Bombay High Court
M/S.R.R.B Realtors Pvt Ltd vs M/S.Subhash Nagar Rajeshwari ... on 22 December, 2016
Author: S. J. Kathawalla
Bench: S. J. Kathawalla
KPPNair 1 arbp-681
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITR ATION PETITION NO. 681 OF 2016
M/s. R.R.B. Realtors Pvt. Ltd. ... Petitioner
vs.
M/s. Subhash Nagar Rajeshwari CHS Ltd. and others ...Respondents
ALONG WITH
NOTICE OF MOTION NO. OF 2015
IN
BOMBAY CITY CIVIL COURT L.C. SUIT NO. 2598 OF 2015
Dr. Birendra Saraf, along with Mr. Kunal Banage and Mr. Vasin Siddiqui, instructed
by Kunal Banage for the Petitioner.
Mr. Raj Patel, along with Mr. G.D. Uttangale, instructed by M/s. Uttangale & Co.,
for Respondent No.1.
Mr. A.S. Kharatmol for Respondent Nos. 2 to 8.
COR AM: S. J. KATHAWALLA, J.
Judgment reser ved on : 4th July, 2016
Judgment pronounced on : 22nd December, 2016
JUDGMENT:
1. The above Petition is filed by the Petitioner -- R.R.B. Realtors Pvt. Ltd., under Section 9 of the Arbitration and Conciliation Act, 1996 ("the Act") against the Respondents -- M/s. Subhash Nagar Rajeshwari CHS Ltd. and 10 others i.e. Respondent Nos. 2 to 11, who are the members of the Respondent No.1 Society but ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 2 arbp-681 are not vacating and handing over possession of the tenements to the Petitioner and/or the Respondent No. 1 Society for the purpose of redevelopment. The Petitioner has therefore prayed for appointment of Court Receiver in respect of the tenements occupied by Respondent Nos. 2 to 8 mentioned in Schedule-A to the Petition with the power to take physical possession of the same and hand over the same to the Petitioner for the purpose of redevelopment of the Society building i.e. Building No. 18, Subhash Nagar, Chembur, Mumbai-400 071 and also for appointment of Court Receiver in respect of the ig tenements occupied by Respondent Nos. 9 to 11 (whose whereabouts are not known) with power to take physical possession after making inventory of the articles lying in their tenements and handing over the same to the Petitioner for the purpose of redevelopment and upon completion of redevelopment of the new building to hand over possession of three tenements to be allotted in the name of Respondent Nos. 9 to 11 either to the Court Receiver or MHADA or to the Respondent No. 1 Society as may be deemed fit and proper by this Court. The Petitioner has also sought directions of this Court against Respondent Nos. 2 to 8 to forthwith vacate and hand over the physical possession of the respective tenements to the Petitioner for expeditious development of the Society building by accepting agreed rent, shifting charges, brokerage and corpus amount, within a time bound period.
2. The Petitioner is a Private Limited Company primarily engaged in the business ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 3 arbp-681 of real estate development. Respondent No.1 is a registered Co-operative Housing Society of persons belonging to "Lower Income Group" (LIG). The said society comprises of 36 residential flats each admeasuring about 180 sq.ft. of carpet area.
The building which is owned by the Society was constructed by Maharashtra Housing and Area Development Authority (MHADA) i.e. building No. 18 on plot at S. No. 67 to 71 and CTS 831 (PT.) admeasuring about 1203.42 sq/mtrs. at Subhash Nagar, Chembur, Mumbai-400 071 (the said building). The flat purchasers later formed the Respondent No. 1 Society and got the same registered under the Societies Registration Act. By a Deed of Conveyance dated 19 th January, 1994, MHADA sold, transferred and conveyed the said building to the Respondent No. 1 Society. MHADA also granted lease of the land underneath the building in favour of the Society.
3. As stated hereinabove, Respondents Nos. 2 to 8 are the non-cooperating members of Respondent No-1-society who are refusing to vacate and hand over possession of the respective tenements for redevelopment contrary to their individual agreements as well as the Development Agreement dated 15 th July, 2013 executed by the society. Respondent Nos. 9 to 11 are persons in whose name 3 flats stand in the records of the Society. It is the case of the Petitioner that the said flats have remained locked for nearly a decade and the owners of the said flats are not traceable. Pursuant to an order dated 21st March, 2016, a notice was issued by way of publication in the ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 4 arbp-681 newspapers. However, Respondent Nos.9 to 11 have not appeared before the Court.
4. Out of the said 36 members, 26 members in consonance with the terms of the Redevelopment Agreement dated 15th July, 2013 vacated their individual flats in the said building and have already shifted to alternate transit accommodation of their own choice. Since Respondent Nos.2 to 8 have failed to vacate the premises and Respondent Nos. 9 to 11 have abandoned the premises and are not traceable, according to the Petitioner and Respondent No.1, the entire redevelopment of the Society has been held up thereby causing serious irreparable loss and prejudice not only to the Petitioner but to a majority of members of the said Society i.e. 26 out of 36 members. The Petitioner has therefore filed the above Petition seeking reliefs set out in paragraph (1) above.
5. Briefly set out are the facts as narrated by the Petitioner and Respondent No.1 Society:
5.1 The said building which is owned by the Society was constructed in or around the year 1954.
5.2 Since the construction of the said building, no major repairs have been carried out thereby resulting in the said building being in highly dilapidated and dangerous condition causing a threat to the occupants of the building and also to the people in its vicinity.
