Bombay High Court
Excel Enterprises Realty Llp vs Sharmila S Amin on 16 June, 2025
2025:BHC-OS:8987
19.CARBP.813.2024.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION PETITION NO.813 OF 2024
Excel Enterprises Realty LLP ...Petitioner
Versus
Sharmila S. Amin & Ors. ...Respondents
Mr. Gaurav Joshi, Senior Counsel a/w, Sarosh Bharucha,
Tushar Gujjar & Deepak Singh i/b SL Partners, for the
Petitioner.
Mr. Yousuf Khan, for Respondent No.1 to 23 and 25.
Mr. Rathore Sunil Kumar, for Respondent No.24.
Mr. J.S. Kini a/w. Aum J. Kini i/b. Ms Sapna Krishnappa, for
Respondent No.27.
CORAM: SOMASEKHAR SUNDARESAN, J.
DATE : JUNE 16, 2025
ORAL JUDGMENT :
1. This is a typical Petition involving redevelopment filed under
Section 9 of the Arbitration and Conciliation Act, 1996 ( "the Act") in
connection with a development agreement.
2. In the facts of this case, the Petitioner is a Developer, Respondent
No.27 is a Society, and the other Respondents fall in two distinct
classifications, which I shall advert to shortly.
Digitally
signed by
AARTI
AARTI GAJANAN
GAJANAN PALKAR
PALKAR Date:
2025.06.19
17:38:53
+0530 June 16, 2025
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19.CARBP.813.2024.doc
3. The Society has a total of 60 members, of which 56 members
have signed and executed the Development Agreement dated October
29, 2021 ("Development Agreement"). A bare reading of the
Development Agreement would show that each of the members of the
Society who have signed the Development Agreement would fall within
the meaning of the term "party" as defined in the Development
Agreement. Any dispute or difference among the "parties" is covered by
the arbitration agreement contained in Clause 29 (found at Page
No.140 of the Petition) of the Development Agreement.
4. Consequently, in the facts of this case, there is direct privity to
the arbitration agreement by each of the members of the Society who
have signed the Development Agreement. Four members have held out
without signing the Development Agreement. Even among those who
have executed and bound themselves to the bargain reached in the
Development Agreement (56 in number), 22 members have not vacated
their premises. A total of 34 members have vacated their premises.
5. It is in this backdrop that this Petitioner has urged for this
Court's intervention, in its equitable jurisdiction under Section 9 of the
Act, to enable the redevelopment work to commence.
6. Learned Senior Counsel on behalf of the Petitioner submits that
the financial payments that are required to be made under the
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Development Agreement are being paid, and the expenditure incurred
in terms of premium etc. for additional area has resulted in a total
outgo of Rs.28 Crores so far from the pockets of the Developer. The
development plan, pursuant to the Development Agreement, has
undergone a change to enhance the area made available for members
for the rehabilitation flats from 600 square feet computed under the
Real Estate (Regulation and Development) Act, 2016 ( "RERA") formula
to an area of 600 square feet computed under the Maharashtra
Ownership of Flats Act, 1963 ("MOFA") definition. The latter does not
include the balcony area and the space occupied by the walls.
7. The Intimation of Approval ("IOA") from MHADA received in
the past had lapsed. This is the fourth time this Petition is listed. On
an earlier occasion, I had directed that the Petitioner come back to the
Court as and when the IOA from MHADA were actually renewed, so
that the Court is not requested to exercise its equitable jurisdiction in a
vacuum.
8. Learned Counsel for the Petitioner tenders across the bar, the
renewed IOA dated June 13, 2025, by which the earlier IOA dated
September 15, 2022 is now revived. He submits that this time it would
be vital not to have redevelopment be delayed and lose the timelines
anticipated to work in line with the new IOA.
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9. Having examined the above factual matrix, the Respondents who
are holding out i.e. those who are refusing to vacate despite signing the
Development Agreement, and also those who have not signed the
Development Agreement at all, were asked to present their objections.
10. Learned Counsel on behalf of Respondent Nos.1 to 23 and
Respondent No.25 submitted that his clients have all signed the
Development Agreement and the new IOA dated June 13, 2025, has
been received only on Saturday. However, his primary contention is
that the building height for which approval appears to have been
granted was meant to be 70 meters, whereas approval has been granted
only for 53 meters and this would need clarification. To this, Learned
Senior Counsel on behalf of the Petitioner submits that the 53-metre
height would adequately accommodate the rehabilitation flats. As and
when the project progresses the Petitioner would be making further
payments to load further entitlements to construct and secure further
approvals for the residual height out of the total height of 70 meters for
the building.
