Bombay High Court
Heritage Housing Corporation ... vs Kesri Jamshed Randaria on 5 June, 2023
Bench: G. S. Kulkarni
2023:BHC-OS:4346
CAP-437 of 2021.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION NO. 437 OF 2021
M/s. Heritage Housing Corporation, partnership)
firm registered under the Indian Partnership )
Act, 1932, having its Registered Office at )
Heritage Ahura Residency, Ashraya E Wing, )
101/2/3, behind CID office, LBS Road, )
Ghatkopar (West), Mumbai - 400 086. )
Through its partners Mrs. Pooja Anil Nair and )
Mrs. Chandra Harak Jain ) ...Petitioner
Versus
Kersi Jamshed Randaria, adult, Indian Inhabitant)
claiming to be a Sole Proprietor of Messrs Ambaji)
Construction having his office address at Mazda )
House, behind CID Office, L.B.S. Marg, )
Ghatkopar (West), Mumbai - 400 086. ) ...Respondent
________
Mr. Shreepad Murthy a/w Ms. Clarissa Miranda i/b Mr. Abhishek Patil, for
the Petitioner.
Mr. Chetan Kapadia a/w Mr. Chaitanya Chavan a/w Mr. Pratik Shah a/w Ms.
Ami Brahmabhatt a/w Ms. Ankita Karmokar i/b L. R. and Associates, for the
Respondent.
________
CORAM : G. S. KULKARNI, J.
DATE : JUNE 05, 2023.
JUDGMENT:
1. This petition filed under Section 37 of the Arbitration and
Conciliation Act, 1996, assails an order dated 02 June 2021 passed by the
learned sole Arbitrator, on an application as filed by the petitioner/claimant
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under Section 17 of the Arbitration and Conciliation Act, 1996 (for short
"ACA") rejecting the prayers for interim reliefs pending the arbitral
proceedings. The following reliefs were prayed by the petitioner in the
Section 17 Application (which in fact were the prayers as made in the
proceedings under Section 9 of the ACA as filed before this Court.):-
"(a) THAT pending the conclusion of the Arbitration proceedings and until
the making and/or implementation of the Award and 90 days thereafter, the
Hon'ble Court be pleased to stay the operation of the termination notices
10th December, 2018, 20th December, 2018, 7th January, 2019 and 5th
August, 2020 and the Respondent, his servants, agents, assignee or any
persons claiming through him be restrained from acting upon the
terminations letters and taking any further steps in furtherance thereto and/
or implementation thereof.
(b) THAT pending the conclusion of the Arbitration proceedings and
until the making and/or implementation of the Award and 90 days
thereafter the Respondent, his servants, agents, assignee or any persons
claiming through him be restrained from in any manner interfering with the
possession of the petitioner in the properties being Slum Plots bearing CTS
Nos.1774, 1775, 1776A, 1776B and 1777A admeasuring about 7348.2 at
Jay Bhavani Compound, LBS Marg, Ghatkopar, Mumbai and Slum Plot
bearing CTS Nos.1776A (pt.) admeasuring about 1589.8 at Jay Bhavani
Compound, LBS Marg, Ghatkopar, Mumbai.
(c) THAT pending the conclusion of the Arbitration proceedings and
until the making and/or implementation of the Award and 90 days
thereafter, the Respondents, his servants, agents or any persons claiming
through him be restrained from in any manner dealing with, disposing of,
alienating, encumbering, creating third party rights, inducting or parting
with possession of any rights including the development rights in respect of
the Jivdaya and Sai Krupa property and also the free sale units described in
Exhibit-EE and Exhibit-FF hereto or any part thereof.
(d) THAT pending the conclusion of the Arbitration proceedings and
until the making and/or implementation of the Award and 90 days
thereafter, the Hon'ble Court be pleased to appoint the Court Receiver,
High Court, Bombay in respect of the free sale flats (as per schedule
annexed at Exhibit-EE herein) with all powers under Order XL, Rule 1 of
the Code of Civil Procedure, 1908.
(e) Order and direct Respondent to disclose on oath all his assets
including movable, immovable, investments, bank accounts, bank lockers,
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investment in any business, partnership firm etc.
(f) THAT pending the conclusion of the Arbitration proceeding and
until the making and implementation of Award thereof, restrain the
Respondent from in any manner dealing with, disposing of, alienating,
encumbering, creating third party rights, inducting or parting with
possession of any of his assets movable/immovable including those that may
be disclosed by Respondent as prayed hereinabove.
(g) FOR ad-interim reliefs in terms of prayer clause (a) to (g) above;
(h) FOR the cost of the Petition;
(i) FOR such further and other reliefs as the nature and circumstances
of the case may require;
FACTS:
2. The relevant facts are as under:-
Events qua the petitioner in relation to the property in question:-
On 10 February 1993, the Government of Maharashtra through the
Collector granted a lease for a period of 99 years (w.e.f 1 August, 1952) in
favour of one Dayabhai Waghji Patel of the land in question bearing Survey
No. 131 A, Village Kirol admeasuring 7348.2 sq. mtrs. situated at Village
Kirol, Jay Bhavani Compound, L.B.S. Marg Ghatkopar (West), Mumbai
which was subsequently declared to be a slum. In the year 1994, the society of
the Slum Dwellers, namely, the Jivdaya (SRA) Housing Society Ltd. (for short
"the Jivdaya Property") decided to implement the Slum Rehabilitation and
Development Scheme (for short "the Slum Scheme") on the Jivdaya Society.
