Bombay High Court
K. Talsania Construction vs Siddhi Apartments Chsl And 8 Ors on 7 February, 2019
Author: G.S.Kulkarni
Bench: G.S. Kulkarni
pvr 1 arbp395-18.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.395 OF 2018
K.Talsania Construction. ... Petitioner
Vs.
1.Siddhi Apartments Co-op.Housing Society Ltd. & Ors....Respondents
-----
Mr.Simil Purohit with Vishal Kanade, Ketki Prajapati, Maulik Vora I/b.
M/s.Pramod Kumar & Co., for the Petitioner.
Mr.Rohan Cama with Harshi Panchal I/b. Divya Singhavi, for Respondent
No.1.
Mr.Sharan Jagtiani with Mutahhar Khan I/b. Devendra M.Shinde, for
Respondent No.2.
Dr.Birendra Saraf with Mehul Shah I/b. Yatin S.Khochare, for Respondent
Nos.5 and 6.
Mr.Ashwin Shete I/b. Jaykar & Partners, for Respondent nos.7 to 9.
-----
CORAM : G.S. KULKARNI, J.
DATE: 7 February,2019
---
PC:-
1. This is a petition under Section 9 of the Arbitration and Conciliation
Act,1996 (for short 'the Act') wherein the petitioner who is a developer is
seeking interim reliefs pending the arbitral proceedings. The petitioner has
prayed for the following reliefs:-
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 2 arbp395-18.doc
"(a) that pending the commencement and culmination of the
arbitral proceedings between the Petitioner and Respondent no.1,
this Hon'ble Court be pleased to appoint the Court Receiver, High
Court, Bombay or any other fit and proper person as Receiver of
the property described in Exhibit 'A' hereto with all powers under
Order XL Rule 1 of the Code of Civil Procedure including power to
take physical possession of the subject Premises described in the
Exhibit 'B' hereto from Respondent Nos.2 to 9, their family
members and/or any person found in possession thereof, with the
help of police assistance, if necessary, including the breaking open
of lock and to hand over the same to the Petitioner for demolition
and re-development of the Property in accordance with the said
Agreement being Exhibit 'I' hereto;
(b) that pending the commencement and culmination of the
arbitral proceedings between the Petitioner and Respondent No.1,
this Hon'ble Court be pleased to grant an order and injunction
restraining the Respondents No.2 to 9, their family members,
servants, agents and any person claiming by, through and/or under
them or any one or more of them from in any manner selling,
transferring, alienating, dealing with, disposing off and/or creating
third party rights and/or encumbrances in respect of the subject
premises described in Exhibit'B' hereto or any part thereof and/or
parting with possession thereof and/or obstructing, interfering with
and/or creating hurdles in re-development of the property
described in Exhibit 'A' hereto by the Petitioner under said
Agreement (being Exhibit 'I' hereto), in any manner whatsoever."
2. In brief the facts are:
Respondent no.1 - Co-operative society (for short 'the society') is
the owner of the land bearing final plot No.69/B/3 admeasuring about
1738 sq.meters of Village Valnai, Taluka Borivali. Part of the land
belonging to the Society (508 sq.meters) was occupied by slum and the
balance land (1230 sq.meters) was in possession of the society having the
building consisting of flats occupied by 34 members. Respondent no.1-
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 3 arbp395-18.doc
society was desirous of a redevelopment of its building in the form of a
composite redevelopment which would include redevelopment of the area
occupied by the slum dwellers and the area in the occupation of the
society. The society had accordingly taken steps to invite bids from the
developers.
3. It is not in dispute that in that the society followed a open-tender
process by appointing a Project Management Consultant (PMC). Initially
a tender process was initiated by a PMC namely Namarch Consultants
who had issued the tender notice dated 3 August 2014 (page 149A). In
the said tender document as prepared by the said PMC as regards the
status of the plot the following statements were made:-
"(A) Plot Details
01) Status of the Plot : Conveyance is on the name of the society."
