Bombay High Court
M/S. Akash Pruthvi Lifestyle vs Akash Co-Op. Hsg. Soc. Ltd. And Another on 26 August, 2013
Author: S.J. Kathawalla
Bench: S.J. Kathawalla
kpp 1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION (L) NO. 1518 OF 2013
IN
SUIT (L) NO. 666 OF 2013
M/s. Akash Pruthvi Lifestyle ...Applicants
In the matter between:
M/s. Akash Pruthvi Lifestyle ig ... Plaintiffs
Vs.
Akash Co-op. Hsg. Soc. Ltd. and another ...Defendants
Mr. Prashant Naik, instructed by M/s. Divya Shah & Associates, for the
Plaintiffs.
Mr. Aniruddha Joshi, along with Ms. Pratiti Naphade, instructed by Mr. B.G.
Saraf, for Defendant No.1.
Mr. Ajay S. Gadkari for Defendant No.2.
Mr. H. Pimple for the Mumbai Municipal Corporation (As per the directions of
the Court).
CORAM: S.J. KATHAWALLA, J.
DATE: AUGUST 26
, 2013
ORAL ORDER:
1. The above Suit is filed by the Plaintiffs for a declaration that the Development Agreement dated 12th June, 2012 (Exhibit-F to the Plaint) in respect of the property bearing Plot No. 23 of Paranjape Scheme No. B and Survey No. 50-A , Hissa No. 1 (Part) CTS No. 156 and 156/1 to 156/11, Vile 1/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 2 Parle (East), Mumbai-400 057 ("the Suit Property") is valid, legal and binding on the Defendant Nos. 1 and 2. The Plaintiffs have also sought directions against Defendant Nos. 1 and 2 to specifically perform the terms and conditions of the Development Agreement dated 12th June, 2012. The Plaintiffs have further sought an order and direction against Defendant No. 2 to hand over vacant and peaceful possession of his flat i.e. Flat No. 201, Second Floor, Akash Co-operative Housing Society Ltd., Plot No. 23, Paranjape Scheme No. B, Vile Parle (East), Mumbai-400 057 ("the Suit Flat") to the Plaintiffs for reconstruction and redevelopment of the Suit Property in accordance with the terms and conditions of the Development Agreement dated 12 th June, 2012.
The Plaintiffs have also sought appointment of a Court Receiver in respect of the Suit Flat with the power to take possession of the Suit Flat from the Defendant No.2 and/or any person or persons claiming through or under him found in possession of the Suit Flat, if need be with the help of the police authorities and to hand over vacant and peaceful possession of the Suit Flat to the Plaintiffs to demolish the said building and the Suit Flat in pursuance of the Development Agreement dated 12th June, 2012.
2. The Plaintiffs have taken out the above Notice of Motion, inter alia for appointment of Court Receiver, High Court, Bombay, in respect of the Suit Flat with the power to take possession of the same from Defendant No.2 and/or any person or persons claiming through or under him found in possession of 2/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 3 the Suit Flat,if need be with the help of the police authorities and to hand over vacant and peaceful possession of the Suit Flat to the Plaintiffs to demolish the building in which the Suit Flat is situated, in pursuance of the Development Agreement dated 12th June, 2012 and until redevelopment work is completed and a new flat is handed over to the Defendant No.2 as agreed.
3. The Plaintiffs - Akash Pruthvi Lifestyle are a registered Partnership Firm and are in the business of undertaking development, redevelopment and construction projects in the city of Mumbai. According to the Plaintiffs, they have successfully completed various construction and development projects to the satisfaction of its clients. The Defendant No.1 is a Co-operative Society who is the owner of the Suit Property. The Defendant No. 2 is a member of the Defendant No.1 Society and as a member is in use and occupation of the Suit Flat.
4. Defendant No.1 Society comprises of 15 members. The building situated on the Suit Property was constructed during the years 1981-84. The Defendant No.1 after construction of the building allotted the tenements/flats in the said building to its existing members. The said building which is almost 40 years old is in a dilapidated condition and requires urgent renovation/redevelopment thereof. According to the Plaintiffs as well as the Defendant No.1 Society, the condition of the building is almost inhabitable and 3/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 4 in any case unsafe for habitation.