3. Between the years 1994 and 1996, one Bholanath Yadav (since
deceased) was appointed as a Constituted Attorney by Dayabhai Patel to
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implement the slum scheme on the Jivdaya Property. On 8 May 1999,
Dayabhai Patel expired.
4. On 19 October 2002, Jivdaya Society filed a proposal for the
conversion of the old scheme into the fresh Slum Rehabilitation Scheme
under Regulation 33(10) of the Development Control Regulations for
Greater Bombay, 1991 (for short, "the DCR") as amended.
5. On 30 October 2007, a Partnership Deed was executed between
Bholanath Yadav and the respondent for the construction business to be
conducted in the name and style of M/s Ambaji Construction. It is stated that
as per clause 20 of the Partnership Deed, in the event of death of a partner,
the surviving partner was permitted to carry on the business under the same
name and style.
6. Thereafter, on 24 April 2008, the respondent was appointed as a
developer by Jivdaya Society to implement the Slum Rehabilitation Scheme
on the Jivdaya property. The Finance Department of Slum Rehabilitation
Authority (SRA) issued Annexure III in favour of the respondent on 14 July
2008. After issuance of the Annexure III, in order to proceed with the Slum
Scheme, a No Objection Certificate (NOC) of the legal heirs of Dayabhai
Patel (original lessee) was obtained by the respondent and submitted to the
SRA on 20 May 2009. Thereafter on 12 June 2009, the SRA issued a Letter
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of Intent (for short "LOI") in favour of the respondent for redevelopment of
the Jivdaya Property. The SRA issued an Intimation of Approval (for short
"IOA") in the name of the respondent for Jivdaya Property on 5 August
2009.
7. The respondent entered into individual agreements with the slum
dwellers in respect of the Jivdaya Property on 12 December 2009. On 13
December 2009, Ambaji Construction Corporation (a partnership firm of Mr.
Kersi Randeria and his son Zubeen Kersi Randeria) entered into a
Development Agreement with another society of slum dwellers namely one
Sai Krupa (SRA) Housing Society Ltd. (for short "the Sai Krupa Property") to
implement a Slum Rehabilitation Scheme, on what is described to be the "Sai
Krupa property" being on land survey No.1776A being the land adjoining to
the Jivdaya Property.
8. On 25 January 2010, the SRA issued a Commencement Certificate
(CC) in favour of the respondent for construction of rehabilitation building
upto plinth level on the Jivdaya Property. On such backdrop, on 31 January,
2010 upon its appointment as a developer, the respondent entered into a
Development Agreement with Jivdaya Society towards implementation of the
Scheme and simultaneously the Society also executed an irrevocable power of
attorney in favour of the respondent qua the Jivdaya Property.
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9. On 16 October 2010, Bholanath Yadav, the Constituted Attorney
appointed by the owner Dayabhai Patel expired, hence, the respondent in
terms of Clause 20 of the Partnership Deed continued the project as a sole
proprietor namely of M/s Ambaji Construction. Between the period from 26
April 2010 to 12 July 2011, for the purpose of providing temporary
accommodation in regard to the Jivdaya property, the respondent obtained
requisite permissions for constructing transit buildings. In or about 2012, the
respondent is stated to have completed the construction of the transit
buildings. A fresh Annexure II1 was issued on 12 September 2012 by the
Competent Authority as per the new format procedure. Further, a revised
Annexure II was issued on 28 June 2013.
Joint Venture Agreement between respondent and petitioner:-
10. On the above conspectus, a Joint Venture Agreement (for short 'JVA')
between the respondent and the petitioner came to be executed on 10 July
2014 for the purpose of development of both the properties, namely, the
Jivdaya Property and the Sai Krupa Property under the JVA. The respondent
and the petitioner agreed to develop the said property on terms and
conditions contained in the JVA. Simultaneously with the execution of the
said JVA, the respondent executed an irrevocable power of attorney in favour
1 * List of eligible slum dwellers to be rehabilitated.
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of the partners of the petitioner. Under the JVA, disputes and differences
have arisen between the parties.
11. The JVA contains an 'arbitration agreement' between the parties at
Clause 16. Under the JVA, the parties agreed that the petitioner would be
required to complete the redevelopment work namely the construction of the
rehabilitation building for the slum dwellers, as also the free sale building
within a period of 40 months from the date of the JVA (i.e. from 10 July
2014). It was also an obligation of the petitioner to make payment to the slum
dwellers of the interim rent/compensation towards temporary alternate
accommodation pending the construction of the rehabilitation building and
the slum dwellers was put in possession thereof.
