Drushti Realtors Pvt. Limited vs Pant Nagar Trishul Co-Operative ...
2021 Latest Caselaw 8453 Bom

                                                 CARBPL-11060-2021.doc




         IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                  ORDINARY ORIGINAL CIVIL JURISDICTION
                        IN ITS COMMERCIAL DIVISION

 COMMERCIAL ARBITRATION PETITION (L) NO. 11060 OF 2021

M/s. Drushti Realtors Pvt. Ltd.                  .. Petitioner
            Vs.
Pant Nagar Trishul Co-operative
Housing Society Ltd. And Ors                     .. Respondents



Mr.Karl Tamboly i/b. Omprakash Parihar, Aarti Suvarna & Suraj Swami,
Advocate for the Petitioner.


Mr.Harinder Toor a/w. Mr. Subhash Bane & Kajol Agawane, Advocate for the
Respondent No.1.


Mr. M. M. Vashi, Sr. Counsel i/b. Mr. M. P. Vashi & Associates, Advocate for
Respondent No.7.



                                  CORAM :- B.P.COLABAWALLA, J.

DATE :- 25th June, 2021.

(Through Video Conferencing)

P. C.:

1. The present Petition is filed under Section 9 of the

Arbitration and Conciliation Act, 1996 (for short "the Arbitration

Act") seeking the appointment of the Court Receiver under Order

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XL, Rule 1 of the Code of Civil Procedure, 1908 (for short "CPC")

so as to enable him to take forcible vacant possession of certain

shops in occupation of Respondent No.7 on the property bearing

Survey No. 192/1(part) of Ghatkopar Village, Pant Nagar,

Ghatkopar (East) admeasuring about 3033 Sq Mtrs. or

thereabouts with a building standing thereon bearing No.185

situated at Pant Nagar, Ghatkopar (East) Taluka - Kurla, District -

Bombay suburban (for short "the said property"). The reason

why this relief is sought is because Respondent No.7 is the only

member of Respondent No.1 - society (out of a total of 171

members) who has failed to vacate his shops, which in turn is

holding up the entire redevelopment of the said property.

Respondent No.7 has refused to vacate despite there being a

consent Award dated 25th February, 2019 between the Petitioner

and the 1st Respondent - society under which the Petitioner is to

undertake the task of redeveloping the said property and house

171 members of the said society. The shops in occupation of

Respondent No.7 are shop Nos.5045, 5059, 5064, 5065, 5066,

and a Pan Shop. According to the Petitioner and the 1st

Respondent, the Pan Shop is a wholly illegal structure.

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2. Initially, when this matter was moved, the Court was

informed that the disputes between the Petitioner and Respondent

Nos. 2 to 6 have been settled and they have handed over vacant

possession of their respective premises to the Petitioner and no

cause of action survives against them. Accordingly, the Court

directed deletion of Respondent Nos. 2 to 6 from the array of

parties and the Petition was kept pending only against

Respondents Nos. 1 and 7. Consequently, after deletion of

Respondent Nos.2 to 6, Respondent No. 7 has been arrayed as

Respondent No.2. However, for the sake of convenience I will refer

to the Respondents as they are originally arrayed in the Petition

before the deletion of Respondent Nos.2 to 6.

3. The brief facts giving rise to the present controversy

are that the Petitioner and Respondent No.1 - society entered into

a Development Agreement dated 24th September, 2009 to

redevelop the said property. Subsequently, there was also a

supplementary Development Agreement dated 9th June, 2010.

Pursuant to the Development Agreements, Respondent No.1 also

executed a registered Power of Attorney dated 9th June, 2012 in

favour of Mr.Ashok Jagdale, a Director of the Petitioner, vesting

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the Petitioner with certain powers and authorities in connection

with the development of the said property.

4. It appears that thereafter certain disputes arose

between the Petitioner and the 1st Respondent - society by virtue

of which the 1st Respondent - society informed the Petitioner (vide

its letter dated 27th June, 2014), that it had resolved for taking

steps to terminate and cancel the Development Agreement and

the Power of Attorney. The resolution passed by the 1st

Respondent - society seeking termination of the Development

Agreement was pursuant to the Special General Body Meeting

held on 23rd March, 2014.