5. Defendant No. 1 Society in its Annual General Meeting convened on 3 rd August, 2008, decided that the building on the Suit Property required immediate attention as it was in a dilapidated condition and therefore decided to go in for redevelopment. In the said meeting it was also suggested that the members of the Defendant No. 1 Society should also bring in proposals from developers. In the meantime, on 16 th April, 2009 and 21st April, 2009, the Plaintiffs formerly known as M/s. Pruthvi Enterprises, submitted its proposal to the Defendant No.1 Society for redevelopment of the building. On 15 th May, 2009, Defendant No.1 Society appointed Shri S.P. Kamarkar, Consulting Engineer, to inspect and submit his report concerning the building on the Suit Property. Accordingly, Shri Kamarkar submitted his report and advised the Defendant No.1 Society that its building required major structural repairs and it was advised that the building be demolished considering the age of the building. A copy of the report submitted by Shri Kamarkar, Consulting Engineer dated 15th May, 2009, is annexed and marked as Exhibit-A to the Plaint.
6. Defendant No. 1 Society convened a Special General Meeting on 7 th June, 2009 wherein it was resolved to entrust the redevelopment work to the Plaintiffs. The said resolution was signed by all the members except the 4/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 5 Defendant No.2. In the meantime, on 10 th June, 2009, the Plaintiffs forwarded a revised offer to the Defendant No.1 Society as desired by them. On 14 th June, 2009, in the Special General Meeting convened by the Defendant No. 1 Society it was resolved to accept the revised offer given by the Plaintiffs.
Between July, 2009 and September, 2009, the Defendant No.1 received four offers from the prospective developers which were placed before the General Body. However, the same were not accepted since they were not up to the requirements specified by the Defendant No.1 and also because the Plaintiffs were already entrusted with the work of redevelopment. One M/s. ABN Corporation had also made an offer through Defendant No.2 which offer was not accepted and the decision of not accepting the offer of M/s. ABN Corporation was conveyed to the Defendant No.2. In the meanwhile, on 20 th September, 2009, all the members of the Defendant No.1 Society including the Defendant No.2 executed consent letters agreeing for redevelopment of the Suit Property.
7. On 8th October, 2009, at the request of the Defendant No.1 Society, the Plaintiffs once again revised its offer which included an increase in the corpus fund and provided every flat holder a minimum carpet area of 225 sq.ft. This revised offer given by the Plaintiffs was placed before the Special General Meeting convened on 7th February, 2010 and all the 15 members present accepted the revised offer given by the Plaintiffs and gave their written 5/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 6 consent for appointment of the Plaintiffs as a developer to redevelop the Suit Property of the Defendant No.1 Society. A copy of the extract of the Resolution with consent of the 15 members signed on 7 th February, 2010, including Defendant No. 2, is annexed as Exhibit-C to the Plaint.
8. Pursuant to the Resolution of the General Meeting held on 7 th February, 2010, unanimously accepting the revised offer given by the Plaintiffs and confirming their reappointment, a Memorandum of Understanding was executed on 9th September, 2010, between the Plaintiffs and the Defendant No.1 Society. The Defendant No.1 Society did not have a conveyance in respect of the Suit Property in its favour. Therefore, the Plaintiffs initiated the process of obtaining a deemed conveyance in favour of the Defendant No.1 Society and accordingly on 17th January, 2012, the District Deputy Registrar, Co-
operative Societies, issued an order granting a unilateral conveyance in favour of the Defendant No.1 Society. Accordingly, on 16 th March, 2012, the Plaintiffs assisted the Defendant No.1 in getting the deemed conveyance registered by making payment of Rs. 7,67,225/- towards stamp duty.
