Bombay High Court
Vijay Kumar Angrish And 4 Ors vs Shree Trimurti Chsl. And 6 Ors on 7 October, 2023
Author: N.J.Jamadar
Bench: N.J.Jamadar
2023:BHC-OS:12457
IA 3375 OF 2021.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION NO.3375 OF 2021
IN
SUIT NO.81 OF 2021
Evershine Builders Pvt. Ltd. ... Applicant/Plaintiff
versus
Nina Bhagat and Ors. ... Respondents
WITH
INTERIM APPLICATION NO.1579 OF 2021
IN
SUIT NO.81 OF 2021
Vijay Kumar Angrish and Ors. ... Applicants
in the matter between
Evershine Builders Pvt. Ltd. ... Applicant/Plaintiff
versus
Nina Bhagat and Ors. ... Respondents
WITH
INTERIM APPLICATION NO.1664 OF 2021
IN
SUIT NO.136 OF 2021
Vijay Kumar Angrish and Ors. ... Applicants/Plaintiffs
versus
Shree Trimurti CHS Ltd. and Ors. ... Respondents/Defendants
Mr. Girish Godbole, Senior Advocate with Mr. Swapnil Bangur, Mr. Aditya Miskita,
Ms. Aayushi Gohil i/by M.T.Miskita and Co., for Applicant/Plaintiff in IA No.3375 of
2021 and for Respondent in IA 1579 of 2021 and IA 1664 of 2021 - Evershine Builders.
Mr. Ghanshyam Upadhyay with Mr. Aakash Mishra, Mr. Rajmukar Mishra i/by Law
Juris, for Defendant Nos.1 to 6 in Suit No.81 of 2021 and for Applicants in IA 1579 of
2021 and IA 1664 of 2021
Mr. Sandeep Parikh with Ms. Gaurangi Patil, Mr. Parth Mehta i/by GP and
Associates, for Shree Trimurti CHS - Defendant No.7 in Suit No.81 of 2021 and for
Defendant No.6 in Suit No.136 of 2021.
Mr. Sagar Patil, for Mumbai Municipal Corporation.
SSP 1/53
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CORAM: N.J.JAMADAR, J.
RESERVED ON : 10 APRIL 2023
REHEARD ON : 7 OCTOBER 2023
PRONOUNCED ON : 20 OCTOBER 2023
JUDGMENT :
1. Evershine Builders Pvt. Ltd. - Plaintiff in Suit No.81 of 2021, is a company incorporated under the Companies Act, 2013. Shree Trimurti Co-op. Housing Society Ltd. (the Society) - Defendant No.7 is a co-operative housing society registered under the Maharashtra Co-operative Societies Act, 1969 (the Societies Act, 1960). Defendant Nos.1 to 6 are the members of Defendant No.7 Society. Defendant No.7 is the owner of the property bearing Plot No.K-69/78, South Avenue, 17 th Road, Khar (W), Mumbai and the building standing thereon (the suit property) consisting of 17 flats. The said building was constructed in the year 1966.
2. As the building is in a dilapidated condition, Defendant No.7 Society decided to redevelop the suit property. A Special General Body meeting of the Defendant No.7 Society was convened. The Deputy Registrar, Co-op. Societies was requested vide letter dated 28 September 2015 to appoint an Authorized Officer. On 18 October 2015, in the presence of the authorized Officer appointed by the Deputy Registrar, Co-op. Societies, a Special General Body Meeting of the Society was held. 13 out of 16 members of the society attended the said meeting. Offers of four short- listed developers were considered. The society, inter alia, resolved to appoint SSP 2/53 IA 3375 OF 2021.doc Evershine Builders for redevelopment of the society premises.
3. On 18 October 2015 an intimation was given to Evershine about its appointment as a developer. On 22 February 2016, a Letter of Intent came to be executed between the Plaintiff and Defendant No.7 Society. Letter of Intent, inter alia, provided for 61% of the additional carpet area in the proposed new building, hardship compensation to every member @ Rs.6,000/- per sq.ft. of the extant carpet area and monthly displacement compensation @ Rs.150/- per sq.ft.
4. The Plaintiff avers, post execution of the Letter of Intent, due to change in the Government policies and directives, there was a substantial escalation in the cost of redevelopment. The Plaintiff claims, there were negotiations, and, eventually, in a Special General Body Meeting of the Defendant No.7 Society, held on 7 August 2016, a revised proposal of the developer was adopted. In the Special General Body Meeting held on 26 January 2018, the minutes of the meeting of the Special General Body Meeting held on 7 August 2016 were adopted by a majority of 9 votes against 6. It was further resolved that the revised offer, given by the developer, of 48% additional carpet area and the hardship compensation @ Rs.4100/- per sq. ft. and Rs.125/- per sq.ft. per month rent for 24 + 6 months with an additional 8% increase after 30 months was also adopted by a majority of 9 to 6.
5. Eventually, a Development Agreement came to be executed between the Plaintiff and Defendant No.7 Society on 6 February 2018.
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6. The Plaintiff avers that on the basis of the Development Agreement, and post public notice inviting objections and consideration thereof, the Plaintiff applied for further permissions, no objections and Intimation of Disapproval (IOD) to redevelop the society premises. On 4 January 2020, the Plaintiff received IOD. In accordance with the terms of the Development Agreement, the Plaintiff issued notice to vacate. Thereupon, Defendant No.7 Society convened a Special General Body Meeting on 21 January 2020. In the said meeting, Defendant No.7 Society passed a resolution, inter alia, covering the aspect of floor rise. Pursuant to the aforesaid development, the Plaintiff claims, a majority of 12 members have issued their written consent for redevelopment of Defendant No.7 Society, agreeing to execute confirmation deed / individual agreement and handover vacant and peaceful possession of their respective flats.
7. Defendant Nos.1 to 6, however, raised objection to the process of redevelopment. Asserting that the objections and allegations of Defendant Nos.1 to 6 are untrue and baseless, the Plaintiff has approached the Court with a case that the delivery of vacant possession of all the flats is necessary to take steps in pursuance of the development agreement. Further stipulations in the agreement do not trigger till all the members of the Defendant No.7 Society handover the possession of their respective flats, like payment of compensation for temporary accommodation, payment of shifting and brokerage expenses, payment of balance hardship SSP 4/53 IA 3375 OF 2021.doc compensation and the bank guarantee to be furnished to the Defendant No.7 Society.
8. The Plaintiff claimed to have incurred substantial expenses aggregating to Rs.20 Crores in respect of the redevelopment process. A sum of Rs.3.60 Crores has been paid to the members of the Society. Likewise, other members of the society, who constitute the majority, also continuously suffer on account of the delay in commencement of the redevelopment. The building is in a dilapidated condition. A portion of the society premises has collapsed. A notice under Section 354 of the Mumbai Municipal Corporation Act, 1888 has been issued by the Mumbai Municipal Corporation as the building is in a dilapidated condition. Hence, it is necessary to demolish the building forthwith and commence redevelopment.
9. Hence, the suit for a declaration that Defendant Nos.1 to 6 are bound by the Development Agreement and they have no right to oppose the redevelopment and/or refuse to vacate their respective individual flats and a mandatory order directing Respondent Nos.1 to 6 to forthwith vacate their respective flats, and handover the quiet, vacant and peaceful possession thereof. Consequential reliefs of appointment of the Court Receiver and permanent injunction are also sought.
10. In the suit, the Plaintiff has taken out an Interim Application, asserting that there is an extreme urgency as a part of the building has collapsed on 18 August 2020. There is an imminent risk to the life and property. Hearing and final disposal of the suit is likely to take considerable time. In the meanwhile, the consenting SSP 5/53 IA 3375 OF 2021.doc members would continue to suffer prejudice and hardship. The Plaintiff has, therefore, by way of interim relief, prayed for the appointment of the Court Receiver to take possession and custody of the suit property, including the flats in the possession of Defendant Nos.1 to 6, and handover the same to the Plaintiff forthwith; and an interim mandatory injunction directing the Defendant Nos.1 to 6 to vacate their respective flats and handover vacant and peaceful possession thereof to the Plaintiff and also restrain Defendant Nos.1 to 6 from alienating and/or creating any third party interest in their respective flats.
11. Defendant Nos.1 to 6 have resisted the application by filing an affidavit in Reply. The Defendants contend the suit suffers from the vice of suppressio veri and suggestio falsi. Therefore, the Plaintiff does not deserve any equitable relief. Secondly, the Development Agreement dated 6 February 2018, according to Defendant Nos.1 to 6, is a product of fraud, and non-est in the eye of law. The Defendants contend, the Plaintiff secured his appointment as developer by making a representation that each of the members would get 61% additional carpet area and Rs.6,000/- per sq.ft. towards hardship compensation. However, the Plaintiff has, in connivance with the members of the managing committee of Defendant No.7, substantially reduced the benefits under the redevelopment from 61% of the additional carpet area to 48% additional carpet area and from Rs.6,000/- per sq.ft. to Rs.4100/- per sq.ft. towards the hardship compensation.
