Bombay High Court
Triveni Co-Operative Housing Society ... vs Reliance Estate Developers And 3 Ors on 30 August, 2018
Author: R.D. Dhanuka
Bench: R.D. Dhanuka
arbp813-17.doc
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.813 OF 2017
1). Reliance Estate Developers, )
a Partnership Firm, duly registered )
under the Indian Partnership Act, 1960 )
having its registered office at D-114, )
Raj Arcade, 90 ft. Road, Mahavir )
Nagar, Dahanukar Wadi, Kandivali )
(West) - Mumbai - 400 069 )
)
2). Mr.Atul R. Shah )
)
3). Mr.Hemendra H. Mapara )
)
4). Mr.Samir M. Shah )
)
Partners of M/s.Reliance Estate )
Developers having office at D-114, )
Raj Arcade 90 ft. Road, Mahavir )
Nagar, Dahanukar Wadi, Kandivali )
(West) - Mumbai - 400 069 ) ...Petitioners
....Versus....
Triveni Co-operative Housing Society Ltd.
)
registered under the Maharashtra )
Co-operative Societies Act, 1960 (as )
amended), having its address at building)
Nos.52 & 47, Tilak Nagar, Chembur, )
Mumbai - 400 089, )
)
presently having correspondence address )
at 05, Dhanashree Co-operative Housing )
Society Limited, Building No.20, Tilak )
Nagar, Chembur, Mumbai - 400 089 ) ...Respondent
WITH
CHAMBER SUMMONS (LODGING) NO.316 OF 2017
1
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IN
COMMERCIAL EXECUTION APPLICATION NO.133 OF 2017
IN
INTERIM ORER / AWARD DATED 03.11.2016
Triveni Co-operative Housing Society Ltd.
)
registered under the Maharashtra )
Co-operative Societies Act, 1960 (as )
amended), having its address at building)
Nos.52 & 47, Tilak Nagar, Chembur, )
Mumbai - 400 089, )
)
presently having correspondence address )
at 05, Dhanashree Co-operative Housing )
Society Limited, Building No.20, Tilak )
Nagar, Chembur, Mumbai - 400 089 ) ...Applicant
IN THE MATTER BETWEEN :
Triveni Co-operative Housing Society Ltd.
)
registered under the Maharashtra )
Co-operative Societies Act, 1960 (as )
amended), having its address at building)
Nos.52 & 47, Tilak Nagar, Chembur, )
Mumbai - 400 089, )
)
presently having correspondence address )
at 05, Dhanashree Co-operative Housing )
Society Limited, Building No.20, Tilak )
Nagar, Chembur, Mumbai - 400 089 ) ...Applicant
....Versus....
1). Reliance Estate Developers, )
a Partnership Firm, duly registered )
under the Indian Partnership Act, 1960 )
having its registered office at D-114, )
Raj Arcade, 90 ft. Road, Mahavir )
Nagar, Dahanukar Wadi, Kandivali )
(West) - Mumbai - 400 069 )
)
2). Mr.Atul R. Shah )
)
2
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3). Mr.Hemendra H. Mapara )
)
4). Mr.Samir M. Shah )
)
Partners of M/s.Reliance Estate )
Developers having office at D-114, )
Raj Arcade 90 ft. Road, Mahavir )
Nagar, Dahanukar Wadi, Kandivali )
(West) - Mumbai - 400 069 ) ...Respondents
Mr.Mayur Khandeparkar with Mr.Arun Panicker I/b Mr.Nitin Sopan
Parkhe for the Applicant in Chamber Summons and the Respondent
in ARBP No.813 of 2017.
Mr.Simil Purohit i/b Mr.Tamsin Monis for the Respondent Nos.1 to 4 in
Chamber Summons No.316 of 2017 and the Petitioner in in ARBP
813 of 2017.
CORAM : R.D. DHANUKA, J.
RESERVED ON : 24TH JULY, 2018
PRONOUNCED ON : 30TH AUGUST, 2018
JUDGMENT :-
1. By consent of parties, both these proceedings were heard together and are being disposed of by a common order.
2. In the Arbitration Petition No.813 of 2017 the petitioners, (the original respondents in the arbitral proceedings) have impugned the order dated 3rd November, 2016 passed by the learned arbitrator granting various interim measures in favour of the respondents (original claimants in the arbitral proceedings) under section 17 of the Arbitration & Conciliation Act, 1996 (for short "the Arbitration Act"). Insofar as the Chamber Summons (Lodging) No.316 of 2017 filed by the applicant (original claimant) is concerned, the applicant has 3 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc prayed for an order permitting the applicant to withdraw the amount of Rs.34,56,000/- along with interest accrued thereon towards the rent from January, 2017 to March, 2017 lying deposited in this Court by the respondent nos.1 to 4 to the chamber summons pursuant to an order dated 29th March, 2017 and seeks directions for making payment of further amount of rent for the month of April, 2017 to October, 2017 and for further period. The applicants have also prayed for issuance of a direction against the respondents to the chamber summons to give a bank guarantee in the sum of Rs.1,38,24,000/- and for an order that the respondent nos.1 to 3 to be detained under Order 21 Rule 43(3) of the Code of Civil Procedure, 1908 for non- compliance of the order passed by this Court. Some of the relevant facts for the purpose of deciding these proceedings are as under :
3. On or before 8th September, 2006, the petitioners entered into two separate Redevelopment Agreements with two societies. Both the societies were subsequently merged into one society. Under the said Redevelopment Agreement, it was provided that each of the member of the respondent no.1 society would be entitled to 323 sq. ft. carpet area. The petitioners would be entitled to the balance available FSI as well as future FSI / TDR / or any other benefits on the land. Clause 7 of the said agreement provides for payment of monthly compensation at the rate of 7,000/- per month for temporary alternate 4 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc accommodation, Rs.14,000/- per month to each of the members towards brokerage and Rs.4,000/- to each of the members towards shifting and transportation charges to the temporary alternate accommodation. It is the case of the petitioners that there was neither any provision for escalation in the compensation amount clause 7 of the said Redevelopment Agreements nor any other provisions for payment of any interest to the members of the respondent society.
4. The dispute arose between the parties. On 16th September, 2016, the respondent society filed a petition under section 9 of the Arbitration Act before this Court inter-alia praying for various interim measures against the petitioners. By an order dated 20th October, 2016, this Court directed that the said petition filed under section 9 of the Arbitration Act shall be treated as the petition under section 17 of the Arbitration Act and appointed a counsel of this Court as the sole arbitrator in the matter.
5. It was directed in the said order that the learned sole arbitrator was required to decide the issue regarding the correct amount of rent payable by the petitioners to the members of the respondent society. The said order dated 20 th October, 2016 was clarified by an order dated 26 th October, 2016. It was clarified that the issue with regard to correct amount of rent payable by the respondent nos.1 to 4 to the tenants / members of the respondent nos.1 to 4 5 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc therein (petitioners herein) shall be decided by the learned arbitrator. In the event of any amount of rent being found to be refundable to the respondent nos.1 to 4, the society undertakes on behalf of the members to pay the same to the respondents therein i.e. the petitioners to this arbitration petition. This Court accepted the undertakings given by the learned counsel for the respondent society.
6. Both the parties appeared before the learned arbitrator and made their respective submissions on the said application under section 17 of the Arbitration Act and also filed the affidavits. By an order dated 3rd November, 2016, the learned arbitrator disposed of the said application under section 17 of the Arbitration Act and directed that the petitioners shall continue to pay to the members of the society a sum of Rs.16,000/- per month as monthly compensation as rent towards the temporary alternate accommodation. Learned arbitrator passed an order of injunction restraining the petitioner no.1 from in any manner selling, alienating, encumbering or creating any third party rights and/or interest in respect of 7 flats which remained unsold in the rehabilitation building.