5.3 In view thereof, the members of the Society including Respondent Nos. 2 to 8
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in the meeting held some time in 2004-2005 unanimously resolved and appointed a developer to carry out the redevelopment of the said building.
5.4 After appointing the first Developer, no progress was made in the redevelopment process thereby resulting in further dilapidation of the said building.
The Respondent No.1 Society thereafter was on a look out for some other developer to carry out the redevelopment work. It was at that time that the Petitioner came forth and offered to undertake the redevelopment project.
5.5 That after detailed negotiations, the Petitioner made an offer to the Respondent No.1 Society.
5.6 That after scrutinising the proposal for redevelopment forwarded by the Petitioner, in the meeting of the Defendant No.1 Society held on 9 th August, 2009, it was unanimously resolved to appoint the Petitioner as the developer for the society.
The meeting was attended by Respondent No. 3 and the original members of the flats occupied by Respondent Nos. 2, 4 and 8. The said Resolution dated 9th August, 2009 has been annexed at Exhibit "B" - Pg.28 of the Petition.
5.7 In furtherance of the said resolution, a Development Agreement dated 22 nd April, 2010 was executed between the Petitioner and Respondent No.1-society. As per the said development agreement, the following benefits were to be given to each member of the said society. ( "Annexure 2" - Page - 26, in the compilation of documents filed by the Respondent No.1 ) : -
(i) Permanent Alternate Accommodation admeasuring 400sq.ft. in view of ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 6 arbp-681 180sq.ft. currently occupied by the said Respondents. (Clause No.2, Pg. 31)
(ii) Transit Rent - Rs. 11,000/- per month for 24 months (Clause No.3, Pg. 31).
(iii) Corpus Fund - Total Rs.4,00,000/-
(Rs.2,00,000/- before handing over possession and Rs.2,00,000/- to be paid in the name of society at the time of giving possession. ) (Clause No.4, Pg. 31) 5.8 Further to the unanimous support expressed by all the members of the said society including Respondent Nos.2 to 9, all the 33 out of 36 members of the society in June 2010 executed individual consent letters in favour of the Petitioner thereby signifying their irrevocable individual consent to the redevelopment project. The copies of the said individual consent letters of Respondent Nos. 2 to 8 are annexed at pages 37, 40, 42, 45, 48, 51 and 54 of the Petition.
5.9 Alongwith the aforesaid consent letters, the members including the Respondent Nos. 2 to 8 in June, 2010 also executed 'Agreement for Alternate Accommodation'. Each of these agreements incorporated an arbitration clause (Clause 20) for resolution of disputes. The copies of the Agreement for Alternate Accommodation executed by Respondent Nos. 2 to 8 are at pages 57,71, 85, 108, 123, 137 and 151 of the Petition.
5.10 The Petitioner vide its application dated 20 th September, 2010 applied to MHADA seeking their NOC for redevelopment of the society building. ( Annexure 4
- Pg. 43 in the compilation of documents filed by the Respondent No.1.).
5.11 MHADA issued its "First Offer Letter" in respect of redevelopment of the
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said society. (Annexure - 5 - Pg. 44 in the compilation of documents filed by the Respondent No.1) 5.12 In view of change of certain policies by MHADA, all redevelopment proposals were put on hold. The Petitioner had to revise its proposal to MHADA a few times. Finally, vide its letter dated 15 th May, 2013 MHADA granted NOC for redevelopment on a condition that the Petitioner deposits an amount of Rs.3,26,38,010/- towards MHADA charges and an additional amount of Rs.1,05,31,518/- towards off-site infrastructure charges payable to MCGM.
(Annexure 6 - Pg. 49 in the compilation of documents filed by the Respondent No.1) 5.13 Due to delays caused in receiving the initial NOC/ clearance from MHADA, Respondent No.1-society held a meeting dated 14th June, 2013. At the said meeting, the terms of the Development Agreement were re-negotiated and the benefits to be given to the members of Respondent No.1-society were enhanced. The said meeting of Respondent No.1-society was attended by all the 33 available members including Respondent Nos. 2 to 8 who in fact had taken a leading role in re-negotiating the terms of the Redevelopment. At the said meeting, it was decided to further enhance the benefits to be given to the members including enhancement in the area of flats to be given to each member, enhancement in corpus fund, enhancement in monthly transit rent, and also enhancement in the shifting charges. It was in this meeting that all the members of the society unanimously resolved to modify the terms of development.
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in the compilation of documents filed by the Respondent No.1).
5.14 As agreed in the General Body Meeting dated 14/06/2013 the Petitioner along with Respondent No.1-society executed a fresh Agreement for Redevelopment incorporating the revised terms set out in Clause 15 above, which agreement was registered on 15th July, 2013. The enhanced benefits provided in this agreement are as follows:
(i) Corpus Fund - Rs.5,40,000/-
(Rs.3,00,000/- before handing over possession and Rs.2,40,000/- to be paid in the name of society at the time of giving possession.
(ii) Alternate Area 450 sq.ft. in place of 400 sq.ft as agreed earlier.
(iii) Monthly Transit Rent Rs.18,500/- .
(iv) One time shifting charge Rs.20,000/-
(Copy of the said Registered Development Agreement dated 15/07/2013 is annexed at "Annexure 8" - Pg. 91 in the compilation of documents filed by the Respondent No.1 ) 5.15 Vide its letter dated 3rd February, 2014, MHADA gave its final approval to the redevelopment proposal forwarded by the Petitioner. ("Annexure 9" - Pg.214 in the compilation of documents filed by the Respondent No.1).