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12. Defendant Nos.1 to 6 categorically assert that the said decision which is pre-judicial to the members of the Defendant No.7 Society has been taken by the then self-proclaimed managing committee without the consent of the 75% of the members of the society, and, therefore, the development agreement cannot be said to be legal and valid. Defendant Nos.1 to 6 have denied that the Plaintiff has been appointed as a developer in conformity with the provisions of the Maharashtra Co-op. Societies Act, 1960 and the government directives issued under Section 79A of the Act, 1960.
13. It was contended that the Special General Body Meeting held on 18 October 2015 was itself tainted by fraud. Defendant Nos.1 to 6 contend, Defendant No.7 Society in its Special General Body Meeting held on 1 March 2015 had, inter alia, resolved to appoint Kolte Patil Developers Pvt. Ltd., as a developer, as the said entity had offered 60% additional carpet area and Rs.6,000/- per sq.ft. towards the hardship compensation. The self-proclaimed members of the managing committee, however, deliberately delayed the process of appointment of the developer and, instead, in connivance with the Plaintiff passed a resolution in the Special General Body Meeting dated 18 October 2015. Since initial offer was of 61% of the additional carpet area and Rs.6000/- per sq.ft. towards hardship compensation, Defendant Nos.1 to 6 were induced to agree with the said proposal. The subsequent acts of re-negotiating the terms and substantially reducing the benefits admissible to the members upon redevelopment, according to Defendant Nos.1 to 6, vitiated the initial appointment of SSP 7/53 IA 3375 OF 2021.doc the Plaintiff.
14. Defendant Nos.1 to 6 further contended that in the proposed area statement, the members of the managing committee and others were provided additional area in the redeveloped building, while Defendant Nos.1 to 6 and others were given less area. Alleging that the members of the managing committee and the other members who consented for revised and reduced offer are unjustly enriching themselves, Defendant Nos.1 to 6 have pleaded collusion between the Plaintiff and the majority members of the Society.
15. In the Affidavit in Reply, Defendant Nos.1 to 6 have further assailed the legality and validity of the resolution passed in the Special General Body Meeting dated 26 January 2018. It was, inter alia, contended that there was no consent of 75% of the members of the society required to accept the revised/reduced offer. Attributing various acts of omission and commission, Defendant Nos.1 to 6 alleged that the appointment of the plaintiff as a developer for the execution of the development agreement is vitiated by fraud.
16. It would be contextually relevant to note that Defendant Nos.1 to 5 have also instituted a Suit, being Suit No.136 of 2021, seeking declarations that the Development Agreement dated 6 February 2018 is void, bad in law and without any authority and the same be declared null, unenforceable and not binding upon the Plaintiffs (Defendant Nos.1 to 6 herein) and cancel the said development agreement. SSP 8/53
IA 3375 OF 2021.doc In addition to the grounds raised in the Reply to the Interim Application taken out by the Plaintiff, Defendant Nos.1 to 5 also asserted that, since the development agreement has been executed by the persons who cannot lawfully claim to be the members of the managing committee, as their term had expired long back, the development agreement is void and unenforceable.
17. In the said suit, Defendant Nos.1 to 5 have taken out an application for interim relief, being Interim Application No.1664 of 2021, seeking interim injunction to restrain the Defendants therein, including the Plaintiff herein, and the Municipal Corporation from proceeding further in any manner whatsoever, towards the redevelopment of the society premises in pursuance of the Development Agreement dated 6 February 2018 and acting upon the said Development Agreement and also sought stay to the execution, implementation and effect of IOD dated 4 January 2020.
18. The Plaintiff has filed an affidavit in Reply contesting the prayers in the said application. Defendant No.7 Society - Defendant No.1 therein, has also resisted the application for interim relief. The Municipal Corporation has also filed an Affidavit in Reply to contest the prayers therein.
19. I have heard Mr. Girish Godbole, learned Senior Advocate for the Applicant-Plaintiff, Mr. Ghanshyam Upadhyay, learned Counsel for Defendant Nos.1 to 6 and Mr. Sandeep Parikh, learned Counsel for Defendant No.7 Society. The learned Counsel took the Court through the pleadings and documents on record. SSP 9/53
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20. As is evident, the prayers in IA No.3375 of 2021 in Suit No.81 of 2021 and IA No.1664 of 2021 in Suit No.136 of 2021 are diametrically opposite. In IA No.3375 of 2021, Evershine seeks a mandatory injunction qua Defendant Nos.1 to 6 - dissenting members, to vacate the flats in their respective possession. In contrast, in IA No.1664 of 2021 in Suit No.136 of 2021, the dissenting members seek to restrain the Society, the developer and the Municipal Corporation from acting in furtherance of the Development Agreement. Resultantly, the decision in IA No.3375 of 2021 in Suit No.81 of 2021 would seal the fate of IA No.1664 of 2021 in Suit No.136 of 2021.
21. Mr. Godbole, learned Senior Advocate for the Plaintiff, submitted that the dissenting members of Defendant No.7 Society cannot be permitted to put hindrances in the redevelopment of the Defendant No.7 Society to the great prejudice of the majority of the members, especially when the Defendant No.7 Society has followed the mandate of law in appointing the developer in letter and spirit. It was submitted that the decision of the society recorded in the Special General Body Meeting by the requisite majority must be given due weightage. In the case at hand, according to Mr. Godbole, the resolution to appoint the developer was unanimously passed in the Special General Body Meeting of the Society held on 18 October 2015 by all 13 members of the society, who attended the said meeting. Mr. Godbole laid emphasis on the fact that there has been no challenge to the said Resolution dated 18 October 2015, whereby Evershine came to be appointed as a developer. SSP 10/53
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22. Mr. Godbole would further urge that the objections sought to be raised on behalf of the dissenting members on the ground that benefits to the members of the Defendant No.7 Society are scaled down, and, therefore, the redevelopment by the developer is not in the best interest of the Defendant No.7 Society and its members is clearly misconceived. It was submitted that there is material on record to show that there were justifiable reasons to revise the proposal, brought about by change in policies and supervening circumstances.
23. In any event, the revised offer has also been accepted and approved by Defendant No.7 Society by majority. Therefore, the said decision to carry out redevelopment on the revised terms, as incorporated in the Development Agreement dated 6 February 2018, firmly binds the dissenting members. An individual member has no independent right. An individual member must speak through the Society. Once the majority of the members of the society have taken a decision to redevelop the society on particular terms, individual member cannot be permitted to stall the redevelopment, submitted Mr. Godbole.
24. Mr. Godbole would further urge that the situation in the case at hand is rather critical. The society premises has been categorized as C-1 requiring immediate evacuation and demolition. The Municipal Corporation has issued a notice under Section 354 of the Act, 1888. The City Civil Court declined to grant injunction to restrain the Corporation from taking action on the said notice. Even post audit by the SSP 11/53 IA 3375 OF 2021.doc Technical Advisory Committee (TAC), pursuant to the directions of this Court in AO No.1098 of 2022, TAC has categorized the building as C-1.
25. Mr. Godbole submitted that for the obstructive stand of few of the dissenting members, the redevelopment cannot be deferred. Mr. Godbole would submit that this Court has, in a series of judgments, deprecated the tendency of dissenting members to stall the redevelopment by refusing to vacate their flats. It was submitted that an order of mandatory nature, at an interim stage, can be passed, in the circumstances of the present nature, as there is no possibility of prejudice to the dissenting members as they would be entitled to benefits like the consenting members. In contrast, if the dissenting members are not directed to vacate their flats, the majority would suffer for an indefinite period.
26. To bolster up these submissions, Mr. Godbole placed reliance on the decisions of this Court in the cases of Chirag Infra Projects Pvt.Ltd. V/s. Vijay Jwala Co-operative Hsg. Soc. Ltd.1, Westin Sankalp Developers V/s. Ajay Sikandar Rana and Ors.2, Abhanga Samata Co-op. Hsg. Soc. Ltd. V/s. Parag Binani and Ors.3 and Choice Developers V/s. Pantanagar Pearl Co-op. Hsg. Soc. Ltd.4
27. Mr. Sandeep Parikh, learned Counsel for Defendant No.7 Society, 1 2021 SCC Online Bom 364 2 2021 SCC Online Bom 421 3 AO(ST) No.7776 of 2021 dt. 7 May 2021 4 2022 SCC Online Bom 786 SSP 12/53 IA 3375 OF 2021.doc supported the submissions of Mr. Godbole. Mr. Parikh would urge that the contention of the dissenting members of alleged non-compliance of the mandate of law in appointing the developer and execution of the Development Agreement is actuated by a design to delay the redevelopment of the society. It was submitted that in the case at hand, the directives issued by the State Government under Section 79A of the Act, 1960 have been fully complied with. Even otherwise, this Court has held that those directives issued under Section 79A of the Act, 1960, are directory and not mandatory.