7. The learned arbitrator clarified that the sales made by the petitioner no.1 in respect of the access FSI used and/or under plan of 27th July, 2016 shall be subject to final orders passed in the arbitration. The petitioners have been directed to make payment of 6 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc Rs.92,16,000/- towards the arrears of rent from March, 2016 to October, 2016 in the manner set out in the order dated 20 th October, 2016. Being aggrieved by the said order dated 3 rd November, 2016, passed by the learned arbitrator, the petitioners have preferred this petition under section 37 of the Arbitration Act. The society on the other hand has filed the Execution Application in this Court bearing No.133 of 2017 inter-alia praying for execution of the order dated 3rd November, 2016. The respondent society has also filed a chamber summons in the said execution application inter-alia praying for various relief. The said arbitral proceedings filed by the respondent society against the petitioners are still pending.
8. Mr.Purohit, learned counsel appearing for the petitioners invited my attention to the various documents and the orders annexed to the arbitration petition and also to the pleadings filed by both the parties before this Court in the arbitration petition filed by the respondents under section 9 of the Arbitration Act.
9. Insofar as the direction of the learned arbitrator to deposit various amounts towards the payment of rent and to pay the rent at the rate of Rs.16,000/- per month is concerned, it is submitted by the learned counsel that it was the case of the respondents in the arbitration petition filed before this Court that from March, 2016 the petitioners did not pay the rent amount as per the development 7 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc agreement. It is submitted that as per the development agreement and more particularly under clause 7 thereof, the rent payable by the petitioners to each of the members of the respondent society was in the sum of Rs.7,000/- per month per member and not at the rate of Rs.16,000/- per month as sought to be canvassed by the respondents.
10. It is submitted that it was the contention of the respondent society thereafter that monthly amount paid by the petitioners since November, 2013 to each of the members of the respondent society was at the rate of Rs.16,000/- per month. He submits that there was no agreement between the petitioners and the respondents for payment of rent in the sum of Rs.16,000/- per month to he members of the respondent society. The petitioners had denied the liability to pay the rent at the rate of Rs.16,000/- per month to each of the members of the respondent society or that the rent was paid by the petitioners to the members of the respondent society at the rate of Rs.16,000/- per month at any point of time.
11. It is submitted by the learned counsel that the learned arbitrator however has erroneously held that it was not denied by the petitioners that the petitioners had paid rent to the members of the respondent society at the rate of Rs.16,000/- per month and has further held that even otherwise the records would clearly indicate that 8 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc the petitioners have been making payment of Rs.16,000/- per month to the members of the respondent society from November, 2013. He submits that the observation of the learned arbitrator that the petitioners had been making payment of Rs.16,000/- per month since November, 2013 towards rent to the members of the respondent society is contrary to the documents and correspondence placed on record before the learned arbitrator. Learned arbitrator has made an attempt to deduce the figure of Rs.16,000/- per month from the chart annexed at page 209 to the arbitration petition filed by the respondents. He submits that even according to the respondent society, the amount being paid by the petitioners did not comprise of rent alone but was for the rent plus shifting charges plus brokerage as it evident from the minutes of the Special Body General Meeting dated 13th March,2011. He submits that the order directing the petitioners to pay the rent at the rate of Rs.16,000/- per month is contrary to clause 7 of the development agreement and is based on no evidence.
12. It is submitted by the learned counsel for the petitioners that the respondent society has misappropriated the amount of Rs.1,08,00,000/- and has committed breach of the terms of the development agreement insofar as the payment of brokerage is concerned. It is submitted that even if the payment of rent charges of 9 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc Rs.7,000/- per month from the date of the development agreement till October, 2013 and thereafter at the rate of Rs.16,000/- per month from November, 2013 till the date of filing the petition is considered, still there would be surplus / access amount of Rs.26,62,100/- still lying with the respondent society. There was thus no question of the learned arbitrator directing the petitioners to deposit further amount or to pay the rent at the rate of Rs.16,000/- per month to each of the members of the respondent society. Learned arbitrator has not considered the chart prepared by the petitioners showing the surplus lying with the respondent society and has erroneously accepted the case of the respondent society as correct.
13. It is submitted that the learned arbitrator has not complied with the directions issued by this Court in the order passed on 20 th October, 2016 read with the order dated 26 th October, 2016. He submits that none of the documents including the correspondence on record would confirm that the petitioners had agreed to make payment of rent at the rate of Rs.16,000/- per month or in fact had paid the rent at the rate of Rs.16,000/- per month to the members of the respondent society. The burden of proof was on the respondent society and not on the petitioner.
14. It is submitted by the learned counsel that the learned arbitrator did not consider the submission of the petitioners that the 10 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc petitioners had made payment to the members of the respondent society on ad-hoc basis as demanded by the respondent society to help the members and not at a particular fixed rate as sought to be canvassed by the respondent society and erroneously accepted by the learned arbitrator. Since there is no provision for escalation for the purpose of computation of compensation amount, the learned arbitrator could not have directed the petitioners to pay rent at the rate of Rs.16,000/- per month to each of the members of the respondent society. Learned arbitrator could not have divided the amount lying in the bank account of the respondent society amongst 72 members when the petitioners had made payment of the lump sum amount at different intervals.
15. It is submitted that the pleadings filed by the respondent society would clearly indicate that even according to the respondent society at least till October, 2013, the rent was only at the rate of Rs.7,000/- per month and from November, 2013, the rent would be at the rate of Rs.16,000/- per month, the learned arbitrator ought to have considered the amount already paid by the petitioners to the members of the respondent society and ought to have considered that the amounts lying with the respondent society deposited by the petitioners was in excess.
16. It is submitted that the finding of the learned arbitrator that 11 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc the petitioners had paid the rent at the rate of Rs.16,000/- per month per member is without any evidence produced by the respondent society nor such claim was supported by any provision in the development agreement. Learned arbitrator has decided contrary to the pleadings of the respondent society and more particularly in paragraph 37 of the arbitration petition filed under section 9 of the Arbitration Act.
17. Learned counsel for the petitioners submits that the learned arbitrator could not have directed the petitioners to pay the rent at the rate of Rs.16,000/- per month per member on the ground that the petitioners could not complete the construction and hand over possession of the tenements to the members of the respondent society on or before 21st December, 2011 i.e. within a period of 18 months from the date of issuance of commencement certificate by MHADA including the grace period of six months as the said alleged delay was irrelevant for the purpose of determination of the rent demanded by the respondent society. He submits that the Maharashtra State Road Development Corporation (MSRDC) had directed MHADA not to grant any permission to the projects under development on the SCLR Belt which included the present redevelopment project. Even if there was any delay on the part of the petitioners, the rent amount could not be increased from Rs.7,000/- 12 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 :::
arbp813-17.doc per month to Rs.16,000/- per month per member.
18. It is submitted by the learned counsel that the respondent society did not produce any leave and license agreement or alternate accommodation agreements in the vicinity of the same area of about 178 sq. ft. in support of their claim for payment of rent at the rate of Rs.16,000/- per month per member. The impugned order passed by the learned arbitrator tantamount to unjust enrichment on the part of the respondent. He submits that the learned arbitrator has erroneously recorded the statement alleged to have been made by the learned counsel for the petitioners, that the petitioners were paying to the members of the respondent society at the rate of Rs.16,000/- per month. No such statement was ever made by the counsel for the petitioners before the learned arbitrator. He submits that though the petitioners had filed an application for clarification of the order regarding the alleged admission on the part of the petitioners, learned arbitrator has not passed any order on the said application till date. Learned arbitrator has directed the petitioners to pay the huge amounts to the respondent society based on such alleged statement made by the counsel for the petitioners. He submits that the issue of payment of rent was required to be adjudicated upon by the learned arbitrator finally and could not have left the said issue to be decided conclusively at the stage of making 13 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc an award.
