Bombay High Court
Mp Space Dynamics Pvt Ltd vs Janardan Chavan And 4 Ors on 23 December, 2021
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
7. ARBPL 17007-21.docx
LAXMI
SUBHASH
SONTAKKE IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Digitally signed by
LAXMI SUBHASH
SONTAKKE ORDINARY ORIGINAL CIVIL JURISDICTION
Date: 2021.12.24
16:09:33 +0530
ARBITRATION PETITION (L) NO. 17007 OF 2021
MP Space Dynamics Pvt. Ltd. .. Petitioner
Vs.
Janardan Chavan & Ors. .. Respondents
WITH
INTERIM APPLICATION (L) NO. 19660 OF 2021
IN
ARBITRATION PETITION (L) NO. 17007 OF 2021
Dattatraya W. Shevade & Ors. ..Applicants/
Interveners
IN THE MATTER BETWEEN
MP Space Dynamics Pvt. Ltd. .. Petitioner
Vs.
Janardan Chavan & Ors. .. Respondents
Mr. Karl Tamboly with Vachan Bodke, Pinky Sharma, Swati Kalatme
& Tushar Nagvekar i/b V. & M. Legal for the Petitioner.
Mr. Akash Rebello i/b Neha Choksi for the Applicants in IA(L)
19660/2021.
Mr. Joel Carloz i/b Rohan Mirpure for Respondent Nos.1 to 4.
Laxmi 1/49
7. ARBPL 17007-21.docx
CORAM :- B. P. COLABAWALLA, J.
Reserved on :- OCTOBER 29, 2021.
Pronounced on :- DECEMBER 23, 2021.
JUDGEMENT:-
1. This is yet another case where the Petitioner - Developer has been constrained to approach this Court seeking reliefs against four dissenting members (Respondent Nos.1 to 4) who are holding up the entire re-development by refusing to vacate the premises in their occupation. Respondent No.1 is the occupant of Flat No.A/9;
Respondent No2 is the occupant of Flat No.A/20; Respondent No.3 is the occupant of Flat No.A/21; and Respondent No.4 is the occupant of Flat No.A/22 and Flat No.B/22 respectively. All the other members of the 5th Respondent Society have vacated their respective premises. It is the uncooperative attitude of these four members (Respondent Nos.1 to
4) that has led to the filing of the above Petition under Section 9 of the Arbitration and Conciliation Act, 1996 (for short the "Arbitration Act"), seeking the following reliefs:
(a) That this Hon'ble Court be please to appoint Court Receiver, Bombay High Court with all powers under order 40 rule 1 of the Civil Procedure Code, 1908 to take forceful possession of flats of the Respondent Nos. 1, 2, 3 Laxmi 2/49
7. ARBPL 17007-21.docx and 4 in the Respondent No.5 (wrongly mentioned as Respondent No.4).
(b) That this Hon'ble Court be please to issue directions to take forceful possession of respective flats of the Respondent Nos. 1, 2, 3 and 4 through the office of the Court Receiver High Court Bombay & if necessary to take police protection to enable the Petitioner to start the redevelopment work by demolishing the existing building of the said society.
2. The above Interim Application has been filed by 28 members of the 5th Respondent Society seeking to intervene in the above Petition. All these 28 members are supporting the Petitioner.
3. The brief facts giving rise to the present controversy are this. The dispute pertains to re-development of the property of the 5th Respondent Society being a building consisting of ground plus four floors comprising of 33 flats situated at Plot No. 222 and 223, TPS. III, 51st TPS Road, Babhai, Borivali (West), Mumbai-400 091 (for short the "said property"). Respondent Nos. 1, 3 and 4 are the legal heirs of the original members of the 5th Respondent Society. As far as Respondent No.2 is concerned, she is along with Swapnali Ranade, is a member of the 5th Respondent Society.
4. On 6th March, 1981, Respondent No. 5 was registered as a Society. The members of the Society are purchasers of the flats in the Laxmi 3/49
7. ARBPL 17007-21.docx existing building constructed on the said property. As of today there are 33 members of the said Society. On 13th November, 1998, an Occupation Certificate was issued in respect of the existing building constructed on the said property and a deemed conveyance in respect of the said property was also executed by the Competent Authority in favour of Respondent No.5 on 22nd August, 2012.
5. On 25th August, 2013, an Annual General Meeting of the Society was held wherein the Managing Committee of Respondent No.5 was appointed. According to Respondent Nos. 1 to 4 this meeting was conducted without the proper coram and hence is invalid. Be that as it may, between 2013 to 2015, the 5th Respondent Society resolved to undertake re-development of its existing building by appointing a Developer. In this regard, on 27th September, 2015, an Annual General Meeting was conducted wherein the Petitioner was introduced to the members of Respondent No.5 to develop the said property. After the aforesaid Annual General Meeting, in October, 2015, majority of the members of Respondent No.5 issued letters of consent authorizing the Petitioner to undertake the re-development of the said property.
6. Thereafter, on 18th October, 2015, a General Body Meeting of Respondent No. 5 was held wherein a resolution was passed inter-
Laxmi 4/497. ARBPL 17007-21.docx alia recording that the majority members of Respondent No.5 had provided their written consent in favour of the Petitioner being appointed as the Developer to re-develop the said property. Thereafter, another Special General Body Meeting was also convened on 12th December, 2015 wherein copies of a draft Development Agreement was provided to the members of Respondent No.5.
7. After all this, on 9th August, 2016, a Development Agreement was executed between the 5th Respondent Society and the Petitioner (as the Developer) for re-development of the said property.
The Development Agreement categorically records that the existing building is not in a sound condition and is incapable of being repaired.
It further stipulates that the members of the Society must vacate their existing premises and hand over vacant and peaceful possession of their respective premises within 30 days of receipt of the Petitioner's intimation in that regard after obtaining IOD, failing which, every defaulting member shall be liable to pay Rs. 50,000/- per day as compensation to the Petitioner. This Development Agreement also contains an arbitration clause between the parties as reflected in clause 36 thereof.
8. After entering into the aforesaid Development Agreement, Laxmi 5/49
7. ARBPL 17007-21.docx minutes of the Special General Body Meetings held on 27th September, 2015 and 18th October, 2015 were approved on 26th September, 2016.
9. According to Respondent Nos. 1 to 4, the five year tenure of the Managing Committee of Respondent No.5 lapsed as on 24th August, 2018. Since the tenure of the Managing Committee had lapsed, according to Respondent Nos.1 to 4, the said Managing Committee had no power to convene any meetings and consequently any resolutions passed at any such meetings were also invalid, illegal and without any proper authority. The reason I have mentioned this over here is because it is the contention of Respondent Nos. 1 to 4 that all resolutions passed by the 5th Respondent Society have been challenged before the Cooperative Court, and pending that challenge, Respondent Nos. 1 to 4 cannot be asked to vacate their respective premises.