5. Being aggrieved by these actions of the 1st Respondent

- society, the Petitioner invoked Arbitration in terms of the

arbitration clause in the Development Agreement. Finally, this

Court by its order dated 11th March, 2015 referred the parties to

arbitration and appointed a Sole Arbitrator (Mr. Farhan Dubash)

to adjudicate the disputes between the Petitioner and the 1st

Respondent - society. During the pendency of the arbitration

proceedings, the Petitioner and Respondent No.1 agreed to resolve

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their disputes amicably and consequently the 1st Respondent -

society, in its Special General Body Meeting held on 2nd

September, 2018, resolved to file Consent Terms before the

Arbitral Tribunal. Accordingly, Consent Terms came to be filed by

the parties before the Arbitral Tribunal on 25th February, 2019

and the Final Award came to be passed in terms of the Consent

Terms.

6. After the Consent Terms were filed, the Petitioner took

further steps to proceed with the Development of the said

property including obtaining an Intimation of Approval (IOA) from

MHADA. Thereafter, Respondent No.1 vide its Special General

Meeting dated 8th November, 2020, resolved that all the members

of the 1st Respondent - society shall hand over their respective

tenements/shops by 31st March, 2021 and give vacant possession

to the Petitioner for redevelopment of the said property. Despite

this, Respondent No.7 (and who today, is the only non-cooperative

Member of the 1st Respondent - society), has refused to hand over

possession of the shops that he claims to be in

occupation/possession, and which has necessitated the filing of the

present Petition.

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7. In this factual background, Mr. Tamboly, the learned

counsel appearing on behalf of the Petitioner, submitted that there

are totally 171 members of the 1st Respondent - society out of

which 170 members have already vacated their respective

premises and consented to the development of the said property

by the Petitioner. Mr. Tamboly submitted that the entire

development has been stalled and 170 members of the 1st

Respondent - society are suffering because Respondent No. 7 has

refused to vacate the shops that he has in his

occupation/possession. He submitted that one member of the

society cannot hold the majority to ransom in this fashion. He

submitted that Respondent No.7 being a member of the society

cannot claim any independent rights but can claim only through

the society and is bound by the acts of the society. He submitted

that once an Award was passed against the society, then the same

is binding on all its members. In support of this proposition, Mr.

Tamboly relied upon a Judgment of a learned Single Judge of this

Court (G. S. Patel, J) in the case of Westin Sankalp Developers

v/s. Ajay Sikandar Rana & Ors [Commercial Arbitration

Petition (L) No. 221 of 2020 decided on decided on 19th

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March, 2021] and a decision of the Division Bench in the case of

Girish Mulchand Mehta & Anr. V/s. Mahesh S. Mehta & Anr.

[Appeal No. 338 of 2009 in Arbitration Petition (L) No. 493 of

2009 decided on 10th December, 2009]. Mr. Tamboly, therefore

submitted that appropriate directions be passed by this Court

under which possession of the shops in occupation of Respondent

No.7 be handed over to the Petitioner.

8. On the other hand, Mr. Vashi, the learned senior

counsel appearing on behalf of Respondent No.7, took a

preliminary objection that the Petition is not maintainable as what

the Petitioner seeks to do is to execute the Consent Award by filing

a Petition under Section 9 of the Arbitration Act rather than

invoking the provisions of Order XXI of the CPC to execute the

Award. Mr. Vashi relied upon the wordings of Section 9 to contend

that once the Award is enforceable as a Decree then the only

remedy available to the Petitioner is to file execution proceedings

and cannot invoke Section 9 of the Arbitration Act. Mr. Vashi also

submitted that if the Petition is allowed as sought for by the

Petitioner, then there would be absolutely nothing left to execute

as the Consent Award would have been executed against

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Respondent No.7 by virtue of granting the reliefs prayed for in the

section 9 Petition. He therefore submitted that on this ground

alone the Petition be dismissed.

9. Mr. Vashi then submitted that the area that is being

offered to Respondent No. 7 in the proposed redeveloped project is

far lesser than what Respondent No. 7 is entitled to. In this regard,

he brought to my attention Exhibit "F" to the Affidavit-in-Reply

filed by Respondent No.7 to contend that the area that is being

offered to Respondent No.7 is only 936.8 Sq. ft carpet area

whereas Respondent No.7 is entitled to an area of 2403.47 Sq.ft

carpet area. He submitted that the entitlement of Respondent No.7

to a larger area cannot be defeated and that too without protecting

the rights of Respondent No.7. Lastly, Mr. Vashi contended very

feebly that Respondent No.7 is not a member of the 1st Respondent

- society and therefore no actions of the said society can bind

Respondent No.7. For all these reasons, Mr. Vashi submitted that

the Petition is without any merit and ought to be dismissed with

costs.