4. There was another clause in the said tender document as published
under the said tender notice being clause (H) pertaining to 'cost of
conveyance to be considered', which read as under:-
"H) COST OF CONVEYANCE CONSIDERED:
"Developer has to give lump sum cost he
Considers would incur to obtain conveyance
(Lump sum)"
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 4 arbp395-18.doc
There were bids received under this tender notice. The petitioner had
submitted its bid. However, for certain reasons this tender could not be
finalised and was not granted to any of the bidders.
5. The society thereafter appointed Rex Con Cor as a new PMC, who
again prepared a tender document. A fresh tender notice came to be
published on 10 June 2015 (page 264A) as published in the local
newspapers Maharashtra Times, Times of India and Mumbai Samachar
which was approved by Special General Body meeting of the society held
on 7 June 2015. The minutes of the meeting indicate that a resolution to
the following effect was proposed by respondent no.2- Bhimsen K.Khatri.
The relevant portion of the resolution reads thus:
"Resolution:A tender notice for inviting the bidders for the demolition and
the redevelopment of the society property/bldg of Siddhi Apartment CHS
Ltd. Be published in the local two newspapers i.e. Times of India,
Maharashtra Times and Mumbai Samachar on 10 th June 2015, pre bid
meeting on 26 at PMC office, with tender submission date as on
28.06.2015 between 12.00 noon to 5.00 p.m. and opening of the tenders
submitted by the bidders on the very same day @ 7 p.m. at the society
office."
6. In the tender document as prepared for this new tender, an
inadvertent mistake had taken place to the effect that the society was yet
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 5 arbp395-18.doc
to get the conveyance of the property executed in favour of the society.
However, at the same time, there were following disclosures under the
title "Highlights of the Project":-
"HIGHLIGHTS OF THE PROJECT
1. Calm and serene location within Mumbai-Centrally located.
2. Good residential area.
3. Highway, Airport, market, school hospital, etc. all nearby
4. Consent of all members of Redevelopment.
5. Facing/Touching 30' ft. wide DP Road.
6. Decent/peace loving/class society/members.
7. Ownership Plot/FSI RIGHTS OF LAND WITH SOCIETY.
(emphasis supplied)
7. In the said tender document under another heading titled as
"Liabilities of the Project", the following was provided:-
".. .. ..
4. Conveyance cost needs to be adjusted approx. 50 lacs, which includes cost
of purchase of 133 sq.mtr plot from original owner, stamp duty and
registration of documents and mutation/update of all property documents as
per standard norms." (emphasis supplied)
8. In response to this tender, two bids were received, one was of the
petitioner and the other was of one Shivshakti Construction. There was a
special general body meeting of the society held on 28 June 2015 to
transact the business; "to accept the tender documents alongwith the
relevant documents and EMD envelopments for the redevelopment of the
society building/property". In the minutes of the meeting of the said
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 6 arbp395-18.doc
Special General Meeting, in regard to the say of respondent no.2-
Mr.Bhimsen Khatri the following was recorded :-
"... Shri.Desai on verification with the other committee members revealed to
the meeting that the conveyance process is in final stage and society
redevelopment process will not be hampered. He further informed that the
cost for the conveyance has to be borne by the prospective developer since the
society cannot afford for the same at this stage. Dr.Khatri categorically
clarified that he wanted to go with the common decision but it should be
most benefiting to the society and further requested the chair to postpone the
date of SGBM scheduled for the selection of the developer since he would not
be in India till 26th July,2015."
(emphasis supplied)
9. Thereafter a special general body meeting was held on 14 August
2015. Discussion took place in the meeting to finalize the tender. The
minutes of the meeting recorded thus:-
"But the PMC representative Shri.Sinha informed the meeting that from
PMC REX CON COR Consultants office one tender form is issued to the
potential bidder M/s.Aditya Developers who was accompanied by our
respectable member Dr.Shri.Khatri. He stressed the efforts of Dr.Khatri for
the benefit of all the society members being the only member who strived for
additional opportunity to bidders. Shri.Sinha further informed that the
visiting developer was advised to submit the duly filled tender form along
with the FTGL tender terms set to society office within the given period of
fifteen days from 28th July 2015 to 12th August 2015, as decided in the
meeting on 28th July 2015. The member/developer both were guided by the
PMC office about the timely submission.
Hon.Secretary informed the SGBM that the society has not received any
tender form after the previous meeting of 28 th July 2015.