12. Disputes and differences had arisen between the respondent and the
petitioner inter alia to the effect that the respondent alleged that the
petitioner had stopped making payment of the transit rent/compensation to
the slum dwellers from November 2018, as also did not comply with its
obligations under the JVA to construct rehabilitation buildings as also the free
sale buildings. On account of these material breaches, the respondent
terminated the said JVA on 5 August 2020. The termination was essentially
on the ground that the petitioner had breached its primary obligations arising
from the JVA and had failed to complete the project within the stipulated
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time and had stopped paying rent to the slum dwellers.
13. Prior to such termination, there were certain proceedings taken up by
the slum society before the Chief Executive Officer, Slum Rehabilitation
Authority wherein the SRA exercising its authority under Section 13(2) of the
Slums Act, removed the respondent as developer appointed by the society. In
that regard, there was litigation between the society and the respondent which
had reached the Apex Grievance Redressal Committee (AGRC). The details
of which need not be adverted at this stage, suffice it to observe that the order
passed by the Chief Executive Officer removing the respondent as a developer
by the slum society ultimately was set aside.
14. On 11 September, 2020, the petitioner served a reply to the
respondent's notice dated 5 August, 2020 terminating the JVA and invoked
the arbitration agreement as contained in Clause 16 of the JVA. Thereafter,
immediately on 12 September 2020, the petitioner filed a petition under
Section 9 of the ACA (Arbitration Petition (L) No. 3306 of 2020) before this
Court. On 26 October 2020, the Court passed an order by consent of the
parties of an interim mechanism as arrived between the parties qua the sale of
flats in the project. The said order reads thus:
"1. Heard through video conferencing.
2. Revised minutes of the order are tendered by email. I have
considered these with counsel on both sides at the hearing. After some
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discussion, and some revisions to the minutes, including incorporating my
suggestions which both sides have accepted, I make the following order by
consent of parties and advocates.
1. Without prejudice to the rights and contentions of the
Parties, the Parties have agreed to the following mechanism to be
put in place as an interim arrangement between them for the
purpose of sale of Flats (whether from the list at Exhibit "EE" or
"FF" to the Petition) from the project till the final hearing of the
Interim Application before the Learned Arbitrator or further
orders of the Court in this Petition, whichever is earlier.
2. Till such date, if the Parties proceed to sell any further
Flats then all such sales shall be strictly in accordance with the
following terms and conditions.
a. All sales shall only be by registered agreements. Before
entering into any Agreement for sale/sale deed the party
undertaking the sale shall intimate the other side at least four
working days in advance the terms of sale including but not
limited to (a) total selling price, (b) date and amount - of the
advanced to be paid and(c) description of the Flat. In any case,
the advance money to be paid by potential purchaser shall not be
less than 30% of the total selling price and the same shall be paid
within 30 days of execution of the agreement. Further, for the
purpose of undertaking any future sale, the sale price of a Flat
from the Jivdaya Project shall not be less than Rs.18,000/per
square feet of RERA Carpet area.
b. Upon entering into any agreement for sale, the party
concerned shall intimate the other side about the same within
two days of execution.
c. Upon accepting any amount pursuant to such sale, the
party responsible for the sale shall deposit the amount so
received with the Learned Senior Master and Prothonotary,
Bombay High Court, Original Side within a period of three days
and simultaneously intimate the other side regarding the same.
d. It is clarified that the entitlement to the sale proceeds
pursuant to the aforesaid terms and conditions will be Subject to
further Orders passed by this Hon'ble Court.
e. Once an agreement for sale/sale deed of any Flat is
executed and registered in favour of any buyer in compliance
with the aforesaid terms and conditions, it will not be open to
either party to question the entitlement/rights of such buyer save
and except in accordance with the terms of such agreement.
f. In order to protect the interest of buyers, the parties
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undertake to complete sale of Flats and execute all the necessary
documents to effectuate transfer of title in favour of such buyers
in accordance with the direction/Order/award which may be
passed by the Arbitrator in that regard.
3. Both sides agree that they will not claim any equities on
the basis of this order.
3. List the Petition on 27th November 2020 at 3:00 pm, subject to
overnight part-heard.
4. This order will be digitally signed by the Private Secretary of this
Court. All concerned will act on production of a digitally signed copy of
this order."
15. This Court by a further order dated 17 March 2021 passed on the
Section 9 petition, recorded that the parties had agreed for conversion of
Section 9 petition into Section 17 application, to be adjudicated by the sole
arbitrator. The parties also agreed for continuation of the ad-interim order
dated 26 October, 2020 till the disposal of the Section 17 application. The
parties were accordingly before the arbitral tribunal in the Section 17
proceedings, on which the impugned order was passed.
16. As noted above, the prayers as made by the petitioner in the Section 17
application pending the arbitral proceedings, have been rejected. Being
aggrieved by the impugned order, the petitioner is before the Court in the
present proceedings.
Submissions on behalf of the petitioner:-
17. In assailing the impugned order, Mr. Murthy has made detailed
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submissions.