28. To buttress this submission, Mr. Parikh placed reliance on the decision of this Court in the cases of M/s. Maya Developers V/s. Neelam R. Thakkar & Ors.5 Harsha Co-op. Hsg. Soc. Ltd. & Ors. V/s. Kishandas S. Rajpal and Ors. 6 Kamgar Seva Sadan Co-op. Hsg. Soc. Ltd. V/s. Divisional Joint Registrar, Co-op. Housing Soc. And Ors.7
29. Mr. Parikh would further urge that a minuscule minority of the members cannot be permitted to put hindrances in the development of the society as it is the majority which prevails in the decision making process. Reliance was placed on the decision of this Court in the cases of Bay Home Properties Developers Pvt. Ltd. and Ors. V/s. National Properties Builders and Developers and Ors. 8, Girish Mulchand Mehta and Anr. V/s. Mahesh S. Mehta and Anr.9 Kamla Homes and 5 2016 SCC Online 6947 6 WP No.10285 of 2009 7 2018(6) Mh.L.J. 769 8 2019 SCC Online Bom 5299 9 2010 (2) Mh.L.J. 657 .
SSP 13/53
IA 3375 OF 2021.doc Lifestyles Pvt. Ltd. V/s. Pushpa Kamal Co-op. Hsg. Soc. Ltd. and Ors. 10 and Vikram Delite Co-op. Hsg. Soc. Ltd. V/s. Meenakshi Chandrakant Shall and Ors.11
30. Mr. Upadhyay, learned Counsel for the dissenting members, stoutly submitted that the very premise of the developer's suit is flawed. Assailing the legality and validity of the development agreement, nay the very representation of the Society by the managing committee, Mr. Upadhyay would urge that the members of the managing committee who executed a Development Agreement on behalf of the Society were elected in the year 2011. Their term came to an end by statutory operation. Therefore, the said members had no right to represent the society and all the actions of the said managing committee are vitiated and non-est in the eye of law.
31. Secondly, Mr. Upadhyay would urge, the dissenting members cannot be bound down by the resolution which is not in conformity with the legal mandate. It was urged that the revised proposal substantially scaling down the benefits to the members was not approved by 75% of the members of the society. Therefore, the execution of the Development Agreement on the strength of the resolution purportedly passed in the meeting held on 26 January 2018 is legally unsustainable as the resolution itself cannot be said to have been validly passed.
32. Thirdly, Mr. Upadhyay would urge, the Development Agreement has been 10 2019 SCC Online Bom 823 11 2017 SCC Online Bom. 7738 SSP 14/53 IA 3375 OF 2021.doc brought about by practicing fraud. It was submitted that the members of the managing committee resorted to deliberations with the developer, keeping other members of the society in the dark. Approval of the revised proposal is, therefore, tainted by fraud. It was further submitted that the members of the managing committee have also forged the resolution. Mr. Upadhyay would urge that the members of the managing committee for their personal aggrandizement have accepted the revised proposal which causes substantial prejudice to the dissenting members.
33. Mr. Upadhyay would further urge that the fact that initially the Society had resolved to appoint M/s. Kolte Patil Developers as the developer as it had offered best terms, was deliberately suppressed by the Plaintiff and the Defendant No.7 Society. In view of such deliberate suppression, the Plaintiff does not deserve any equitable relief.
34. Lastly, Mr. Upadhyay would urge, the grant of relief of mandatory injunction at this interim stage, which partakes the character of final relief, would amount to a decree without adjudication. Simultaneously, the suit instituted by the dissenting members would be rendered infructous if the dissenting members are compelled to deliver possession of their respective flats and the redevelopment work commences. Such relief cannot be granted at an interim stage, submitted Mr. Upadhyay.
35. Mr. Upadhyay placed reliance on a number of judgments, reference to which SSP 15/53 IA 3375 OF 2021.doc would be made at an appropriate stage.
36. Uncontroverted facts first. The fact that Defendant No.7 Society consists of 16 members who occupied 17 flats in the society premises is not in contest. Nor the fact that the society building was constructed in the 1966. Though the dilapidated condition of the building can be controverted, yet the fact that the society premises necessitates redevelopment can hardly be put in contest. On the aspect of the compliance of the directives issued by the State Government vide Circular dated 3 January 2009 under Section 79A of the Act, 1960, indisputably, the proceedings of the Special General Body Meeting were held on 18 October 2015 in the presence of the Authorized Officer appointed by the Deputy Registrar, Co-op. Societies. Out of 16, 13 members attended the said Special General Body Meeting. It is not in contest that M/s. Evershine was unanimously appointed as a developer in the said Special General Body Meeting. Dr. Hosangadi - Defendant No.5, Suresh and Sanjay Rohara - Defendant Nos.4(a) and (b), and Vijaykumar Angrish - Defendant No.3 did not attend the said meeting.
37. Indisputably, the Deputy Registrar, Co-op. Societies vide communication dated 20 February 2015 informed the Society as well as the Municipal Corporation that in the Special General Body Meeting held on 18 October 2015, in the presence of the Authorized Officer, the said resolution was passed unanimously. The Letter of Intent dated 27 February 2016, inter alia, recorded that each of the members would be SSP 16/53 IA 3375 OF 2021.doc entitled to 61% additional carpet area, Rs.6000/- per sq.ft. towards hardship compensation and Rs.150/- per sq.ft. towards the displacement compensation. Upto this point, it seems, there was rather no cleavage amongst the members of the Defendant No.7 Society.
38. The controversy arose with the proposed reduction in the benefits. It seems, in the Special General Body Meeting dated 26 January 2018, the Society approved the revised proposal of 48% additional carpet area, hardship compensation of Rs.4,100/- per sq.ft. and rental at the rate of Rs.125/- per sq.ft. per month with a provision of 8% increase after 30 months. The said resolution was adopted by a majority of 9 to 6. The dissenting members attended the said meeting and voted against the proposal. The society further resolved to empower the Chairman, Secretary and Treasurer of the managing committee to execute the Development Agreement. The execution of the Development Agreement, on 6 December 2018, on the strength of the said resolution and the authorization, is indisputable.
39. It may be relevant to note a dispute on another front. The society represented by the majority of the members and the developer assert, the building is in a dilapidated condition and poses imminent risk to life and property. A notice under Section 354 of the Act, 1888 came to be issued. Assailing its legality and validity, few of the dissenting members approached the City Civil Court. As noted above, the City Civil Court had declined to grant ad-interim relief and the dissenting members came SSP 17/53 IA 3375 OF 2021.doc in Appeal before this Court. By an order dated 16 December 2022 in AO No.1098 of 2022, TAC was directed to submit a report.
40. Eventually, by a judgment and order dated 14 September 2023, this Court was persuaded to dismiss AO No.1098 of 2022 holding, inter alia, that the Plaintiffs - dissenting members were not entitled to any temporary injunction during the pendency of the suit assailing the said notice. The Court noted that the independent structural auditor and TAC have recommended immediate evacuation and demolition of the society building.
41. In the backdrop of these facts, as is evident, the dispute between the society and dissenting members revolves primarily around the choice of the developer and the terms on which the redevelopment should be carried out. As the matter is at an interim stage, the question that wrenches to the fore is whether, in the circumstances of the case, the Plaintiff has made out a strong prima facie case to grant interim mandatory injunction which, in a sense, works out the suit itself.
42. On first principles, it is trite the interim relief ordinarily should not partake the character of final relief where the entitlement of the party to such relief requires adjudication. The interim mandatory injunction prayed for by the Plaintiff has the character of the final relief in the suit. The principles of grant of interim mandatory injunction are well recognized. Yet, it is not an immutable rule of law that interim mandatory relief which partakes the character of the final relief cannot be granted SSP 18/53 IA 3375 OF 2021.doc whatever be the circumstances of the given case. Undoubtedly, a very strong prima facie case to grant interim mandatory injunction is required to be established and the elements of balance of convenience and irreparable loss must firmly tilt in favour of the party seeking such a relief.
43. Mr. Upadhyay, learned Counsel for the Defendants would submit that such a course cannot be resorted to, save in exceptional and rare cases. A strong reliance was placed on a judgment of this Court in the case of M/s. Jaydeep Constructions V/s. Pant Nagar Rail View Co-op. Hsg. Soc. Ltd. and Ors. 12 A learned Single Judge of this Court in the context of the relief of mandatory injunction sought at an interlocutory stage observed that no mandatory relief can be granted as in the said case the Plaintiff had miserably failed to make out a strong prima facie case. It is settled position of law that the Plaintiff must make out a strong prima facie case and while granting the mandatory injunction, the Court should be convinced that the Plaintiff is likely to succeed in the said suit.