11. Consequently, this objection on behalf of Respondent Nos.1 to 23
and Respondent Nos.25 prima facie stand addressed and would not
stand in the way of making an intervention for the larger public good of
the members of the Society, in particular, those who have signed the
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agreement and have vacated, as compared to those who are refusing to
vacate despite having committed to adhering to the terms of the
Development Agreement, and are now vacillating.
12. Learned Counsel for Respondent No.24 submits that it is unclear
as to whether the bank guarantee for Rs.10 Crores, as committed by the
Petitioner has been tendered. A similar objection is raised by the
Learned Counsel for Respondent No.26 stating that the bank guarantee
must be secured before demolishing the premises. Learned Senior
Counsel for the Petitioner submits that the bank guarantee is ready and
the minute it is issued, the Petitioner would start incurring further
expenses on the guarantee fee. Therefore, he undertakes, on
instructions, that if this Court's intervention to enable vacating the
premises is made, the bank guarantee would be handed over no sooner
than the premises are vacated and well before demolition. Learned
Senior Counsel for the Petitioner undertakes that the bank guarantee
would be provided before demolition work can commence and
immediately after all the premises are vacated. This assurance is taken
on record as an undertaking given to the Court.
13. Learned Counsel on behalf of Respondent No.26 has a number of
objections to the redevelopment. It is noteworthy that Respondent
No.26 is one of the four parties who has not signed the Development
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Agreement and therefore submits that he is a third party to the
Development Agreement. Most of his objections centre around the
quality of governance of the Society at the hands of its Managing
Committee. In particular, he would point to anomalies in the minutes
of the meeting at which the appointment of the Developer had been
approved.
14. Learned Counsel for this Respondent would submit that as of the
date of the meeting, when the appointment of the Developer was
approved, the Developer did not have a three-year track record. He
would point to the certificate issued by the Registrar of Companies to
show that the LLP was formed on July 8, 2021, and which would
inexorably point out that the Developer did not have a three-year track
record at the time of appointment. To this, Learned Senior Counsel for
the Petitioner would submit that the Petitioner is a special purpose
vehicle in the form of a limited liability partnership formed by a well
known promoter with track record of far more than three years.
15. The second objection is that the persons who are not members
have attended the General Body Meeting of the Society to approve the
appointment of the Developer. He would point to seven names shown
in the minutes of the meeting to indicate that non-members appear to
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have voted, thereby calling into question the veracity and the integrity
of the governance process by which the Developer has been appointed.
16. The third objection raised by Learned Counsel for Respondent
No.26 is that the minutes record that the quorum was validly formed
whereas the video recordings would show that there was no quorum at
the appointed time for commencement of the meeting. According to
him, once the quorum is unavailable at the designated time, the
meeting must mandatorily be adjourned by seven days and it cannot be
adjourned by a short period on the same day for quorum to be formed
afresh to conduct the meeting. Consequently, the contention is that the
very conduct of the meeting is bad in law and therefore the decision
taken in that meeting is bad in law.
17. Finally, Learned Counsel for Respondent No.26 would submit
that under Clause 3.2 (found at Page No.110 & 111 of the Petition) any
additional area that becomes available due to any change in law or
policy, would need to be negotiated among the members for
appropriate and proportionate entitlement being distributed across
members. According to him, additional area has emerged and this
additional area allocation to the members has not been done. He
would point to the approved built up area communicated by MHADA
vide its letter dated December 30, 2021 to indicate that additional area
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had been obtained and contend that such additional area should be
made available to all members. This not having been done, he would
submit, is a violation of the very Development Agreement.
18. Learned Counsel for Respondent No.26 would also point to
discrepancies between the official authorized representative's report to
the co-operatives department on the conduct of meeting and its conflict
with the contents of the minutes of the meeting maintained by the
Society, to indicate that the number of people who have attended and
the number of people who have voted are at variance in the two
documents.
19. Learned Counsel for Respondent No.1-Society would submit that
the names of individuals who are not members as found in the minutes,
are names of authorized representatives who attended the meeting on
behalf of members who could not remain present for the meeting. He
would submit that one has to look to the signatures on the
Development Agreement, which is an integral part of the Petition, to
see that it is only the members who have executed the Development
Agreement and consequently they have consciously agreed to the
bargain contained therein, and no infirmity can be found with the
conduct of the meeting.
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20. Learned Counsel for the Society submits that since there is an
official report by the officer who attended the meeting and has filed the
report with Deputy Registrar, one may go by that and any infirmity in
the minutes would boil down to a difference of one member and that
may be put down as an inadequate and inefficient record of the
minutes. However, he would submit, this cannot have any bearing on
the legality of the process conducted and the selection of the Petitioner
as the Developer.