It is submitted that JVA was entered into on the basis of several
representations and assurances of the respondent, as categorically recorded in
the JVA in its various terms and conditions. It is submitted that the petitioner
had accordingly commenced construction on the Jivdaya Property, despite
several hurdles and obstacles faced by the petitioner on the site including
non-fulfillment of its obligations by the respondent under the JVA. It is
submitted that the petitioner and the respondent under the JVA had agreed
for the distribution of the free sale component in the ratio of 57.5% and
42.5%. Also, an amount of Rs. 5,25,00,000/- was paid by the petitioner to
the respondent, being the full and final monetary consideration under the
JVA. It is submitted that the respondent had assured to the petitioner that no
interference or obstruction would be caused in the construction and that
respondent would make out a marketable title to the said properties. It is
submitted that the respondent was also assured that there was no pending
litigation against him, as also the permissions obtained from the Slum
Authorities were valid and subsisting.
18. Mr. Murthy has submitted that despite the binding terms and
conditions of the JVA, the respondent failed to obtain a clear and marketable
title of the said properties, on account of claims made by three persons,
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namely, heirs of Mr. Bholanath Yadav, who was the erstwhile partner of
respondent in M/s. Ambaji Construction; by one Manilal Patel claiming to be
the heirs of the lessee of the said properties from the Government; and from
Mr. Prajapati, who has also filed a suit in the City Civil Court at Bombay
claiming to have rights of 25% along with the said Bholanath Yadav and the
respondent.
19. It is submitted that the respondent also failed and neglected to
handover original documents of title, sanctions and permissions granted by
the Slum Authorities to the petitioner. Mr. Murthy would submit that in
respect of Sai Krupa property, the LOI was issued by the SRA in the name of
M/s. Ambaji Construction Corporation, which was a partnership firm in
which the respondent was a partner with his son, which showed the
misrepresentation by the Respondent in the JVA, wherein the respondent had
claimed that he was the sole proprietor having rights in respect of Sai Krupa
Property.
20. Mr. Murthy submits that the petitioner was also not kept informed of
the proceedings that would affect the development of the properties and the
notices issued by the SRA under Section 13(2) of the Slums Act. It is
submitted that the respondent also failed to get occupants/ slum dwellers of
the said properties vacated to enable the petitioner to carry out the
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construction and development work.
21. Mr. Murthy has submitted that the JVA was between the petitioner
and respondent whereby it was agreed by the respondent that the petitioner
need not pay any transit rent/compensation to the slum dwellers and the same
would be borne by the respondent. It is his submission that the JVA was
acted upon and the obligation under the JVA to pay the monetary
consideration, was complied by the petitioner by paying an amount of
Rs.5,25,00,000/- to the respondent. It is his submission that the entire basis
for the petitioner to terminate the agreement was illegal inasmuch as it is clear
from the orders passed by the AGRC that there were no delays in construction
and the finding of the AGRC in fact would support the case of the petitioner,
so as to dislodge the respondent's case as set out in the termination notice. It
is his submission that the petitioner was illegally removed from the project on
2 December 2020 in a manner not known to law, as also the petitioner was
not permitted to enter the area of the project by the respondent.
22. Mr. Murthy submits that the learned arbitrator has failed to consider
that a prima facie case was made out by the petitioner so as to secure the
arbitral interest of the parties' that is the property itself. It is his submission
that the investment that has been made by the petitioner is also not
considered by the learned arbitrator in passing the impugned order. It is
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submitted that in fact, the petitioner had made an investment of
Rs.5,25,00,000/- being the amount paid by the petitioner to the respondent
and in addition an amount, Rs.8,65,00,000/- was paid by the petitioner
towards transit rent as paid to the slum dwellers. All this was necessary and
intended for the construction of the two rehabilitation buildings and three
free sale buildings. In two rehab building, 'A' wing was constructed up to the
fifth floor and 'B' wing was fully completed and the completion certificate was
sought. It is submitted that there were several hurdles that were caused to the
petitioner's discharging its obligations under the JVA. Mr. Murthy would
submit that there were 18 slum dwellers on site who were required to be
rehabilitated which was not the responsibility of the petitioner. The
commencement certificate itself was received in 2018 and hence it was not
possible to attribute any breach of the terms and conditions for the JVA on
the part of the petitioner. Thus, the findings of the learned arbitrator in that
regard are perverse. Mr. Murthy drawing the Court's attention to Clause
9(xxviii) of the JVA would submit that the petitioner and respondent
although were entitled to take, implement and execute all decisions in relation
to the project, however, under the said Clause the petitioner was to be solely
entitled to manage the entire project on behalf of the respondent. The
Court's attention is also drawn to Clauses 9(xxviii) and 10(x) under which
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according to Mr. Murthy, it was the obligation of the respondent to manage
any claim or objection and it was not the liability of the petitioner.
23. Mr. Murthy has submitted that as per clause 7(a) of the JVA, the
respondent was obliged to procure a clear marketable title, free from all
encumbrances and claims and it was always the liability of the respondent to
procure a clear marketable title. The contention is that the arbitrator has failed
to consider that the respondent was unable to procure a clear marketable title
with respect to the slum project. This, according to Mr. Murthy, was clear
from the fact that on 20 October 2014, the petitioner had received an e-mail
from the Architect appointed by the respondent informing that on 18
October 2014 the SRA had received a letter from the lawyers of one Mr.
Navneet Dayabhai Patel, claiming right, title and interest over the slum
projects, who claims through his late father, being the lessee of this property.