5.16 In pursuance of the final approval received from MHADA the Petitioner paid an amount of Rs.3,71,80,310/- to MHADA for FSI/ TDR and further paid an ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 9 arbp-681 amount of Rs.1,21,19,727/- to MCGM towards infrastructure charges.
5.17 The members of Respondent No.1-society had even neglected to pay the basic service charges to MHADA which had by now aggregated to Rs.31,80,806/-. The Petitioner had to pay this amount on behalf of the Defendant No. 1 society in order to receive the final consent from MHADA for redevelopment.
It was after making all the aforesaid requisite payments amounting to nearly Rs.
5.18 5,34,80,843/-, that the Petitioner finally secured NOC from MHADA for procuring IOD in respect of the re-development project.
5.19 The Petitioner thereafter applied for IOD to MCGM for the said project and made the requisite deposit of Rs.10,00,000/- towards IOD charges.
5.20 MCGM after scrutinizing the proposal forwarded by the Petitioner granted IOD for Redevelopment dated 30th June, 2015. ("Annexure 16 - Pg.237" in the compilation of documents filed by the Respondent No.1).
5.21 At the meeting held on 14th June 2013, the members of the Respondent No.1- society had left to the Petitioner to grant certain additional areas to the members beyond the area of 450 sq.ft. The Petitioner, to respect the sentiments of the members, agreed to allot permanent alternate accommodation admeasuring 480 sq.ft.
carpet area and the said understanding was crystallized in the "Individual Agreement" for alternate accommodation executed between the individual member and the Petitioner herein. These agreements were executed at the time when the ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 10 arbp-681 individual members started vacating their flats and handing over the possession thereof to the developer.
5.22 The process of entering into individual agreements for permanent alternate accommodation with the members commenced on 11th August, 2015. The last such agreement was executed on 25th March, 2016. In consonance with the understanding arrived at between the parties the Petitioner paid to each member who had vacated his existing premises the requisite amounts towards shifting charges, advance transit rent and corpus fund as agreed between the parties collectively amounting to Rs.2,42,74,600/-. With this payment, the funds invested by the Petitioner in this project aggregated to Rs. 7,77,55,443/-.
5.23 In the meanwhile, instead of vacating the premises to enable the commencement of redevelopment work, Respondent No. 3 along with the Associate Members of Flats occupied by Respondent Nos. 4, 7 and 8, filed a regular Civil Suit bearing L.C. Suit 9449 of 2015 against the Petitioner and Respondent No.1. The prayers in the said Suit are as follows: -
(i) That this Hon'ble Court be pleased to declare by an order of this Hon'ble Court that the Development Agreements dated 22 nd April, 2010 and 15th July, 2013 stands cancelled in respect of the suit premises i.e. Building NO.18, Rajeshwari Co-Operative Housing Society, Subhash Nagar, Chembur, Mumbai - 400 071.::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 :::
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(ii) That this Hon'ble Court be pleased pass an Order by directing
the Defendant No.4 to appoint New Developer by following due process of law in respect of suit premises i.e. Building No.18, Rajeshwari Co-operative Housing Society, Subhash Nagar Chembur, Mumbai - 400 071.
(iii) That this Hon'ble Court be pleased to pass an order by directing the Defendant No.2 and Defendant No.3 not to grant permission for any construction activities carried out by Defendant No.1 in respect of the suit premises i.e. Building No.18, Rajeshwari Co-operative Housing Society, Subhash Nagar Chembur, Mumbai - 400 071.
(iv) That this Hon'ble Court be pleased to pass an order directing Defendant No.4 to declare balance Fund of Society and utilise said fund for repairs and maintenance of the society.
(v) That this Hon'ble Court be pleased to pass an order and permanent injunction of this Hon'ble Court restraining Defendant No.1 and Defendant No.4 from carrying out construction activities at the suit premises i.e. Building No.18, Rajeshwari Co-operative Housing Society, Subhash Nagar Chembur, Mumbai - 400 071.
5.24 In the said Suit, the Plaintiffs filed a Notice of Motion seeking interim relief restraining the Petitioner from carrying out any redevelopment activities and for appointment of a new developer. Pursuant to an order dated 21/03/2016 passed by this Court, the said Suit has been transferred to this Court and the Notice of Motion has been heard alongwith the Arbitration Petition filed by the Petitioner.
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6. The Learned Advocate appearing for the Petitioner has taken me through the above facts and has made the following submissions:
6.1 That the Respondent No.1 Society pursuant to a unanimous resolution of all its available members has entered into a development agreement with the Petitioner.
The Society and its members have extensively negotiated the terms of the development agreement with the Petitioner which have been incorporated in the development agreement and the individual agreements with the members. All the members other than the Respondent Nos.2 to 8 have vacated their individual premises and are in transit accommodations. Respondent Nos.9 to 11 in whose names the remaining three premises stand in the records of the Respondent No.1-society are not traceable and have not appeared before this Court despite public notice having been issued. It is therefore, seven out of 36 members who are obstructing the redevelopment process. The Petitioner has obtained all the necessary permissions to commence the construction and it is only due to Respondent Nos. 2 to 8 not vacating their respective premises that the entire process of redevelopment is at a stand still.