10. Be that as it may, on 1st September, 2018, the Development Control and Promotion Regulation of 2034 (for short "DCPR 2034") came into force. In view of the aforesaid DCPR 2034, an Annual General Meeting was convened on 22nd September, 2019 wherein Respondent No.5 allowed the Petitioner to take necessary steps to obtain the approval of plans in accordance with DCPR, 2034. In fact, prior thereto, on 23rd December, 2018, another Special General Body Meeting was Laxmi 6/49
7. ARBPL 17007-21.docx convened wherein inter-alia a resolution was passed that two out of the three office bearers of Respondent No.5 must be signatories for executing deeds, documents, Permanent Alternate Accommodation Agreements and/or any other documents in respect of the said property and also to represent Respondent No.5 before the Sub Registrar of Assurances for admitting execution of any of the abovementioned documents. Thereafter, on 1st October, 2020, another Annual General Meeting of Respondent No.5 was convened wherein inter-alia a resolution was passed admitting seven slum dwellers as members of the 5th Respondent Society.
11. The Petitioner - Developer, thereafter, obtained the Intimation of Disapproval (IOD) from the MCGM for re-development of the said property under DCPR, 2034. This IOD was obtained on 22nd January, 2021.
12. Since, there were certain internal disputes in the 5th Respondent Society, complaints came to be filed before the Deputy Registrar of Cooperative Societies inter-alia alleging that the ex-office bearers of the Managing Committee were fraudulently representing themselves as office bearers of Respondent No.5, even after expiry of their tenure. Pursuant to the complaints filed, the office of the Deputy Laxmi 7/49
7. ARBPL 17007-21.docx Registrar of Cooperative Housing Societies passed an order on 18th February, 2021, dismissing the Managing Committee of Respondent No.5 and appointed one Mr. Shashank Chowkidar, a Certified Chartered Accountant, as the Authorized Administrator to oversee the daily work of the Society. Thereafter, the office of the Deputy Registrar of Cooperative Housing Societies passed an order on 16th September, 2021 whereby Mr. Shashank Chowkidar (as the Administrator) was replaced by a 3 Member Administrator Board consisting of Mr. Mahindra D. Kharat, Mr. Atul Govind Virkar and Mr. Vijay S. Soni, who are all members of the 5th Respondent Society, to take charge of the records of the society and initiate the process for conducting elections.
13. In the interregnum, on 26th July, 2021, the Petitioner addressed a Letter to the Administrator appointed pursuant to the order dated 18th February, 2021 stating that the Petitioner had acquired development rights over the said property by following the guidelines as prescribed under Section 79A of the Maharashtra Co-operative Housing Societies Act, 1960 and also highlighted the dilapidated condition of the building. Thereafter, the present Petition was filed on 3rd August, 2021.
14. When this matter had come up on the first occasion namely, on 18th August, 2021, Respondent Nos. 1 to 4 sought time to file Laxmi 8/49
7. ARBPL 17007-21.docx an affidavit-in-reply to the above Petition. Acceding to this request and considering that the re-development was held up from 2016, the said Respondents were directed to file their affidavit-in-reply on or before 25th August, 2021. However, before the aforesaid date, on 23rd August, 2021 (after filing of the present Petition and after it came up for the first time), Respondent Nos. 1 to 4 filed Dispute No.162 of 2021 before the IVth Cooperative Court at Mumbai challenging several resolutions passed by the 5th Respondent Society, the details of which are as under:
Sr. Resolution Date Purpose
No
1. Resolution dated 25th October, Appointment of the earlier
2013 Managing Committee
2. Resolution dated 27th September, Introducing the Developer to the 2015 Committee.
3. Resolution dated 18th October, Appointment of MP Space for 2015 Redevelopment
4. Resolution dated 12th December, Approval to the sign the 2015 Development Agreement
5. Resolution dated 23rd December, Acceptance of the term of the 2018 Development Agreement.
6. Resolution dated 22nd September, Adoption of DPCR, 2034 2019
7. Resolution dated 4th October, Admitting the seven slum 2020 dwellers to the Society as Members
15. On the same date, (23rd August, 2021), the IVth Cooperative Court passed a status quo order. Since, the aforesaid status quo order was only an ad-interim order and pending the opponents in the said Laxmi 9/49
7. ARBPL 17007-21.docx dispute to file a reply, I had on 24th September, 2021, directed the IVth Cooperative Court to decide the Interim Application filed by Respondent Nos. 1 to 4 herein within a period of two weeks from the said date. Pursuant to the aforesaid directions, the Cooperative Court passed an order in the Interim Application partly allowing the same inter-alia directing the 5th Respondent Society not to act or implement the resolutions dated 23rd December, 2018, 22nd September, 2019 and 4th October, 2020 as well as maintain status quo till the decision of the dispute. This order is dated 8th October, 2021.
16. In this factual backdrop, Mr. Tamboly, the learned Counsel appearing on behalf of the Petitioner, submitted that the aforesaid four members, namely, Respondent Nos. 1 to 4 are the only members who have refused to vacate their respective premises. He submitted that these four members cannot stall the entire re-development. The majority of the members have consented to the re-development and have, in furtherance thereof, even vacated their respective premises for which the Petitioner is paying them transit rent. It was the submission of Mr. Tamboly that the minority has to bend to the will of the majority and once the majority of the members of the Society have agreed to go forward with the re-development of the said property, the minority cannot hold up the entire re-development. He submitted that these four Laxmi 10/49
7. ARBPL 17007-21.docx Respondents do not have any independent existence apart from that of the Society and hence cannot hold the majority of the members of the 5th Respondent Society to ransom in this fashion. He therefore submitted that this is a fit case where this Court ought to direct Respondent Nos. 1 to 4 to vacate their respective premises in a time bound manner, failing which, the Court Receiver ought to be appointed who shall take physical possession of the premises in occupation of Respondent Nos. 1 to 4, and thereafter, hand over the same to the Petitioner so that re-development of the said property can continue smoothly and in a timely fashion. In support of these submissions, Mr. Tamboly relied upon the following decisions:
(a) Girish Mulchand Mehta and Anr. Vs. Mahesh S. Mehta [2009 SSC OnLine Bom 1986]
(b) Calvin Properties and Housing Vs. Green Fields Co-operative Housing Society Ltd and Ors [2013 SCC OnLine Bom 1455]
(c) Westin Sankalp Developers Vs. Ajay Sikandar Rana and Ors. [2021 SCC OnLine Bom 421].
17. On the other hand, Mr. Carloz, the learned Counsel appearing on behalf of Respondent Nos. 1 to 4, submitted that all the resolutions passed by the Society have been challenged by Respondent Nos. 1 to 4 before the Cooperative Court. Since all the resolutions have been challenged, including the one authorizing the Society to enter into Laxmi 11/49
7. ARBPL 17007-21.docx the Development Agreement with the Petitioner and which is now sub-
judice before the Cooperative Court, no relief can be granted in favour of the Petitioner. He submitted that under the scheme of the Maharashtra Cooperative Societies Act, 1960, the resolutions passed by the Society can only be challenged under Section 91 of the said Act before the Cooperative Court and to the exclusion of all other Courts. Such a challenge has been laid by Respondent Nos. 1 to 4 herein to the resolutions passed by the Society. Mr. Carloz submitted that the Cooperative Court No. IV at Mumbai has in fact passed an order dated 8th October, 2021, wherein certain resolutions passed by the Society have been stayed and the Society has been asked to maintain status quo till the decision of the dispute. This being the case, Mr. Carloz submitted that no relief can be granted in favour of the Petitioner. Consequently, there was no merit in the above Section 9 Petition and the same ought to be dismissed with costs, was the submission of Mr. Carloz. I must mention that though several other arguments and contentions have been raised in the affidavit-in-reply filed by Respondent Nos. 1 to 4, Mr. Carloz, in his usual fair manner, has only pressed the aforesaid point into service to deny the Petitioner relief under Section 9 of the Arbitration Act.