44. It may be apposite to consult a judgment of Dorab Cawasji Warden V/s. Coomi Sorab Warden and Ors.13 wherein the principles which govern the grant of mandatory injunction at an interlocutory stage, were succinctly enunciated. The observations in Paragraphs 16 and 17 are instructive and, hence, extracted below :
"16. The relief of interlocutory mandatory injunctions are thus granted generally to preserve or restore the status quo of the last non-contested 12 NMS 348 of 2009 in Suit 126 of 2009 dt. 8.1.2010 13 (1990) 2 SCC 117 SSP 19/53 IA 3375 OF 2021.doc status which preceded the pending controversy until the final hearing when full relief may be granted or to compel the undoing of those acts that have been illegally done or the restoration of that which was wrongfully taken from the party complaining. But since the granting of such an injunction to a party who fails or would fail to establish his right at the trial may cause great injustice or irreparable harm to the party against whom it was granted or alternatively not granting of it to a party who succeeds or would succeed may equally cause great injustice or irreparable harm, courts have evolved certain guidelines. Generally stated these guidelines are :
(1) The Plaintiff has a strong case for trial. That is, it shall be of a higher standard than a prima facie case that is normally required for a prohibitory injunction.
(2) It is necessary to prevent irreparable or serious injury which normally cannot be compensated in terms of money.
(3) The balance of convenience is in favour of the one seeking such relief.
17. Being essentially an equitable relief the grant or refusal of an interlocutory mandatory injunction shall ultimately rest in the sound judicial discretion of the court to be exercised in the light of the facts and circumstances of each case. Though the above guidelines are neither exhaustive nor complete or absolute rules, and there may be exceptional circumstances needing action, applying them as prerequisite for the grant or refusal of such injunctions would be a sound exercise of a judicial discretion."
45. The judgment in the case of Dorab Cawasji Warden (supra), has been consistently followed by the Supreme Court.
46. On the touchstone of aforesaid principles, I propose to determine the prayers in the instant application. To begin with, it may be necessary to note the SSP 20/53 IA 3375 OF 2021.doc nature of the rights which a member of a co-operative Society has qua the society and the tenor of the jural relationship formed by becoming a member of the co-operative society. It may also be necessary to note few provisions of the Act, 1960, especially in the matter of the management of the affairs of the co-operative society.
47. Section 72 of the Act, 1960, under the Chapter VII dealing with the management of the society, vests the final authority of the society in the general body of members of the society. It reads as under :
"72. Final authority of Society Subject to the provisions in this Act and the rules, the final authority of every society shall vest in the general body of members in general meeting, summoned in such a manner as may be specified in the bye-laws. Where the bye-laws of a society so provide, the general meeting shall be attended by delegates appointed by the members, and such meeting shall be deemed to be the meeting of the general body, for the purpose of exercising all the powers of the general body."
48. Section 73(1) of the Act, 1960 provides that the management of every society shall vest in a committee constituted in accordance with the said Act and the rules and bye-laws, which shall exercise such powers and perform such duties as may be conferred or imposed respectively by the said Act, the rules and the bye-laws.
49. A conjoint reading of the aforesaid provisions would indicate that the management of the society vests in the Committee constituted in accordance with the provisions of the Act. However, it is the general body of the members of the society SSP 21/53 IA 3375 OF 2021.doc which is the final decision making authority.
50. The aspect of the individual right or authority of a member of the society where the general body of the society takes a decision in accordance with the democratic norms of decision by majority, has engaged the attention of the Courts. After having become a member of the society, an individual member does not continue to have an independent right qua the Society.
51. A useful reference in this context can be made to a Constitution Bench judgment of the Supreme Court in the case of Daman Singh and Ors. V/s. State of Punjab14. In the said case, the question as to whether certain individual member of the society are entitled to assail the constitutionality of certain provisions in the Punjab Co-operative Societies Act, arose for consideration. Negating the contention on behalf of the individual members, the Supreme Court observed that, once a person becomes a member of a co-operative Society, he loses is individuality qua the society and he has no independent rights, except those given to him by the statute and the bye-laws. He must act and speak through the society or or rather , the society alone can act and speak for qua rights or duties of the society as a body.
52. The aforesaid pronouncement was followed and further elucidated by the Supreme Court in the case of State of U.P. and Anr. V/s. C.O.D. Chheoki Employees' Co-op. Soc. Ltd. and Ors.15. After adverting to the aforesaid 14 AIR 1985 SC 973 15 (1997) 3 SCC 681 SSP 22/53 IA 3375 OF 2021.doc pronouncement, the Supreme Court reiterated that a member of the society has no independent right qua the Society and it is the society that is entitled to represent as the corporate aggregate. No individual member is entitled to assail the constitutionality of the provisions of the Act, rules and the bye-laws as he has his right under the Act, rules and bye-laws and is subject to its operation. The stream cannot rise higher than the source. The observations in paragraph 16 are material and, hence, extracted below :
16. Thus, it is settled law that no citizen has an fundamental right under Article 19(1)(c) to become a member of a Co-operative Society. His right is governed by the provisions of the statute. So, the right to become or to continue being a member of the society is a statutory right. On fulfilment of the qualifications prescribed to become a member and for being a member of the society and on admission, he becomes a member. His being a member of the society is subject to the operation of the Act, rules and bye-laws applicable from time to time. A member of the Society has no independent right qua the Society and it is the society that is entitled to represent as the corporate aggregate. No individual member is entitled to assail the constitutionality of the provisions of the Act, rules and the bye-laws as he has his right under the Act, rules and bye-laws and is subject to its operation. The stream cannot rise higher than the source." (emphasis supplied)
53. In the light of the aforesaid exposition of law, if an individual member is aggrieved by the decision of the society, represented by the majority taken in conformity with the provisions of the Act, 1960 or the rules or the bye-laws of the society, such member will be required to work out his remedies under the provisions SSP 23/53 IA 3375 OF 2021.doc of the governing statute.
54. The aforesaid principles have also been consistently followed in a series of decisions by this Court. In the case of Girish Mulchand Mehta (supra), wherein an identical situation of grant of interim relief during the pendency of arbitration proceedings to physically remove the Respondents therein and their family members, who were occupying two flats in the building which was to be redeveloped, the Division Bench after following the aforesaid pronouncement in the cases of Daman Singh and Ors. (supra), and State of U.P. V/s. Chheoki Employees (Supra), observed, inter alia, as under :
"16. In the present case, it is not in dispute that the General Body of the Society which is supreme, has taken a conscious decision to redevelop the suit building. The General Body of the Society has also resolved to appoint the Respondent No.1 as the Developer. Those decisions have not been challenged at all. The appellants who were members of the society at the relevant time, are bound by the said decisions. The appellants in the dispute filed before the Co-operative Court have only challenged the Resolution dated 27-04-2008, which challenge would merely revolve around the terms and conditions of the Development Agreement. As a matter of fact, the General Body of the Society has approved the terms and conditions of the Development Agreement by overwhelming majority. Merely because the terms and conditions of the Development Agreement are not acceptable to the appellants, who are in minuscule minority (only two out of twelve members), cannot be the basis not to abide by the decision of the overwhelming majority of the General Body of the member of the co- operative Society, he loses his individuality with the Society and he has no independent rights except those given to him by the statute and Bye-laws.SSP 24/53
IA 3375 OF 2021.doc The member has to speak through the Society or rather the society alone can act and speaks for him qua the rights and duties of the society as a body (see Daman Singh and Ors. (supra). This view has been followed in the subsequent decision of the Apex Court in the case of State of U.P. V/s. Chheoki Employees (supra). In this decision the Apex Court further observed that the member of the Society has no independent right qua the Society and it is the Society that is entitled to represent as the corporate aggregate. The Court also observed that the stream cannot rise higher than the source. Suffice it to observe that so long as the Resolutions passed by the General Body of the Respondent No.2 society are in force and not overturned by a forum of competent jurisdiction, the said decisions would bind the appellants. They cannot take a stand alone position but are bound by the majority decision of the General Body. Notably, the appellants have not challenged the Resolutions passed by the General Body of the Society to redevelop the property and more so, to appoint the Respondent No.1 as the Developer to give him all the redevelopment rights. The proprietary rights of the appellants herein in the portion (in respective flats) of the property of the society cannot defeat the rights accrued to the Developer and/or absolve the society of its obligations in relation to the subject-matter of the Arbitration Agreement. The fact that the relief prayed by the respondent No.1 in Section 9 Petition and as granted by the learned Single Judge would affect the proprietary rights of the appellants does not take the matter any further. For, the proprietary rights of the appellants in the flats in their possession would be subservient to the authority of the General Body of the Society. Moreso, such rights cannot be invoked against the Developer (Respondent No.1) and in any case, cannot extricate the society of its obligations under the Development Agreement. Since the relief prayed by the respondent No.1 would affect the appellants, they were impleaded as party to the proceedings under section 9 of the Act, which was also necessitated by virtue of Rule 803E of the Bombay High Court (Original Side) Rules. The said Rule reads thus :SSP 25/53
IA 3375 OF 2021.doc "R. 803-E. Notice of Filing Application to persons likely to be affected - Upon any application by Petition under the Act, the Judge in Chambers shall, if he accepts the petition, direct notice thereof to be given to all persons mentioned in the petition and to such other persons as may seem to him to be likely to be affected by the proceedings, requiring all or any of such persons to show cause, within the time specified in the notice, why the relief sought in the petition should not be granted. (emphasis supplied)
55. The Division Bench has enunciated the principles that, if a member is aggrieved by the decision of the society, the remedy is to challenge that decision in the manner known to law. Secondly, if the dissenting members are of the view that the terms and conditions of the Development Agreement are not acceptable to them, that cannot a basis not to abide by the decision of the overwhelming majority of the General Body of the Society.