6.2 That the Respondent Nos. 2 to 8 are bound by the agreement executed by the Respondent No.1-society and cannot be permitted to obstruct the development project agreed to by the majority members of the society. In fact, the Respondent Nos. 2 to 8 had also accepted the redevelopment and also executed individual agreements. The stand now taken by Respondent Nos. 2 to 8 is clearly illegal and an after thought.
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6.3 Pursuant to the development agreement, the Petitioner has spent 7,77,55,443/-
of which more than 3.5 crores has been invested by the Petitioners out of their own funds. The Petitioners are willing to deposit all the monetary benefits due to the Respondent Nos. 2 to 11 in Court. The Petitioners have also appointed reputed architect and interior designer to execute the project, details of which are set out in the affidavit dated 04.06.2016 filed by the Petitioner.
6.4 That it is settled law as laid down by various judgments of this Hon'ble Court in Girish vs. Mahesh1 , Bharat Infrastructure Engineering Pvt. Ltd. vs. Park Darshan CHS Ltd.2 , Akash Pruthi Lifestyle vs. Akash Co-op. Hsg. Society Ltd. 3, Disha Constructions vs. Jaysen Mastakar4 and Mayfair Housing Pvt. Ltd. vs. M/s. Meera M. Bhagat5 that the dissenting members are bound by the decision of the majority in a co-operative society and cannot defeat the rights of the Respondent No.1-society by obstructing the redevelopment process. The obstructive attitude of Respondent Nos. 2 to 8 is causing grave and irreparable harm, loss and prejudice not only to the Petitioner but all the other members of the Respondent No.1-society who have vacated their respective premises.
1 (2010 (2) Mh.L.J.657) [Paragraphs 18 to 20].
2 (Judgment dated 18.03.2013 in Arbitration Petition No.199 of 2013) [Paragraph 24, 32 & 33].
3 (Judgment dated 26.08.2013 in Notice of Motion (lodging) No.1518 of 2013 in Suit (lodging) No.662 of 2013 [Paragraphs 19 & 20].
4 (Judgment dated 16.09.2013 in Notice of Motion No.859 of 2009 in Suit No.397 of 2013 [Paragraphs 62 & 63].
5 (Judgement dated 18.02.2012 in Notice of Motion No.74 of 2012 in Suit No.40 of 2012 [Paragraphs 22] ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 14 arbp-681
7. The Learned Advocate appearing for the Respondent No. 1 Society has also pointed out the aforestated facts and has submitted that since the said building has been in a dilapidated and dangerous condition due to lack of maintenance and repairs, the members of the Respondent No. 1 had been deliberating the issue of redevelopment of the building since the year 2002, However, the Respondent No. 1 was unable to undertake the redevelopment of the building due to lack of sufficient funds for the Society. The Society had in fact identified a developer in the year 2005- 2006. However, the said developer abandoned the project due to pressure from the local leaders who were wanting to promote only one particular developer to redevelop the cluster of buildings in the area. Thereafter, the Society approached the Petitioner for the purpose of redevelopment of the Society building some time in June, 2009. On 9th August, 2009, the Society held a Special General Body Meeting where Respondent Nos. 3, 5 and 6 were personally present and Respondent Nos. 2, 4, 7 and 8 were being represented by the nominee members/family members. In the said meeting, all the members present unanimously passed various Resolutions viz.
appointing the Petitioner as a developer, the rent for alternate accommodation, corpus fund to be given to the Petitioner, Bank guarantee to be taken from the developer, carpet area for the permanent accommodation, etc. These Resolutions were in fact seconded by Respondent No.3. The Development Agreement was thereafter executed on 22nd April, 2010 and all the members of the Society including ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 15 arbp-681 Respondent Nos. 2 to 8 executed consent letters in favour of the Petitioner on 8 th June, 2010 and also executed individual agreements for alternate accommodation.
After the execution of the development agreement in 2010, the members of the Society held further discussions with the Petitioner and bargained for higher amount of corpus fund, rent for alternate accommodation, larger carpet area, shifting and brokerage charges etc. The said meeting was personally attended by Respondent Nos. 3 to 7 and Respondent Nos. 2, 4 to 6 and 8 were represented by their family members/nominee members. All the members present at the meeting have passed various resolutions unanimously. In view of the resolutions passed at the meeting held on 14th June, 2013, a Development Agreement was executed between the Petitioner and Respondent No. 1 Society on 15 th July, 2013. Since the Society and its members bargained hard with the Petitioner, the Petitioner increased the area to be allotted to the members of the Society from 400 sq.ft. (carpet) to 450 sq.ft. (carpet) and later to 480 sq.ft. (carpet).
8. It is further submitted on behalf of the Respondent No. 1 Society that the election of the Managing Committee was held in the Annual General Meeting on 23d August, 2015 in the presence of the Co-operative Officer appointed by the Deputy Registrar, Co-operative Societies, Bandra, Mumbai. The Respondent Nos. 2, 3, 4, 5 and 7 also contested the said elections. However, except for Respondent Nos. 4 to 7, Respondent Nos. 2, 3 and 5 lost the elections. In view thereof, Respondent Nos. 2 to ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 16 arbp-681 8 started objecting to the decisions taken by the new Managing Committee thereby acting against the benefit and interest of the majority of the members of the Society and filed a Suit in the City Civil Court seeking reliefs against the Society and its office-bearers. The Society has conducted AGMs/SGMs every year as per the provisions of law. However, Respondent Nos. 2 to 8 have made incorrect allegations against the Society that they have been kept in dark and were not informed about the progress pertaining to the redevelopment. The Petitioner has already spent crores of rupees on the redevelopment project.
ig 26 members have shifted to temporary alternate accommodations long back and the Petitioner has paid to them the part corpus fund, advance rent for 12 months, shifting and brokerage charges as agreed under the Development Agreement dated 15th July, 2013. All of them are eagerly waiting for the building to be demolished and the redevelopment to start and to return back to the new flats having larger area of 480 sq.ft. in lieu of the present tenements admeasuring 180 sq.ft. Respondent Nos. 2 to 8 are wrongly and unreasonably obstructing the redevelopment project through the Petitioner. The balance of convenience is in favour of the Petitioner and the members of the Society and therefore the Petition be allowed as prayed.