19. Insofar as the prima-facie observation of the learned arbitrator in the impugned order attributing the delay on the part of the petitioners in completing the project and considering that factor for the purpose of computation of the rent at the rate of Rs.16,000/- per month per member is concerned, learned counsel for the petitioners invited my attention to clauses 24, 26, 32, 45 and 57 of the development agreements which provides for the period of completion of the project, providing obligation on the part of both the parties and more particularly the co-operation of both the parties and the obligation of the members of the respondent society not to cause any hindrance in the day to day working of the petitioners for smooth completion of the project, providing for unforeseen circumstances beyond the control of the petitioners etc.
20. It was pleaded specifically by the petitioners that the delay was not attributable to the petitioners but was due to unforeseen reasons beyond the control of the petitioners and was attributable to some extent to the members of the respondent society. In support of this submission, learned counsel invited my attention to various paragraphs of the affidavits filed by the petitioners and the documents from the compilation filed by MHADA and the Municipal Corporation and to show that the petitioners had made sincere efforts to complete 14 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc the project within the time contemplated under the development agreements. He submits that several hindrances in proceeding with the project were caused due to unavoidable circumstances. The petitioners had to spent huge amount from time to time to remove such hindrances and have lost substantial part of potential profits due to such reasons.
21. It is submitted by the learned counsel that Santacruz - Chembur Link Road seriously affected the project. The proposed link road fell right in the centre of the building project. Several approvals / directions were required to be obtained by the petitioners from MSRDA and also from MMRDA. The primary approvals were received only in the year 2009 and the final approvals could be received in the year 2014. The ground work for the proposed Santacruz - Chembur Link Road which was supposed to start in the year 2003, started in the year 2007. There were changes in the policy of the State Government in the year 2012 due to which the petitioners were required to take various steps and to start a fresh as far as the approval of plans is concerned.
22. It is submitted that the members of the respondent society did not co-operate with the petitioners though were obliged to co- operate under the development agreements. Several applications have been filed by the respondent society before various authorities 15 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc to stall the project. He submits that the learned arbitrator totally failed to consider that the MHADA vide its letter dated 14 th July, 2005 had conveyed that no permission for construction would be granted. The petitioners were required to pay heavy premium and penalty of approximately Rs.9,83,00,000/- towards relaxation. Learned arbitrator has passed an order not based on the pleadings and contractual provision but has taken equitable and sympathetical approach in favour of the respondent.
23. Insofar as the direction of the learned arbitrator regarding entitlement of the petitioners to FSI is concerned, the learned counsel for the petitioners placed reliance on clauses 1, 8, 16 and 28 of the development agreement which provides for the rights of the petitioners to use the FSI. It is submitted that the respondent had contended before the learned arbitrator that the petitioner had consumed 2.5 FSI instead of 2.4 FSI and thus the society was entitled to additional benefits as per 2.5 FSI. It was the case of the respondent that the consent of 70% members of the respondent society was not obtained by the petitioners before taking benefit of 2.5 FSI. It is submitted by the learned counsel for the petitioners that under the development agreement and more particularly under clauses 1, 6 and 28 thereof, each of the member was entitled to an area of 323 sq. ft. carpet area as per the approved plan.
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24. It is submitted by the learned counsel that under the development agreement, the petitioners were exclusively entitled to use all FSI available on the plot of land being developed during the course of the development and permissible under the norms of MCGM and MHADA after providing the tenants with their 323 sq.ft. area tenements under the development agreement. The respondent had consented to the entitlement of the petitioners to use all FSI available then during the course of the development. 86% members of the respondent had signed individual consent in favour of the petitioners in the year 2006 stating that besides 36 flats with carpet area of 323 sq.ft., the respondent society had agreed to allow the petitioners to ustilise maximum permissible FSI by purchasing from MHADA and as per the plans approved by MCGM.
25. It is submitted by the learned counsel that although at the relevant time in the year 2012, flower bed area/niches/lofts were excluded from the Development Control Regulation (DCR) and were free of cost after the amendment in the DCR in the year 2012, the same was included in the FSI and was utilised and now became chargeable under 33(5) of the DCR. He submits that fresh consent from the society to construct as per 2.5 FSI was not at all required to be obtained as per the development agreement as all FSI emanating, available and/or exploitable on the said land was available 17 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc to the petitioners. He placed reliance on the letter dated 16 th August 2012 issued by MHADA and would submit that the said letter did not in any manner affect the entitlement of the petitioners to exploit the FSI.
26. Learned arbitrator however erroneously proceeded to pass the impugned order on the ground that the petitioners ought to have obtained fresh consent from the society under the said MHADA circular. He submits that the MHADA had already considered separate individual consent of the members of the society obtained along with the development agreement as the consent of the society in favour of the petitioners for using maximum available FSI. He submits that if the development agreement would have restricted the consumption of FSI to less than 2.5, only in that event, the petitioners would have required to obtain a resolution from the respondent society with 70% consent of the occupants to exceed the FSI granted in favour of the petitioners, however, there was no such provision in the development agreement.
27. It is submitted that clause 8 of the condition imposed by MHADA in letter dated 16th August 2012 would be applicable only in the event the agreement would have restricted to consumption of 2.4 FSI. Learned arbitrator failed to appreciate that the MHADA calculates FSI on layout which includes roads, recreation ground 18 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc etc. He submits that the learned arbitrator had also made certain observations on the MHADA regarding grant of NOC in favour of the petitioners. Learned arbitrator has decided contrary to the provisions of the development agreement entered into between the petitioners and the respondent society.
28. Learned counsel for the petitioners submits that the society had admittedly applied for information from MHADA during the pendency of the application as to how much FSI had been actually consumed in the process of the development. MHADA had informed that the petitioners had not even used 2.4 FSI and had used only 2.24 FSI for development of the plot which was even less than 2.4 FSI mentioned in the development agreement. In support of this submission, learned counsel invited my attention to a copy of the letter dated 9th May 2017 addressed by MHADA to the respondent society. He submits that the learned arbitrator failed to appreciate that the petitioners were though entitled to utilise the maximum available FSI during the course of the development, the petitioners were not in a position to utilise 2.5 FSI due to 'Height Restriction' in the area as the Aviation Department was not granting NOC if the height of the building exceeded certain meters and thus the petitioners could utilise only 2.24 FSI and not 2.4 FSI or 2.5 FSI.
29. Learned counsel placed reliance on the averments made 19 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc by the society in the Writ Petition No.941 of 2013 which is placed on record stating that the members of the society were entitled to an area of 41.41 sq.mtrs. as per 2.5 FSI and the petitioners were under an obligation to provide that much area to each of the members of the respondent society. It was further contended in the said writ petition that the petitioners had flatly refused to provide area anything greater than 370 sq.ft. instead of 41.41 sq.mtrs.
30. It is submitted by the learned counsel for the petitioners that as on today, the members of the respondent society have been provided with units admeasuring 441 sq.ft. area as opposed to 323 sq.ft. tenements which the petitioners were obliged to provide the members of the respondent under the said development agreement. The said area of 323 sq.ft. was increased to 370 sq.ft. in 2011 and from 370 sq.ft. to 441 sq.ft. in 2014, the plans for the same were approved in the year 2016. He placed reliance on various documents from the compilation filed by the petitioners in support of this submission.
