such agreement and the other
documents with the petitioner developer. It is not in dispute that
any of these resolutions which were passed by more than ¾
majority as well as development agreement entered into between
the petitioner and society have been impugned by any of the
members in any Court of law. These resolutions, in my view are
thus binding on all the members of the society under the provisions
of Societies Act and bye-laws of the society.
30. Division Bench of this Court in case of Girish Mulchand
Mehta (supra) has also considered this issue at length. Paragraphs
18 of this Judgment which is relevant for the purpose of deciding
this issue reads thus:
"18. We have no hesitation in taking the view that since the
Appellants were members of the Society and were allotted flats
in question in that capacity at the relevant time are bound by the
decision of the General Body of the Society, as long as the
decision of the General Body is in force. As observed earlier, the
Appellants have not challenged the decisions of the General Body
of the Society which is supreme, in so far as redevelopment of
the property in question or of appointment of the Respondent
No. 1 conferring on him the development rights. The Appellants
have merely challenged the Resolution which at best would raise
issues regarding the stipulations in the Development Agreement.
The General Body of the Society has taken a conscious decision
which in this case was after due deliberation of almost over 5
years from August 2002 till the Respondent No. 1 came to be
finally appointed as Developer in terms of Resolution dated
2nd March, 2008. Moreover, the General Body of the Society by
overwhelming majority not only approved the appointment of
Respondent No. 1 as developer but also by subsequent
Resolution dated 27th April, 2008 approved the draft
Development Agreement. Those terms and conditions have been
finally incorporated in the registered Development Agreement
executed by the Society in favour of Respondent No. 1. That
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decision and act of the Society would bind the Appellants unless
the said Resolutions were to be quashed and set aside by a
forum of competent jurisdiction. In other words, in view of the
binding effect of the Resolutions on the Appellants, it would
necessarily follow that the Appellants were claiming under the
Society, assuming that the Appellants have subsisting proprietary
rights in relation to the flats in their possession. It is noticed that
as of today the Appellants have been expelled from the basic
membership of the Society. Their right to occupy the flat is
associated with their continuance as member of the Society. It is
a different matter that the decision of expelling the Appellants
from the basic membership of the Society will be subject to the
outcome of the decision of the superior authority where the
appeals are stated to be pending. If the decision of the Society to
expel the Appellants is to be maintained, in that case, the
Appellants would have no surviving cause to pursue their remedy
even before the Co-operative Court much less to obstruct the
redevelopment proposal. As a matter of fact those proceedings
will have to be taken to its logical end expeditiously. Even if the
Appellants were to continue as members, they would be bound
by the decision of the General Body whether they approve of the
same or otherwise. In any case, keeping in mind that the
Development Agreement does not absolutely take away the
rights of the Appellants in the flats in question, as after
demolition of the existing building, the Appellants would be
accommodated in the newly constructed flats to be allotted to
them in lieu of the existing flats, on the same terms as in the case
of other members, provided the Appellants continue to remain
members of the Society. Under the Development Agreement, the
Respondent No. 1 is obliged to complete the project within 18
months from the date of receipt of full Commencement
Certificate from the Corporation. The full Commencement
Certificate would be issued only upon the vacant possession of
the entire building is delivered to the Respondent No. 1 who in
turn would demolish the same with a view to reconstruct a new
building in its place. Significantly, out of twelve (12) members,
ten (10) members have already acted upon the Development
Agreement as well as have executed separate undertaking-cum-
agreement with the Respondent No. 1 Developer. They have
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already vacated flats in their occupation to facilitate demolition
of the existing building and have shifted to alternative transit
accommodation as back as in February 2009. The project has
been stalled because of the obstruction created by the Appellants
herein who are in minuscule minority. The said ten members of
the Society who have already shifted their premises, they and
their family members are suffering untold hardship. At the same
time, the Respondent No. 1 who has already spent huge amount
towards consideration of the Development Agreement and
incurred other incidental expenses to effectuate the Development
Agreement in addition will have to incur the recurring cost of
paying monthly rent to the ten members who have already