21. Be that as it may, having heard the parties, I find that the
objections raised by Respondent No. 26 against the Managing
Committee are all matters which essentially point to grievances that a
member can have against the Society's administration. I am informed
by the Learned Counsel for Respondent no.26 that there is already a
complaint filed under the law governing co-operative societies and
proceedings would be taken up against the Society for violation of
protections available to a member of the Society. It is made clear that
any relief granted in this Section 9 Petition will evidently not have any
influence on those proceedings and if there is any shortcoming in the
conduct of governance of the members of the Society, the consequences
for that would be dealt with in accordance with the laws governing the
conduct of co-operative societies.
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22. However, the core question that falls for consideration today is
what would be an appropriate relief in the factual matrix, whereby 34
members who are signatories to the Development Agreement have
vacated their premises and are undergoing the hardship of relocation.
On the other hand, 22 members, despite signing the Development
Agreement and having committed to comply with the same are holding
out and have indeed secured a marginally better bargain than what was
contained in the Development Agreement, such as a marginally greater
ceiling height and a marginally larger square feet area in the premises.
23. In my opinion, there may be matters of detail that can be
thrashed out by the parties, should they so desire, in arbitration
proceedings since all these 22 members have privity to the arbitration
agreement. As stated earlier, in the facts of this case, the arbitration
agreement binds all "parties" and each of the members who has signed
the Development Agreement is indeed a party to the arbitration
agreement. If there are any grievances that any member has about the
true interpretation of the Development Agreement, that would be
amenable to arbitration. No grievance is incapable of being resolved by
denominating it in value terms and should the members be right, they
can always be compensated in the course of the arbitration
proceedings.
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24. What falls for consideration today is to protect the subject matter
of the arbitration agreement i.e. the redevelopment of the building
covered by the Development Agreement. The short question that needs
to be considered today is whether the redevelopment should be held up
any further in the teeth of 22 members holding out being parties to the
Development Agreement. The condition precedent to vacating the
premises has been met by the re-issuance of the IOA. To my mind, this
calls for an intervention in exercise of jurisdiction under Section 9 of
the Act, particularly taking into account all the members who have
signed the Development Agreement are party to the arbitration
agreement.
25. In these circumstances the following order is passed:-
A] All the residual members who have yet to vacate,
regardless of whether they have executed the Development
Agreement, shall vacate their premises no later than August
14, 2025.
B] This is a rather extraordinary long time that is being
granted only because of the strength of the rains in the city of
Mumbai at this stage. To my mind, it would have been
appropriate to have them vacate by July 31, 2025, but an
additional period of 15 days is granted purely as a matter of
grace;
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C] Should any member of the Society not vacate by
12.00 noon on August 14, 2025, the Learned Court Receiver
of this Court shall be entitled to take physical possession with
police assistance, if necessary, and hand over such possession
to the Petitioner for commencement of the redevelopment
activity. Once such possession is handed over to the
Petitioner, either by the Court Receiver or by the Society
upon taking possession from the members, the Petitioner
shall hand over to the Learned Court Receiver, the bank
guarantee in the sum of Rs.10 Crores, who shall then hand it
over to the Society upon ascertaining that the premises have
indeed been vacated;
D] Should any of these Respondents fail vacate by the
aforesaid deadline, when taking forcible possession with
police assistance, the Learned Court Receiver shall also take
an inventory of any belongings contained in the premises and
hand over the same for storage by the Petitioner, who shall
then call upon the Respondents to have them collected within
a period of one month of receipt of the belongings from the
Learned Court Receiver, failing which such belongings may
be disposed of;
E] The local police station shall provide all necessary
assistance to the Learned Court Receiver for taking
possession as above. The Petitioner's advocates shall serve a
copy of this Order on the local police station as also on the
office of the Deputy Commissioner of Police in whose
jurisdiction the property falls, for information and requisite
planning for the forcible possession, should the need arise;
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F] The Petitioner, the Society and the Respondents
in Possession shall execute permanent alternate
accommodation agreements and other related ancillary
documentation evidencing the takeover of the premises and
the entitlement to the redeveloped flats ("PAAA
Documentation") such that they accord pari passu treatment
to the entitlements of these Respondents as compared with
all other flats where this Court has not had to intervene to
have them vacated. Any variations to the documentation may
only be in respect of the identification of these flats and the
proportionate and commensurate variations linked to their
size, area and related features of these flats in line with the
Development Agreement;
G] The outer deadline for executing the PAAA
Documentation shall be July 31, 2025 by each member. The
Developer shall ensure that appropriate appointments are
taken in consultation with the respective members, seeking
the convenience of the members for attending the Registry
office, and work out a schedule for execution of all the PAAA
documentation by July 31, 2025.