31. It is submitted by the learned counsel for the petitioners that the society was fully aware of the availability of 2.5 FSI way back in the year 2012 itself and has discussed several issues in the meetings of the respondent society. The respondent society in those meetings also agreed for the area of 441 sq.ft. which was offered to 20 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc be given to each member as per 2.5 FSI. The respondent thus cannot be allowed to urge that the petitioners have utilised any additional FSI than what was contemplated in the development agreement. He submits that the allegation of the respondent that consent of 70% occupiers was not obtained by the petitioners was ex-facie false and misleading.
32. In so far as the injunction granted by the learned arbitrator against the petitioners from selling, alienating, encumbering or creating any third party rights and/or interest in respect of the 7 flats in the rehabilitation building is concerned, it is submitted that the learned arbitrator has not rendered any finding as to how much FSI has been actually consumed by the petitioners. Learned arbitrator also did not consider the provisions of the DCR and the sanction granted by the MHADA and also the fact that the members of the respondent society themselves had filed a writ petition inter-alia praying for allotment of flats admeasuring 441 sq.ft. which was much more than the area of flat offered under the development agreement. Learned arbitrator thus could not have granted any injunction in respect of the 7 flats in the rehabilitation building.
33. Insofar as the observation made by the learned arbitrator that the construction was taking place according to the plan sanctioned on 27th July, 2016 which did not bear signature of the 21 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc society and the same was allegedly in clear contravention of the expressed term of the development agreement is concerned, the respondent society had contended before the learned arbitrator that the petitioners had forged an undertaking submitted to MHADA in order to avail the benefits of 2.5 FSI.
34. Learned counsel for the petitioners submits that redevelopment agreement entered into between the parties did not restrict the petitioners to use only limited FSI on the plot of land being developed under the development agreement. The undertaking or letter of MHADA did not create any entitlement of the petitioners to larger FSI on the plot of MHADA. There was thus no necessity for the petitioners to forge any undertaking of the society to utilise 2.5 FSI on the said plot and more particularly when the petitioners had the joint and individual consents from each member of the society way back in the year 2006 to utilise all FSI available on the land.
35. Learned arbitrator had could not have rendered any such finding in the application filed under section 17 of the Arbitration and Conciliation Act, 1996 and based on such erroneous observation could not have granted injunction against the petitioners. The allegation of the forgery was neither proved nor even demonstrated prima-facie. Merely on the statement of the Chairman and the Secretary of the respondent society before the the police authorities, 22 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc the learned arbitrator could not consider such statement as conclusive to render a findings that the signatures of the Chairman and the Secretary of the respondent were forged.
36. Insofar as the issue of approval of plans by the respondent society is concerned, it was the case of the respondent before the learned arbitrator that the plans were approved by the Municipal Corporation without consent of the society. It is submitted by the learned counsel for the petitioners that the respondent society had granted various rights in favour of the petitioners under the redevelopment agreement for seeking sanction of plans from the authorities and had also executed power of attorneys both dated 8 th September 2006 in favour of the petitioners at the time of execution of the redevelopment agreement. The petitioners were authorised to make applications and submit amended building plans to all authorities including MMRDA and MCGM, to sign on behalf of the society the documents to be submitted to the authorities, to apply for and obtain the entire FSI which may be available in respect of the said property and to do various other acts as may be required for carrying out constructions on the property of the respondent.
37. It is submitted that all the plans submitted prior to 2016 bore the signatures of the committee members. The plans submitted in the year 2016 were in pursuance of the writ petition and extreme 23 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc pressure created by the society. The present Secretary of the respondent society himself had filed a writ petition seeking 441 sq.ft. area on the basis of 2.5 FSI and based thereon, the subsequent plan was submitted on 27th July, 2016 and thus the same could not be in contravention of any terms of the development agreement.
38. It is submitted by the learned counsel for the petitioners that admittedly the application filed by the petitioners for modification / correction of the order passed by the learned arbitrator recording the alleged consent of the learned counsel for the petitioners is still pending. It is thus clear that the petitioners have not admitted to have made any such statement before the learned arbitrator. He submits that in any event, such alleged statement is ex-facie contrary to the affidavit filed by the petitioners before the learned arbitrator.
39. It is lastly submitted that since the petitioners have paid/deposited excess amount to the respondent, the learned arbitrator could not have passed such drastic order against the petitioners while deciding the application under section 17 of the Arbitration Act. He submits that the entire order thus passed by the learned arbitrator deserves to bes set aside.
40. Insofar as the chamber summons filed by the respondent society for various reliefs is concerned, it is submitted by the learned counsel that since the impugned order passed by the learned 24 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc arbitrator itself is erroneous and contrary to the law and facts on record and is the subject matter of the arbitration petition filed by the petitioners, no relief claimed in the chamber summons shall be granted in favour of the respondent society.
41. Mr.Khandeparkar, learned counsel for the respondent society on the other hand invited my attention to clauses 7, 24, 25, 39 and 57 of the development agreement dated 8th September, 2006. He submits that under clause 24 of the development agreement, the petitioners were under an obligation to complete the construction of the building and to handover the possession of the tenements for the members of the respondent society within 18 months from the date of the commencement certificate including grace period. The commencement certificate was issued on 21st December, 2009. 18 months expired on 20th December,2011. He submits that even till today, the construction of the building has not been completed by the petitioners and the possession of the tenements have not been handed over to the members of the respondent society. 72 members of the respondent society had vacated the premises as far back as in the month of June 2008 and till date they have not been re- accommodated in the building proposed to be constructed and completed much earlier.
42. It is submitted that when the petitioners asked the 25 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc members of the respondent to vacate in the year 2008, there was already delay of two years attributable to the petitioners even at that stage. From the date of handing over possession, the petitioners made payment in a particular pattern i.e. in the year 2010 at the rate of Rs.10,000/- per month, in the year 2012 at the rate of Rs.12,000/- per month. The petitioners were fully responsible for gross delay in obtaining IOD.
43. Learned counsel placed reliance on the chart showing the dates of payment made by the petitioners from time to time to the members of the respondent at page 309 of the compilation of the documents. He submits that the said chart itself would indicate that the amount of Rs.1,26,72,000/- which was paid by the petitioners during the month of November 2013 to September 2014 i.e. for 11 months to 72 members would come to around Rs.16,000/- per month. The learned arbitrator rightly considered the said chart and the other material produced by both the parties and have rightly concluded that the rent paid by the petitioners was at the rate of Rs.16,000/- per month for the relevant period.
44. It is submitted that no grievance was made by the petitioners that the petitioners had paid the said amount as advance and was subject to adjustment or that the excess payment was made by the petitioners to the members of the respondent society. 26 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 :::
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45. Learned counsel for the respondent placed reliance on the rejoinder filed by the respondent before this Court in the proceedings filed under section 9 of the Arbitration Act and would submit that the bank statement of the another society with whom the petitioners had similar agreement would clearly indicate that the petitioners had paid rent to the members of the said society at the rate of Rs.18,000/- per month at the same time. The petitioners had followed the same pattern even in respect of the said society.
46. It is submitted by the learned counsel for the respondent that some of the cheques issued by the petitioners were dishonoured. The petitioners had stopped the payment in respect of some of the post-dated cheques. He submits that this Court has to consider the overall pleadings of both the parties and not any isolated paragraphs.