56. The majority rule and binding efficacy of the decision of the general body on the members who constitute minority has been reiterated by this Court in cases of Kamla Homes and Lifestyles Pvt. Ltd. (supra), and Vikram Delite Co-op. Hsg. Soc. Ltd. (supra). It may not be necessary to advert to these pronouncements in detail. The decision of the Division Bench of this Court in the case of Bay Home Properties Developers Pvt. Ltd. and Ors. (supra), however, deserves to be noted in a little detail.
57. Bay Home Properties Developers Pvt. Ltd. and Ors. (supra), was an appeal against the order passed by the learned Single Judge of this Court in a Notice of SSP 26/53 IA 3375 OF 2021.doc Motion appointing the Court Receiver to take possession of the suit property and directing the Defendants therein by an order of interim mandatory injunction to handover possession of the flats and garages in their possession. Those Defendants were again the members representing the minority in the society.
58. The Division Bench after considering the law on the aspect of the individual rights of the members and noting a large body of decisions, including the aforesaid cases, enunciated that the legal position which emerges from the said decision was that if the material placed before the Court shows that the Co-operative Society has played by the Rule-Book, one has to adjust to situations, so long as there is no fraud, concealment, willful default or any hint of underhand dealing, there was no reason to stop development work.
59. The precedential authority of Bay Home Properties Developers Pvt. Ltd. and Ors. (supra), also lies in the enunciation of law in the context of the submissions on the premise that the interim mandatory injunction, which works out the whole relief, cannot be granted. The Division Bench adverted to the decision of the Supreme Court in the case of Samir Narain Bhojwani V/s. Aurora Properties and Investments16 and culled out the legal position as under :
"49.The legal position could be stated thus : Members of a co-operative Housing Society cannot claim that their rights in the flats occupied by them are de hors the rights of the society. Once a person becomes a member of a co-operative Society he loses his individuality and has no independent right 16 2018(10) Scale 33 SSP 27/53 IA 3375 OF 2021.doc except those given to him by the Statute and the Bye-laws. A stream cannot rise higher than the source. Minority members cannot take a stand-alone position and are bound by the majority decisions. The proprietary rights of the flat owners cannot defeat the rights accrued to the co-operative society and the Developer. These disgruntled minority members would be estopped from questioning the majority decisions and in that sense have no rights which needs to be protected. The principle of co-operative Democracy would govern the decision by a court and not principles of mandatory interim injunctions.
50. Assuming that the principle of mandatory interim injunction being that at best status quo ante can be restored i.e. the position which existed before the offending act was committed and no more is applicable in the instant case, the grant of the mandatory injunction has in the facts of the present case restored the status quo ante. Before the ten flat owners of the Kukreja Group purchased the flats, their predecessor in interest had approved the redevelopment project and had signed the consent letters. These ten persons by their act of withdrawing the consent had altered the status quo which the impugned order restores. (emphasis supplied)
60. The Division Bench has in terms ruled that the principle of co-operative democracy would govern the decision by the Court and not principles of mandatory interim injunction. Thereafter, the Division Bench went on to hold that even if it was assumed that the principle of mandatory interim injunction were to be applied, a direction to handover the possession of the flats by the minority members would be in the nature of restoration of status quo ante where the minority members endeavoured to resile from the position of their predecessors in interest.
61. The challenges sought to be mounted by Mr. Upadhyay to the decision of SSP 28/53 IA 3375 OF 2021.doc the Defendant No.7 society deserve to be appraised in the light of the aforesaid exposition of law.
62. First and foremost, the submission on behalf of the dissenting members that the term of the managing committee having expired by efflux of time, the entire decision making process was vitiated. Under sub-Section (3) of Section 73AAA of the Act, 1960, the term of the office of the elected members of the committee and its office bearers shall be five years from the date of election and the term of office bearers shall be co-terminus with the term of the committee. By Amendment Act No.50 of 2018, it was further provided that on the expiry of the term of the committee, the members shall be deemed to have vacated their offices as members of the committee.
63. Mr. Upadhyay would urge that the committee of the Defendant No.7 Society came to be elected in the year 2011. Thereafter, there have been no elections to the committee of the society. Resultantly, the actions taken by the managing committee were without any authority. Mr. Upadhyay would urge that the term of the committee expired by efflux of time, and there could be no extension of term statutorily prescribed.
64. To buttress this submission, Mr. Upadhyay placed a strong reliance on a Division Bench Judgment of this Court in the case of Jayram Sakharam Pachore and Ors. V/s. State of Maharashtra and Ors. 17 In the context of the challenge to the vires 17 2000(4) Mh.L.J. 255 SSP 29/53 IA 3375 OF 2021.doc of Section 73G(2B), 73A, 73IB and 77A(3) of the Act, 1960, as those provisions then stood, the Division Bench held that by operation of Section 73-G(2) and (2B) of the Act, the elected members had ceased to hold the office and an elected member did not have the right to continue in the said office beyond the statutory period. The Division Bench observed that Section 73G(2B) read with Section 73G(2) of the Act states that on expiry of the original tenure or the extended tenure, the outer limit being of six years, the elected members ceased to hold office of the managing committee.
65. Reliance was also placed on another judgment of a learned Single Judge of this Court in the case of Ashok Maharu Thakare and Ors. V/s. State of Maharashtra and Ors.18 wherein with reference to the provisions contained in Section 73-G and following the judgment in the case of Jayaram Sakharam Pachore and Ors. (supra), it was reiterated that the cessation of the term of the members of the managing committee on expiry of the original term or an extended term, as the case may be, is automatic.
66. At the first blush, the submission of Mr. Upadhyay may appear alluring. However, on close scrutiny, in the backdrop of the facts of the case, the submission does not carry much conviction. It is imperative to note that the first resolution to redevelop the Defendant No.7 Society and appoint the Plaintiff as a developer was passed in the Special General Body Meeting held on 18 October 2015 in the presence 18 (2002 (3) Mh.L.J. 358 SSP 30/53 IA 3375 OF 2021.doc of the Authorized Officer appointed by the Deputy Registrar. The managing committee was allegedly elected in the year 2011. Thus, on facts, it could not be urged that on the date the resolution to redevelop the Defendant No.7 Society and appointing the Plaintiff as a developer was passed, five years term of the managing committee had expired.
67. There is another important facet which renders the challenge unsustainable. Not only the first resolution dated 18 October 2015 appointing the Plaintiff as developer was passed in the Special General Body Meeting, but also the subsequent Resolution to accept the revised proposal of the developer was passed in the Special General Body meeting. As noted above, under Section 72 of the Act, 1960, the final authority vests in the general body of the members of the society in a general meeting. None of the resolutions, on which the Plaintiff and the society banked upon, draw support and sustenance from the decisions taken by the managing committee. The resolutions, on the contrary, indicate that it is the general body of the members of the society which took the decision.
68. Mr. Upadhyay would also urge that the very execution of the development agreement with the plaintiff is fraught with infirmity as the members of the managing committee who executed the Development Agreement had no authority in law. The minutes of the Special General Body Meeting dated 26 January 2018 indicate that in the said meeting, the general body also resolved to authorize the Chairman, Secretary SSP 31/53 IA 3375 OF 2021.doc and Treasurer of the managing committee to execute the Development Agreement. The members who were then occupying the said positions were also named in the said resolution. The execution of the development agreement in favour of the developer, therefore, can be traced to the authority conferred upon them by the general body in the Special General Body Meeting dated 26 January 2018.
69. In this context, I find substance in the submission of Mr. Godbole that the dissenting members, having not challenged the resolutions passed in the Special General Body Meeting in the appropriate proceedings before the appropriate forum, cannot be permitted to assail the legality and validity of those resolutions in these proceedings.
70. It is of critical salience to note that the Resolution to redevelop the society in the Special General Body Meeting held on 18 October 2015 was unanimously passed by all the 13 members, who were present in the said meeting. The dissenting members, as is evident, did not participate in the said meeting. The next challenge on behalf of the dissenting members to the decision to redevelop the Defendant No.7 Society and appoint the Plaintiff as a developer on the ground that there was no consent of 75% of the members of the society qua the resolution passed in the Special General Body dated 18 October 2015, therefore, does not merit acceptance.
71. In the absence of the participation in the said meeting, the challenge to the said resolution dated 18 October 2015 at the instance of the dissenting members can SSP 32/53 IA 3375 OF 2021.doc only be on the count of the legality thereof, for being in express breach of the provisions of the Act, 1960, rules or bye-laws of the society. The material on record, as indicated above, indicates that the Special General Body meeting was held in the presence of the Authorized Officer nominated by the Deputy Registrar in conformity with the directives issued under Section 79A of the Act, 1960. Even otherwise, nothing worthy of consideration could be pointed out to assail the legality and validity of the resolution dated 18 October 2015 passed in the Special General Body meeting. An infraction of the procedure, even if it assumed to exist, is not of decisive significance.