18. In light of the arguments canvassed by Mr. Carloz, I have to Laxmi 12/49
7. ARBPL 17007-21.docx decide whether the Petitioner is entitled to the reliefs sought for in the above Section 9 Petition. I have heard the learned Counsel for the parties at great length and have perused the papers and proceedings in the above Section 9 Petition. Before dealing with the arguments canvassed by the respective parties, it would be relevant to set out how this matter has progressed.
19. As mentioned earlier, the Petitioner filed the above Petition on 3rd August, 2021. Thereafter, the first hearing in this Petition took place on 18th August, 2021 when Respondent Nos. 1 to 4 sought time to file an affidavit-in-reply. Acceding to this request, Respondent Nos. 1 to 4 were directed to file their affidavit-in-reply in this Court on or before 25th August, 2021. Before filing the aforesaid reply, on 23rd August, 2021 itself, Respondent Nos. 1 to 4 approached the Cooperative Court challenging all the resolutions passed by the 5th Respondent Society from the year 2013 onwards, a list of which is already set out earlier.
Considering that these resolutions were challenged, I had directed the Cooperative Court to decide the Interim Application filed by Respondent Nos. 1 to 4 herein within a period of two weeks from 24th September, 2021. The above Interim Application was accordingly decided by the Cooperative Court vide its order dated 8th October, 2021 and limited relief was granted only in relation to the resolutions dated Laxmi 13/49
7. ARBPL 17007-21.docx 23rd December, 2018, 22nd September, 2019 and 4th October, 2020 respectively.
20. Since, these three resolutions were stayed, to obviate any additional complications and to ensure that Respondent Nos. 1 to 4 should have no further grievances, I had suggested to the parties that the entire dispute relating to these resolutions could be resolved if the parties agreed to a fresh meeting being called of all the members of 5th Respondent Society, and which would be conducted under the supervision of an officer of this Court. I made this suggestion as this course of action has been previously adopted by several Division Benches of this Court in similar matters. To this suggestion, the learned Counsel appearing on behalf of the Petitioner, Respondent Nos. 1 to 4 as well as the intervenors (who are 28 members of the 5th Respondent Society and supporting the Petitioner), on instructions, all agreed to have a fresh meeting to resolve the disputes with reference to the resolutions challenged before the Cooperative Court and which pertained to the re-development of the said property. In fact, I had even made it clear to the learned Counsel appearing on behalf of the Petitioner, that in the said meeting, if Respondent Nos. 1 to 4 wished to bring any fresh Developer who would offer better terms, the same can be considered by all members of the 5th Respondent Society. In the said Laxmi 14/49
7. ARBPL 17007-21.docx hearing, all parties agreed to this course of action being adopted and it was in these circumstances, that the matter was kept on 14th October, 2021 to enable the parties to put the aforesaid agreement in writing.
21. However, when the matter was called out on 14th October, 2021, much to my surprise, the previous advocate appearing on behalf of Respondent Nos. 1 to 4, apologized to the Court and stated that Respondent Nos.1 to 4 were brazenly reneging on the agreement reached before this Court and therefore sought leave to withdraw from the above proceedings. The conduct of Respondent Nos.1 to 4 itself indicates that on one pretext or the other they want to stall the re-
development. Firstly, the timing of challenging the General Body resolutions passed by the Society from 2013 to 2020 cannot be ignored.
All the resolutions (from 2013 to 2020) were challenged before the IVth Co-operative Court only on 23rd August, 2021 (i.e. after the filing of the present Petition). There is absolutely no explanation as to why Respondent Nos.1 to 4 did not challenge the said resolutions earlier.
Secondly, the conduct of Respondent Nos. 1 to 4, of now reneging on the agreement reached before this Court for holding a fresh meeting under the supervision of this Court, also clearly indicates that they are in the minority and will not succeed in thwarting the re-development. From all this, it isn't difficult to discern that Respondent Nos. 1 to 4, under one Laxmi 15/49
7. ARBPL 17007-21.docx pretext or the other, want to stall the re-development without having any regard or concern that the other members of the Society have vacated their respective premises and are anxious to move back into the new premises that would be allotted to them under the re-development.
The conduct of Respondent Nos.1 to 4 speaks volumes of their motives.
Be that as it may, despite their conduct, I have heard Mr. Carloz on the merits of the matter. As mentioned earlier, Mr. Carloz has only argued that since all the resolutions passed by the Society are challenged before the Co-operative Court and the Co-operative Court has passed an order dated 8th October, 2021 staying the effect and implementation of certain resolutions, no relief can be granted to the Petitioner in the above Section 9 Petition.
22. Firstly, I must mention that the law on the subject is quite well settled. This Court has time and again held that the minority members are bound by the decisions taken by the majority and cannot hold up re-development of the entire project in this fashion. Merely because some terms and conditions of the Development Agreement are not acceptable to the minuscule minority, cannot be the basis for refusing to abide by the decision of the overwhelming majority of the General Body of the Society. In this regard, the reliance placed by Mr. Tamboly on the decisions of this court in the matter of (i) Girish Laxmi 16/49
7. ARBPL 17007-21.docx Mulchand Mehta and Anr. Vs. Mahesh S. Mehta (supra); and
(ii) Calvin Properties and Housing Vs. Green Fields Co-
operative Housing Society Ltd and Ors (supra) is well founded.
The relevant portion of Girish Mulchand Mehta and Anr. Vs. Mahesh S. Mehta (supra) reads thus:
"3. As a counter blast to the abovesaid Petition filed by the respondent No. 1 under section 9, the appellants filed dispute dated 25th June, 2009 before the Cooperative Court, Mumbai being Case No. AVN/CC-II/207 of 2009 praying for following reliefs:--
"a) that it be declared that the convening and holding of the purported Special General Meeting dated 27-4-2008 of the Opponent Society and all its proceedings, including Resolutions passed therein, are illegal, bad in law, null and void ab-initio and not binding upon the Disputants.
(b) it be declared that the purported Development Agreement dated 7-5-2008 between the Opponent Society and the Developer, being Ex-A hereto is illegal, bad in law, null and void ab-initio and not binding upon the Opponent Society nor any of its members, including the Disputants.
(c) the Opponent Society, its office bearers, agents and servants be permanently restrained by an order of injunction of this Hon'ble Court from, in any manner, implementing and/or acting upon any of the purported Resolutions passed in the purported Special General Meeting held on 27-4-2008 and the purported Development agreement dated 7-5-2008 being Ex-A hereto.