47. Insofar as the praecipe filed by the petitioners before the learned arbitrator seeking clarification of the order is concerned, it is submitted by the learned counsel for the respondent that except filing the said praecipe dated 16th January, 2017, there was no further reminder or the request from the petitioners to pass an order on the said praecipe. It is submitted by the learned counsel that the said praecipe filed by the petitioners does not support their arguments as the praecipe fails to bring out and/or mention any pleadings with respect to advance payment from their affidavit in reply dated 22nd 27 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc September, 2016. The arbitral proceedings are already at the evidence stage. Learned counsel for the respondent placed reliance on the order dated 20th October,2016 passed by this Court in the Commercial Arbitration Petition (Lodging) No.137 of 2016 which recorded an undertaking that the petitioners would pay an amount of Rs.92,16,000/- towards arrears of rent from March 2016 to October 2016 on the specified dates mentioned therein. He submits that even that undertaking would clearly indicate that the petitioners had undertaken to pay to the 72 members of the respondent at the rate of Rs.16,000/- per month. The said order was subsequently corrected by this Court on 26th October, 2016 insofar as clause (ix) of paragraph (1) of the order dated 20th October, 2016 is concerned.
48. Learned counsel invited my attention to paragraph (14) of the impugned order and would submit that the learned arbitrator has made it clear in the impugned order that all the observations made in the said order are prima-facie in nature and are made only for the purpose of disposal of the application under section 17 and are in no way of final determination of the rights of the parties. The petitioners has also made a counter claim for refund of the alleged excess amount allegedly paid to the respondent by the petitioners. He invited my attention to issue no.1 in the counter claim filed by the petitioners.
49. Insofar as submission of the learned counsel for the 28 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc petitioners that there was a specific denial by the petitioners that the petitioners had made the payment of rent at the rate of Rs.16,000/- per month to the members of the respondent is concerned, it is submitted by the learned counsel that the said denial was totally vague. He submits that in any event, the learned arbitrator has considered the other evidence on record while computation of rent at the rate of Rs.16,000/- per month to each of the member of the respondent and not only the averments of the petitioners in the affidavit in reply. It is submitted that in any event, the petitioners have already made a counter claim for recovery of the alleged excess rent which would be decided by the learned arbitrator on its own merits. He submits that since 1st April, 2017, the petitioners have not made any payment of rent to the members of the respondent no.2 society and thus the members of the respondent are in precarious financial condition because of the unreasonable attitude on the part of the petitioners.
50. It is submitted by the learned counsel that the petitioners have fabricated no objection certificate of the respondent. In support of this submission, learned counsel invited my attention to the averments made by the respondent in the arbitration petition filed by the respondent under section 9 of the Arbitration Act before this Court.
51. It is submitted by the learned counsel that pursuant to the 29 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc order dated 20th October, 2016, passed by this Court, the petitioners have paid a sum of Rs.46,08,000/- for the period between March, 2016 and October, 2016. On 23rd December,,2016, the petitioners paid the second tranche of payment of rent of Rs.46,08,000/- for the period March, 2016 to October, 2016.
52. By an order dated 29th March, 2017 in Notice of Motion No.420 of 2017 in Commercial Arbitration Petition No.132 of 2017 filed by the respondent herein, the petitioners were directed to deposit Rs.16,000/- per month towards rent per month for 72 members for the period November, 2016 to March, 2017. The petitioners have deposited a sum of Rs.57,60,000/- with the learned Prothonotary and Senior Master of this Court. The respondent has been allowed to withdraw a sum of Rs.23,04,000/- as rent for the months of November and December, 2016 out of amount of Rs.57,60,000/-. He submits that a sum of Rs.34,56,000/- being the rent for the period January, 2017 to March, 2017 still lying with the office of the learned Prothonotary and Senior Master of this Court. He submits that this Court be pleased to grant liberty to the respondent to withdraw the said amount as prayed in the Chamber Summons (Lodging) No.316 of 2017. It is submitted by the learned counsel that the petitioners are in default of payment of rent for the period January, 2017 to June, 2018 at the rate of Rs.16,000/- per month amounting to Rs.2,07,36,000/-. 30 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 :::
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53. Insofar as computation of the rent by the learned arbitrator is concerned, it is submitted by the learned counsel that the learned arbitrator has rightly relied upon paragraphs 37 and 38 and table at Ex.'AG' of the petition filed by the respondent under section 9 of the Arbitration Act in this Court and has rightly come to the conclusion that the prevailing market rent at Tilak Nagar was Rs.16,000/- for the period November, 2013 to September, 2014 and it was increased to Rs.17,600/- from October 2014. He submits that the learned arbitrator has rightly recorded the prima-facie finding that the petitioners were responsible for gross delay in completion of construction and thus could not be allowed to contend that the petitioners were obliged to pay only Rs.7,000/- per month to the members of the respondent society. It is submitted that the petitioners have not carried out any further progress for completion of the building and the construction activity at site are totally standstill after the impugned order came to be passed by the learned arbitrator.
54. It is submitted by the learned counsel that the two cheques issued by the petitioners amounting to Rs.5,75,000/- each for payment of rent were dishonoured on account of payment stopped by the petitioners. It is submitted that the petitioners had never paid the rent to the members of the respondent society at the rate of Rs.7,000/- per month. The rent paid by the petitioners to each of the member of the 31 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc respondent society commenced from Rs.10,000/- per month in June 2008 and was paid till December, 2016 at Rs.16,000/- per month. The said amount of Rs.10,000/- which was the rent initially paid by the petitioners during the period between 14th June, 2008 to 17th March, 2010 was subsequently increased to Rs.12,000/-, Rs.14,000/-, Rs.14,500/-, Rs.15,000/-, Rs.15,500/- and lastly at Rs.16,000/- per month per member.
55. Learned counsel for the respondent placed reliance on the annexure to the affidavit in reply filed by the respondent in Notice of Motion (Lodging) No.425 of 2017 and would submit that a separate cheques were issued for every month. The brokerage was also paid by separate cheques to members and in that month two cheques of even date were issued, one for the brokerage and one for rent.
56. Insofar as the sanction of the plan dated 16th September, 2016 relied upon by the petitioners is concerned, it is submitted by the learned counsel that the learned arbitrator has rightly held that the alleged plan had only signature of the representative of the petitioners and was not signed by the members or the office bearers of the respondent society. There was no approval or consent obtained from the society for the alleged approved plan as per clauses 17 and 37 of the development agreement.
57. Learned counsel for the respondent invited my attention to 32 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc the affidavit in reply filed by the Municipal Corporation on 26 th September, 2016 in the arbitration petition filed by the respondent in support of his submission that the said affidavit would clearly indicate that atleast five plans were submitted by the petitioners without consent of the respondent and that the petitioners had paid penalty of Rs.9,59,42,995/- to the Municipal Corporation for constructing an illegal floor.
58. Insofar as the issue raised by the petitioners as to whether the petitioners cannot utilize any additional FSI or alter the plans without consent in writing of the society is concerned, it is submitted by the learned counsel for the society that as per 2009 policy of MHADA, the FSI was increased to 2.5 on the demarcated plot as per the approved layout and in addition prorata FSI was available with respect to gardens, open plot, internal roads, etc. Thus the demarcated plot increased the plot area to 3144.60 sq.mtrs. multiplied by 2.5. The petitioners also became entitled to avail fungible FSI. The total FSI thus available to the petitioners was 11663.67 sq.mtrs. i.e. 4.559 FSI.
59. Learned counsel for the respondent placed reliance on the revised offer letter dated 16th June, 2012 of MHADA for availing 2.5 FSI. Condition no.8 contemplates submission of new resolution before issuance of NOC for the proposed redevelopment as per 2.5 33 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc FSI by obtaining consent of 70% of the members which was mandatory. He submits that the learned arbitrator rightly made prima- facie observation that no such resolution has been submitted to MHADA and no such resolution exists. He submits that it was beyond reasonable doubt that the petitioners had forged and fabricated undertaking dated 29th October, 2012 so as to circumvent condition no.8 of the offer letter dated 16th August, 2012. He submits that since the office bearers of the respondent came to know about such forged and fabricated undertaking, the erstwhile office bearers whose signatures were fabricated, in the extra ordinary meeting dated 27th July, 2014 admitted that the signature on the purported undertaking were not their signature.