.........
Then PMC Shri.Anup Gupta also explained how the society gave the
opportunity to all who desired and proposed for bringing more
bidders/developers in previous meeting.
Again at this stage the general body unanimously approved the tender
process and confirmed that the subject of searching any more further bidders
be closed and mock voting be taken.
Society members unanimously approved by majority vote that the search of
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 7 arbp395-18.doc
more builders and higher financial offer to be closed.
.. ... ...
The Hon.Secy informed the chair that the society is in receipt of 2(two)
verbal/mail votes and those required to be taken into account since the
members are out of station. After collecting the entire mock voting forms
PMC representative, as per instruction of the chairman went through the
same and counted them by loudly reading for the knowledge of the members
with the name of the developers and the votes casted. PMC Shri.Parinay
Sinha counted the votes in front of general body. The Chairman with PMC
help declared the name of the developer selected by the SGBM as "Total mock
votes 29 casted and all in favour of M/s.K.Talsanisa Constructions." 27 votes
in writing and 2 verbal. The chairman asked the members to submit written
vote against this verbal vote. Based on percentage of highest /all vote casted
in favour of one developer, as such M/s.K.Talsania Constructions is selected
by the mock voting for the final selection in presence of Registrar of co-op.
Societies."
(emphasis supplied)
10. Thus on a majority, voting as undertaken, the members of the
society resolved to appoint the petitioner as the developer to undertake
the redevelopment of the premises of the society. Thereafter again on 22
October 2015 a Special General Body meeting was held for confirmation
of the award of the tender to the petitioner. During this meeting, the
authorised officer of the Deputy Registrar Mr.Rokade was present and the
following decision was taken by majority:-
"The authorized officer MR.S.B.Rokade again confirmed the quorum for this
meeting. He also noted the presence of representative of competitive
developers Shri.Kishore Talsania for M/s.K.Talsania and Shri.Praful Shah
for M/s.Shakti Construction and the society's PMC M/s.Rex Con Cor
Consultants Pvt.Ltd."
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 8 arbp395-18.doc
11. Accordingly the petitioner being awarded the re-development
contract, a development agreement dated 30 May 2016 was entered
between the society and the petitioner. The agreement was acted upon
and it is the case of the petitioner that in pursuance of the said agreement,
the petitioner has undertaken construction of the slums building to
accommodate forty six slum dwellers. After receipt of the occupation
certificate, the eligible slum dwellers are already put into possession of
their respective tenements. It is stated that thereafter the petitioner
intended to commence the construction of the society's building as also
commercial component as would be available in the said building of the
petitioner. The case of the petitioner is that it has made substantial
investment in undertaking the construction of the slum dwellers building
and now as per the terms of the development agreement, is entitled to
undertake further construction of the society's building. It is at this stage
that the petitioner requested respondent no.2 to vacate flat nos.14 and 15,
respondent nos.3 and 4 to vacate flat no.25 and respondent nos.5,6,7,8
and 9 to vacate flat nos.31 and 72. However, on some reasons which are
untenable and contrary to the development agreement entered by the
petitioner with the society, these respondents have refused to vacate their
respective tenements. As regards the other members of the society out of
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 9 arbp395-18.doc
total 34 members, 28 members have already executed agreements for
permanent alternate accommodation and are ready and willing to hand
over the possession of the respective flats to the petitioner. Further about
18 members have already vacated their respective premises. It is in these
circumstances on refusal on the part of these respondents to vacate the
respective tenements, the present petition has been filed seeking the
reliefs as noted above.
12. Mr.Kanade, learned Counsel for the petitioner referring to the
clauses in the development agreement would submit that in the above
circumstances, respondent nos.2 to 9 cannot take a position that they
would not vacate their respective flats and hand over the vacant
possession to the society and delay the work of redevelopment. He
submits that the petitioner has invested substantial amounts, the
construction of the slum rehabilitation building is already completed, any
further delay in starting the construction will cause a serious prejudice to
the petitioner. Mr.Kanade would submit that the redevelopment project
was a composite project of construction of the slum rehabilitation building
as already completed and the society building. It is submitted that now
after completion of first part of the project and when the petitioner
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 10 arbp395-18.doc
intends to undertake the redevelopment of the existing building of the
society, for which majority of the members have entered into agreements
for permanent alternate accommodation, these respondents intend to stall
the project to also causing a prejudice to the majority of the member of
the society. It is submitted that respondent no.2- Bhimsen K.Khatri is not
vacating flat nos.14 and 15 whereas respondent nos.3 and 4 are not
vacating flat no.25 and respondent nos.5 to 9 are not vacating flat nos.31
and 72. It is submitted that there are no justifiable reasons for them not
to vacate the flats. The Court's attention is drawn to the various
averments as made in the petition on the basis of which the relief is
sought.