The respondent did not have any right, title and interest to carry out the
development in the slum property and that the respondent had not obtained
permission/rights from the lessee. It is submitted that this was one of the
major hurdles which certainly would have a bearing to complete the SRA
project. This accompanied by the fact that the title documents had not been
handed over to the petitioner which ought to have been disclosed to the
petitioner. According to Mr. Murthy, this was fatal and amounted to a breach
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of faith of the petitioner. It is also his submission that a false impression was
created by the respondent that the LOI was issued in the name of M/s. Ambaji
Construction Corporation (partnership firm) dated 26 February 2015 for the
Sai Krupa Property, as it is only in the RERA porceedings, the petitioner took
a search of the documents submitted by the respondent to the authority in
regard to the slum project in the year 2018, when it was revealed that M/s
Ambaji Construction Corporation was subjected to incorporation between the
respondent and his son Mr. Zubeen and its partners. It was also revealed that
the respondent entered into a partnership by the name of M/s. Ambaji
Construction Corporation which was set up with the sole motive of receiving
the petitioner under the joint venture. This despite the fact that under the
JVA it was stipulated that it is the petitioner which would execute the
construction of the slum project which consisted of both the properties,
namely, Jivdaya Property as well as Sai Krupa Property. It is his submission
that despite fully being aware that the construction was being undertaken by
the petitioner, the respondent illegally and in malafide manner got the
partnership firm M/s Ambaji Corporation incorporated, as also the LOI for
the Sai Krupa property was issued in the name of the firm of which the
petitioner was not aware.
24. Mr. Murthy submits that the learned arbitrator also did not consider
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that on 31 January 2019, one Mr. Prajapati, Partner of M/s. Ambaji
Construction, addressed letter to the Advocate for the petitioner stating that
he was a partner of M/s Ambaji Construction, and claimed that the
respondent and Mr. Bholanath Yadav had fabricated the settlement dated 18
February 2006, in order to secure the slum project properties and induct a
new partner in the said project. Mr. Prajapati also claimed that he had filed
Suit No.713 of 2011 before the City Civil Court, Bombay against the
respondent and Mr. Bholanath Yadav which was pending.
25. It is submitted that the learned arbitrator had failed to consider that an
amount of Rs. 23,14,63,095/- was invested by the petitioner in the
construction of the project. In these circumstances, Mr. Murthy would
submit that the petition needs to be allowed and the relief as prayed under the
Section 17 application ought to be granted by this Court. In support of his
contentions has placed reliance on the decisions in The Rajasthan State
Industrial Development and Investment Corporation vs Diamond and Gem
Development Corporation Ltd.2 and M/s. Tata Advanced Systems Limited vs.
M/s. Telexcell Information Systems Limited3.
Submissions on behalf of the Respondent
26. Mr. Kapadia, learned counsel for the respondent in opposing the
2 AIR 2013 SC 1241
3 (2020) 3 Arb LR 654
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petition submits that there is no substance in the contentions as urged on
behalf of the petitioner. At the outset, Mr. Kapadia has submitted that the
claim of the petitioner that the respondent had not complied with his
obligations under the JVA was untenable, inasmuch as Clause 7(b), Clause
10(xi), Clause 10(iv), Clause 10(ix) and Clause 10(xii) of the JVA would make
it clear that the respondent had represented to the petitioner that there were
previous partners in the M/s. Ambaji Constructions and based on such
representations, several drafts of the JVA were exchanged between the
respondent and the husband of one of the partners, who is advocate and
solicitor. It is his submission that in fact the respondent was fully aware of the
nature of the project and on such backdrop, the respondent had executed an
irrevocable power of attorney in favour of the petitioner. The scope of the
POA was to the effect that the petitioner was given the absolute authority to
correspond with the SRA and other authorities for the purpose of
development of both properties. Also, it was the petitioner' authority to
submit plans, layouts and specification for construction of rehab and sale
buildings; to apply, obtain any permission, sanction or approval for the
development of both the properties and to make all the necessary applications
for IOD and CC to the competent authority. It is hence Mr. Kapadia's
submission that the petitioner had full authority to approach the SRA in
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relation to the development of the said property and on the basis of such
powers petitioner had complete access to the documents submitted to SRA by
the respondent in relation to both the properties.
27. Mr. Kapadia would submit the entire case of the petitioner that there
was defect in the title and that the petitioner was not provided with all the
information in regard to the title of the property, was ex-facie false. According
to him this was clear from the fact that the petitioner had obtained a title
certificate from Mr. Haraklal Jain (solicitor) the husband of one of the
partners of the petitioner. It is his submission that even from a perusal of such
title certificate it can be seen that it refers to the JV, POAs, LOI, IOA, and CC
along with PR cards of both the properties as also takes note of the fact that
the NOCs were issued to the SRA by the legal heirs of Dayabhai Patel (since
deceased). It also takes into account the order dated 30 November 2015
issued by the Collector cancelling the lease of Dayabhai Patel and reverting of
the property back to the State Government. It is thus Mr. Kapadia's
submission that such title certificate issued by the husband of one of the
petitioner's partners confirms that the petitioner was entitled to develop the
Sai Krupa and Jivdaya Properties. Mr. Kapadia would submit that it is based
on such a title certificate, the petitioner also filed a declaration with the RERA
inter alia stating that the petitioner had a legal title in regard to the Jivdaya
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Property.