(d) the Opponent Society, its office bearers, agents and servants be permanently restrained by an order of injunction of the Hon'ble Court from disconnecting and/or causing the disconnection of (i) the water supply and the common electric supply to the Society's building Laxmi 17/49
7. ARBPL 17007-21.docx and (ii) the electric meter for the common lights, staircase lights, water pump etc. and the electricity meters in respect of the suit flats No. 1 and 3 in the building of the Opponent Society at 257, R.N. Narkar Marg, Ghatkopar (E), Mumbai- 400 077.
(e) that pending the hearing and final disposal of this dispute, the Opponent Society, its office bearers, agents and servants be restrained by an order of injunction of this Hon'ble Court from, in any manner, implementing and/or acting upon (i) any of the purported Resolutions passed in the purported Special General Meeting held on 27-4-2008 and (ii) the purported Development agreement dated 7-5-2008 being EX-A hereto.
(f) That pending the hearing and final disposal of this dispute, the Opponent Society, its office bearers, agents and servants be restrained by an order of injunction of this Hon'ble Court from disconnecting and/or causing the disconnection of (i) the water supply and the electric supply to the building and (ii) the electric meter in respect of common lights, staircase lights, water-pump and the electricity meters of the suit flats No. 1 and 3 in the building of the Opponent Society at 257, R.N. Narkar Marg, Ghatkopar (E), Mumbai-400 077.
(g) for urgent Ad-Interim orders in terms of prayers (e) and
(f) above.
(h) for costs.
(i) for such other and further reliefs as the nature and circumstances of the case may require".
***************
5. Be that as it may, the respondent No. 1 instituted Petition under section 9 essentially against the respondent No. 2 Society with whom the respondent No. 1 had entered into Development Agreement on the assertion that the Society has failed to perform its part of the obligation under the said Agreement and it was just and convenient to grant the relief as prayed in section 9 Petition. Since the grant of the proposed relief was to incidentally affect the appellants herein, they Laxmi 18/49
7. ARBPL 17007-21.docx were also impleaded as respondents 2 and 3. The said respondents were required to be impleaded also because of Rule 803-E of the Bombay High Court (Original Side) Rules. The respondent No. 2 Society, however, did not resist the relief claimed in the said Petition. In fact, the respondent No. 2 Society took the stand that in spite of its willingness to perform its part of the obligation under the agreement, it was unable to do so because of the untenable obstruction caused by the appellants herein (who were its members till they came to be expelled by the General Body). The Petition, however, was mainly resisted by the appellants. The Principal grievance of the appellants (Original respondents 2 and 3) was that they could not be made party in the Petition under section 9, as they were not party to the Arbitration Agreement. The Court had no jurisdiction to pass any direction or order against the appellants since they were not party to the Arbitration Agreement. In any case, the Court cannot order their dispossession in exercise of power under section 9 of the Act. The appellants justified their obstruction mainly on the ground that they did not approve of the terms and conditions specified in the Development Agreement executed in favour of the respondent No. 1. It was their case that the offer given by the respondent No. 1 was prejudicial to the interest of the members of the Society. In that, the Developer was not only obliged to provide bigger alternative reconstructed flats but also obliged to provide additional corpus to the Society. In the first place, the Learned Single Judge found that there was an Arbitration Agreement in the shape of clause 49 of the Development Agreement executed between the respondent No. 1 and respondent No. 2. Thus, it was open to the respondent No. 1 to invoke section 9 of the Act being party to the Arbitration Agreement. Further, section 9 can be invoked in aid to the main relief/claim pending before the Arbitral Tribunal. The Learned Single Judge then considered the grievance of the appellants and found that the Resolutions passed by the overwhelming majority of members of the Society were not challenged till the filing of the Petition under section 9. Besides, the majority decision of the General Body of the Society would not only bind the Society but also the Laxmi 19/49
7. ARBPL 17007-21.docx appellants. It is further held that essentially the relief claimed under section 9 by the respondent No. 1 Petition was against the respondent No. 2 Society who was obliged to comply with the obligation under the Development Agreement without which the respondent No. 1 would not be able to get Commencement Certificate thereby stalling the redevelopment of the building. The Learned Single Judge also noticed that it is only the two members-appellants herein, who were causing obstruction which was resulting in delay. Moreover, it was causing serious prejudice not only to the respondent No. 1 (petitioner) in terms of recurring cost as the respondent No. 1 has already acted upon the agreement and incurred substantial amount towards consideration of the agreement and other expenses, but even the remaining 10 members of the Society have already acted upon the agreement by vacating their respective flats and have shifted to transit accommodation for which they have been duly compensated by the respondent No. 1 as per the terms of the Agreement. The Learned Single Judge also noted that the appellants herein were not in a position to secure the amount invested and incurred including the future expenses and cost of the respondent No. 1 in case the project was stalled at their instance. Taking overall view of the matter, the Learned Single Judge not only thought it just and convenient to appoint Court Receiver but also accepted the request of the respondent No. 1 to allow the Court Receiver to take possession of all the flats in the said building and hand over vacant possession of the entire building to the respondent No. 1 so as to enable the respondent No. 1 to complete the project in terms of Development Agreement and discharge his obligation of providing duly constructed accommodation/premises to all members including appellants herein (original respondents 2 and 3) within the prescribed time. The Learned Single Judge also noticed that the relief sought would only require the appellants herein to shift to another accommodation till the redevelopment of the property of the Society whereafter they would be once again accommodated in the newly constructed accommodation in lieu of their existing flats. Accordingly, the Petition was made absolute in terms of prayer clause (a).
Laxmi 20/497. ARBPL 17007-21.docx *******************
13. The appellants, however, place reliance on the decision of the Kerala High Court in the case of Shoney Sanil v. Coastal Foundations (P) Ltd., reported in AIR 2006 Kerala 206. In that case the question considered was whether the writ-petitioner, admittedly, a third party to an alleged Arbitral Agreement between the respondents inter se, and who had in his favour a confirmed Court sale and certificate of such sale and delivery of possession, following and arising under an independent decree, could be dispossessed, injuncted or subjected to other Court proceedings under section 9 of the Act? The Kerala High Court held that orders under section 9(ii)(c) can be passed only in relation to subject-matter of dispute in arbitration which may be in possession of any party since it is not the intention of the Act or any arbitration proceedings as conceived by the law of Arbitration to interfere with or interpolate third party rights. It concluded that on a plain reading of section 9 of the Act and going by the Scheme of the said Act, there is no room to hold that by an interim measure under section 9, the rights of third party holding possession on the basis of Court sale could be interfered with, injuncted or subjected to proceedings under section 9 of the Act. Instead, it held that section 9 of the Act contemplates issuance of interim measures by the Court only at the instance of party to Arbitration Agreement with regard to the subject-matter of the Arbitration Agreement. The Court has, however, noted that such order can be only against the party to an Arbitration Agreement or at best against any person claiming under him. The Principle expounded in this decision is that if a third party has independent right in the subject-matter of the Arbitration Agreement, section 9 cannot be invoked to affect his rights. At the same time, the Kerala High Court has plainly opined that it is possible to pass orders under section 9 against a third party if such person is claiming under the party to the Arbitration Agreement. Thus understood, section 9 can be invoked even against a third party who is not party to an arbitration agreement or arbitration proceedings, if he were to be person claiming under the party to the arbitration agreement and likely to be affected by the interim measures. The appellants Laxmi 21/49
7. ARBPL 17007-21.docx herein will have to substantiate that they were claiming independent right in respect of any portion of the subject- matter of the Arbitration Agreement on their own and not claiming under the respondent No. 2 Society who is party to the Arbitration Agreement. In absence thereof, the Court would certainly have jurisdiction to pass appropriate order by way of interim measures even against the appellants herein, irrespective of the fact that they are not party to the Arbitration Agreement or the Arbitration Proceedings.