13. Mr.Ashwin Shete, learned Counsel for respondent nos.7 to 9
at the outset submits that his clients have no objection for redevelopment
to be undertaken as also for vacating the premises. It is submitted that the
disputes inter-se between respondent nos.5 to 9 are sub-judice and are
subject matter of civil suit no. 3182 of 2015 filed before the City Civil
Court at Bombay.
14. Dr.Saraf, learned Counsel for respondent nos.5 and 6 would
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 11 arbp395-18.doc
also not dispute that there are inter-se disputes between his clients and
respondent nos.7 to 9. Dr.Saraf, learned Counsel for respondent nos.5
and 6 on merits has opposed the reliefs as prayed in the petition.
Dr.Saraf's principal contention is that the petitioner is acting in breach of
clauses 3.1, 10.1 and 10.2 of the development agreement as entered with
the society which provide for certain conditions, compliance of which is
mandatory by the petitioner, before which the petitioner cannot called
upon the respondents to vacate the premises. These conditions of the
development agreement read thus:-
"3.1 It is also agreed by and between the parties hereto that as per the
representation, the TDR that is to be loaded on the said property, the
premium for the fungible FSI availed on the sale area, and the
development charges, if any [covering the premises allotted to the
Members of the Society] shall be paid by the Developer on or before
request being made by the developer to vacate respective tenements of
the occupants of the society.
...... ....
10.2 The developers shall initially get the specific principal approval of
Municipal Commissioner for the plans for plot potential FSI; admissible
TDR and the admissible compensatory fungible FSI. The developers
agrees to get the plans and specification sanctioned for consumption of
the basic FSI of 1.00 and further additional FSI of 0.50 by paying
premium (within one TDR) and admissible compensatory fungible FSI for
accommodating all the Members before getting the vacant possession of
all Flats. The developer shall pay the payment of premium for the fungible
F.S.I. The developer shall get the approval of admissible FSI i.e. said
property potential together with TDR & compensatory fungible FSI
loading of TDR which is covering the Members' existing premises initially
and not for the entire property before demand for vacating flats.
(emphasis supplied)
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 12 arbp395-18.doc
15. The next contention of Dr.Saraf is that the scheme under the
development agreement in question is undertaken by the petitioner as a
slum scheme. It is contended that this is clear from the permission issued
by Slum Rehabilitation Authority. It is submitted that the redevelopment
of the premises of the society can never form part of the slum scheme as
the society premises are required to be independent premises which
according to Mr.Saraf is clear from clause 17(r) of the agreement which
provides that the property shall not be developed as SRA property and a
distinct demarcation will have to be earmarked for development of SRA
portion and development of the society's building and that the developer
shall not to describe or introduce the words 'SRA' in the name of the
society, however, both the buildings will be distinct and separate and shall
not have common compound. It is submitted that the development in
question is being undertaken by the petitioner contrary to these clauses of
the agreement.