shifted to transit accommodation. The learned Single Judge has
noted that the Appellants are not in a position to secure the
amount invested and incurred including the future expenses and
costs of the Respondent No. 1 herein in case the project was to
be stalled in this manner. Even before this Court the Appellants
have not come forward to compensate the Respondent No. 1
herein and the other ten members of the Society for the loss and
damage caused to them due to avoidable delay resulting from
the recalcitrant attitude of the Appellants. Considering the
impact of obstruction caused by the Appellants to the
redevelopment proposal, not only to the Respondent No. 1
Developer but also to the overwhelming majority of members (10
out of 12) of the Society, the learned Single Judge of this Court
opined that it is just and convenient to not only appoint the
Court Receiver but to pass further orders for preservation as well
as protection and improvement of the property which is subject
matter of Arbitration Agreement. We have already noticed that
the Court's discretion while exercising power under Section 9 of
the Act is very wide. The question is whether in the fact situation
of the present case it is just and convenient to appoint Court
Receiver coupled with power conferred on him to take over
possession of the entire building and hand over vacant and
peaceful possession thereof to the Respondent No. 1 who in turn
shall redevelop the property so as to provide flats to each of the
members of the Society in lieu of the existing flats vacated by
them as per the terms and conditions of the Development
Agreement, as ordered by the learned Single Judge. For the
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reasons noted by the Learned Single Judge which we have
reiterated in the earlier part of this decision, we find that it
would be just and convenient to not only appoint Court Receiver
to take over possession of the property but also pass further
order of empowering the Court Receiver to hand over vacant
possession of the suit building to the Respondent No. 1 to enable
him to complete the redevelopment work according to the terms
and conditions of the Development Agreement."
31. It has been held by the division bench of this Court that merely
because terms and conditions of development agreement are not
acceptable to the members who are in minuscule minority, cannot
be the basis not to abide by the decision of the overwhelming
majority of the General Body of the society. It is held that once a
person becomes a member of the co-operative society, he loses his
individuality with the society and he has no independent rights
except those given to him by the stature and Bye-laws. The
member has to speak through the society or rather the society
alone can act and speaks for him qua the rights and duties of the
society as a body. This Court has also adverted to the Judgment of
Supreme court in case of Ramesh Himmatlal Shah v. Harsukh Jadhavji
Joshi (AIR 1975 SC 1470) in which it is held that the right so enjoyed
by the member is the species of the property namely the right to
occupy a flat, which assumes significant importance and acquires
under the law a stamp of transferability in furtherance of interest of
commerce. This Court has held that a member cannot be allowed
to say that his rights in the flat occupied by him were de hors the
rights of the society therein and that he is not claiming through
society at all. Division Bench of this Court has held that a member is
bound by the decision of the General Body of the society till it is in
force."
(emphasis supplied)
24. These decisions make it amply clear that the General Body
of the Society is supreme and the Minority would have to bend to the
will of the Majority. Keeping these decisions in mind, I have to consider
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the effect of the limited relief granted by the Co-operative Court in
favour of Respondent Nos. 1 to 4 and against the 5th Respondent
Society. As mentioned earlier, Respondent Nos. 1 to 4 herein, challenged
several resolutions before the Co-operative Court including the
resolutions that authorized the Society to enter into the Development
Agreement with the Petitioner. Despite such a challenge, the Co-
operative Court only partly allowed the Interim Application filed by
Respondent Nos. 1 to 4 herein and inter-alia directed the 5th
Respondent Society not to act or implement the resolutions dated 23rd
December, 2018, 22nd September, 2019 and 4th October, 2020 and
maintain status quo till the decision of the dispute. What is pertinent to
note is that the resolutions passed by the General Body on 27th
September, 2015 and 18th October, 2015 inter alia appointing the
Petitioner - Developer to redevelop the said property of the 5th
Respondent Society has not been stayed and no relief is granted in
relation thereto. I, therefore, have to only examine the three resolutions
set out above to see whether restraining the 5th Respondent Society from
acting or implementing these resolutions would in any way be a fetter
on this Court from passing orders in favour of the Petitioner seeking a
direction against Respondent Nos. 1 to 4 to vacate their respective
premises.