14. Reliance was placed on another decision of the Delhi High Court in the case of Impex Trading GMBH v. Anunay Fab. Ltd., reported in 2008 (1) Arb. LR 50 Delhi. In this case relief was sought against the bankers of the respondent No. 1 and petitioner respectively. The Court found as of fact that the Bankers (respondents 2 to 4) were regulated in their working by various articles of the UCP500. The liability of the Bank under the document was independent of any dispute as to breach of contract between the seller and the buyer. On this finding, the Court went on to hold that Petition under section 9 of the Act against the Bankers who are not even party to the Consignment Agreement and the Arbitration Clause is not maintainable and deserves dismissal qua them. Once again that was not a case of person claiming under the party to the Arbitration Agreement, unlike in the present case where the appellants were members of the respondent No. 2 Society and would be therefore bound by the Award against the Society. The fact that the appellants have proprietary rights in the flats occupied by them does not mean that they were claiming such right de hors the rights of the Society in the said flats. For, the Society is the owner of the land and structure standing thereon. The flats occupied by the appellants are part thereof and in fact, allotted to the appellants in the capacity of members of the Society. In that sense, the appellants are persons claiming rights in the flats situated in the property which is the subject-matter of the Arbitration Agreement, under the respondent No. 2 Society who is party to the said Arbitration Agreement. Accordingly, even this decision will be of no avail to the appellants.
Laxmi 22/497. ARBPL 17007-21.docx ****************
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 Cooperative 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 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. By now it is well established position that once a person becomes a 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. 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 v. State of Punjab, reported in (1985) 2 SCC 670 : AIR 1985 SC 973). This view has been followed in the subsequent decision of the Apex Court in the case of State of U.P. v. Chheoki Employees Co-operative Society Ltd., reported in (1997) 3 SCC 681 : AIR 1997 SC 1413. In this decision the Apex Court further observed that the member of 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 Laxmi 23/49
7. ARBPL 17007-21.docx 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 803-E of the Bombay High Court (Original Side) Rules. The said Rule reads thus:--
"R. 803-E.Notice of Filling 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".
***********************
18. We have no hesitation in taking the view that since the appellants were members of the Society and were allotted flats in question in that capacity at the relevant time are bound by the decision of the General Body of the Society, as long as the decision of the General Body is in force. As observed earlier, the appellants have not challenged the decisions of the Laxmi 24/49
7. ARBPL 17007-21.docx General Body of the Society which is supreme, insofar as redevelopment of the property in question or of appointment of the respondent No. 1 conferring on him the development rights. The appellants have merely challenged the Resolution which at best would raise issues regarding the stipulations in the Development Agreement. The General Body of the Society has taken a conscious decision which in this case was after due deliberation of almost over 5 years from August, 2002 till the respondent No. 1 came to be finally appointed as Developer in terms of Resolution dated 2nd March, 2008. Moreover, the General Body of the Society by overwhelming majority not only approved the appointment of respondent No. 1 as developer but also by subsequent Resolution dated 27th April, 2008 approved the draft Development Agreement. Those terms and conditions have been finally incorporated in the registered Development Agreement executed by the Society in favour of respondent No. 1. That decision and act of the Society would bind the appellants unless the said Resolutions were to be quashed and set aside by a forum of competent jurisdiction. In other words, in view of the binding effect of the Resolutions on the appellants, it would necessarily follow that the appellants were claiming under the Society, assuming that the appellants have subsisting proprietary rights in relation to the flats in their possession. It is noticed that as of today the appellants have been expelled from the basic membership of the Society. Their right to occupy the flat is associated with their continuance as member of the Society. It is a different matter that the decision of expelling the appellants from the basic membership of the. Society will be subject to the outcome of the decision of the superior authority where the appeals are stated to be pending. If the decision of the Society to expel the appellants is to be maintained, in that case, the appellants would have no surviving cause to pursue their remedy even before the Co-operative Court much less to obstruct the redevelopment proposal. As a matter of fact those proceedings will have to be taken to its logical end expeditiously. Even if the appellants were to continue as members, they would be bound by the decision of the General Laxmi 25/49
7. ARBPL 17007-21.docx Body whether they approve of the same or otherwise. In any case, keeping in mind that the Development Agreement does not absolutely take away the rights of the appellants in the flats in question, as after demolition of the existing building, the appellants would be accommodated in the newly constructed flats to be allotted to them in lieu of the existing flats, on the same terms as in the case of other members, provided the appellants continue to remain members of the Society. Under the Development Agreement, the respondent No. 1 is obliged to complete the project within 18 months from the date of receipt of full Commencement Certificate from the Corporation. The full Commencement Certificate would be issued only upon the vacant possession of the entire building is delivered to the respondent No. 1 who in turn would demolish the same with a view to reconstruct a new building in its place. Significantly, out of twelve (12) members, ten (10) members have already acted upon the Development Agreement as well as have executed separate undertaking- cum-agreement with the respondent No. 1 Developer. They have already vacated flats in their occupation to facilitate demolition of the existing building and have shifted to alternative transit accommodation as back as in February, 2009. The project has been stalled because of the obstruction created by the appellants herein who are in minuscule minority. The said ten members of the Society who have already shifted their premises, they and their family members are suffering untold hardship. At the same time, the respondent No. 1 who has already spent huge amount towards consideration of the Development Agreement and incurred other incidental expenses to effectuate the Development Agreement in addition will have to incur the recurring cost of paying monthly rent to the ten members who have already shifted to transit accommodation. The learned Single Judge has noted that the appellants are not in a position to secure the amount invested and incurred including the future expenses and costs of the respondent No. 1 herein in case the project was to be stalled in this manner. Even before this Court the appellants have not come forward to compensate the respondent No. 1 herein and the other ten Laxmi 26/49
7. ARBPL 17007-21.docx members of the Society for the loss and damage caused to them due to avoidable delay resulting from the recalcitrant attitude of the appellants. Considering the impact of obstruction caused by the appellants to the redevelopment proposal, not only to the respondent No. 1 Developer but also to the overwhelming majority of members (10 out of 12) of the Society, the learned Single Judge of this Court opined that it is just and convenient to not only appoint the Court Receiver but to pass further orders for preservation as well as protection and improvement of the property which is subject-matter of Arbitration Agreement. We have already noticed that the Court's discretion while exercising power under section 9 of the Act is very wide. The question is whether in the fact situation of the present case it is just and convenient to appoint Court Receiver coupled with power conferred on him to take over possession of the entire building and hand over vacant and peaceful possession thereof to the respondent No. 1 who in turn shall redevelop the property so as to provide flats to each of the members of the Society in lieu of the existing flats vacated by them as per the terms and conditions of the Development Agreement, as ordered by the learned Single Judge. For the reasons noted by the Learned Single Judge which we have reiterated in the earlier part of this decision, we find that it would be just and convenient to not only appoint Court Receiver to take over possession of the property but also pass further order of empowering the Court Receiver to hand over vacant possession of the suit building to the respondent No. 1 to enable him to complete the redevelopment work according to the terms and conditions of the Development Agreement.