16. Mr.Jagtiani, learned Counsel for respondent no.2 has also opposed
this petition on the ground that in fact, the tender process undertaken by
the petitioner itself is vitiated by fraud inasmuch as the tender document
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 13 arbp395-18.doc
itself mislead the bidding parties on the issue of conveyance. Mr.Jagtiani
would submit that the tender document as earlier issued by the Project
Management Consultant namely Namarach Consultants, there was a
discrepancy as made in the tender document in regard to the conveyance,
as noted in the foregoing paragraphs. It is submitted that in the second
round in the tender document issued at the behest of new PMC Rex Con
Cor, again in regard to the conveyance, there was a misrepresentation, as
noted above, which is a fraud played by the society on its members in
pursuing the said tender process by the PMC - Rex Con Cor. It is
therefore submitted that the development agreement ought not to be
acted upon and/or given effect to. It is submitted that respondent no.2
has already initiated the proceedings in a revision before the co-operative
authorities, whereby the meeting as held by the society to proceed with
the development, has been questioned in the said proceedings. In support
of his submission, Mr.Jagtiani has placed reliance on the following
observations of the Division Bench of this Court in the decision in "Girish
Mulchand Mehta & Anr. Vs. Mehesh S.Mehta & Anr.1:
" 20. It was also aruged that the property was in good condition and
there was no need to redevelop the existing building. In the first place, as
noted earlier, the decision of the General Body of the Society to redevelop
the suit property has not been challenged at all. Besides, no provision in
the Co-operative Societies Act or the rules or any other legal provision has
1 2010(2) Mh.L.J. 657
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 14 arbp395-18.doc
been brought to our notice which would curtail the right of the society in
redevelop the property when the General Body of the Society intends to
do so. Essentially, that is the commercial wisdom of the General Body of
the Society. It is not open to the Court to sit over the said wisdom of the
General Body as an Appellate Authority. Merely because some members in
minority disapprove of the decision, that cannot be the basis to negate the
decision of the General Body, unless it is shown that the decision was the
product of fraud or misrepresentation or was opposed to some statutory
prohibition. That is not the grievance made before us... .. ."
(emphasis supplied)
17. On the other hand Mr.Cama learned Counsel for the respondent-
society has opposed the submissions as made by Dr.Saraf, learned Counsel
for respondent nos.5 and 6 and Mr.Jagtiani, learned Counsel for
respondent no.2. Mr.Cama at the outset would submit that the society as
a body is wholeheartedly supporting the petitioner. It is submitted that 28
members have already entered into an agreement for permanent alternate
accommodation as also the majority of them have vacated the premises. It
is submitted that the contesting respondents are creating unnecessary
hurdles in the redevelopment of the premises of the society which is
causing irreparable prejudice and injury to the other members of the
society. Mr.Cama would submit that the contention as urged by Dr.Saraf
referring to clause 3.1 and 10.2 of the development agreement to contend
that such a compliance is not made by the developer, is totally
misconceived. It is submitted that these respondents have completely
misread the said clauses of the agreement to allege non compliance of the
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:33 :::
pvr 15 arbp395-18.doc
petitioner. It is submitted that the petitioner is making compliance of all
the clauses of the agreement including the said clauses as referred by
Dr.Saraf and would submit that these respondents are misreading the said
clauses. As regards Dr.Saraf's contention that the development of the
society's building cannot form development under the slums scheme,
Mr.Cama referring to the various clauses of the development agreement
would contend that Dr.Saraf's submission is misconceived and contrary to
the development agreement.
18. Mr.Cama in response to the submissions of Mr.Jagtiani would
submit that at all the relevant time respondent no.2 Mr.Khatri was part
and parcel of the decision making process and was making an attempt to
avoid awarding of the contract of redevelopment to the petitioner. My
attention is drawn to the several documents on record to make good his
submission that at every stage of the decision making process, the
respondent no.2 was involved. Mr.Cama would submit that the
submissions as made by Mr.Jagtiani are in the teeth of the ratio laid down
by the Division Bench in its decision in Girish Mulchand Mehta (supra),
where the Division Bench taking a review of the law, has categorically
observed that minuscule minority of the members in a society cannot
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:34 :::
pvr 16 arbp395-18.doc
override the majority opinion of the members, merely on the ground that
certain terms and conditions of the development agreement are not
acceptable to these members. Mr.Cama further submits that at all material
times it was to the knowledge of respondent no.2 that the conveyance is
already obtained as it was also clear from the first tender document which
was prepared by PMC Namarch Consultants, and the clause in regard to
payment was only in the nature of recompense clause, wherein it was
accepted that the developer who would be appointed would compensate
the conveyance cost incurred by the society. It is submitted that both the
petitioner and the other bidders who responded to the tender published by
the PMC Rex Con Cor also were aware that the conveyance was already
obtained and there was no dispute in this regard. Mr.Cama would thus
submit that the contention of Mr.Jagtiani that a fraud is played by the
society on its members, is patently incorrect and in fact false to the
knowledge of respondent no.2.