10. I have heard the learned counsel for the parties at

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length and have perused the papers and proceedings in the

Petition. It is not in dispute that the Petitioner and the 1st

Respondent - society have entered into Consent Terms before the

Arbitral Tribunal. The Arbitral Tribunal has in fact passed a

Consent Award in terms of the Consent Terms dated 25th

February, 2019. Under the Consent Terms, the said property is to

be developed by the Petitioner for the benefit of the 1st Respondent

- society and its members. It is also not in dispute that out of 171

members of the 1st Respondent - society, 170 members have

vacated their respective premises and handed over the same to

the Petitioner to enable it to undertake the task of redevelopment.

The redevelopment is being held up only because of the refusal of

Respondent No.7 to handover to the Petitioner the premises that

are in his occupation/possession.

11. Having said this, I shall now refer to the arguments

canvassed by Mr. Vashi. Mr. Vashi first contended that the

Petition is not maintainable as the Petitioner can execute the

Consent Award by reverting to the provisions of Order XXI of the

CPC. I find no merit in the aforesaid argument. Section 9

postulates that a party may before or during the Arbitral

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proceedings or at any time after the making of the Arbitral Award

but before it is enforced in accordance with Section 36 may apply

to the Court for the reliefs as mentioned therein. It is important to

note that the words used by the Legislature are ".....after the

making of the Arbitral Award but before it is enforced in

accordance with Section 36.....". The Section does not

contemplate that the moment the Award becomes enforceable a

party cannot approach the Court under Section 9. There is a clear

distinction in the words used by the Legislature, namely, "...but

before it is enforced...." as opposed to the Award becoming

"enforceable" (which is a very different thing). This being the case,

I do not find that the argument canvassed by Mr. Vashi is of any

substance. In the view that I take, I am supported by decision of

this Court (G. S. Patel, J) in the case of Evonik India Pvt. Ltd.

V/s. Reliable Spaces Pvt. Ltd. [Interim Application alongwith

Commercial Arbitration Petition No.370 of 2020 decided on

19th October, 2020], wherein this Court has clearly held that

even after that Award becomes enforceable, if it is not put in

execution, a party can always apply for reliefs under Section 9.

The relevant portion of this decision reads thus:-

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"20. The other argument that now that the Section 34 petition is dismissed, Evonik can only move in execution, is based on a total misreading of Centrinet Pharmaceuticals India Pvt Ltd v Hindustan Antibiotics Ltd.1 A single point of distinction will suffice. In Centrinet, the Section 9 Petitioner had already filed execution proceedings under Order XXI and yet attempted to move in parallel in Section 9. That is not the case here. Evonik is yet to file its execution application. It must be protected until then. I am not making an order of payment, but only one of security pending execution. That is certainly within the remit of a post-Award Section 9, for that section now permits precisely such an application 'until the Award is enforced' (i.e., not only until it becomes enforceable, a very different thing)."

(emphasis supplied)

12. As far as the question of Mr. Vashi's client being

entitled to a larger area, I am afraid that this is not an argument

that I can entertain in the present Petition. Exhibit "F" to the

Affidavit-in-Reply filed by Respondent No.7 and on which Mr.

Vashi placed heavy reliance, reads as under:

Sr.      Shop              Existing Area Area        that    may      Actual entitlement
No.      Number            (Sq.ft.) (Carpet be     allotted     to    of     Respondent
                           area)            Respondent No.7 as        No.7
                                            per annexure C to the     (Sq.ft.)(Carpet
                                            consent terms. (Sq. ft.   area)
                                            Carpet area)
1.       5045              839 (Shop Area 496.80                      1451.47
                           355 Sq.ft. +
                           regularised area
                           184        sq.ft.
                           +Mezzanine


    2019 SCC OnLine Bom 1614

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                          Floor300 Sq.ft.)

                          60    sq.ft.   +
                          regularised area
                          140 sq.ft.)

                          60    sq.ft.   +
                          regularised area
                          40 sq.ft)


                          60    sq.ft.   +
                          regularised area
                          40 sq.ft.)