*******************
20. It was also argued 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 been brought to our notice which would curtail the right of the Society to redevelop the property when the General Body Laxmi 27/49
7. ARBPL 17007-21.docx 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. In the present case, the General Body took a conscious decision after due deliberations for over five years to redevelop its property. Even with regard to the appointment of the respondent No. 1 as the Developer, the record shows that it was decided by the General Body of the Society after examining the relative merits of the proposals received from the developers and interviewing them. Even the proposed development agreement to be entered with the Developer (respondent No.
1) was approved by the General Body. The appellants raised untenable pleas to cause obstruction and have belatedly filed proceedings in the Co-operative Court as a counter blast only to protract the redevelopment work to be carried out by the respondent No. 1 herein."
(emphasis supplied)
23. Similarly, the relevant portion of Calvin Properties and Housing Vs. Green Fields Co-operative Housing Society Ltd and Ors (supra) reads thus:
"27. Division Bench of this Court in case of Girish Mulchand Mehta (supra) has considered this issue in detail. Division Bench has held that Section 9 can be invoked even against a third party who is not a party to arbitration agreement or arbitration proceedings, if he was to be a person claiming under a party to the agreement and accordingly to be affected by interim measure. Such party who is Laxmi 28/49
7. ARBPL 17007-21.docx likely to be affected by interim measure will have to substantiate that he was claiming independent right in respect of any portion of the subject matter of the arbitration agreement on his own and not claiming under a party to the arbitration agreement. This Court has held that in absence of such situation, Court has jurisdiction to pass appropriate order by way of interim measure even against such party irrespective of the fact that they are not party to arbitration agreement or the arbitration proceedings. This Court has also considered Rule 803E of the Bombay High Court (Original Side) Rules, which provides that notice of filing application has to be issued to all persons likely to be affected. Paragraphs 12 to 14 and 16 of the Judgment of division bench on this issue would be relevant which read thus:
12. The next question is whether order of formulating the interim measures can be passed by the Court in exercise of powers under Section 9 of the Act only against a party to an Arbitration Agreement or Arbitration Proceedings. As is noticed earlier, the jurisdiction under Section 9 can be invoked only by a party to the Arbitration Agreement. Section 9, however, does not limit the jurisdiction of the Court to pass order of interim measures only against party to an Arbitration Agreement or Arbitration Proceedings; whereas the Court is free to exercise same power for making appropriate order against the party to the Petition under Section 9 of the Act as any proceedings before it. The fact that the order would affect the person who is not party to the Arbitration Agreement or Arbitration Proceedings does not affect the jurisdiction of the Court under Section 9 of the Act which is intended to pass interim measures of protection or preservation of the subject matter of the Arbitration Agreement.
13. The Appellants, however, place reliance on the decision of the Kerala High Court in the case of Shoney Sanil v. Coastal Foundations (P) Ltd. reported in MANU/KE/0036/2006: AIR 2006 Kerala (206). In that case the question considered was whether the writ-petitioner, admittedly, a third party to an alleged Arbitral Agreement between the Respondents inter se, and who had in his favour a confirmed Court sale and Laxmi 29/49
7. ARBPL 17007-21.docx certificate of such sale and delivery of possession, following and arising under an independent decree, could be dispossessed, injuncted or subjected to other Court proceedings under Section 9 of the Act? The Kerala High Court held that orders under Section 9(ii)(c) can be passed only in relation to subject matter of dispute in arbitration which may be in possession of any party since it is not the intention of the Act or any arbitration proceedings as conceived by the law of Arbitration to interfere with or interpolate third party rights. It concluded that on a plain reading of Section 9 of the Act and going by the Scheme of the said Act, there is no room to hold that by an interim measure under Section 9, the rights of third party holding possession on the basis of Court sale could be interfered with, injuncted or subjected to proceedings under Section 9 of the Act. Instead, it held that Section 9 of the Act contemplates issuance of interim measures by the Court only at the instance of party to Arbitration Agreement with regard to the subject matter of the Arbitration Agreement. The Court has, however, noted that such order can be only against the party to an Arbitration Agreement or at best against any person claiming under him. The Principle expounded in this decision is that if a third party has independent right in the subject matter of the Arbitration Agreement, Section 9 cannot be invoked to affect his rights. At the same time, the Kerala High Court has plainly opined that it is possible to pass orders under Section 9 against a third party if such person is claiming under the party to the Arbitration Agreement. Thus understood, Section 9 can be invoked even against a third party who is not party to an arbitration agreement or arbitration proceedings, if he were to be person claiming under the party to the arbitration agreement and likely to be affected by the interim measures. The Appellants herein will have to substantiate that they were claiming independent right in respect of any portion of the subject matter of the Arbitration Agreement on their own and not claiming under the Respondent No. 2 Society who is party to the Arbitration Agreement. In absence thereof, the Court would certainly have jurisdiction to pass appropriate order by way of interim Laxmi 30/49
7. ARBPL 17007-21.docx measures even against the Appellants herein, irrespective of the fact that they are not party to the Arbitration Agreement or the Arbitration Proceedings.
14. Reliance was placed on another decision of the Delhi High Court in the case of Impex Trading GMBH v. Anunay Fab. Ltd.
reported in MANU/DE/8800/2007: 2008 (1) Arb. LR 50 Delhi. In this case relief was sought against the bankers of the Respondent No. 1 and Petitioner respectively. The Court found as of fact that the Bankers (Respondents 2 to 4) were regulated in their working by various articles of the UCP 500. The liability of the Bank under the document was independent of any dispute as to breach of contract between the seller and the buyer. On this finding, the Court went on to hold that Petition under Section 9 of the Act against the Bankers who are not even party to the Consignment Agreement and the Arbitration Clause is not maintainable and deserves dismissal qua them. Once again that was not a case of person claiming under the party to the Arbitration Agreement, unlike in the present case where the Appellants were members of the Respondent No. 2 Society and would be therefore bound by the Award against the Society. The fact that the Appellants have proprietary rights in the flats occupied by them does not mean that they were claiming such right dehors the rights of the Society in the said flats. For, the Society is the owner of the land and structure standing thereon. The flats occupied by the Appellants are part thereof and in fact, allotted to the Appellants in the capacity of members of the Society. In that sense, the Appellants are persons claiming rights in the flats situated in the property which is the subject matter of the Arbitration Agreement, under the Respondent No. 2 Society who is party to the said Arbitration Agreement. Accordingly, even this decision will be of no avail to the Appellants.