19. Mr.Kanade, learned Counsel for the petitioner also supports the
arguments as made on behalf of Mr.Cama to submit that at all material
times the bidding parties were aware that the conveyance was already
obtained by the society and it is on that basis the petitioner participated in
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:34 :::
pvr 17 arbp395-18.doc
the tender in question and agreed to re-compensate the society in that
regard.
20. Having heard the learned Counsel for the parties and having
perused the record, I am not persuaded to accept the submissions as urged
on behalf of the respondents. Firstly dealing with the submissions of
Dr.Saraf, in my clear opinion, the provisions of clauses 3.1 and 10.2 of the
agreement, of which Dr.Saraf would urge, that there is breach on the part
of the petitioner, cannot be accepted. This for the reason that, there is
complete misreading of these clauses in making this argument. On a
plain reading of clause 3.1 it is clear that in respect of the TDR which is to
be loaded on the property and for the fungible FSI which is to be availed
on the sale area, the premium and the development charges, if any which
would cover the premises allotted to the members of the society, are
required to be paid by the developer on or before the request is made by
the developer to vacate the tenements of the occupants of the society.
Further clause 10.2 provides that the developer is required to make
payment of premium for fungible FSI and that the developer will obtain
approval of admissible FSI, that is the said property potential, together
with TDR and compensatory fungible FSI, loading of TDR which would be
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:34 :::
pvr 18 arbp395-18.doc
covering the members' existing premises, "initially" and not for the entire
property before the demand for vacating flats.
21. A cumulative reading of the clauses 3.1 and 10.2, in my opinion,
does not indicate that the developer would be required to make payment
of the entire amount of the charges/premium in regard to the full TDR
and compensatory fungible FSI and it would be sufficient that the charges
in regard to construction of the premises covering tenements of the
members of the society are initially paid as clearly agreed between the
society and the petitioner. This is significantly clear from the following
recital as contained in clause 10.2:-
10.2 The developers shall initially get the specific principal approval of
Municipal Commissioner for the plans for plot potential FSI; admissible
TDR and the admissible compensatory fungible FSI. The developers
agrees to get the plans and specification sanctioned for consumption of
the basic FSI of 1.00 and further additional FSI of 0.50 by paying
premium (within one TDR) and admissible compensatory fungible FSI for
accommodating all the Members before getting the vacant possession of
all Flats. The developer shall pay the payment of premium for the fungible
F.S.I. The developer shall get the approval of admissible FSI i.e. said
property potential together with TDR & compensatory fungible FSI
loading of TDR which is covering the Members' existing premises initially
and not for the entire property before demand for vacating flats.
(emphasis added)
22. However, to clarify this position, this Court had directed the
respondents to file an affidavit so as to ascertain whether clauses 3.1 and
10.2 as they stand are being complied by the petitioner and that the
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:34 :::
pvr 19 arbp395-18.doc
members of the society in no manner are prejudiced even in regard to the
payment in regard to the construction of the society premises/building. An
affidavit dated 31 January 2019 is filed by Jayur Kishore Shah -partner of
the petitioner to the following effect:-
"1. I say that as on date the Concerned Development Authority
has permitted and sanctioned the development potentiality of
1230 sq.mtrs. As "Base Land FSI", the Petitioner has got generated
from the Concerned Development Authority/SRA and loaded the
development potentiality of 885.50 sq.mtrs. The Petitioner has
also been granted the Fungible FSI of 562 sq.mtrs and premium
FSI of 174 sq.mtrs. Aggregating in all 2851.50 sq.mtrs. The
Petitioner have paid an amount of Rs.71,25,000/- (Rupees
Seventy one lakh Twenty Five thousand only) as and by way of
premium to the Concerned Authority towards procuring the
premium FSI of 174 sq.mtrs. The constructed area in the form of
residential premises to be provided to the Society for its members
is 2,367.64 sq.mtrs (built up area). IN view of the above, I say that
the Clause no.3.1 read with Clause no.102 of the Development
Agreement dated 30th May 2016 have been fully complied with
and therefore the time for the Members of Respondent No.1
Society to vacate their respective premises, has arisen.