9. The Learned Advocate appearing for Respondent Nos. 2 to 8 has submitted as follows:
9.1 That the present Petition is not maintainable in law since Respondent Nos. 2 to ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 17 arbp-681 8 have already filed a suit being No. 2598 of 2015 in the City Civil Court at Mumbai, against the Petitioner and others pertaining to the same subject matter.
9.2 That the Petitioner and Respondent No. 1 are acting in collusion and are bent upon evicting Respondent Nos. 2 to 8 in the guise of redevelopment, though there are many triable issues raised in the Suit filed by them being Suit No. 2598 of 2015.
9.3 That on 15th July, 2013, the Respondent No. 1 Society entered into a Development Agreement with the Petitioner without informing Respondent Nos. 2 to 8 and without taking them in confidence. Respondent Nos. 2 to 8 had to obtain the Development Agreement under the Right to information Act.
9.4 The Respondent Nos. 2 to 8 were required to obtain a copy of the development agreement under the Right to Information Act.
9.5 That the arbitration clause No. 57 of the Development Agreement dated 22 nd April, 2010, became redundant in view of clauses 54, 59 and 60 of the said Agreement.
9.5 That during the period between 2010 and 2013, the Petitioner had not made any sort of correspondence and communication with Respondent Nos. 2 to 8.
Respondent Nos. 2 to 8 continuously approached Respondent No. 1 for enquiry about the stage of development activities undertaken as per the development agreement between the Petitioner and Respondent No.1. However, Respondent No. 1 did not respond at all. The tenure of the Committee of Respondent No. 1 expired in the year 2013 and existing Committee of Respondent No. 1 did not take any steps ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 18 arbp-681 for holding election and has not held AGMs since 2013.
9.6 That Respondent No. 1 has not explained any factual position/progress of redevelopment project and also not followed due process of law such as appointment of Project Management Consultant, tender offer procedure , holding of AGM/SGM in the presence of the Dy. Registrar of the Co-operative Societies.
9.7 That the PMC Structural Audit Report in Point No. ( E) -DURABILITY has stated that "Building needs to be maintained for carrying out repairs from time to time for durability. The above suit building is not maintained properly".
9.7 That Respondent No. 1 has not followed due process of law while verifying credentials of the Petitioner.
9.8 That the Petitioner has not explained anything about the progress of the building proposal i.e. what the Petitioner is proposing to offer such as area and size of flat, corpus, rents, etc. 9.9 That the Petitioners have not replied to the letter addressed to them by the Advocates for Respondent Nos. 2 to 8 through Subhash Chandra Pal.
9.10 That the Petitioner and Respondent No. 1 have in collusion prepared new flat allotment list as per their convenience and mentioned wrong new flat numbers and new floor numbers of Respondent Nos. 5 and 6.
9.11 That it is not proper to grant interim relief under Section 9 of the Act against the persons who have no contractual relationship with the Petitioner. The contract is only between the Petitioner and Respondent No. 1 Society.
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9.12 That the above Petition needs to be dismissed and the Notice of Motion be
allowed.
9.13 That the decision of the Delhi High Court dated 25 th May, 2009 in the case
of KK Modi Investment and Financial Services Pvt. Ltd. vs. Apollo International Inc. lends support to the submission of Respondent Nos. 2 to 8 that the Petitioner has no privity with the Respondent Nos. 2 to 8.
10. The Learned Advocates appearing for the Petitioner as well as Respondent No. 1 have in rejoinder submitted that the submissions and contentions raised by Respondent Nos. 2 to 8 are false, untenable and baseless and the above Petition be therefore allowed as prayed.
11. I have gone through the petition filed by the Petitioner as well as the papers and proceedings in the Suit filed by Respondent Nos. 2 to 8 being Suit No. 2598 of 2015 before the City Civil Court at Bombay which suit is transferred to this Court and by consent of the parties the Notice of Motion taken out by Respondent Nos. 2 to 8 in the said Suit is taken up for hearing along with the above Petition.
12. Respondent Nos. 2 to 8 have submitted that the Development Agreement dated 15th July, 2013 was executed without informing them and without taking into confidence. Admittedly the said building was constructed in the year 1954 by MHADA for persons belonging to Lower Income Groups (LIG).The 36 flat purchasers who purchased the flats admeasuring 180 sq.ft. formed and registered a ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 20 arbp-681 Society in whose favour MHADA, executed a conveyance dated 19th January, 1994 and also granted lease in respect of the land beneath the said building As submitted by the Society, over the years the members were not able to carry out any major repairs resulting in the said building being in a dilapidated condition. In the year 2005-2006, the Society did identify a developer to redevelop the said building.