                  Total 1359                 1046.8                  2403.47

13. The areas mentioned in Exhibit "F" (and reproduced

above) are seriously disputed by the Petitioner as well as the 1st

Respondent - society. According to the 1st Respondent - society,

the additional areas claimed by Respondent No.7 are all due to

illegal/unauthorised construction carried out by him and hence he

is not entitled to any area above 936.8 sq ft carpet area. According

to Respondent No.7, if any area was initially illegal or

unauthorized, the same has been regularized by MHADA as well

as the MCGM and hence Respondent No.7 is entitled to an area of

2403.47 sq ft carpet area. Considering the serious dispute

regarding the additional area (i.e. 2403.47 sq ft - 936.8 sq ft),

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Respondent No.7 will have to establish his entitlement to the

additional area in independent substantial proceedings against the

1st Respondent - society and/or the Petitioner. Merely because

Respondent No.7 claims a larger area and for which there is a

serious dispute, I cannot stall the entire redevelopment. It would

be highly unjust to stall the entire development and deny the

fruits thereof to 170 members (out of 171) who have vacated their

respective premises and are eagerly awaiting the completion of

the development on the said property. I may hasten to add that

whether Respondent No.7 is entitled to a larger area or otherwise,

is an issue on which I have not opined one way or another and the

same will be determined in appropriate proceedings as and when

filed by Respondent No.7. Those proceedings shall be decided on

their own merits and in accordance with law.

14. The last argument canvassed by Mr. Vashi was that

Respondent No.7 is not a member of the 1st Respondent - society

and therefore not bound by any actions taken by it. Prima-facie, I

find this argument completely contrary to the record. Respondent

No.7 has filed an Affidavit-in-Reply dated 27th May, 2021. In the

said Affidavit (paragraph 6 thereof) it is categorically stated by

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Respondent No.7 that the Petitioner and Respondent No.1 are

trying to steamroll the rights of Respondent No.7 under the guise

that minority members are bound by the decision taken by the

majority members. The affidavit itself proceeds on the basis that

Respondent No.7 is a Member of the 1st Respondent - society. This

apart, on 28thApril, 2021, Respondent No.7 has issued a statutory

notice under Section 164 of the Maharashtra Co-operative

Societies Act, 1960 to the (i) Hon'ble Commissioner for

Cooperation Registrar of Cooperative Societies (Maharashtra

State); and (ii) District Deputy Registrar of Cooperative Societies -

DDR (II) Eastern Suburbs, in which Respondent No.7 has

categorically stated that he is a Member of the 1st Respondent -

society. Paragraph 2 of this notice reads thus:

"2. That I intend to institute a suit against Pantnagar Trushul Cooperative Housing Society Ltd having its registered office at 185/5069, Pantnagar, Ghatkopar (East), Mumbai-400075 of which I am member and have my ownership shop premises bearing No. 5045/5059/5064/5065/5066, at 185, Pantnagar Trushul CHS Ltd., Pantnagar, Ghatkopar (East), Mumbai - 400075."

(emphasis supplied)

15. Over and above this, the Petitioner in its Affidavit-in-

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Rejoinder has also annexed at pages 333, 335, 337, 339 and 341

of the paper-book the share certificates issued by the 1st

Respondent - society to Respondent No.7 in respect of the shops in

occupation of Respondent No.7. All this material clearly goes to

show that Respondent No.7 is a Member of the 1st Respondent -

society and would therefore be bound by the actions of the society

and cannot claim any independent rights in his individual

capacity. This proposition is now too well settled. So as to not

burden this Judgment with several decisions on this issue, I think

the reliance placed by Mr. Tamboly on the Judgment of Westin

Sankalp Developers (Supra) squarely answers this argument.

The relevant portion of the decision reads thus:-

"1. This is the second case in as many weeks of dissenting members of a cooperative society holding up its re-development, though this re-development is approved by a vast majority of the general body. Mr. Pachundkar urges the same point of law that has been raised and negatived repeatedly by this court. He claims that since his clients, Respondents Nos. 1 and 2, have not signed the development agreement, they are not bound by the arbitration clause and no relief in Section 9 can be made against them. The question is no longer res integra. It has not been res integra for many years. Every dissenting member of society after society constantly repeating the same jaded mantra again and again, totally unmindful of the law, is a practice that must now be deprecated in the strongest possible terms. This is now the very last time I will refrain from imposing severe costs. These are claims in the Commercial Division of this court and we are under the Commercial Courts Act, 2015. That Act amended the provision for costs in Section 35 of the Code of Civil Procedure, 1908. One of the factors to be borne in mind

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while awarding costs -- which can be actual costs and even exemplary costs -- is the frivolity of the defence and whether the party against whom costs are to be made has wasted the Court's time. Every such untenable and unsustainable objection by a dissenting member is a colossal waste of judicial time. The next such matter will receive, first, an order of immediate eviction of the dissenting member (i.e., vacating that very day, or at best the next), and, second, an appropriately severe order of costs. That order will be made keeping in mind the costs incurred by the Society, the loss to other society members, and the actual loss suffered by the developer on account of the delay occasioned by such members. Consequently, the order of costs is unlikely to be moderate or modest. This is, in my view, only fitting, for there is nothing moderate or modest about the opposition by these dissenting members. They behave as if they are not bound by orders of this Court or by the law. They are.