2. I say that I.O.D. has also been granted in respect of the
Building wherein the Members of the Respondent No.1 society will
be accommodated. I further say that the FSI presently allowed
sufficiently covers the Members' premises and also makes available
to the Petitioner an area of 485.12 sq.mtrs for Free sale which
includes security flats."
23. It is thus clear that there is no substance in the contention as urged
by Dr.Saraf that there is violation of clauses 3.1 and 10.2 to the prejudice
of the members of the society. It is significant to note that the arguments
of Dr.Saraf are in no manner whatsoever are supported by the society
which would represent the majority members of the society. This
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:34 :::
pvr 20 arbp395-18.doc
compounds the fact that if the majority members themselves are satisfied
with the clear purport and implication of these clauses of the agreement
and the majority of members do not find any compliance and a prejudice,
it would be too far-fetched for Dr.Saraf, learned Counsel for respondent
nos.5 and 6 to assert such interpretation of clause 3.1 and 10.2 of the
development agreement only because respondent no.2 so believes.
Moreover, Dr.Saraf's clients have no justifiable answer to the affidavit as
filed by Mr.Jayur Kishor Shah on behalf of the petitioner, as directed by
the Court.
24. As regards the the next contention of Dr.Saraf that the entire
development has been undertaken as a slum project and which is contrary
to the terms and conditions of the agreement, also cannot be accepted. It
is clear from the record and the development agreement, that the
development in question is for a composite development. Admittedly the
area admeasuring 508 sq.meters was covered by slum and titled as 'slum
area' in clause 1A of the development agreement. An area of 1230
sq.meters was the area defined as the society's area. There are clear
clauses in the agreement which obligates the petitioner to put boundary
wall and keep the areas demarcated. In my opinion, this argument of
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:34 :::
pvr 21 arbp395-18.doc
Dr.Saraf is thus an absolute exaggeration and presumptuous. This apart,
this argument of Dr.Saraf, also cannot be accepted at such a belated stage
of the project. Further the argument is also contrary to the very terms of
the development agreement which takes within its fold a composite
development of the slum area and the society area. It can also be clearly
seen from the record that it is not the case that Dr.Saraf's client was not
aware in regard to the nature of development and that the development is
composite development of slum and society area. Dr.Saraf 's client was
also aware that it would be impossible to construct the slum rehabilitation
building without the benefits of redevelopment coming to the share of the
developer in undertaking the construction of free sale area and in
constructing society's premises. Thus, considering the documents on
record in my clear opinion, the contentions as urged by Dr.Saraf on
behalf of respondent nos.5 and 6 are wholly misconceived and deserve to
be rejected.
25. It appears that respondent nos.5 and 6 intends to create hurdles in
the smooth redevelopment of the society's building and more particularly
when he was completely aware about the entire sequence of the events
which had led the petitioner to undertake this project and that too after
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:34 :::
pvr 22 arbp395-18.doc
the petitioner completing half the project, that is completion of
rehabilitation building.
26. As regards the contention of Mr.Jagtiani, learned Counsel for
respondent no.2 that there is fraud which is played by the society on its
members by entering into the development agreement, also cannot be
accepted. The argument is totally untenable. This firstly for the reason
that respondent no.2 being a member of the society has never assailed the
development agreement before the competent Court in the manner known
to law. Further the revision proceedings as initiated by respondent no.2
before the co-operative authority would also not assist Mr.Jagtiani's client,
as those proceedings are not the proceedings where respondent no.2
would succeed in getting a declaration that the development agreement
itself is vitiated by fraud. In my clear opinion, the argument of
Mr.Jagtiani's client is clearly an afterthought. It is too late in time for
respondent no.2 to contend that the agreement itself is vitiated by fraud.
This more particularly when respondent no.2 has participated in various
meetings which not only pertaining to appointment of the project
management consultant but also inviting bids by publication of tender.