72. Mr. Parikh, learned Counsel for Defendant No.7 Society was within his rights in canvassing a submission that Defendant No.7 has taken the decisions in adherence to the principle of co-operative democracy. Any deviation from the directives issued by the State Government under Section 79A of the Act, even if assumed to have taken place, does not vitiate the said decisions. Reliance on the decisions of this Court in the cases of M/s. Maya Developers (supra), Harsha Co- op. Hsg. Soc. Ltd. (supra), and Kamgar Seva Sadan Co-op. Hsg. Soc. Ltd. (supra), appears to be well founded.
73. In the case of M/s. Maya Developers (supra), a learned Single Judge of this Court after an elaborate analysis, held that it is impossible to accept the submission that the directives contained in 2009 Circular are mandatory. The SSP 33/53 IA 3375 OF 2021.doc material compliance is more than sufficient and it in no way undermines or detracts from the overall authority of the general body of a society's members. It is sufficient if participation, notice and disclosure are ensured. Where majority decisions are consistent with material compliance with the provisions of the Directive, that is surely enough.
74. It would be suffice to note that the aforesaid pronouncement was followed with approval in the cases of Harsha Co-op. Hsg. Soc. Ltd. (supra), and Kamgar Seva Sadan Co-op. Hsg. Soc. Ltd. (supra). The Division Bench in the case of Bay Home Properties Developers Pvt. Ltd. and Ors. (supra), also gave its imprimatur to the aforesaid enunciation.
75. This propels me to the thrust of the submission of Mr. Upadhyay that the decision to appoint the Plaintiff as a developer of the Defendant No.7 Society is tainted by fraud. A two fold submission was sought to be canvassed. One, the first resolution dated 18 October 2015 to redevelop the society and appoint the Plaintiff as a developer was itself vitiated by fraud. Two, the subsequent resolutions accepting revised proposals substantially scaling down the benefits to the members are fraudulent.
76. The first count of the alleged fraud in passing the resolution dated 18 October 2015 cannot be acceded to for the reason that the four of dissenting members had not at all participated in the said meeting. Rest of the members (13) had passed the SSP 34/53 IA 3375 OF 2021.doc said resolution unanimously. In the affidavit in reply to the interim application (para
15) the Defendants contended that they were induced to refrain from raising objection towards appointment of the Plaintiff as a developer by making an initial offer. This stand of the Defendants demolishes the contention that the initial resolution was brought about by fraudulent means. It implies that the dissenting members are attributing taint of fraud to the initial decision on account of the reduction in the benefits subsequently.
77. The second count of the challenge in passing resolutions, especially the resolution in the Special General Body Meeting dated 26 January 2018 revolves around the alleged meeting between the members of the managing committee and the developer, as is evident from the correspondence exchanged between the Plaintiff and Defendant No.7. Fraud, it is trite, is required to be specifically pleaded and proved. The allegations of fraud are easy to make than prove. What seals the issue is the fact that in the Special General Body meeting dated 26 January 2018, the dissenting members did participate and voted against the resolution to accept the revised proposal at reduced additional carpet area and hardship compensation. The said resolution was passed with majority of 9 to 6. The decision of the majority may not be acceptable to the dissenting members. However, the decision cannot be said to have been arrived by practicing fraud on the dissenting members of the society for the reason that the majority agreed for accepting the revised proposal scaling down the SSP 35/53 IA 3375 OF 2021.doc benefits.
78. The controversy, if properly considered, boils down to the terms at which the redevelopment is to be carried out. Whether the society could have agreed for the revised proposal of the Plaintiff, which scaled down the benefits, was the matter within the province of authority of the general body of the society. The general body spoke through the majority and decided to accept the revised proposal. The justifiability of the decision, in my considered view, cannot be tested on the barometer of the extent of benefit originally offered and subsequently revised. A host of factors come into play and influence the decision. The general body of the society considered it in the best interest of the society to accept the revised proposal. I find it difficult to attach a taint of fraud to the decision of the majority on that count alone.
79. Mr. Upadhyay urged with a degree of vehemence that the fact that initially the society had resolved to appoint M/s. Kolte Patil Developers as the developer as it had offered the best terms, was deliberately suppressed and the decision to appoint the Plaintiff was taken in the Special General Body meeting held on 18 October 2015. To appreciate this submission, a reference to the resolution dated 18 October 2015 become necessary. The minutes of the meeting dated 18 October 2015 record that the offers of four shortlisted developers including M/s. Kolte Patil Developers Pvt. Ltd., were considered and comparative sheets of offers of four short-listed developers were circulated in advance to all the members, and, thereafter, the 13 members of the SSP 36/53 IA 3375 OF 2021.doc society unanimously resolved to appoint the Plaintiff as a developer. The submission of fraud is, therefore, belied by the minutes of the meeting dated 18 October 2015. On the contrary, an inference becomes inescapable that the society took an informed decision to appoint the Plaintiff as a developer after considering the offers of four short-listed developers.
80. The situation which emerges is that the dissenting members cannot be permitted to stall the redevelopment on the ground that the decision to accept the revised proposal is not in their interest. The legal position as enunciated in the decisions referred to above, precludes the dissenting members from stalling the redevelopment of the society as they are bound by the decisions of the general body of the society. If they refuse to adhere to the said decisions, the society, especially the majority members, cannot be left in the lurch and remediless. In the circumstance of this nature, this court has passed orders at an interlocutory stage to ensure that the will of the society represented through majority is given effect to and redevelopment of the society is not retarded for an indefinite period to the great prejudice of the consenting members .
81. I have already adverted to the Division Bench Judgments in the cases of Girish Mulchand Mehta and Anr. (supra) and Bay Home Properties Developers Pvt. Ltd. and Ors. (supra). This position was reiterated in the case of Chirag Infra Projects Pvt.Ltd. (supra).
SSP 37/53
IA 3375 OF 2021.doc
82. After adverting to the decision in the case of Girish Mulchand Mehta and Anr. (supra), the learned Single Judge in the case of Chirag Infra Projects Pvt. Ltd. (supra), underscored the hardship and prejudice suffered by the majority members and other stake holders, if the redevelopment is indefinitely delayed putting pertinent questions. The observations in paragraph 37 deserve extraction. They read as under :
37. If anything, what Kondvilkar does not say makes matters worse. I am not even looking to the interest of the developer in this case. Let me put it diferently. How long must other members of the society, all of them equally part of the lower income group, suffer? How long must they wait for their redeveloped homes only in order to satisfy perhaps the ego or perhaps the ill-
conceived notions in law by which Kondvilkar seems so enchanted? Why should Kondvilkar be invested with the authority to hold his neighbours and fellow members of the society entirely to ransom like this? Under what understanding of law, justice or equity can Kondvilkar state that a building that is demonstrably and in law declared to be hazardous and unf it for human habitation should be left standing, continuing to pose a risk to all concerned? Why should anyone, whether a member of the society, or a Court have to wait indefnitely while Kondvilkar exhausts himself in pursuing this or that legal remedy? What makes Kondvilkar so special that no law applies to him other than the law that he chooses to apply? Kondvilkar has not assailed the society's general body resolution. He has not challenged the development agreement and it is too late to do that now. What he has done is to arrogate to himself the power to sit alone, god-like, in appeal and supervision of the general body of the society of which he is a member. It must, he insists, conform to his notions. It must follow his diktat and his fate. He alone will decide what is to be done, by whom and when. He is not bound by arbitration law. He is not bound by cooperative law. He is not bound by any concept of justice. He is not bound to make restitution. He assumes no liability. He is not bound by anyone or anything, but everyone is bound by his slightest whim SSP 38/53 IA 3375 OF 2021.doc and fancy." (emphasis supplied)
83. In the case at hand, as noted above, the fact that the building has been classified in C-1 category also bears upon the existence of a strong prima facie case. The challenge to the notice under Section 354 of the Act, 1888 at the instance of the dissenting members, has failed upto this Court. That brings in an element of imminent risk to the life and property of the persons who continue to occupy the building and the neighbours and passersby as well. If the building is required to be immediately demolished, the redevelopment of the society cannot wait any more.
84. In my view, this circumstance tilts the balance of convenience in favour of the Plaintiff and majority members of the society irretrievably. Out of 16 members of the Defendant No.7 Society, 12 members have given their consent letters to vacate their respective flats. Out of the dissenting members, it was submitted on behalf of the Plaintiff that, only three members, who are in the occupation of flat Nos.3, 12 and 14, have not vacated their respective flats. One of the dissenting members who was in the occupation of flat No.9 has also vacated the flat. Out of 13 consenting members, 10 had vacated the flats and three of them were still in the occupation of the flats. With the notice of demolition under Section 354 of the Act, 1888 having been issued and the challenge thereto failed, not only those majority members, who have given consent to vacate the flats, but also the dissenting members would be legally enjoined SSP 39/53 IA 3375 OF 2021.doc to vacate their respective flats. Therefore, the balance of convenience does not tilt in favour of the dissenting members.