60. A local police station also recorded the statement of the erstwhile chairman and secretary that the signature on the alleged undertaking were not their signatures and that the stamp of the society was forged. He submits that the prima-facie findings thus recorded by the learned arbitrator on this issue were based on the documents produced on record and cannot be faulted with.
61. It is submitted by the learned counsel that by circumventing condition no.8 of the revised offer letter dated 16 th August, 2012 by utilizing 2.5 FSI and prorata FSI for layout, the petitioners are constructing additional 21 shops and 127 residential tenements 34 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc without sharing any corresponding benefits to the respondent.
62. Learned counsel for the respondent placed reliance on the judgment of Supreme Court in case of Wander Ltd. vs. Antox India Pvt. Ltd. 1990 Suppl.SCC 727 and submits that since the learned arbitrator has exercised his discretion judicially while granting interim relief in favour of the respondent in the application filed under section 17 of the Arbitration Act, this Court cannot interfere with the order of discretion exercised by the learned arbitrator. He submits that interference is permissible only if the discretion is exercised arbitrarily or capriciously or perversely or where the learned arbitrator had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions.
63. Learned counsel for the respondent also placed reliance on the judgment of this Court delivered on 27 th September, 2017 in Arbitration Petition No.1266 of 2016 in case of M/s.Hitech Hafizi Town (A) Developers vs. Om Shree Gokul Co-operative Housing Societies Ltd., and would submit that this Court has applied the principles laid down by the Supreme Court in case of Wander Ltd. (supra) and has refused to interfere with the order passed by the learned arbitrator under section 17 of the Arbitration Act.
64. This Court permitted both the parties to file written arguments. Pursuant to the liberty granted by this Court, both the 35 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc parties have filed written arguments which are dealt with by this Court in the later part of this judgment.
REASONS AND CONCLUSIONS :
65. This Court by an order dated 20th October, 2016 while appointing the learned arbitrator in the arbitration petition filed by the respondent under section 9 of the Arbitration Act had directed that the said petition shall be treated as a petition under section 17 of the Arbitration Act. This Court clarified that issue with regard to the correct amount of rent payable by the petitioners herein to the tenants / members of the respondent society shall be decided by the learned arbitrator. In the event of any amount of the rent being found to be refundable to the petitioners herein, the respondent shall pay the same to the petitioners. The said order dated 20th October, 2016 was clarified by an order dated 26th October, 2016 that the issue with regard to the correct amount of rent payable by the petitioners to the tenants / members of the respondent society shall be decided by the learned arbitrator. In the event of any amount of rent being found to be refundable to the petitioners herein, the respondent society undertakes on behalf of the members to pay the same to the petitioners. This Court accepted the undertaking rendered by the respondent society.
66. In the said order dated 20th October, 2016, this Court 36 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc recorded an undertaking on behalf of the petitioners herein to pay an amount of Rs.92,16,000/- towards the arrears of rent from March, 2016 to October, 2016 in the manner provided therein. The petitioners also undertook to pay the rent of November, 2016 and December, 2016 on or before 15th January, 2017.
67. Learned arbitrator passed an order on 3rd November, 2016 which is impugned by the petitioners herein directing the petitioners to continue to pay the members of the respondent society a sum of Rs.16,000/- per month per member as monthly compensation as the rent towards temporary alternate accommodation and further directed to make payment a sum of Rs.92,16,000/- towards the arrears of rent from March, 2016 passed by this Court in Commercial Arbitration Petition (Lodging) No.137 of 2016.
68. The respondent society thereafter filed a Notice of Motion No.420 of 2017 in the said commercial arbitration petition. The petitioners deposited a sum of Rs.57,60,000/- as rent for the months of November, 2016 to March, 2017. The respondent society was allowed to withdraw a sum of Rs.23,04,000/- as rent for the months of November and December, 2016. The respondent society thereafter filed a Chamber Summons (Lodging) No.316 of 2017 in the Commercial Execution Application (Lodging) No.121 of 2017 inter-alia praying for execution of the impugned order passed by the learned 37 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc arbitrator.
69. Both the parties argued the issue as to whether the learned arbitrator could have directed the petitioners to pay the members of the respondent society at the rate of Rs.16,000/- per month or not.
70. Insofar as the petitioners are concerned, the learned counsel appearing for the petitioners placed reliance on various clauses of the Development Agreements including clause 7 thereof and vehemently urged that the obligation of the petitioners to pay compensation to each of the member of the respondent society was only in the sum of Rs.7,000/- per month per member and not at the rate of Rs.16,000/- per month per member as canvassed by the respondent society. It is also urged by the learned counsel for the petitioners that there was no provision for escalation of the amount of compensation payable by the petitioners to the members of the respondent society even if there was any delay in completing the project and in handing over possession of the tenements to the members of the respondent society.
71. It is also urged by the learned counsel for the petitioners that the petitioner had not paid any compensation at a particular rate to the members of the respondent society but had paid those amounts on ad-hoc basis at the request of the members of the respondent 38 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc society so as to oblige them and no amount @ Rs.16,000/- per month per member was paid as sought to be canvassed by the respondent society. It is the case of the petitioners that the amounts paid by the petitioners to the members of the respondent society had been misappropriated. The petitioners had alleged to have made payment of access amount at least in the sum of Rs.26,62,100/- which amount was lying with the respondent society and thus the learned arbitrator could not have directed the petitioners to pay any further amount towards compensation to the members of the respondent society.
72. It is also the case of the petitioners that the amount awarded by the learned arbitrator is without any evidence produced by the respondent society and more particularly by producing any leave and license agreement or any other evidence on record showing that the petitioners had agreed to make payment of Rs.16,000/- per month per month or had in fact paid the compensation at the rate of Rs.16,000/- per month.
73. A perusal of the record indicates that the learned arbitrator considered the documents produced by both the parties and also the pleadings in support of their rival contentions. Learned arbitrator also considered that the petitioners had paid various amounts from time to time which amounts were distributed to 72 members of the 39 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc respondent society. Learned arbitrator accordingly considered the chart produced by both the parties to arrive at a prima-facie conclusion that the compensation paid by the petitioners was at the rate of Rs.16,000/- per month per member.
74. It is also not the case of the petitioners that the petitioners had paid compensation to the members of the respondent society at the rate of Rs.7,000/- per month for the entire period. The respondent society on the other hand had also relied upon the payment made by the petitioners in case of other societies which payment of compensation was even higher than the compensation made by the petitioners to the members of the respondent society. The respondent society had also produced the bank statement of one of the members of the respondent society to demonstrate that the petitioners had paid separate amounts towards compensation and towards brokerage etc.
75. A perusal of the impugned order passed by the learned arbitrator clearly indicates that the learned arbitrator after considering the pleadings and documents including the chart produced by both the parties has held that under clause 7 of the Development Agreements which was executed on 8th Separate, 2006, the petitioner were to pay a sum of Rs.7,000/- per month to each member as monthly compensation for temporary alternate accommodation and Rs.14,000/- being one time shifting and transportation charges. The 40 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc said amount was in addition to the corpus fund amount. Leaned arbitrator also considered that the respondents (original claimants) had clearly stated in their claim that the prevailing market rate in Tilak Nagar was Rs.16,000/- per month for the period November, 2013 to Separate, 2014 which was increased at Rs.17,600/- per month from October, 2014.