28. Mr. Kapadia would next submit that on 10 November, 2017, time of
40 months to complete the construction, as stipulated under the JVA had
expired and hence the petitioner requested for extension of time.
Consequently, the respondent agreed to grant extension of one year. It is
submitted that in the meantime, from February 2018 upto October 2018, the
SRA had granted permission, namely, CC was extended upto six floors for
Wing 'B' and SRA approved the amended plans in respect of rehab Wing 'A'
as also sale Wing C, D & E. A Commencement Certificate was issued in
respect of such Wings and Commencement Certificate (CC) was further
extended for rehab Wing 'A' (ground + 5th upper floors) and further sale
Wing 'C' (stilt floor) and 'D' Wing (stilt + first floor), etc. Also the SRA
approved the plans for the amended layout and further CC was extended upto
7 upper floors for the rehab Wings 'A' and 'B'.
29. Mr. Kapadia would next submit that in November 2018, petitioner
stopped paying the transit rent to the slum dwellers as also slowed down the
construction work being a material obligation under the JVA, on the
purported ground that the respondent was unable to make out a marketable
title, as the legal heirs of Dayabhai Patel (since deceased), who, according to
the petitioner, were still making claims in the property. Mr. Kapadia submits
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that the petitioner falsely alleged that the respondent had concealed that M/s
Ambaji construction was a partnership firm. It is submitted that the
petitioner's decision to stop the work under the slums scheme was contrary to
the policy of the SRA, hence, there were no alternative to the respondent but
to issue to the petitioner notice of termination dated 10 December 2018. It is
submitted that as clearly seen, the petitioner had failed to pay the monthly
rent to the slum dwellers for almost two years as also even after one year no
satisfactory work was undertaken at the site. Mr. Kapadia would submit that
the petitioner had in fact abandoned the project which is also seen from the
fact that the notice dated 20 December 2018 addressed to the respondent was
returned with a remark "addressee left". It is submitted that the respondent
addressed one more notice dated 20 December 2018. It is Mr. Kapadia's
submission that it was thus crystal clear that the petitioner despite having
received all the necessary construction permission from the SRA based on the
LOI and other permissions issued in the name of the respondent, at no point
of time questioned the respondent's entitlement and rights to undertake the
slum scheme on both the properties. In fact, the petitioner had also procured a
title certificate from its Advocate. The petitioner having stopped paying the
rent to the slum dwellers, was sought to be justified on the basis of specious
grounds, as also despite repeated notices, the petitioner did not pay the transit
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rent to the slum dwellers and most pertinently even after the show cause
notice under Section 13(2) of the Slum Act being issued by the SRA which
was only on two grounds firstly delay in construction and secondly non-
payment of transit rent to the slum dwellers. Mr. Kapadia submits that in fact
for all these reasons, the respondent was required to face litigation before the
CEO, SRA, as also the AGRC and this Court, and at all material times, he has
succeeded on the ground that the respondent was determined to complete the
project in terms of the agreement as entered with the society. In support of
his submissions Mr. Kapadia has placed reliance on Shenbagam and Others
vs. K. K. Ranthinavel4, Raghivir Buildcon Pvt. Ltd. vs. Ircon International
Limited5, Supreme Infrastructure India Ltd. vs Central Public Works
Department6. It is thus submitted that the respondent was correct in its
contentions and which have been rightly considered by the learned arbitrator
in rejecting the Section 17 application.
Reasons and Conclusion
30. I have heard learned counsel for the parties and with their assistance,
perused the voluminous record.
31. At the outset, it is required to be observed that there is no dispute in
regard to the terms and conditions of the JVA as agreed between the parties.
4 2022 SCC Online SC 71
5 (2021) 281 DLT 41
6 2017 SCC OnLine Del 8228
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The primary contention as urged by Mr. Murthy is that the petitioner was not
informed of all the material details and more particularly with respect to the
title of the properties. In such context, the learned arbitrator has appropriately
observed that the husband of one of the partners of the petitioner himself was
an Advocate and Solicitor, as also noting that he was actually involved in the
formation and execution of the JVA. The learned arbitrator considering the
materials on record, has rightly observed that the JVA was executed pursuant
to several drafts exchanged between the parties, this apart an irrevocable
Power of Attorney dated 10 July 2014, was executed by the respondent in
favour of the petitioner, so as to enable the petitioner to undertake the project,
which also enabled the petitioner to receive all information in regard to the
project from the different authorities. Thus it appears that the petitioner's
contentions that there was misrepresentation by the respondent as to the title
of the said properties, prima facie appears to be untenable as rightly observed
by the learned arbitrator.