85. The dispute over the quantum of the benefit where the members of the society are forced to stay out of their flats cannot be permitted to be agitated for an indefinite period of time. If the society decides to accept the redevelopment with reduced benefits, in a situation of this nature, where the building is required to be demolished, resistance to redevelop on the ground of the terms being not beneficial to the dissenting members cannot be countenanced.
86. This factor also bears upon the irreparable loss. I find substance in the submission of Mr. Godbole that the Defendants are not likely to suffer any loss as they would be entitled to the same benefits as are admissible to the majority members. The submission of Mr. Upadhyay that in the proposed redevelopment, the membes of the managing committee and those who support them stand to benefit more at the cost of the dissenting members may not be readily accepted to, if considered in the light of the terms of the development agreement. The apprehension, if any, can be addressed by ordering that there shall be no discrimination of whatsoever nature in the matter of the grant of benefits to the members of the society and those benefits should be based on the area in the occupation of the respective members of the society in the existing building.
87. In the event of refusal to grant interim mandatory relief, the Plaintiff would SSP 40/53 IA 3375 OF 2021.doc also suffer. Undoubtedly, the Plaintiff being the developer has a commercial interest. The Plaintiff has, however, invested substantial amount in the redevelopment project. IOD has been obtained. The Plaintiff has parted with portions of the amount which was to be paid to the members of the society under the terms of the Development Agreement.
88. The submission on behalf of the Defendants that the Plaintiff cannot pray for specific performance of the development agreement, in the facts of the case, is unworthy of acceptance. The contest is not between the Plaintiff and the society, which has entered into development agreement with the Plaintiff. Reliance placed by Mr. Upadhyay on the decisions in the cases of Heritage Lifestyle and Developers Ltd. V/s. Cool Breeze Co-op. Hsg. Soc. Ltd. and Ors. 19 and the Division Bench judgment in the case of Lokhandwala Infrastructure Pvt. Ltd. V/s. Om Dattaji Rahiwasi Seva Sangh and Ors.20, does not seem to be well founded. Those decisions were rendered in the context of a different fact situation.
89. Mr. Upadhyay submitted that in view of the allegations of fraud and discrimination and substantial reduction in the benefits to the members in the redevelopment, the relief cannot be granted at this stage without a trial. So many disputed questions of facts are raised, which require determination after recording evidence. Mr. Upadhyay placed a very strong reliance on the judgments of this Court 19 2014 (3) Mh.L.J. 376 20 2011 (4) Mh.L.J.216 SSP 41/53 IA 3375 OF 2021.doc in the cases of Acknur Construction Pvt. Ltd. V/s. Sweety Rajendra Agarwal and Ors.21 and Ekta Supreme Corporation V/s. Vimla Kapoor and Ors.22 to lend support to the submission that the Defendants cannot be directed to vacate their flats without an opportunity to contest the claim of the Plaintiff.
90. I have perused the judgments in Acknur Construction Pvt. Ltd. (supra) and Ekta Supreme Corporation (supra). The decisions, if I correctly appreciate, turned on the peculiar facts of those cases. In the case of Acknur Construction Pvt. Ltd. (supra), the learned Judge found that the Plaintiff therein had not made out a prima facie case. The nature of the agreement executed in favour of the Plaintiff was itself in the corridor of uncertainty. The learned Judge further held that the balance of convenience also did not tilt in favour of the Plaintiff. Having regard to the serious and debatable matters and issues raised, this Court found that unless and until the Plaintiff prove their right to dispossess the Defendants therein, they cannot be evicted from the existing premises, lest the Defendants would suffer an irreparable loss.
91. In the case of Ekta Supreme Corporation (supra), this Court found that there was non-compliance of the terms of the agreement, in the sense that the Defendants therein had not independently concurred and consented to the redevelopment as under the terms of the agreement, independent concurrence was required to be obtained of the non cooperative members and, thus, it was held that the 21 2009 SCC Online Bom. 1951 22 NMS 1645 of 2010 in S.No.1631 of 2010 decided on 06.01.2011 SSP 42/53 IA 3375 OF 2021.doc contesting Defendants therein were not bound by the development agreement.
92. I am afraid, the aforesaid pronouncements do not govern the facts of the case. On the contrary, the present case is governed by the decision which follow the principles in the case of Girish Mulchand Mehta and Anr. (supra).
93. Finally, the matter can be looked at from an equitable perspective. The controversy essentially boils down to the terms of the redevelopment. Necessity of redevelopment is beyond the pale of controversy. Society building requires immediate evacuation and demolition. An overwhelming majority has vacated the flats. A prolonged delay, which the final adjudication of suits may entail, will cause grave prejudice not only to majority members but also dissenting members. Reduction in the additional carpet area and the quantum of hardship compensation is at the heart of the matter. That is a matter which is surely amenable to monetary computation. The dissenting members have also instituted the suit. In the event, the dissenting members succeed, the reliefs can be moulded to compensate them for the loss on account of reduced benefits. Thus, in my considered view, redevelopment cannot be stalled on that count.
94. The conspectus of aforesaid consideration is that the Plaintiff has succeeded in making out a strong prima facie case. The balance of convenience tilts in favour of the Plaintiff and Defendant No.7 Society. The refusal to grant interim reliefs in the nature of directions to the dissenting members to handover possession of their SSP 43/53 IA 3375 OF 2021.doc respective flats and appointment of a Court Receiver would cause irreparable loss to the Plaintiff as well as the majority members of the Defendant No.7 Society. I am, therefore, persuaded to allow Interim Application No.3375 of 2021. I.A.NO.1579 OF 2021:-
95. The Applicants/Defendant No.2 to 6 have taken out this application seeking following reliefs:-
"(a) That this Court may be pleased to dismiss the captioned suit and interim application taken out by the plaintiff therein, at the very threshold with exemplary costs.
(b) That this Court may be pleased to initiate proceedings under section 195 read with 120 B Code of Criminal Procedure and/or suo moto contempt proceeding against the plaintiff and its concerned directors.
(c) Pending the hearing and final disposal of the instant application, this Court may be pleased to stay/defer the hearing of the captioned suit and interim application taken out the plaintiff therein."
96. The substance of the application is that the plaintiff while instituting Suit No. 81 of 2021 has referred to and relied upon the forged and fabricated and got up documents in order to suppress and distort material facts and to make misleading statements for the purpose of procuring favourable orders from the Court. It is asserted the plaintiff has referred to and relied upon the minutes of the Special General Body Meeting dated 7th December, 2016 (Exhibit R), purported letter dated 27th July, 2017 (Exhibit T) and purported minutes of the Special General Body SSP 44/53 IA 3375 OF 2021.doc Meeting dated 7th December, 2018 (Exhibit Y), which are forged and fabricated.
97. An affidavit in reply is filed by the plaintiff controverting the assertions in this application. The application is stated to be misconceived and filed with a design to delay the disposal of the interim application and suit and to further delay the redevelopment of the society premises to the prejudice of the plaintiff and majority members.
98. Mr. Upadhyay, the learned counsel for the applicants/defendants strenuously urged that it is beyond cavil that a party who approaches the Court with false and fabricated documents and endeavours to play a fraud on the Court does not deserve to be heard and his case is liable to be thrown out at the threshold. Mr. Upadhyay would urge that the forgery of the documents is writ large. Inviting the attention of the Court to the minutes of the Special General Body Meeting, dated 12 th August, 2016 (Exhibit R to the plaint - also annexed as Exhibit B to the instant application) and the minutes of the Special General Body Meeting, dated 12 th August, 2016 (Exhibit C to the application), (which according to the Defendants are correct and genuine minutes of the meeting), submitted that the forgery becomes evident from a bare perusal of these documents.
99. Comparing and contrasting the minutes of the Special General Body Meeting dated 12th August, 2016 (Exhibits B and C) and pointing out the discrepancies therein, Mr. Upadhyay would urge that it is fit case to invoke the powers of the Court SSP 45/53 IA 3375 OF 2021.doc under section 340 read with 195 of the Code of Criminal Procedure, 1973 and initiate prosecution and/or initiate suo moto contempt proceedings against the plaintiff and its concerned Directors.
100. In opposition to this, it was urged on behalf of the plaintiff and defendant No. 7 that whether those documents are forged and fabricated would be a matter for trial and the said question cannot be decided at this stage.
102. So far as the alleged forgery of the letter dated 27 th July, 2017 (Exh.T), the said letter appears to have been addressed on behalf of the plaintiff to the Secretary/Chairman of defendant No. 7- society. Whether the contents of the letter are false to the knowledge of the plaintiff, is a matter which cannot be determined at this stage. Likewise, the document at Exhibit Y to the plaint appears to be a letter addressed to the Dy. Registrar, Cooperative Societies by the Secretary and Chairman of the defendant NO. 7- society. The submission regarding fabrication of the said letter by adverting to the intrinsic evidence therein would also be a matter for evidence.