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 Laxmi 31/49
7. ARBPL 17007-21.docx 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 Cooperative 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 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. By now it is well established position that once a person becomes a member of the Cooperative Society, he looses his individuality with the Society and he has no independent rights except those given to him by the statute and Bye-laws. 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 v. State of Punjab reported in MANU/SC/0392/1985:
AIR 1985 SC 973). This view has been followed in the subsequent decision of the Apex Court in the case of State of U.P. v. Chheoki Employees Cooperative Society Ltd. reported in MANU/SC/0332/1997: AIR 1997 SC 1413. In this decision the Apex Court further observed that the member of 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 Laxmi 32/49
7. ARBPL 17007-21.docx propriety 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 propriety rights of the Appellants does not take the matter any further. For, the propriety 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:
R803E. Notice of Filling 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.
28. On perusal of the prayers in the arbitration petition, it is clear that petitioner seeks appointment of Court Receiver and mandatory injunction against respondent Nos. 2 to 6C in respect of the premises in their occupation. It is thus clear beyond reasonable doubt that any order if passed in this petition as prayed, respondent Nos. 2 to 6C would be affected. Such parties are thus rightly impleaded as parties to the present petition and are given an opportunity of being heard and to oppose this petition. Without going into the larger issue whether respondent No. 2 to 6C are party to the arbitration agreement or not, not being signatories to Laxmi 33/49
7. ARBPL 17007-21.docx the development agreement, in view of the fact that each of these respondents are claiming through respondent No. 1 society in respect of the properties of the society in which these members have subservient rights and in view of the fact that any orders that would be passed in these proceedings would seriously affect the rights of the respondent Nos. 2 to 6C, such interim measure can be granted by this Court under Section 9 of Arbitration Act against such parties even if they are not parties to the arbitration agreement. In my view there is no merit in the submission made by the learned counsel appearing for respondent Nos. 2 to 5 and reliance placed by the learned counsel appearing for the respondents on the Judgment of Supreme Court in case of Indowind Energy (supra) would be thus of no assistance to the respondents.
29. The next question that arises for consideration of this Court is whether individual members of Society can oppose the reliefs sought by the petitioner under Section 9 of Arbitration Act for seeking interim measures in view of the dispute having arisen between the petitioner and the society under development agreement pursuant to the resolution passed by more than ¾ of majority of the members without challenging such resolutions in Court of law. On perusal of resolutions passed by the society in various Special General Body Meetings some of which were also attended by one or the other party who are parties to these proceedings, it is clear that more than 3/4th majority of the members have resolved that the existing buildings and the premises occupied by the members shall be demolished and the property be redeveloped by appointment of a developer. Society had appointed a Project Management Consultant for the purpose of preparing a report and draft tender. Tender document prepared by the said PMC appointed by the Society disclosed the area in possession of each member. Based on such tender document prepared by the society, various bidders including the petitioner submitted their bid. All these bids were opened by the society. It was resolved by the society to appoint the petitioner as developer.
Draft development agreement and Power of Attorney was circulated to all the members including respondent Nos. 2 to 6. There was some suggestion given by some of the member. Perusal of the record indicates that some of the suggestions were also Laxmi 34/49
7. ARBPL 17007-21.docx incorporated in draft development agreement. Draft development agreement and other documents were thereafter approved by the members of the society in one of the Special General Body Meeting by more than ¾ majority. Some of the office bearers of the society were authorised to execute such agreement and the other documents with the petitioner developer. It is not in dispute that any of these resolutions which were passed by more than ¾ majority as well as development agreement entered into between the petitioner and society have been impugned by any of the members in any Court of law. These resolutions, in my view are thus binding on all the members of the society under the provisions of Societies Act and bye-laws of the society.
30. Division Bench of this Court in case of Girish Mulchand Mehta (supra) has also considered this issue at length. Paragraphs 18 of this Judgment which is relevant for the purpose of deciding this issue reads thus:
"18. We have no hesitation in taking the view that since the Appellants were members of the Society and were allotted flats in question in that capacity at the relevant time are bound by the decision of the General Body of the Society, as long as the decision of the General Body is in force. As observed earlier, the Appellants have not challenged the decisions of the General Body of the Society which is supreme, in so far as redevelopment of the property in question or of appointment of the Respondent No. 1 conferring on him the development rights. The Appellants have merely challenged the Resolution which at best would raise issues regarding the stipulations in the Development Agreement. The General Body of the Society has taken a conscious decision which in this case was after due deliberation of almost over 5 years from August 2002 till the Respondent No. 1 came to be finally appointed as Developer in terms of Resolution dated 2nd March, 2008. Moreover, the General Body of the Society by overwhelming majority not only approved the appointment of Respondent No. 1 as developer but also by subsequent Resolution dated 27th April, 2008 approved the draft Development Agreement. Those terms and conditions have been finally incorporated in the registered Development Agreement executed by the Society in favour of Respondent No. 1. That Laxmi 35/49
7. ARBPL 17007-21.docx decision and act of the Society would bind the Appellants unless the said Resolutions were to be quashed and set aside by a forum of competent jurisdiction. In other words, in view of the binding effect of the Resolutions on the Appellants, it would necessarily follow that the Appellants were claiming under the Society, assuming that the Appellants have subsisting proprietary rights in relation to the flats in their possession. It is noticed that as of today the Appellants have been expelled from the basic membership of the Society. Their right to occupy the flat is associated with their continuance as member of the Society. It is a different matter that the decision of expelling the Appellants from the basic membership of the Society will be subject to the outcome of the decision of the superior authority where the appeals are stated to be pending. If the decision of the Society to expel the Appellants is to be maintained, in that case, the Appellants would have no surviving cause to pursue their remedy even before the Co-operative Court much less to obstruct the redevelopment proposal. As a matter of fact those proceedings will have to be taken to its logical end expeditiously. Even if the Appellants were to continue as members, they would be bound by the decision of the General Body whether they approve of the same or otherwise. In any case, keeping in mind that the Development Agreement does not absolutely take away the rights of the Appellants in the flats in question, as after demolition of the existing building, the Appellants would be accommodated in the newly constructed flats to be allotted to them in lieu of the existing flats, on the same terms as in the case of other members, provided the Appellants continue to remain members of the Society. Under the Development Agreement, the Respondent No. 1 is obliged to complete the project within 18 months from the date of receipt of full Commencement Certificate from the Corporation. The full Commencement Certificate would be issued only upon the vacant possession of the entire building is delivered to the Respondent No. 1 who in turn would demolish the same with a view to reconstruct a new building in its place. Significantly, out of twelve (12) members, ten (10) members have already acted upon the Development Agreement as well as have executed separate undertaking-cum- agreement with the Respondent No. 1 Developer. They have Laxmi 36/49
7. ARBPL 17007-21.docx already vacated flats in their occupation to facilitate demolition of the existing building and have shifted to alternative transit accommodation as back as in February 2009. The project has been stalled because of the obstruction created by the Appellants herein who are in minuscule minority. The said ten members of the Society who have already shifted their premises, they and their family members are suffering untold hardship. At the same time, the Respondent No. 1 who has already spent huge amount towards consideration of the Development Agreement and incurred other incidental expenses to effectuate the Development Agreement in addition will have to incur the recurring cost of paying monthly rent to the ten members who have already shifted to transit accommodation. The learned Single Judge has noted that the Appellants are not in a position to secure the amount invested and incurred including the future expenses and costs of the Respondent No. 1 herein in case the project was to be stalled in this manner. Even before this Court the Appellants have not come forward to compensate the Respondent No. 1 herein and the other ten members of the Society for the loss and damage caused to them due to avoidable delay resulting from the recalcitrant attitude of the Appellants. Considering the impact of obstruction caused by the Appellants to the redevelopment proposal, not only to the Respondent No. 1 Developer but also to the overwhelming majority of members (10 out of 12) of the Society, the learned Single Judge of this Court opined that it is just and convenient to not only appoint the Court Receiver but to pass further orders for preservation as well as protection and improvement of the property which is subject matter of Arbitration Agreement. We have already noticed that the Court's discretion while exercising power under Section 9 of the Act is very wide. The question is whether in the fact situation of the present case it is just and convenient to appoint Court Receiver coupled with power conferred on him to take over possession of the entire building and hand over vacant and peaceful possession thereof to the Respondent No. 1 who in turn shall redevelop the property so as to provide flats to each of the members of the Society in lieu of the existing flats vacated by them as per the terms and conditions of the Development Agreement, as ordered by the learned Single Judge. For the Laxmi 37/49
7. ARBPL 17007-21.docx reasons noted by the Learned Single Judge which we have reiterated in the earlier part of this decision, we find that it would be just and convenient to not only appoint Court Receiver to take over possession of the property but also pass further order of empowering the Court Receiver to hand over vacant possession of the suit building to the Respondent No. 1 to enable him to complete the redevelopment work according to the terms and conditions of the Development Agreement."