32. It also appears that from the recital of the JVA that the respondent was
fully aware that the respondent had an erstwhile partner-Late Bholanath
Yadav. The partnership deed between Bholanath Yadav and the respondent
contained in clause 'F', that upon the death of any one of the partners, the
other partner would be entitled to carry out the business of the firm. It is on
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such clause, the respondent had acted upon and continued the business of the
sole proprietor. Although certain claims were made by the heirs of the
Bholanath Yadav and the respondent in respect of proceeding filed by way of
a suit, the said suit was also settled in terms of the consent terms filed in the
year 2013, the petitioner's contention of non-disclosure of a pending
litigation and of any misrepresentation by the respondent on the title or any
pending proceeding of any third party claim qua the suit property appears to
be totally untenable. Similar is the position in regard to a claim made by the
petitioner that Manilal Patel was claiming to be an heir of the original lessee
of Dayabhai Patel. In this context, prima facie it was clear from the record
that Manilal's rights stood extinguished. The learned arbitrator has
appropriately considered the findings are recorded in that regard. Further, as
rightly observed by the learned sole arbitrator that there was correspondence
including with the husband of the petitioner, who is a legal expert (an
advocate).
33. It prima facie also appears that there was no obstruction from the
respondent to enable the petitioner to proceed with the project as agreed
under the JVA. This is also for the reason that the Slums Authority had
granted requisite LOI as also CC in respect of Jivdaya properties as also an
LOI in respect of the Sai Krupa Property, and in fact the petitioner had
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proceeded with the work of redevelopment. This apart the petitioner as also
the respondent had started entering into agreements with the flat purchasers
for sale of flats in the free sale building to be constructed. The petitioner
entered into about 31 such agreements for which a title certificate was settled
and issued before 17 March, 2017 by the husband of the partner of the
petitioner. For all these reasons, the petitioner's claim in regard to any
hindrance or any embargo on the title to the said property appears to be
without merit as rightly observed by the learned arbitrator. In the absence of
any contrary material on record, it would not be possible to accept the case of
the petitioner that when a title clarification was demanded by the petitioner
from the respondent, the same was not furnished by the respondent. There
was no impediment for the petitioner to proceed to comply with its obligation
under the JVA, more particularly when steps were already taken by the
petitioner to sell the free sale flats.
34. From the documents on record, it also appears that the petitioner's case
in regard to the development of the Sai Krupa Property that there was
insufficient disclosure as made to the petitioner, also cannot be prima facie
believed and accepted. The development rights in respect of the said property
were held by the respondent in partnership with his son Zubeen. Also all the
records in that regard were handed over to the partner of the petitioner and
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initialled by him on 1 October 2014. The petitioner was hence aware of the
(Letter of Intent) LOI being issued in the name of the firm on 26 February
2015. Thus the petitioner's case of discovery of such facts much later and i.e.
in September 2017, certainly lacks merit for any relief to be granted to the
petitioner in the Section 17 application.
35. At this stage, it may also be observed that the petitioner has not
approached the tribunal with the case that on such deficiencies being noted,
the petitioner cannot proceed in the project, in fact the petitioner intends to
have a specific performance of the JVA. The petitioner cannot assert a case
contrary to the materials on record and/or contrary to the JVA.
36. In my opinion, the position taken by the petitioner would in fact
amount to an acceptance on the part of the petitioner of all the obligations of
the petitioner in JVA. Prima facie, the reasons put forth by the petitioner in
not complying with its obligations in no manner would permit the petitioner
to take a position that the petitioner would not comply with its obligation
under the JVA and more particularly to stop work and/or from making
payment of the transit rent which were clear obligations of the petitioner
under the JVA.
37. It is also required to be noted that the petitioner's contention on the
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respondent litigating on the project being a reason not to come forward and
comply its JVA obligations, is also not correct. This for the reason that the
show cause notice, which was issued to the respondent under Section 13 (2)
of the Slums Act by the SRA, was on two counts firstly, on account of non-
completion of the rehab building and secondly, non-payment of transit
rent/compensation to the slum dwellers, both of these obligations under the
JVA were obligations of the petitioner. The respondent was required to
defend such proceedings as noted above before the SRA and the AGRC as
also this Court and ultimately the Section 13(2) proceedings were dropped.
38. Mr. Murthy's contention relying on the AGRC's order that such order
itself would go to show that there was no delay on the part of the petitioner
undertaking the project, cannot be accepted, for the reason that the
observations of the AGRC are in such proceedings to which the petitioner was
not a party, and which were solely defended by the respondent. Such
observations cannot come to the aid of the petitioner to contend that there
was no breach of the terms and conditions of the JVA by the petitioner. The
JVA is a contract between the respondent and the petitioner. Any
default/breach of any other terms and conditions by any of the parties is
purely inter se between the parties to the JVA and touching the JVA. Thus,
any material which formed part of the proceedings between the society/slum
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dwellers and the respondent cannot form the basis of the arbitral adjudication
between the petitioner and the respondent and more particularly when the
petitioner was not party to the Section 13(2) proceedings so that the
petitioner on its own actions can justify that prima facie there was no breach
of the terms and conditions of the JVA on its part. Thus, in my opinion, the
finding as recorded by the learned arbitrator in that regard is a plausible view,
far from any perversity.
39. Further Mr. Murthy's contention in regard to the default on the part of
the respondent in not vacating the slum dwellers, prima facie, cannot be
accepted from the materials as placed on record. There is a finding of fact
recorded by the learned sole arbitrator that all the slum dwellers had vacated
the property except for one family namely the Parmar family. However, the
presence of only one structure on the plot as rightly observed by the learned
arbitrator was not any hindrance for the petitioner to undertake the
construction work as per the obligations and requirements of the JVA.