2. An identical question came before me only a few days ago in Chirag Infra Projects Pvt. Ltd. v. Vijay Jwala Coop Hsg Soc Ltd.1 The entire case law on the subject has been considered there : in particular the decisions of a Division Bench of this Court in Girish Mulchand Mehta v. Mahesh S Mehta the decision of a learned Single Judge of this Court (the Hon'ble Mr. Justice KK Tated) in Aditya Developers v. Nirmal Anand Coop Hsg Soc Ltd. and the decision in Sarthak Developers v. Bank of India Amrut-Tara Staff CHSL.

3. I refuse to waste time by re-visiting the same law again and again. I will simply quote the relevant portions of my decision in Chirag Infra Projects Pvt. Ltd. to set the stage for a brief factual discussion.

............

............

............

4. This tells us that the very arguments that Mr. Pachundkar tries to raise today are no longer available to him. These two dissenting members have, as the Hon'ble Mr. Justice KK Tated put it, and as the Division Bench also said, no separate identity from that of the society. Their identity is subsumed and merged into that of the society.

They do not have the right to oppose the decision of the society taken in a properly convened meeting. They cannot

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hold the society to ransom. They cannot prejudice the rights of their fellow members and neighbours in the society. They cannot insist on getting their own way. They cannot be heard to say that they and they alone will determine the future of the society, its property and its redevelopment project. As I said in Chirag Infra Projects, these dissenting members will bend their knee to the law and to the decision of the general body. However unpalatable it may be for them, this is the only method the law recognizes of safeguarding the rights of the society as a legal entity recognized by the Cooperative Societies Act 1960."

(emphasis supplied)

16. In view of the foregoing discussion, I am of the opinion

that interest of justice would be served by passing the following

order:-

(i) The Court Receiver, High Court of Bombay, is appointed as Receiver of Shop Nos.5045, 5059, 5064, 5065, 5066 and the Pan Shop (the details of which are reproduced earlier) situated in the 1st Respondent -

society. The Receiver shall take physical vacant possession of the said shops (if required with the help of Police) from Respondent No.7 and handover the same to the Petitioner. Once possession of the said shops is handed over to the Petitioner, the Receiver shall stand discharged without taking accounts but on the payment of his costs, charges and expenses. The

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charges of the Receiver shall be paid by the Petitioner;

         (ii)     On completion of the redevelopment, the Petitioner
                  shall     handover   to     Respondent         No.7       a     Shop

admeasuring 936.8 Sq.ft. and which shall be a road facing shop on the ground floor. As far as the balance area of 1466.67 Sq.ft is concerned, the same shall be kept available to be given to Respondent No.7, if and when he succeeds in his contention that he is entitled to a larger area as claimed by him in Exhibit "F" to the Affidavit-in-reply filed to oppose the above petition and which is also reproduced earlier;

(iii) It is agreed between the Petitioner and Respondent No.7 that once Respondent No.7 is vacated from Shop Nos.5045, 5059, 5064, 5065, 5066 and the Pan Shop, the Petitioner shall pay transit rent to Respondent No.7 of Rs.1,10,000/- per month till the Petitioner receives an Occupation Certificate for the shop admeasuring 936.8 sq ft. that the Petitioner proposes to give Respondent No.7 in the re-developed project;

(iv) The substantive proceedings which Respondent No.7 proposes to initiate, shall be filed within a period of 16 weeks from today failing which there will be no obligation on the Petitioner to keep available the balance area of 1466.67 sq ft claimed by Respondent No.7. If the substantive proceedings are filed as

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stipulated above, notice of the same shall be given to the Petitioner as well as the 1st Respondent - society and they shall be entitled to intervene in the said proceedings.

17. The Arbitration Petition is accordingly disposed of. No

order as to costs.

18. All parties to act on an authenticated copy of this order

duly signed by the Personal Assistant/Private Secretary/Associate

of this Court.

                                           (B. P. COLABAWALLA, J.)




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