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25. The 1st resolution that has been stayed by the Co-operative
Court is the resolution dated 23rd December, 2018. The passing of this
resolution has been signed by Respondent Nos. 1, 2 and 4. This
resolution can be found at page 367 of the paper book and reads thus:
"RESOLUTION NO.1.
Resolved that all the Members were present in the said
Meeting, unanimously decided that any two signatories is
must out of three office bearer of the Society i.e. Chairman,
Secretary, Treasurer for executing any Deeds, Documents,
Permanent Alternate Accommodation Agreement and any
other Documents and they are also nominated/authorised
to represent before the Sub-Registrar of Assurance for
Registration of any Deeds, Documents, Permanent
Alternate Accommodation Agreement and any other
Documents. It was carried unanimously.
Proposed by MR. VINOD SHAH
Seconded by MR. DATTATRAYA SHEVADE
Carried unanimously
RESOLUTUION NO.2.
Resolved that all the Members were present in the said
Meeting have unanimously accepted and admitted all the
terms and condition of the Development Agreement. It was
carried unanimously.
Proposed by MR. VIJAY SONI
Seconded by MR. VASANT BHURE
Carried unanimously"
26. As can be seen from this resolution, any two out of the three
office bearers of Respondent No.5 must be signatories to execute any
deeds, documents, Permanent Alternate Accommodation Agreements
and/or any other document in that regard. This resolution has been
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stayed by the Co-operative Court. Mr. Carloz submitted that since this
resolution has been stayed, no PAAAs can be executed by the 5th
Respondent Society as required under the Development Agreement and
therefore there was no question of asking Respondent Nos. 1 to 4 to
vacate their premises before the execution of the PAAAs with
Respondent Nos.1 to 4. I must mention that the Permanent Alternate
Accommodation Agreements have already been executed by the
Petitioner with 16 of the members of the 5th Respondent Society. As
mentioned earlier, the Administrator came to be appointed in relation
to the Society on 18th February, 2021 and after which a 3 Member
Administrator Board (Consisting of 3 members of the society) came to
be appointed by an order dated 16th September, 2021. This 3 Member
Board consists of Mr. Mahindra D. Kharat, Mr. Atul G. Virkar and Mr.
Vijay S. Soni who are all Applicants in the above Intervention
Application.
27. I do not see why any Permanent Alternate Accommodation
Agreement that would need to be executed in favour of Respondent Nos.
1 to 4 cannot be executed for and on behalf of the Society by this 3
Member Administrator Board. In fact, Mr. Rebello, the learned Counsel
appearing on behalf of the 28 members who are supporting the
Petitioner, as well as Mr. Tamboly, the learned Counsel appearing on
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behalf of the Petitioner, stated before the Court that neither of them
have any objection if the Permanent Alternate Accommodation
Agreements that are to be entered into with Respondent Nos. 1 to 4 are
executed by the Petitioner, the Administrator Board and respective
Respondents. Further, if any other documents that need to be executed
and which are for the daily functioning of the 5th Respondent Society,
the same can also be executed by the aforesaid Administrator Board.
This being the case, I do not think that a stay of this resolution, namely,
the resolution dated 23rd December, 2018, in any way, has the effect of
holding up the entire re-development. Despite this, even if I were to
assume that since the Resolution dated 23rd December, 2018 is stayed,
and therefore, the three Member Administrator Board cannot execute
any Permanent Alternate Accommodation Agreements with Respondent
Nos.1 to 4 (along with the Petitioner), I still do not see how this can be a
ground available to Respondent Nos.1 to 4 for not vacating their
respective premises. The Development Agreement clearly contemplates
(Clause 10 thereof) that the existing members of the Society shall vacate
their respective premises and hand over vacant and peaceful possession
of their respective flats to the Petitioner within a period of 30 days from
the date of receipt of intimation from the Petitioner in that regard after
obtaining IOD for construction of the proposed new building on the said
property. It is not in dispute that the IOD was received by the Petitioner
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on 22nd January, 2021 and an intimation to vacate the premises has
admittedly been given to all the members of the Society. In fact,
pursuant thereto, barring Respondent Nos.1 to 4, all other members
have vacated their respective premises. I, therefore, do not think that a
stay of the Resolution dated 23rd December, 2018 would in any way
assist Respondent Nos.1 to 4 to contend that by virtue thereof, the
Petitioner is not entitled to ask Respondent Nos.1 to 4 to vacate their
respective premises.