However, since the said developer abandoned the project, the Respondent No. 1 Society approached the Petitioner developer for the purpose of redevelopment of the said building in June, 2009.
12.1. From the records it becomes clear that Respondent No. 1 Society held a Special General Body meeting on 9th August, 2009, which was personally attended by Respondent Nos. 3, 5 and 6 and by the family members/nominee members of Respondent Nos. 2, 7 and 8. In the said meeting, all the members present unanimously passed a Resolution appointing the Petitioner as the developer. In furtherance of the said Resolution, a Development Agreement was executed on 22 nd April, 2010, between the Petitioner and Respondent no. 1 Society wherein the Petitioner agreed to provide permanent alternate accommodation admeasuring 400 sq.ft. in lieu of 180 sq.ft. occupied by the members of the Society. The Petitioner also agreed to pay transit rent of Rs. 11,000/- per month for 24 months to the members and further agreed to pay the total corpus fund of Rs. 4 lakhs to each of the members i.e. Rs. 2 lakhs before handing over possession and Rs. 2 lakhs to be paid to the Society at the time of giving possession.
::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 :::KPPNair 21 arbp-681 12.2 In furtherance to the unanimous support expressed by all the members of the Society including Respondent Nos. 2 to 9, all the 33 out of 36 members of the Society executed individual consent letters in favour of the Petitioner thereby signifying their irrevocable individual consent to the redevelopment project. The copies of the individual consent letters of Respondent Nos. 2 to 8 dated 6 th June, 8th June and 22nd June, are annexed to the Petition at pages 37, 40, 42, ,45, 48,51 and 54 respectively.
Respondent Nos. 2 to 8 have in the said letters, inter alia, categorically stated as under:
"I/We are aware that the Society, vide Resolution passed in the Special General Body Meeting dated 09-08-2009 has decided to redevelop the Society property by demolishing the existing building and construct a new building on the plot thereof.
That I/We are also aware that the Society has received offer for development from various builders and developers and the Society have appointed as developers, M/s. RRB Realtors Pvt. Ltd., a Company incorporated under the Companies Act, 1956. The Society and its constituent members have consented for the said proposed development and the same is binding on me.
!/We hereby given my/our consent to the Society and to the said Developers, M/s. RRB Realtors Pvt. Ltd. to proceed with the proposed redevelopment, in accordance with the plans as approved by the Municipal Corporation of Greater Mumbai.
I/We also agree to sign and execute the Individual Agreement for the Permanent Alternate accommodation, as and when plans for revised area are ready and approved by BMC."::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 :::
KPPNair 22 arbp-681 The Petitioner vide its application dated 20 th September, 2010 applied to MHADA seeking their NOC for redevelopment of the society building to which MHADA issued its "First Offer Letter" in respect of redevelopment of the said society building. Due to change in certain policies by MHADA, the redevelopment proposals were put on hold for some time. The Petitioner had to revise its proposal to MHADA a few times. Finally, vide its letter dated 15 th May, 2013 MHADA granted its NOC for redevelopment on a condition that the Petitioner deposits an amount of Rs.3,26,38,010/- towards MHADA charges and an additional amount of Rs.1,05,31,518/- towards off-site infrastructure charges payable to MCGM.
12.3. In fact, due to delays caused in receiving the initial NOC/ clearance from MHADA, Respondent No.1-society renegotiated the terms of the Development Agreement with the Petitioner and in its meeting held on 14 th June, 2014, got the benefits earlier agreed to be provided to the members, substantially enhanced. The corpus fund was increased from Rs. 4,00,000/- to Rs.5,40,000/- (Rs.3,00,000/- to be handed over to each member at the time of handing over possession of their tenements for redevelopment and Rs.2,40,000/- to be paid in the name of society at the time of giving possession). The area of permanent alternate accommodation was increased from 400 sq.ft. to 450 sq.ft. The monthly transit rent was increased from Rs. 11,000/- to Rs. 18,500/-. One time shifting charge of Rs. 20,000/- was also ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 23 arbp-681 charged to the Petitioner. This meeting was also attended by Respondent Nos. 3 to 7 personally and Respondent Nos. 2 and 8 through their family members/nominee members. In furtherance of the revised terms of development as agreed in the General Body meeting dated 14th June, 2013, the Petitioner along with Respondent No. 1 Society executed a fresh agreement for redevelopment which was registered on 15th July, 2013.
12.4. MHADA has given its final approval to the redevelopment proposal forwarded by the Petitioner vide its consent dated 03 rd February, 2014. In pursuance thereto, the Petitioner paid an amount of Rs.3,71,80,310/- to MHADA for FSI/ TDR on behalf of the Respondent No.1- Society and Rs.1,21,19,727/- to MCGM towards infrastructure charges on behalf of the Respondent No.1 society. Since the members of Respondent No.1-society had even neglected to pay the basic service charges to MHADA which had by now aggregated to Rs.31,80,806/-, the Petitioner also had to pay this amount to MHADA on behalf of the said society. The Petitioner thereafter applied for IOD to MCGM for the said project and made the requisite deposit of Rs.10,00,000/- towards IOD charges. MCGM after scrutinizing the proposal as was forwarded by the Petitioner granted IOD for Redevelopment dated 30th June, 2015.