76. A perusal of record indicates that it was not the case of the petitioners in any of the pleadings filed before the learned arbitrator that whatever amount was paid by the petitioners to the respondent society towards compensation was paid as advance as sought to be canvassed across the bar by the learned counsel for the petitioners. Learned arbitrator considered this crucial aspect in the impugned order while directing the petitioners to pay compensation at the rate of Rs.16,000/- per month.
77. Insofar the submission of the learned counsel for the petitioners that under clause 7 of the Development Agreements, the petitioners were liable to pay compensation to the members of the respondent society only at the rate of Rs.7,000/- per month per member and that there was no provision for escalation of compensation is concerned, in my view, the learned arbitrator rightly rejected the said submission of the petitioners on the ground that amount of Rs.7,000/- per month was fixed under the said 41 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc Development Agreements in the year 2006. When the learned arbitrator passed an order, the order was passed in the month of November, 2016 i.e. after 10 yeas down the line. Learned arbitrator has rightly held that it was inconceivable that the rate of Rs.7,000/- per month would be paid by the petitioners to the members of the respondent society even after 10 years for temporary alternate accommodation.
78. In my view, even if the said clause 7 provided for compensation at the rate of Rs.7,000/- per month per member, there was no bar under any of the provisions of the Development Agreements from making payment of the higher amount or escalation against the members of the respondent society from demanding higher amount though the petitioners had not completed the construction of the buildings within a period of 18 months from the date of issuance of the commencement certificate by MHADA with the grace period of 6 months and even after expiry of more than ten years. The petitioners have not disputed before this Court or before the learned arbitrator that the construction of the building in which the members of the respondent society were to be accommodated by providing permanent alternate accommodation is yet to be completed and would take atleast further 18 months period. In my view, there is no substance in the submission made by the learned counsel for the 42 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc petitioners that the petitioners were not obliged to pay any amount over and above Rs.7,000/- per month per member irrespective of the fact whether the petitioners had complied with their part of obligation to hand over possession of the tenements to the members of the respondent society within the time contemplated under the Development Agreements. Reliance placed by the learned counsel for the petitioners on other clauses of the Development Agreements is misplaced.
79. Insofar as the submission of the learned counsel for the petitioners that the order passed by the learned arbitrator awarding compensation at the rate of Rs.16,000/- per month is without any evidence or is awarded solely on the ground that the petitioners had allegedly simplicitor denied vaguely in the affidavit in reply is concerned, a perusal of the record indicates that the learned arbitrator while directing the petitioners to pay a sum of Rs.16,000/- per month is only by way of ad-hoc arrangement subject to the final amount of compensation to be determined by the learned arbitrator at the time of making a final award. Learned arbitrator in the impugned order and more particularly in paragraph 14 has made it clear that all the observations made in the said order are prima-facie in nature. The parties are still to lead the evidence and final determination is yet to be made. Learned arbitrator also clarified that the observations made 43 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc in the said order were only for the purpose of disposal of the application under section 17 and were in no way final determination of the rights of the parties. In my prima-facie view, there is no substance in the submission of the learned counsel for the petitioners that delay was not attributable to the petitioners.
80. Be that is it may, it is also the case of the petitioners that the amounts paid by the petitioners to the respondent society from time to time were also on ad-hoc basis and not at any particular rate per month. In my view, since the learned arbitrator has not decided the said amount of Rs.16,000/- per month conclusively and has to decide the final amount which would be forming part of the award that would be rendered by the learned arbitrator, no prejudice of any nature whatsoever is caused to the petitioners if the amount as determined by the learned arbitrator is directed to be paid. If in the final award it is determined by the learned arbitrator that the exact amount of compensation payable by the petitioners to the members of the respondent society would be less than the amount directed to be paid by the learned arbitrator to the petitioners, in view of the undertaking already rendered by the respondent society on behalf of the members to return the surplus amount, if any, upon final determination of the amount of compensation, the petitioner would be returned the surplus amount, if any. It is not in dispute that the 44 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc petitioners have already filed a counter claim in this Court before the learned arbitrator which is yet to be adjudicated upon by the learned arbitrator.
81. I am not inclined to accept the submission made by the learned counsel for the petitioners that the learned arbitrator has directed the petitioners to pay the amount at the rate of Rs.16,000/- per month only on the basis of the vague denial of the petitioners in one of the affidavit and has not considered specific denial of the petitioners in the pleadings or has awarded the said amount based on no evidence. Learned arbitrator has considered the documents produced by both the parties in support of their rival contentions regarding the quantum of compensation per month payable as and by way of interim measures and not on the basis of vague denial of the petitioners in one of the affidavit.
82. Insofar as submission of the learned counsel for the petitioners that the respondent has mis-appropriated an amount of Rs.1,08,00,000/- and has committed breach of the term of the development agreement, in my view since the finding of the learned arbitrator that an amount of Rs.16,000/- per month per member as compensation being prima-facie, the issue as to whether the respondent has mis-appropriated any amount towards brokerage or under any other head can be adjudicated upon by the learned 45 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:18 ::: arbp813-17.doc arbitrator in the award. In my view, there is thus no substance in the submission of the learned counsel for the petitioners that the learned arbitrator has not complied with any of the directions issued by this Court in the order dated 20 th October, 2016 read with order dated 26th October, 2016.
83. Insofar as the issue raised by the learned counsel for the petitioners that the application for modification of the order passed by the learned arbitrator is still pending is concerned, a perusal of the record indicates that except filing a praecipe before the learned arbitrator for pressing of the said application, the petitioners have not taken out any further steps before the learned arbitrator to pursue the said application.
84. The learned arbitrator has rendered a prima-facie finding of delay on the part of the petitioners in carrying out the construction of the buildings in question and has rejected the submission of the petitioners that the delay was not attributable on the part of the petitioners or that the same was beyond the control of the petitioners.
85. Insofar as the issue of FSI raised by both the parties as well as the issue of as to whether consent of 70% members of the respondent society was obtained before availing of FSI of 2.5 by the petitioners or not is concerned, the learned counsel for the petitioners have vehemently relied upon the writ petition filed by one of the office 46 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:19 ::: arbp813-17.doc bearer of the respondent society contending that the members of the society were entitled to an area of 441 sq.ft. in respect of each of the flat as against the area of 323 sq.ft. area offered by the petitioners. It is also the case of the petitioners that initially the members of the respondent society were entitled to the flat admeasuring 323 sq.ft. which was increased to 370 sq.ft. in the year 2011 and was thereafter increased to 441 sq.ft. In 2014. On the other hand it is the case of the respondent that the petitioners were not entitled to avail of any additional FSI without requisite consent of the society in writing. It was one of the condition imposed by the MHADA and more particularly in condition no.8 contemplating that a new resolution before issuance of the NOC in the proposed development as per 2.5 FSI was to be passed by obtaining consent of the 70% of the members of the respondent.
86. A perusal of the award on this issue indicates that after considering the terms and conditions of the NOC issued by the MHADA and more particularly clause no.8 thereof, the learned arbitrator has prima-facie taken a view that no such fresh resolution was passed by obtaining consent of 70% of the members of the society. The learned arbitrator has also considered that an extra ordinary general meeting was held of the members of the society on 27th July, 2014 to discuss several issues including the issue relating to 47 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:19 ::: arbp813-17.doc alleged fabricated undertaking relied upon by the petitioners before the authorities allegedly signed by the office bearers of the respondent society. Those office bearers had made a statement before the concerned police station and had also denied their alleged signatures on the said undertaking in the meeting of the society.