9. In the meantime, the Municipal Corporation of Gr. Mumbai amended the Development Control Regulations for the City of Mumbai on 6 th January, 2012, and as a result thereof, on 17 th April, 2012, the Plaintiffs, in view of the amended Development Control Regulations, forwarded a revised proposal to 6/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 7 the Defendant No.1 Society. The Plaintiffs now agreed to provide to all the members of the Defendant No. 1 Society 15 per cent additional area as fungible area in lieu of the area under the elevational features/niches/ducts/dry balconies/flower beds, etc. In addition, the Plaintiffs also agreed to pay higher rentals to the members. Therefore on 22 nd April, 2012, a Special General Meeting was convened and the revised proposal tendered by the Plaintiffs on 17th April, 2012, was considered and it was accepted by the General Body of the Defendant No.1 Society. Further, the General Body also resolved that the Development Agreement be executed between the Plaintiffs and the Defendant No.1 Society within a period of three months thereof. In the said Special General Meeting convened, 13 out of 15 members including the Defendant No.2 were present. Also present was the Authorized Officer deputed by the District Deputy Registrar, Co-operative Societies, Mumbai, in compliance with the procedure for redevelopment undertaken by the Defendant No.1 Society. Thereafter on 9 th May, 2012, the District Deputy Registrar, Co-operative Societies, issued a No Objection Certificate for the appointment of the Plaintiffs as a developer.
10. On 3rd June, 2012, in the Annual General Meeting of the Defendant No.1 Society, the General Body of the Society approved the Development Agreement and ratified the minutes of the meeting held on 22 nd April, 2012.
Thereafter the Agreement for Redevelopment dated 12 th June, 2012, came to 7/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 8 be executed by and between the Plaintiffs and the Defendant No.1 Society. The said Development Agreement was registered upon payment of Rs. 12, 31,000/-
towards stamp duty by the Plaintiffs and the same was registered with the Sub-Registrar of Assurances, Bandra, Mumbai, on 12 th June, 2012. The relevant terms of the Development Agreement are set out in paragraph 14 of the Plaint.
11. Pursuant to the Development Agreement dated 12 th June, 2012, the Plaintiffs have undertaken various steps for redevelopment and reconstruction of the building which are briefly set out hereunder:
(i) The Plaintiffs got the plans approved for implementation;
(ii) The Plaintiffs on 4 th July, 2013, received an IOD issued by the Municipal Corporation of Gr. Mumbai which is annexed and marked as Exhibit-H to the Plaint;
(iii) The Plaintiffs have incurred a sum of Rs. 3,59,71, 821/- (Rupees Three crores fifty nine lakhs seventy one thousand eight hundred twenty one only) towards the stamp duty, registration charges, corpus fund, monthly rentals to the members, brokerage, purchase of TDR, fungible FSI, Municipal Corporation charges, salaries, Architects fees, purchase of construction material, etc.
(iv) The Plaintiffs are also paying monthly rental of Rs. 3,09,592/- to all the members with effect from 1st June, 2013 till the members 8/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 9 receive possession.
12. The Plaintiffs have allotted the Defendant No.2 a flat admeasuring 400 sq.ft. on the third floor in the newly constructed building. The Defendant No.2 has accepted and acknowledged the allotment and has signed the floor plan pertaining to his flat, a copy of which is annexed and marked as Exhibit-J to the plaint. Though 14 out of 15 members have handed over the possession of their premises to the Plaintiffs, Defendant No.2 is the only member who has been obstinate in not handing over possession of the Suit Flat to the Plaintiffs because of which the Plaintiffs are unable to proceed with the work of redevelopment of the Suit Property, resulting in loss and suffering to the Plaintiffs and the other members who have already handed over possession of their respective premises. On 18th June, 2012, the Defendant No. 2 has filed a dispute before the Co-operative Court, Mumbai, being Dispute No. CC-IV/92 of 2012 against the Defendant No.1 Society and the Plaintiffs, inter alia challenging its resolutions.
13. The Plaintiffs have therefore submitted that the Defendant No. 2 is wrongly obstructing the redevelopment project despite having given his consent for carrying out the redevelopment work through the Plaintiffs. It is submitted that the Defendant No. 2 is making an illegal demand of Rs.