The record also indicates that respondent no.2 was clearly aware that the
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:34 :::
pvr 23 arbp395-18.doc
conveyance of the society has been obtained. It is further surprising as to
how this argument can be advanced by respondent no.2 when the record
of special general body meeting clearly indicates that respondent no.2 had
agreed that he would go with the majority vote and also accepted
awarding of tender for redevelopment to the petitioner. It is also quite
clear that the stand as taken by respondent no.2 is not bonafide. It
appears that the entire arguments of respondent no.2 as urged by
Mr.Jagtiani are arguments in desperation and that respondent no.2 has no
bonafide reasons in opposing the redevelopment and in not co-operating
in vacating of the premises. In this context Mr.Cama would be right in his
contention referring to the decision of the Division Bench in "Girish
Mulchand Mehta" (supra), to contend that minuscule members cannot
withhold the greater benefits of the majority members of the society. The
division Bench in the said decision considering the law on the issue as
made the following observations:-
"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 27-4-2008, 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
::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:34 :::
pvr 24 arbp395-18.doc
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 Society. ...
(emphasis supplied)
27. In the aforesaid circumstances, I am of the clear opinion that the
petitioner has made out a prima facie case for grant of interim reliefs
pending the arbitral proceedings. The balance of convenience is
overwhelmingly in favour of the majority members of the society for
whose benefit the petitioner would undertake the development. If the
relief as prayed for is not granted, certainly the petitioner and the
members of the society will suffer a serious prejudice. I have no hesitation
but to grant interim reliefs to the petitioner. Accordingly, the following
order:-
ORDER
(i) Respondent nos.2 to 9 are directed to vacate their respective flats and hand over the possession of their flats to the society within a period of four weeks from today.
(ii) Learned counsel for the respondent nos.7 to 9 on instructions, states that his clients shall hand over the possession of flat no.72 to the ::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:34 ::: pvr 25 arbp395-18.doc society within a period of four weeks from today. Statement is accepted.
(iii) On failure of respondent nos.2 to 6 who are occupying flat nos.14 and 15 and flat nos.25 and 31 respectively, to hand over the possession of the respective flats to the society, as directed in para 1 above, the Court Receiver, High Court, Bombay shall stand appointed as a receiver of the said flats with all powers under Order 40 Rule 1 of the Code of Civil Procedure, 1908 to take physical possession of the said flats and to hand over these flats to the society.
(iv) On completion of the re-development, the petitioner/society shall hand over the permanent alternate premises to the Court Receiver to be handed over to the parties, from whom the possession was taken over. In respect of flats voluntarily surrendered and vacated, the permanent alternate premises be handed over to those persons from whom the premises were taken over.
(v) The petitioner and the society are permitted to enter into an agreement for permanent alternate accommodation with the respondent no.2 to 9 and as and when these respondents come forward to execute the ::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:34 ::: pvr 26 arbp395-18.doc said agreements.
(vi) In view of the dispute between inter se between respondent nos.5 to 9, it would be open to these respondents to nominate any person with whom such an agreement for permanent alternate accommodation is to be entered into qua flat nos. 31 and 72, with which these respondents are concerned. Such an arrangement be informed to the society as also to the petitioner, within a period of two weeks from today. This arrangement shall be subject to the outcome of the proceedings of Suit No.3182 of 2015 and counter claim no.2 of 2018 which are pending before the City Civil Court, Dindoshi at Mumbai.
(vii) The petitioner shall pay the costs/charges of the Court Receiver.
(viii) The parties shall take steps to initiate the arbitral process within a period of 90 days from today.
(ix) It is clarified that respondent nos.5 to 9 shall keep indemnified the petitioner and the society in case any third party makes a claim against them in the inter se disputes between these respondents. ::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:34 :::
pvr 27 arbp395-18.doc (x) It is further clarified that in passing the above order, this Court has
not adjudicated in regard to any rights inter se between respondent nos.5 to 9 nor in any manner has touched and/or reflected on the individual rights of these respondents.
(xi) Mr.Kanade learned counsel for the petitioner states that the rent for the transit accommodation shall be paid to the person from whom possession of the respective flats would be taken by the society. Statement is accepted.
(xii) Petition is accordingly disposed of in the above terms. No order as to costs.
(G.S.Kulkarni, J.) ::: Uploaded on - 08/02/2019 ::: Downloaded on - 09/02/2019 00:57:34 :::