12.5. The Society and its members did not stop at this. Since the Respondent No.1 Society and its members had left to the Petitioner to grant certain additional areas to the members beyond the area of 450 sq.ft. in the meeting held on 14 th June, 2013, the ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 24 arbp-681 Petitioner now agreed to allot permanent alternate accommodation flats to the members of the Society being permanent alternate accommodation admeasuring 480 sq.ft. carpet area in lieu of 180 sq.ft. tenements currently occupied by them. The process of entering into individual agreements for permanent alternate accommodation for the members commenced in or around 11 th August, 2015. The last such agreement was executed on 25th March, 2016. In consonance with the understanding arrived at between the parties the Petitioner paid to each member who had vacated his existing premises the requisite amounts towards shifting charges, advance transit rent and corpus fund as agreed between the parties collectively amounting to Rs.2,42,74,600/. The Petitioner has therefore invested an aggregate amount of Rs. 7,77,55,443/- in the said project.
13. The above facts clearly establishes that Respondent Nos. 2 to 8 were at all relevant times kept informed about the progress pertaining to the redevelopment of the said buildings and belies the submission made by Respondent Nos. 2 to 8 that the Development Agreement dated 15th July, 2015 was executed without informing them and without taking them in confidence.
14. Respondent Nos. 2 to 8 have contended that the Arbitration Clause 57 of the Development Agreement dated 22.04.2010 does not survive in light of clauses 54, 59 or 60 is equally baseless. The Agreement dated 22nd April, 2010 stood substituted by the Development Agreement dated 15th July, 2013. The Development Agreement ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 25 arbp-681 dated 15th July, 2013 incorporates an Arbitration Agreement in Clause 57. It is this Arbitration Agreement which is applicable. In any event the arguments advanced on behalf of Respondent Nos. 2 to 8 in this regard are now academic since 2010 Agreement stood substituted by the subsequent development agreement dated 15 th July, 2010.
15. The contention of Respondent Nos. 2 to 8 that the Petitioner had not made any correspondence and communication with Respondent Nos. 2 to 8 between 2010 and 2013 and despite them having continuously approached Respondent No.1, they did not receive any response nor take their case any further. Once all the members of the Society at a meeting held on 14 th June, 2013 renegotiated the terms and the Society entered into a fresh development agreement, the period prior to this agreement is completely irrelevant. As set out hereinabove, the Petitioner as well as Respondent No. 1 Society has explained the cause why the Development could not take place between 2010 and 2013. These reasons were known and placed before the members who then renegotiated the terms regarding the development agreement of 2013.
16. As regards the contention of Respondent Nos. 2 to 8 that the tenure of the Managing Committee expired in 2013, and steps were not taken for holding election, it appears that the said contention is incorrect in view of what is explained on behalf of the Society and recorded in paragraph 8 hereinabove. In any case, once all the ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 26 arbp-681 members of the Society had unanimously passed the resolution on 14 th June, 2013, this issue is of no relevance whatsoever.
17. The contention of Respondent Nos.2 to 8 that Respondent No.1 has not explained any financial position/progress of the Redevelopment Project, is also incorrect since the Petitioner has filed an affidavit dated 04 th June 2016, setting out the steps taken by the Petitioner qua the redevelopment till date and the manner in which it would be completed.
18. As regards the submission of Respondent Nos. 2 to 8, that the Respondent No. 1 has not followed due process of law such as appointment of Project Management Consultant, tender offer procedure and holding AGM/SGM in the presence of the Dy. Registrar of the Co-operative Societies, the Society has submitted that in fact a Project Management Consultant has been appointed by the Society. Respondent Nos. 2 to 8 have in Paragraph 6 of the Written Submission itself, referred to the report of the Project Management Consultant.
19. As regards the contentions of Respondent Nos. 2 to 8, that the Project Management Consultant prepared a structural audit report as per the convenience of the Respondent Nos. 2 to 11 and both are playing a fraud on Respondent Nos. 2 to 11, the said allegation is without any basis or particulars. The condition of the building is apparent from the photographs itself. The report of Project Management Consultant is annexed at Page 348 of the Petition. The conclusion given by the ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 27 arbp-681 Project Management Consultant is as under:
"To recapitulate, the structure as it stands bears the marks of major deterioration which can be seen in attached photographs. The Structure has outlived its design life and may not sustain and withstand seismic forces in near future. Hence it is advisable to demolish and reconstruct the building as per prevailing IS codes and norms"
In light of the same, the reliance placed by the Respondent Nos. 2 to 8 on only a portion of the report is, as submitted by the Petitioner and Respondent No.1 Society, not a fair reading of the entire report. In any case, whether to undertake a redevelopment or not is a collective decision of the majority members of the Society and the minority members cannot question the said decision, unless the same is fraudulent, lacks bona fides and smacks of mala fides.
20. The contention of the Respondent Nos. 2 to 8 that the Petitioner and Respondent No. 1 has not explained anything about the progress of the building proposal and what the Petitioner is proposing to offer such as area and size of flats, corpus, rents, etc. is belied by the minutes of the meetings dated 14 th June 2013, the terms of the Development Agreement and the clear and categoric statements made by the Petitioner in its Affidavit dated 04th June 2016.