103. The thrust of the submission of Mr. Upadhyay was on the alleged fabrication of the minutes of the Special General Body Meeting, dated 12 th August, 2016. Indeed the document at Exhibit R to the plaint and the document at Exhibits to the instant application, both of which purport to be the minutes of the Special General Body Meeting held on 7th August, 2016, dated 12th August, 2016, appear to be distinct in contents, executants and even the length of the resolutions. SSP 46/53
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104. From the perusal of these documents, record of deliberations apart, the final resolution, passed in the said meeting dated 7 th August, 2016, however, appear to have an element of commonality. The document at Exhibit R to the plaint records the decision on agenda Item No. 2 as under:-
"Resolved that as per the agenda of the requisition letter dated 20.05.2016, the new redeveloped building shall comprise of THREE flats on each floor, consisting of 10 habitable floors, the additional carpet area shall be 52% over and above the existing carpet area of the members, the hardship compensation shall be Rs. 5,100/- per square feet of the members existing carpet area as specified in the LOI dated 22.02.2016, the draft Development Agreement stands confirmed and final and the office bearer/s of the society are authorized to sign and execute the Development Agreement at the earliest."
105. The document at Exhibit C to the application records the decision on agenda Item No. 2 as under:-
"Resolved that as per the agenda of the requisition letter dated 20.05.2016, the new redeveloped building shall comprise of THREE flats on each floor, consisting of 10 habitable floors, the additional carpet area shall be 52% over and above the existing carpet area of the members, the hardship compensation shall be Rs. 5,100/- per square feet of the members existing carpet area, the draft Development Agreement stands confirmed, subject to the Society Solicitor Mr. Flanian D'souza giving his final nod and further the office bearer/s of the society are authorized to sign and execute the Development Agreement, Power of Attorney and other documents related to Redevelopment of the Society at the earliest in the name of M/s. Evershine Builders Pvt. Ltd.SSP 47/53
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106. It is evident that both the resolutions record that the members shall have additional carpet area at 52% over and above the existing carpet area of the members and the hardship compensation at Rs. 5,100 per sq.ft. of the members existing carpet area. The Special General Body Meeting purportedly resolved to authorize the office bearers to execute and sign the Development Agreement. The document at Exhibit contains a rider that the Development Agreement stands confirmed subject to Society Solicitor Mr. Flanian D'Souza giving his final nod.
107. Which of these documents is genuine can not be determined at this stage. Moreover, the aforesaid document does not seem to form the final basis of the execution of the Development Agreement. The decision of the Special General Body Meeting dated 26th January, 2018 led to the execution of the Development Agreement. Undoubtedly, a party who approaches the Court with a false claim and banks upon forged and fabricated documents does not deserve any relief. Fraud vitiates all the acts. But the genuineness or otherwise of each of these two documents would be a matter for trial.
108. At this stage, it may be apposite to make a reference to the constitution Bench judgment in the case of Iqbal Singh Marwah and Another vs. Meenakshi Marwah and Another23 wherein the Supreme Court emphasized that the resort to the 23 (2005) 4 Supreme Court Cases 370.
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IA 3375 OF 2021.doc provisions contained in section 340 read with 195(1)(b) of the Code of Criminal Procedure, 1973 can only be made where the Court finds it expedient in the interest of justice. The Constitution Bench of the Supreme Court further ruled that section 195(1)(b)(ii) of the Code would be attracted only when the offences enumerated in the said provision have been committed with reference to a document after it has been produced or given in evidence in a proceeding in any Court i.e. during the time when the document was custodia legis. The section may not apply where after commission of an act of forgery the document is subsequently produced in Court.
109. The observations in paragraphs 23 and 24 are material and hence extracted below.
"23. In view of the language used in Section 340 Cr.P.C. the Court is not bound to make a complaint regarding commission of an offence referred to in Section 195(1)(b), as the Section is conditioned by the words "Court is of opinion that it is expedient in the interest of justice." This shows that such a course will be adopted only if the interest of justice requires and not in every case. Before filing of the complaint, the Court may hold a preliminary enquiry and record a finding to the effect that it is expedient in the interests of justice that enquiry should be made into any of the offences referred to in Section 195(i)(b). This expediency will normally be judged by the Court by weighing not the magnitude of injury suffered by the person affected by such forgery or forged document, but having regard to the effect or impact, such commission of offence has upon administration of justice. It is possible that such forged document or forgery may cause a very serious or substantial injury to a person in the sense that it may SSP 49/53 IA 3375 OF 2021.doc deprive him of a very valuable property or status or the like, but such document may be just a piece of evidence produced or given in evidence in Court, where voluminous evidence may have been adduced and the effect of such piece of evidence on the broad concept of administration of justice may be minimal. In such circumstances, the Court may not consider it expedient in the interest of justice to make a complaint. The broad view of clause (b)
(ii), as canvassed by learned counsel for the appellants, would render the victim of such forgery or forged document remedyless.
Any interpretation which leads to a situation where a victim of a crime is rendered remedyless, has to be discarded.
24. There is another consideration which has to be kept in mind. Sub- section (1) of Section 340 Cr.P.C. contemplates holding of a preliminary enquiry. Normally, a direction for filing of a complaint is not made during the pendency of the proceeding before the Court and this is done at the stage when the proceeding is concluded and the final judgment is rendered. Section 341 provides for an appeal against an order directing filing of the complaint. The hearing and ultimate decision of the appeal is bound to take time. Section 343(2) confers a discretion upon a Court trying the complaint to adjourn the hearing of the case if it is brought to its notice that an appeal is pending against the decision arrived at in the judicial proceeding out of which the matter has arisen. In view of these provisions, the complaint case may not proceed at all for decades specially in matters arising out of civil suits where decisions are challenged in successive appellate fora which are time consuming. It is also to be noticed that there is no provision of appeal against an order passed under Section 343(2), whereby hearing of the case is adjourned until the decision of the appeal. These provisions show that, in reality, the procedure prescribed for filing a complaint by the Court is such SSP 50/53 IA 3375 OF 2021.doc that it may not fructify in the actual trial of the offender for an unusually long period. Delay in prosecution of a guilty person comes to his advantage as witnesses become reluctant to give evidence and the evidence gets lost. This important consideration dissuades us from accepting the broad interpretation sought to be placed upon clause (b)(ii).
110. In the backdrop of the aforesaid enunciation of law, I am of the considered view that the question as to whether the recourse to the provisions contained in section 340 read with 195 of the Code is warranted is required to be decided at the stage of the final adjudication of the suit as at that stage, post evidence, the Court would be in a position to form an opinion about the genuineness or otherwise of the allegedly forged document. I am, therefore, impelled to defer the hearing of the application No. 1579 of 2021 to the stage of final hearing of the suit.
111. Hence, the following order :
ORDER
(i) Interim Application No.3375 of 2021 stands allowed.
(ii) Defendant Nos.1 to 6 shall vacate and handover peaceful possession of the flats in their respective possession, if already not handed over, to the Applicant-
Plaintiff for redevelopment within a period of four weeks from today.
(iii) If the Defendant Nos.1 to 6 do not vacate and handover possession of the flats to the Applicant-Plaintiff within the said period, the Court Receiver, High SSP 51/53 IA 3375 OF 2021.doc Court, Bombay shall stand appointed to take possession of the respective flats which have not been handed over to the applicant-Plaintiff and handover the same to the applicant-plaintiff for redevelopment.
(iv) The Court Receiver shall be entitled to take assistance of the authorities, as may be required, to take possession of the flats.
(v) The applicant-plaintiff shall comply with all the obligations under the terms of the development agreement and give to the Defendant Nos.1 to 6 all the benefits and incidents available to all other members of the society and there shall not be any discrimination between the Defendant Nos.1 to 6 and other members in the matter of additional allotment of area, hardship compensation and rent.
(vi) The Applicant-Plaintiff shall file an undertaking in the court that it will comply with all its obligations under the Development Agreement qua the members of the Defendant No.7 Society and no member, including any of the Defendants, would be discriminated against in the matter of benefits and incidents available to the members of the Defendant No.7 society upon redevelopment.
(vii) Interim Application No.1579 of 2021 be decided separately along with the Suit.
(viii) In view of the disposal of IA No.3375 of 2021, Interim Application No.1664 of 2021 in Suit No.136 of 2021 does not survive and stands disposed.
(ix) It is hereby made clear that this order shall not be construed as the stay SSP 52/53 IA 3375 OF 2021.doc to the execution and operation of the notice issued by the Municipal Corporation under Section 354 of the Mumbai Municipal Corporation Act, and the consequent action pursuant to the said notice.
(x) In the circumstances, there shall be no order as to costs.
( N.J.JAMADAR, J. ) SSP 53/53 Signed by: S.S.Phadke Designation: PS To Honourable Judge Date: 21/10/2023 16:41:49