H] Should the Respondents fail or refuse to execute the
PAAA Documentation by the aforesaid deadline, the
Petitioner shall be entitled to approach the Learned Court
Receiver within a period of one week after the aforesaid
deadline, to execute such documentation , and
demonstrate to the Learned Court Receiver that the terms of
the PAAA Documentation are in conformity with the
requirements stipulated above. Execution of the PAAA
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Documentation by the Learned Court Receiver in respect of
each of the Respondent's premises would bind
the Respondents;
I] It is hoped that the members would use this
extraordinarily long time given to them effectively to find
alternate accommodation and remove all their belongings
from the premises by the deadline stipulated above without
the need for any physical force and use of police assistance,
which has been specifically authorised above.
26. Learned Counsel for Respondent No.26 submits that despite this
leeway for delayed vacating of the premises, all accrued financial
benefits that would be payable upon vacation, should be paid to them
as arrears. This would be inequitable as a direction under Section 9 of
the Act. One would need to examine the terms contracted in the
Development Agreement to determine when and subject to what
condition, the hardship compensation and transit rent has to be paid.
The parties can always resort to arbitration on this issue. Learned
Senior Counsel for the Petitioner assures that those who have indeed
vacated and are undergoing hardship and have to pay for rent have
indeed been paid all their dues. This statement is accepted. The parties
are free to engage with each other and should disputes and differences
persist, they are free to initiate arbitration. Even the members who
have not signed the Development Agreement are given liberty to
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execute the same and get privity to the arbitration agreement to
proceed to arbitration.
27. It is made clear, that immediately upon premises being handed
over by any member, regardless of when he does so in the next eight
weeks, such member shall be paid the amounts payable upon vacation,
and also any payment under the Development Agreement that is due
without linking it to the date of vacating the premises.
28. All the Respondents who have held out and are represented
today have submitted that the Court may appoint an arbitrator of its
choice without the need for any party having to file a formal application
under Section 11 of the Act. Such arbitrator shall be approached should
disputes and differences persist between the parties even after this
order works itself out.
29. In these circumstances, a Sole Arbitrator is hereby appointed in
the following terms:-
A] Mr. Aadil Parasrampuria, a Learned Advocate of this
Court is hereby appointed as the Sole Arbitrator to adjudicate
upon the disputes and differences between the parties arising
out of and in connection with the Agreement referred to
above. The contact details of the Learned Arbitrator are set
out below:-
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Address : c/o Mr. Karl Tamboly
3, Bardy House,
Veer Nariman Road,
Fort, Mumbai - 400 001.
Email Id : : [email protected]
B] A copy of this Order will be communicated to the
Learned Sole Arbitrator by the Advocates for the Petitioner
within a period of one week from today. The Petitioner shall
provide the contact and communication particulars of the
parties to the Arbitral Tribunal along with a copy of this
Order;
C] The Learned Sole Arbitrator is requested to forward
the statutory Statement of Disclosure under Section 11(8)
read with Section 12(1) of the Act to the parties within a
period of two weeks from receipt of a copy of this Order;
D] The parties shall appear before the Learned Sole
Arbitrator on such date and at such place as indicated, to
obtain appropriate directions with regard to conduct of the
arbitration including fixing a schedule for pleadings,
examination of witnesses, if any, schedule of hearings etc. At
such meeting, the parties shall provide a valid and functional
email address along with mobile and landline numbers of the
respective Advocates of the parties to the Arbitral Tribunal.
Communications to such email addresses shall constitute
valid service of correspondence in connection with the
arbitration and;
E] All arbitral costs and fees of the Arbitral Tribunal
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shall be borne by the parties equally in the first instance, and
shall be subject to any final Award that may be passed by the
Tribunal in relation to costs.
30. Needless to say, nothing contained in this order is an expression
of an opinion on merits of the matter or the relative strength of the
parties. All issues on merits are expressly kept open to be agitated
before the arbitral tribunal appointed hereby.
31. With these directions, nothing survives in this Petition, and it is
finally disposed of. Despite being disposed of, the matter shall be listed
for reporting compliance on August 16, 2025.
32. All actions required to be taken pursuant to this order, shall be
taken upon receipt of a downloaded copy as available on this Court's
website.
[ SOMASEKHAR SUNDARESAN, J.]
June 16, 2025
Aarti Palkar