21. Respondent Nos. 2 to 8 have submitted that no reliefs U/s. 9 of the Act be granted against the said Respondents as they are not privy to any agreement containing a clause for Arbitration whereby the relief sought in the present Petition ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 28 arbp-681 against them can be justified. The submission is devoid of any substance. Individual agreements have been signed by Respondent Nos. 2 to 8 with the Petitioner. All the Agreements contain Arbitration clause (clause 20). All the Agreements are marked Exhibit-D Colly. to the Petition (Pages 51 to 151). Even if there were no such individual agreements, in the proceeding under Section 9 of the Act, the Petitioner is entitled to implead the dissenting members of a Co-operative Society with whom it has a Development Agreement and seek relief against the dissenting members. This is held by a Division Bench of this Court in the case of Girish vs. Mahesh (supra) (Paragraphs 12 to 18) which has been followed in the case of Bharat Infrastructure & Engineering Pvt. Ltd. vs. Park Darshan CHS Ltd. [Supra]. In light of the law laid down by this Court, the reliance placed by the Petitioner on the judgment of the Delhi High Court in the case of K.K. Modi Investment & Financial Services Pvt.
Ltd. vs. Apollo International Inc. is misplaced and not applicable to the facts of the present case.
22. The mere filing of a suit by the dissenting members does not justify the refusal of the relief and the Petition filed by the Petitioners. There was no ad-interim relief in the said suit. In any case, to obviate any grievance, this Court with the consent of the parties transferred and has heard the interim application in the said suit along with the Arbitration Petition. The case made out by Respondent Nos. 2 to 8 in the said suit is the same as the defence set out in the above Arbitration Petition.
::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 :::KPPNair 29 arbp-681 For the reasons set out herein, there is no prima facie case made out by Respondent Nos. 2 to 8 in the Notice of Motion filed by them in that suit. In view thereof mere pendency of the suit cannot be a bar to grant any relief as prayed for by the Petitioner in the above Petition.
23. As set out hereinabove, Defendant Nos. 2 to 8 have failed to justify their unreasonable and unfair conduct. 26 out of 36 members have already vacated their tenements about a year back and are residing in temporary transit accommodation which they have obtained on leave and license basis. The members are facing grave inconvenience and are waiting for the redevelopment work to start at the earliest and completed to enable them to shift in their new ownership flats admeasuring 480 sq.ft.
carpet area in lieu of their present tenaments admeasuring only 180 sq.ft. Respondent Nos. 2 to 8 have by refusing to vacate the premises, for reasons best known to them, obstructed the entire redevelopment process and put the majority members in grave difficulty and inconvenience. The condition of the building is also deteriorating.
Further in case of any collapse of the building or part thereof, grave loss would be caused to the life and property of persons who are occupying the said building and also to the individuals who are around the vicinity of the building. The balance of convenience is entirely in favour of the Petitioner, the members of the Respondent No. 1 and their family members. The Respondent Nos. 9 to 11, have kept their premises vacant and locked since the last one decade and have not come forward to ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 30 arbp-681 answer the above Petition.
24. In view thereof, I pass the following order:
(i) The Court Receiver, High Court, Bombay, is appointed Receiver in respect of the tenements presently occupied by Respondent Nos. 2 to 8. The Respondent Nos. 2 to 8 shall, on or before 13th January, 2017 hand over quite, vacant and peaceful possession of premises presently occupied by them to the Court Receiver who shall in turn hand over the same to the Petitioner and/or the first Respondent Society for redevelopment. In the event of Respondent Nos. 2 to 8 not handing over possession of the tenements to the Court Receiver as directed herein, the Court Receiver shall be at liberty to take forcible possession of the premises occupied by Defendant Nos. 2 to 8 with police assistance and hand over the same to the Petitioner and/or Respondent No. 1 Society for redevelopment.
(ii) The Court Receiver, High Court, Bombay is also appointed Receiver in respect of the tenements of Respondent Nos. 9 to 11. The Court Receiver shall forthwith do the following :
(a) Open the flats in front of the Officials from the local Police Station as well as the Chairman and Secretary of the Society and take an inventory of the belongings lying therein. The Society shall make arrangements to store the items found in the flats.
(b) The Court Receiver shall arrange to have the entire process of taking ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 ::: KPPNair 31 arbp-681 inventory i.e. right since the breaking open of the locks of the said flats video recorded.
(c) The Court Receiver shall thereafter handover the flats owned by Respondent Nos. 9 to 11, to the Petitioner for redevelopment.
(iii) The Petitioner shall simultaneously, with Respondent Nos. 2 to 8 handing over possession of their tenements and/or the Court Receiver forcibly taking possession of the tenements, pay all amounts due till date to Respondent Nos.
2 to 8 as agreed and provided under the Development Agreement 15 th July, 2013.
(iv) The Respondent Nos. 2 to 8 shall also sign agreements with the Petitioner for permanent alternate accommodation as per the agreed terms in the Development Agreement dated 15th July, 2013 with a modification to the extent of allotting permanent alternate accommodation to each of them admeasuring 480 sq.ft. carpet area.
(v) Upon the construction being completed and the occupation certificate obtained by the Petitioner, the Petitioner and/or the Society shall forthwith hand over the new flats allotted to Respondent Nos. 2 to 8 to them and the flats allotted to Defendant Nos. 9 to 11 to the Court Receiver or MHADA or Respondent No. 1 Society.
::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 :::KPPNair 32 arbp-681 The Arbitration Petition is accordingly allowed and the Notice of Motion in Bombay City Civil Court L. C. Suit No. 2598 of 2015 is dismissed. However, there shall be no order as to costs.
(S. J. KATHAWALLA, J.) ::: Uploaded on - 22/12/2016 ::: Downloaded on - 23/12/2016 01:55:52 :::