28. The second resolution of which the Co-operative Court has
granted a stay is the resolution dated 22nd September, 2019. This
resolution basically authorizes the Petitioner to obtain approval of the
Society's plans as per the various provisions of DCPR, 2034 which
includes a change in the permissible additional FSI by paying a
premium and/or quantum of TDR to be purchased from the market etc.
This resolution can be found at pages 103 and 104 of the paper book and
reads thus:
"CERTIFIED TRUE COPY OF THE RESOLUTION
PASSED IN THE ANNUAL GENERAL BODY
MEETING OF THE SOCIETY HELD ON 22/09/2019
AT SOCIETY PREMISES.
Pursuant to the Registered Development Agreement
Dated 09/08/2016, executed between the Developers i.e.
M/S. MP SPACE DYNAMICS PVT. LTD., and the
Society i.e. NEW ASHWIN CO-OP. HSG. SOC. LTD.,
duly Registered on 09/08/2016 bearing Registration No.
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BRL-5/8113/2016, there is a change in Development Control
Regulation for Greater Mumbai. It is understood from
Society's PMC and other relevant sources that the Society's
Redevelopment proposal will now be scrutinised under the
new sanctioned Provisions of Development Control and
Regulation of 2034 (DCPR) as against modified Development
Control Regulation of 1991 (DCR 1991). Hence the scrutiny of
our Society Redevelopment Proposal will be subject to
various changes in the regulations and policies of approval.
This changes include change in the permissible additional FSI
by paying premium and / or quantum of TDR to be
Purchased from Market as per the Road width and/ or
setback advantage and / or FSI due to release of 15%
deductible R.G. and / or FSI or Amenity under reg. 14 of
DCPR 2034 and / or change in rate and quantum of fungible
FSI for Residential / Commercial Areas.
Further, As per Regulation 33(7) (B) of sanctioned
DCPR 2034, Additional FSI for Redevelopment of existing
authorised Residential housing societies, which are of 30
years of age or more, is permitted wherein Developer can use
incentive additional BUA in lieu of TDR from market, to the
extent of 15% of existing BUA or 10 Sq. Mtr. Per tenement,
whichever is more without premium for a redevelopment
proposal re - accommodating existing society Members. This
Provision does not allow any additional BUA to the developer
then what is permitted under DCPR 2034.
IT IS HEREBY RESOLVED THAT the Developers
be allowed to obtain approval of Society plans as per the
various Provisions of DCPR 2034 which includes charge in
the permissible additional FSI by paying premium and / or
quantum of TDR to be Purchased from market as per the
road width and / or setback advantage and / or FSI due to
release of 15 % deductible R.G. and / or FSI of Amenity under
reg. 14 of DCPR 2034 and / or change in rate and quantum
of fungible FSI for Residential / Commercial areas and / or
FSI under Reg. 33 (7) (B) for the use of Developer."
29. This resolution has been signed by Respondent Nos. 1, 3
and 4. As far as this resolution is concerned, Mr. Tamboly correctly
pointed out that this resolution has worked itself out as the Petitioner
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has already applied for planning permissions under DCPR 2034 and in
fact even got the IOD long before any stay was granted by the Co-
operative Court. He pointed out that the IOD was obtained by the
Petitioner, as far back as on 22nd January, 2021 and the stay granted by
the Co-operative Court is on 8th October, 2021. According to me,
therefore, the stay of this resolution would not in any way, stall the
entire re-development as sought to be contended by Respondent Nos. 1
to 4. In any event, the stay of this resolution does not absolve
Respondent Nos. 1 to 4 to vacate their respective premises as set out in
clause 10 of the Development Agreement.