87. The learned arbitrator however in the impugned order has made it clear that he was not concerned with whether the said undertaking was forged or fabricated at this stage but would proceed on the basis as if the said undertaking was actually executed by the erstwhile chairman as well as the secretary of the society. In my view this Court is thus not required to go into the said issue as to whether the said undertaking relied upon by the petitioners allegedly signed by the office bearers of the respondent society was forged or fabricated or not at this stage. The said issue can be decided by the learned arbitrator in the award. The learned arbitrator has held that if the contention of the petitioners is accepted that the petitioners would be entitled to any additional FSI that were to be available during the period of 20 months, it would result in great injustice to the society.
88. Be that as it may, the issue of FSI also can be adjudicated upon by the learned arbitrator conclusively in the final award that would be rendered by the learned arbitrator. This Court is thus not inclined to go into the issue at this stage whether the respondent 48 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:19 ::: arbp813-17.doc society had knowledge of the additional FSI availed of by the petitioners or not or the members of the society themselves had demanded the benefit of additional FSI from the petitioners or not and the said issue can be decided by the learned arbitrator in the final award.
89. Insofar as reliance on the sanction plan of the year 2016 by the petitioners is concerned, the petitioners had strongly placed reliance on the power of attorney both dated 8th September, 2006 in favour of the petitioners executed by the respondent at the time of execution of the redevelopment agreement authorizing the petitioners to make application and submit amended building plan to all authorities including MMRDA and Municipal Corporation of Greater Bombay, to sign on behalf of the society the documents to be submitted to the authorities, to apply for and obtain the entire FSI which may be available on the said property and to the various acts as may be required for carrying out the construction on the property of the respondent.
90. On the other hand, it is the case of the respondent that the petitioners have fabricated the "no objection certificate" of the respondent. The sanction plan dated 16th September, 2016 were admittedly not signed by the respondent society. The Municipal Corporation of Greater Mumbai had filed an affidavit in the 49 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:19 ::: arbp813-17.doc proceedings before this Court in the arbitration petition filed by the society under section 9 of Arbitration and Conciliation Act, 1996 and more particularly dated 26th September, 2016 which would indicate that atleast 5 plans were submitted by the petitioners without consent of the respondent and the petitioners had also paid penalty of Rs.9,59,42,995/- to the Municipal Corporation of Greater Mumbai for various reasons.
91. The learned arbitrator has considered affidavit filed by the Municipal Corporation, the revised offer letter dated 16th August, 2012 which was placed on record by the respondent and also the statement made by Mr.Anil Hukmatrao Govardhan, Deputy Engineer, office of Resident Engineer, Mumbai Board who confirmed that there there was no new resolution by 70% of the members on record of MHADA filed by the respondent society. Several other plans submitted by the petitioners with the Municipal Corporation prior to the revised sanction plan dated 27th July, 2016 were filed with the signatures of the respondent society whereas no signature on the plan were obtained from the respondent insofar as plan dated 27th July, 2016 submitted by the petitioners is concerned. The learned arbitrator in these circumstances rightly granted an injunction against the petitioners from in any manner selling, alienating, encumbering or creating any third party rights and/or interest in respect of the 7 flats which remain 50 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:19 ::: arbp813-17.doc unsold in the rehabilitation building. The learned arbitrator has rightly made it clear that all sales made by the builder in respect of the excess FSI used and/or under the plan of 27th July, 2016 shall be subject to the final orders passed in the arbitral proceedings pending before him.
92. Be that as it may, the learned arbitrator having rendered such prima-facie findings based on the documents and pleadings filed by both the parties and also considering the statement made by the representative of MHADA as well as the affidavit in reply filed by the Municipal Corporation of Greater Mumbai and those findings being prima-facie and being not perverse, cannot be interfered with by this Court in this appeal filed under section 37 of the Arbitration Act.
93. The respondent society has filed an execution application (bearing Commercial Execution Application No.133 of 2017) for seeking execution of the order dated 3rd November, 2016 passed by the learned arbitrator and has also filed a chamber summons bearing (Lodging) No.316 of 2017 inter-alia praying for various reliefs. A perusal of the pleadings in the chamber summons and the execution application indicates that the amount of compensation according to the impugned order passed by the learned arbitrator for the period from 1st March, 2016 to 1st October, 2017 comes to Rs.2,30,40,000/-. The petitioners have already paid a sum of Rs.1,15,20,000/- to the 51 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:19 ::: arbp813-17.doc respondent society. In the execution application, the respondent has also prayed for compensation at the rate of Rs.16,000/- per month per month from 1st November, 2017 in respect of 72 members equivalent of Rs.1,15,20,000/- per month till possession of the alternate accommodation is provided to the members of the society with interest at the rate of 12% per annum for delay in payment.
94. It is not in dispute that a sum of Rs.34,56,000/- along with interest accrued thereon which amount was deposited by the petitioners pursuant to the interim order is still lying with the office of the Prothonotary and Senior Master. The arbitral proceedings are still pending before the learned arbitrator. The petitioners may further take substantial period for completing the construction of the buildings in question and to handover the permanent alternate accommodation to the members of the respondent. The petitioners are thus liable to pay the interim amount of compensation as determined by the learned arbitrator till the date of the petitioners handing over the permanent alternate accommodation to the members of the respondent society subject to the final outcome of the award to be rendered by the learned arbitrator. In my view the arbitration petition is totally devoid of merits and deserves to be dismissed. I, therefore, pass the following order :-
a). Arbitration Petition No.813 of 2017 is dismissed.52 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:19 :::
arbp813-17.doc
b). The petitioners are directed to pay the compensation amount payable in accordance with the impugned order dated 3rd November, 2016 passed by the learned arbitrator to be calculated at the rate of Rs.16,000/- per month inclusive for the month of August, 2018 and September, 2018 after deducting the amount paid pursuant to the said impugned order and/or deposited pursuant to the interim order passed by this Court within two weeks from today.
c). The respondent society would be at liberty to withdraw the amount lying with the Office of the Prothonotary and Senior Master deposited by the petitioners pursuant to the order passed by this Court within two weeks from the date of this order.
d). The petitioners are directed to pay compensation at the rate of Rs.16,000/- per month in compliance with the order passed by the learned arbitrator for the month of October, 2018 onwards till the date of handing over the possession of the permanent alternate accommodation every month on or before 10th of each month in advance.
e). The petitioners shall also furnish an unconditional bank guarantee to secure the amount of compensation at the rate of Rs.16,000/- per month from 1st October, 2018 for a period of six months in the name of the respondent society and shall renew the said bank guarantee if the arbitral proceedings are not concluded 53 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:19 ::: arbp813-17.doc within six months from 1st October, 2018 during the pendency of the said arbitration proceedings and for a period of two months from the date of rendering of an award. Such bank guarantee shall be furnished on or before 15th September, 2018.
f). The amounts directed to be paid and/or paid by the petitioners to the respondent towards compensation or any other heads would be subject to the outcome of the award that would be rendered by the learned arbitrator.
g). If the petitioners do not comply with the order passed by the learned arbitrator and by this Court within the time prescribed, the respondent would be at liberty to execute the impugned order dated 3rd November,2016 passed by the learned arbitrator by proceeding with the Commercial Execution Application No.133 of 2017 and by filing a fresh chamber summons for other appropriate reliefs and to adopt such other proceedings as permissible in law.
h). Chamber summons is also disposed of in the aforesaid terms.
i). The learned arbitrator is directed to dispose of the arbitral proceedings expeditiously and not later than six months from the date of communication of this order.
j). The parties are directed to co-operate with each other and with the learned arbitrator in disposing of the arbitral proceedings 54 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:19 ::: arbp813-17.doc expeditiously as directed aforesaid.
k). The parties, the learned arbitrator and the learned Prothonotary and Senior Master to act on the authenticated copy of this order.
(R.D. DHANUKA, J.) 55 ::: Uploaded on - 30/08/2018 ::: Downloaded on - 31/08/2018 00:17:19 :::