1,50,00,000/- (Rupees One crore fifty lakhs) to give up his rights in the 9/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 10 premises under his occupation. It is submitted that the dilapidated condition of the building of Defendant No.1 is in urgent need of renovation work/redevelopment and the condition of the building is so precarious that it may collapse any time. The Plaintiffs have therefore filed the present Suit seeking the aforestated reliefs.
14. The Learned Advocate appearing for Defendant No. 2 has submitted that this Court has no jurisdiction to decide the present Suit and that it is only the Co-operative Court which can decide the dispute under Section 91 of the Co-operative Societies Act, 1960("the Act"). He has further submitted that even if this Court has jurisdiction to decide the Suit, since the dispute filed by the Defendant No.2 is prior in time and the issues involved in the present Suit and in the dispute filed before the Co-operative Court are identical, the present Suit is required to be stayed under Section 10 of the Code of Civil Procedure, 1908 ("CPC") . The Learned Advocate for Defendant No. 2 has also submitted that the Defendant No.1 has not complied with the State Government Circular dated 3rd January, 2009 and has acted arbitrarily, behind the back of Defendant No. 2, without giving consideration to the other offers which were in the better interest of the members of the Society. The Learned Advocate for Defendant No. 2 has therefore submitted that the Plaintiffs cannot be granted any relief as prayed for or otherwise.
10/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 1115. The submission made on behalf of Defendant No.2 that this Court has no jurisdiction to entertain and try the above Suit and that it is only the Co-
operative Court which has jurisdiction to try the present Suit, cannot be accepted. The Hon'ble Supreme Court in the case of Margaret Almeida vs. Bombay Catholic Co-operative Housing Soc. Ltd. 1, (which is also followed by a Division Bench of this Court in Mohinder Kaur Kochar vs. Mayfair Housing Pvt.
Ltd.2 ) has held that the suit between a developer and the society or its members cannot be a dispute which can be adjudicated by the Co-operative Court under Section 91 of the Act. Again in the case of Vardhman Developers Limited vs. Thailambal Co-op. Hsg. Socy. Ltd. and others, a Learned Single Judge of this Court (Coram: Dr. D.Y. Chandrachud, J.) has, whilst rejecting the contention that in view of the provisions of Section 91 of the Act this Court would not have jurisdiction to entertain and try the suit filed by the developer, held that Section 91 of the Act brings within its purview disputes touching inter alia the constitution, management or business of a Society. The process of redevelopment of the Society by the developer does not constitute the business of the Society within the meaning of Section 91 of the Act. Section 91 of the Act is therefore not attracted. In view thereof, the submission advanced on behalf of Defendant No.2 that this Court has no jurisdiction to entertain and try the present Suit is rejected.
1 2012 (5) SCC 642 2 2012 (6) BCR 194 11/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 12
16. The submission advanced on behalf of Defendant No. 2 that the present Suit deserves to be stayed under Section 10 of the CPC in view of the dispute filed by the Defendant No. 2 before the Fourth Co-operative Court at Mumbai, inter alia, challenging the Resolutions passed by the Defendant No. 1 Society, also cannot be accepted. By the present Suit the Plaintiffs are seeking specific performance of the Development Agreement dated 12 th June, 2012, entered into by and between the Plaintiffs and the Defendant No.1 Society which is not the subject matter of the dispute filed before the Co-operative Court.
Therefore, the scope of the present Suit and the scope of the dispute filed by the Defendant No.2 under Section 91 of the Act are different. Again, the Co-
operative Court and the High Court are not Civil Courts of concurrent jurisdiction. The proceedings before the Co-operative Court cannot be equated with the proceedings before the High Court. The Hon'ble Supreme Court has in the case of National Institute of Mental Health & Neuro Sciences vs. V. Parameshwara3, whilst discussing the scope and applicability of Section 10 of the CPC, inter alia, held in paragraph 8 of the Judgment as follows:
" 8. ..... The language of Section 10 suggests that it is referable to a suit instituted in the civil Court and it cannot apply to proceedings of other nature instituted under any other statute. The object of section 10 is to prevent Courts of concurrent jurisdiction from simultaneously trying two parallel suits 3 AIR 2005 SC 242 12/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 13 between the same parties in respect of the same matter in issue.