30. The last resolution of which the Co-operative Court has
granted a stay is a resolution dated 4th October, 2020. This resolution
can be found at pages 384 to 394 of the paper book. By this resolution,
in Agenda 10, it was resolved that certain hutment dwellers will be given
membership in the 5th Respondent Society, after they follow all the rules
of the Society. I fail to see how this resolution would hold up the entire
re-development. If this resolution is set aside, the consequence would be
that the hutment dwellers would not be members of the 5th Respondent
Society. This does not in any way, hinder the re-development of the said
property. I, therefore, at least prima facie, find that the limited order
passed by the Co-operative Court does not in any way stay the re-
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development of the said property belonging to the 5th Respondent
Society. This is apart from the fact that the Petitioner is not a party to
the dispute between Respondent Nos. 1 to 4 and the 5th Respondent
Society, which is pending before the Co-operative Court.
31. Even otherwise, on the facts of this case, I find that there is
no merit in the contentions canvassed by Mr. Carloz. 32 out of 33
members of the Society are present before this Court. 28 members
(being represented by Mr. Rebello) are supporting the Petitioner even
today. Today also, they have stated that they want to proceed with the
re-development of the said property with the Petitioner. They have also
canvassed before this Court that they have vacated their respective
premises and are eager for the re-development to proceed as
expeditiously as possible, so that these 28 members can be put back in
their newly constructed building. It is only Respondent Nos. 1 to 4 who
are throttling this entire process. Even looking at it from this point of
view, I am of the opinion, that Respondent Nos. 1 to 4 cannot hold up
the entire re-development because they have some disputes with certain
members of the 5th Respondent Society.
32. In view of the foregoing discussion, and taking an overall
view of the matter, the following order is passed:
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(a) Respondent Nos. 1 to 4 and who are occupants of Flat
No.A/9, Flat No.A/20, Flat No.A/21, Flat No.A/22 and Flat
No.B/22 (Respondent No.4 being the Occupant of Flat
Nos.A/22 & B/22) respectively, are directed to vacate and
hand over vacant and peaceful possession of their
respective flats to the Petitioner within a period of six
weeks from today.
(b) In the event of Respondent Nos.1 to 4 failing to comply with
the aforesaid direction, the Court Receiver, High Court,
Bombay shall stand appointed forthwith with all powers
under Order XL Rule 1 of the Code of Civil Procedure, 1908
including the power to take physical possession of Flat
No.A/9, Flat No.A/20, Flat No.A/21, Flat No.A/22 & Flat
No.B/22 from Respondent Nos.1 to 4 and/or any other
person found in occupation thereof. The Court Receiver
shall have the power to break upon the locks, if necessary,
to take physical possession of the said Flats and vacate
whoever is found therein. The Senior Police Inspector of the
local Police Station shall give all necessary assistance
(including deputing adequate number of police personnel)
to the Court Receiver to ensure compliance of this order,
failing which the concerned Senior Police Inspector shall be
liable for contempt.
(c) Once the Court Receiver takes physical possession of Flat
No.A/9, Flat No.A/20, Flat No.A/21, Flat No.A/22 and Flat
No.B/22, he shall hand over the same to the Petitioner. The
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Court Receiver shall thereafter stand discharged without
taking accounts but on the payment of his costs, charges
and expenses. The costs, charges and expenses of the Court
Receiver shall be paid by the Petitioner/Advocate for the
Petitioner within a period of one week of the Receiver
raising his bill in that regard.
(d) If the Court Receiver finds any articles in Flat No.A/9, Flat
No.A/20, Flat No.A/21, Flat No.A/22 and/or Flat No.B/22,
the Court Receiver shall hand over the same to the
concerned Respondent/s. If for any reason, the concerned
Respondent/s refuse to take away their articles from their
respective Flats, the Petitioner shall make arrangements to
have the same stored at its costs in the first instance, and
shall be subject to any further orders passed by this Court
in that regard. Before handing over the said articles to the
Petitioner, the Court Receiver shall prepare an inventory of
the same.
33. The above Arbitration Petition as well as the above Interim
Application are disposed of in the aforesaid terms. However, there shall
be no order as to costs. It is needless to clarify that all the observations
made herein are only prima facie and shall not be binding on the
Arbitral Tribunal whilst deciding the lis between the parties.
34. All parties to act on an authenticated copy of this order
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digitally signed by the Personal Assistant /Private Secretary/Associate
of this Court.
[ B. P. COLABAWALLA, J. ]
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