40. It also appears from the record that insofar as the petitioner is
concerned, the shoe was pinching not on the count as canvassed by the
petitioner, but on the financial difficulties that have been faced by the
petitioner. It also prima facie appears that the petitioner had abandoned the
sale as also had defaulted in making payment of the transit rent to the slum
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dwellers which was in breach of its obligations under the JVA.
41. Now coming to the decisions as cited on behalf of the parties, Mr.
Murthy's reliance on the decision in The Rajasthan State Industrial
Development and Investment Corporation vs Diamond and Gem
Development Corporation Ltd. (supra) would not assist Mr. Murthy in the
facts of the present case for the reason that I do not find that any case has been
made out by the petitioner, of the respondent blowing hot and cold in the
same breath and/or the respondent approbating and reprobating qua its
obligations under the JVA. This is not the case where the respondent
knowingly having accepted the benefit of the contract, had denied the
binding terms and conditions of the contract in the context of which
observations are made by the Court in paragraph 9 of the said decision.
42. Insofar as Mr. Murthy's reliance on the decision of the learned single
Judge of the Delhi High Court in Tata Advance Systems Limited vs Telexcell
Information Systems Limited (supra) is concerned and more particularly in
regard to the observations as made in paragraphs 24, 25, 30 & 31, it is clear
that the decision refers to the well settled principles of law which are required
to be followed by the arbitral tribunal in granting reliefs under Section 17
application. It is well settled that in granting any interim relief in the arbitral
proceedings, so as to safeguard the arbitral interest of the parties, the
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principles which the Court would follow in adjudicating Section 9
proceedings are applicable in adjudicating Section 17 application is well
settled. Thus, for grant of interim reliefs in the nature of injunction under
Section 17, the arbitral tribunal would be required to consider whether there
exists prima facie case, irreparable injury and balance of convenience in favour
of the claimant for granting of such reliefs. As seen from the facts of the
present case the petitioner had failed to make out a prima facie case as also a
balance of convenience was in favour of the respondent considering that the
redevelopment in question was a slum project and which could not have been
obstructed.
43. It is well settled that when a lis pertains to the specific performance of
a contract and in such context, interim reliefs are prayed for, certainly the
Court/arbitral tribunal would consider whether a prima facie case is being
made out by the plaintiff/claimant in the context of his readiness and
willingness to perform his obligations under the contract. In such context,
Mr. Kapadia's reliance on the decision of the Supreme Court in Shenbagam
and Others vs. K. K. Ranthinavel (supra) is well founded. Prima facie such
readiness and willingness, as the law would mandate, is not forthcoming from
the petitioner, as the foundation of the present proceedings is claim of the
petitioner for specific performance of the JVA.
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44. It is also well settled that the interim orders passed by the Court or in
the arbitral proceedings by the tribunal are in aid of the final reliefs and thus
what would weigh with the Court or the tribunal in the context of the final
relief, would be relevant to form a prima facie opinion for passing an interim
order by applying the well-settled principles of law considering the prima
facie case and balance of convenience and irreparable injury.
45. Insofar as Mr. Kapadia's reliance on Raghivir Buildcon Pvt. Ltd. Vs.
Ircon International Limited (supra) is concerned, this is a case in which the
Court has considered the well-settled position of law in regard to the exercise
of jurisdiction by the Court in Section 37 proceedings and more particularly
arising from granting or refusing to grant interim measure under Section 17.
The position in law in such context is also well settled that the scope of
Section 37 proceeding is very limited. The appellate Court would not
interfere with the findings of fact rendered by the arbitrator. The Court
cannot delve into the facts and law on every aspect and substitute its own
decision replacing the decision of the arbitral tribunal. The Court would
consider as to whether the order passed by the arbitral tribunal is a plausible
view as noted in Balaji Pressure Vessels Limited. v. Bharat Petroleum
Company Limited7 in which this Court has held that the scope of Section 37
7 2019 SCC OnLine Bom 476
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is very limited. It is held that the Appellate Court cannot interfere with the
findings of facts rendered by the Arbitrator or by the Learned Single Judge.
Also in Raymond Ltd. v. Akshaypat Singhania8, this Court has held that in a
challenge to an interim order under Section 37, the Court cannot go into the
facts and law on every aspect and substitute its own opinion in place of that of
the arbitral tribunal. What the Court has to look into, is whether the order
passed by the tribunal was one that is a plausible view.
46. In view of the above discussion, none of the contentions as raised on
behalf of the petitioner in assailing the impugned order passed by the learned
sole arbitrator, are tenable. In my considered opinion, the learned sole
arbitrator has appropriately adjudicated the Section 17 proceeding on the
materials placed on record. The findings of the learned sole arbitrator are not
perverse and/or contrary to the record so as to warrant any interference in the
present proceedings. The petition is hence devoid of merits. It is accordingly
rejected. No costs.
[G. S. KULKARNI, J.]
8 2019 SCC OnLine Bom 227