The fundamental test to attract section 10 is, whether on final decision being reached in the previous suit, such decision would operate as res judicata in the subsequent suit. Section 10 applies only in cases where the whole of the subject matter in both the suits is identical. The key words in section 10 are "the matter in issue is directly and substantially in issue" in the previous instituted suit. The words "directly and substantially in issue"
are used in contra-distinction to the words "incidentally or collaterally in issue". Therefore, section 10 would apply only if there is identity of the matter in issue in both the suits, meaning thereby, that the whole of subject matter in both the proceedings is identical."
In the instant case, apart from the fact that the High Court and the Co-
operative Court are not Courts of concurrent jurisdiction, the issues involved in the two proceedings cannot be said to be identical.
17. In the case of Balkrishna vs. Jalgaon People Co-op. Bank4, this Court (Coram: B.H. Marlapalle, J.) has inter alia held as follows:
"As per the scheme of the new Act, Chapter XI deals with the settlement of disputes under Section 91 of the New Act, the disputes have been defined and the Co-operative Court has discretion to refer such a dispute to the Civil Court for being tried and decided as a civil suit in certain cases and therefore a dispute filed before the Co-operative Court is not the same as a 4 1998 (2) Mah. L.J. 147 13/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 14 civil suit filed before a Civil Court."
18. Again in the case of Tarkude Hotels Pvt. Ltd. vs. The Rupee Co-operative Bank Ltd. and others5, this Court (Coram: S.C. Dharmadhikari, J.) has inter alia held as follows:
"19. ... ......However, when it comes to section 10 of CPC, it is more than clear that one cannot lose sight of the fact that section 10 cannot be invoked by applying the tests as if the proceedings before the co-operative court filed by way of disputes are akin to a suit in a civil court.... ....The proceedings may be civil in nature but that does not mean that the Court trying them is a civil court and the proceedings are a "suit" within the meaning of CPC. A right to bring in a suit is an inherent right vested in the litigant and, therefore, while clarifying as to what would be the jurisdiction of the Civil Court to try suits in Section 9 read with the explanation, it would at once become clear by Section 10 that the Court, which is a civil court, is mandated not to proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit between the same parties or between parties under whom they or any of them claim litigating under the same title where such suit is pending in the same or any other court having jurisdiction to grant the relief claimed or in any court beyond the limits of India, established or continued by the Central Government and having like jurisdiction or before the Supreme Court. The sweep of power under section 10 can by no means be read into the MCS Act 5 2011 (11) LJSOFT 83 14/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 15 and particularly section 91 to 98 thereof."
For the aforestated reasons, the contention of Defendant No. 2 that the present Suit be stayed until the dispute filed by the Defendant No.2 before the Co-operative Court is decided, stands rejected.
19. The allegation made by the Defendant No.2 that the Defendant No.1 has not complied with the Government Circular dated 3 rd January, 2009 and that the Defendant No.1 Society has acted arbitrarily and behind his back and has accepted the offer of the Plaintiffs by giving a go by to the better offers received from other developers also cannot be accepted, since the Defendant No.2 who is a member of the Society and also an office-bearer since the last two years has attended almost every meeting in which the issue of redevelopment has been discussed and decisions relating to it are taken. The Defendant No.2 has executed a consent letter in favour of Defendant No.1 Society agreeing for redevelopment of the Suit Property as far back as 20 th September, 2009. The revised offer of the Plaintiffs was placed before the Special General Meeting convened on 7 th February, 2010 and all the 15 members including the Defendant No. 2 who attended the said meeting accepted the said revised offer given by the Plaintiffs and gave their written consent for appointment of the Plaintiffs as Developer to redevelop the Suit Property of the Defendant No.1 Society. A copy of the extract of the resolution 15/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 16 with the consent of the 15 members signed on 7 th February, 2010 is marked as Exhibit-C to the Plaint. After filing of the dispute before the Fourth Co-
operative Court at Mumbai, the Defendant No. 2 has accepted the allotment of a flat admeasuring 400 sq.ft. on the third floor of the proposed newly constructed building and has acknowledged the allotment by putting his signature on the floor plan of the said flat on 9 th September, 2012. A copy of the said acknowledgement signed by Defendant No.2 on the floor plan dated 9th September, 2012, is annexed and marked as Exhibit-J to the Plaint. In view thereof, the objections now raised by the Defendant No.2 and the dispute filed by him before the Co-operative Court completely lacks bona fides. Out of 15 members, only one member i.e. the Defendant No.2 has not handed over vacant and peaceful possession of the Suit Flat to the Plaintiff Developer. The view taken by this Court in Girish Mulchand Mehta and other vs. Mahesh H. Mehta and others6 which was also followed in Godi Griha Sanstha Ltd vs. Mr. Jerry Thomas Cherian and others7 was that the decision taken by the majority of the members of the society will be binding on the minority, unless it is shown by the minority members that the redevelopment scheme is sanctioned due to fraud, misrepresentation, or collusion. Once the overwhelming majority of the members of the General Body of the Society has passed a resolution and has approved the Development Agreement, then one member out of 15 members cannot obstruct the process of redevelopment by refusing to vacate 6 2010 (1) Bom. C.R. 31 7 2011 (2) Bom. C.R. 421 16/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 17 the Suit Flat. The Plaintiffs have therefore made out more than a prima facie case in their favour and are entitled to reliefs as claimed.
20. It is clear that the Defendant No. 2 has filed the said dispute on 18 th June, 2012, only with a view to wrongly and unreasonably obstruct the reconstruction of the Suit Property and to inconvenience 14 out of the 15 members of the Society who have already handed over possession of their respective flats to the Plaintiffs and are waiting for the redevelopment project to be forthwith undertaken, in order to enable them to start residing in their new ownership tenements. This is also clear from the fact that the Defendant No.2 has not moved the Co-operative Court in the last more than one year for any ad-interim/interim reliefs. Even if the issue as to maintainability of the dispute is pending before the Co-operative Court, Defendant No. 2 surely could have moved for ad-interim reliefs. The Suit building is in a precarious condition and likely to collapse and endanger the life and property of its occupants as well as other members of the public. The balance of convenience is completely in favour of the Plaintiffs, Defendant No.1 and its 14 out of 15 members and against the Defendant No.2. In view thereof, I pass the following Order:
(i) The Court Receiver, High Court, Bombay, is appointed as Receiver in respect of the Suit Flat i.e. Flat No. 201, Second Floor in Akash Co-operative 17/18 ::: Downloaded on - 27/11/2013 20:12:29 ::: kpp 18 Housing Society Ltd., Plot No. 23, Paranjape Scheme No. B,Vile Parle (East), Mumbai-400 057;
(ii) The Plaintiffs are directed to make all payments to the Defendant No. 2 payable as on date under the Agreement entered into by and between the Plaintiff and the Society dated 12 th June, 2012 on or before 30 th September, 2013;
(iii) The Defendant No. 2 is directed to hand over vacant possession of the Suit Flat to the Court Receiver on or before 30 th September, 2013, who in turn shall hand over the same to the Plaintiffs to carry out the work of redevelopment as per the Agreement dated 12th June, 2012;
(iv) In the event of Defendant No. 2 not handing over vacant possession of the Suit Flat to the Court Receiver on or before 30 th September, 2013, the Court Receiver, shall with the help of the local police, obtain forcible possession of the Suit Flat and hand over the same to the Plaintiff to carry out the work of redevelopment as per the Agreement dated 12th June, 2012;
21. Notice of Motion is accordingly disposed of.
(S.J. KATHAWALLA, J.) 18/18 ::: Downloaded on - 27/11/2013 20:12:29 :::