31. It has been held by the division bench of this Court that merely because terms and conditions of development agreement are not acceptable to the members who are in minuscule minority, cannot be the basis not to abide by the decision of the overwhelming majority of the General Body of the society. It is held that once a person becomes a 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 stature and Bye-laws. 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. This Court has also adverted to the Judgment of Supreme court in case of Ramesh Himmatlal Shah v. Harsukh Jadhavji Joshi (AIR 1975 SC 1470) in which it is held that the right so enjoyed by the member is the species of the property namely the right to occupy a flat, which assumes significant importance and acquires under the law a stamp of transferability in furtherance of interest of commerce. This Court has held that a member cannot be allowed to say that his rights in the flat occupied by him were de hors the rights of the society therein and that he is not claiming through society at all. Division Bench of this Court has held that a member is bound by the decision of the General Body of the society till it is in force."
(emphasis supplied)
24. These decisions make it amply clear that the General Body of the Society is supreme and the Minority would have to bend to the will of the Majority. Keeping these decisions in mind, I have to consider Laxmi 38/49
7. ARBPL 17007-21.docx the effect of the limited relief granted by the Co-operative Court in favour of Respondent Nos. 1 to 4 and against the 5th Respondent Society. As mentioned earlier, Respondent Nos. 1 to 4 herein, challenged several resolutions before the Co-operative Court including the resolutions that authorized the Society to enter into the Development Agreement with the Petitioner. Despite such a challenge, the Co-
operative Court only partly allowed the Interim Application filed by Respondent Nos. 1 to 4 herein and inter-alia directed the 5th Respondent Society not to act or implement the resolutions dated 23rd December, 2018, 22nd September, 2019 and 4th October, 2020 and maintain status quo till the decision of the dispute. What is pertinent to note is that the resolutions passed by the General Body on 27th September, 2015 and 18th October, 2015 inter alia appointing the Petitioner - Developer to redevelop the said property of the 5th Respondent Society has not been stayed and no relief is granted in relation thereto. I, therefore, have to only examine the three resolutions set out above to see whether restraining the 5th Respondent Society from acting or implementing these resolutions would in any way be a fetter on this Court from passing orders in favour of the Petitioner seeking a direction against Respondent Nos. 1 to 4 to vacate their respective premises.
Laxmi 39/497. ARBPL 17007-21.docx
25. The 1st resolution that has been stayed by the Co-operative Court is the resolution dated 23rd December, 2018. The passing of this resolution has been signed by Respondent Nos. 1, 2 and 4. This resolution can be found at page 367 of the paper book and reads thus:
"RESOLUTION NO.1.
Resolved that all the Members were present in the said Meeting, unanimously decided that any two signatories is must out of three office bearer of the Society i.e. Chairman, Secretary, Treasurer for executing any Deeds, Documents, Permanent Alternate Accommodation Agreement and any other Documents and they are also nominated/authorised to represent before the Sub-Registrar of Assurance for Registration of any Deeds, Documents, Permanent Alternate Accommodation Agreement and any other Documents. It was carried unanimously.
Proposed by MR. VINOD SHAH Seconded by MR. DATTATRAYA SHEVADE Carried unanimously RESOLUTUION NO.2.
Resolved that all the Members were present in the said Meeting have unanimously accepted and admitted all the terms and condition of the Development Agreement. It was carried unanimously.
Proposed by MR. VIJAY SONI Seconded by MR. VASANT BHURE Carried unanimously"
26. As can be seen from this resolution, any two out of the three office bearers of Respondent No.5 must be signatories to execute any deeds, documents, Permanent Alternate Accommodation Agreements and/or any other document in that regard. This resolution has been Laxmi 40/49
7. ARBPL 17007-21.docx stayed by the Co-operative Court. Mr. Carloz submitted that since this resolution has been stayed, no PAAAs can be executed by the 5th Respondent Society as required under the Development Agreement and therefore there was no question of asking Respondent Nos. 1 to 4 to vacate their premises before the execution of the PAAAs with Respondent Nos.1 to 4. I must mention that the Permanent Alternate Accommodation Agreements have already been executed by the Petitioner with 16 of the members of the 5th Respondent Society. As mentioned earlier, the Administrator came to be appointed in relation to the Society on 18th February, 2021 and after which a 3 Member Administrator Board (Consisting of 3 members of the society) came to be appointed by an order dated 16th September, 2021. This 3 Member Board consists of Mr. Mahindra D. Kharat, Mr. Atul G. Virkar and Mr. Vijay S. Soni who are all Applicants in the above Intervention Application.
27. I do not see why any Permanent Alternate Accommodation Agreement that would need to be executed in favour of Respondent Nos.
1 to 4 cannot be executed for and on behalf of the Society by this 3 Member Administrator Board. In fact, Mr. Rebello, the learned Counsel appearing on behalf of the 28 members who are supporting the Petitioner, as well as Mr. Tamboly, the learned Counsel appearing on Laxmi 41/49
7. ARBPL 17007-21.docx behalf of the Petitioner, stated before the Court that neither of them have any objection if the Permanent Alternate Accommodation Agreements that are to be entered into with Respondent Nos. 1 to 4 are executed by the Petitioner, the Administrator Board and respective Respondents. Further, if any other documents that need to be executed and which are for the daily functioning of the 5th Respondent Society, the same can also be executed by the aforesaid Administrator Board.
This being the case, I do not think that a stay of this resolution, namely, the resolution dated 23rd December, 2018, in any way, has the effect of holding up the entire re-development. Despite this, even if I were to assume that since the Resolution dated 23rd December, 2018 is stayed, and therefore, the three Member Administrator Board cannot execute any Permanent Alternate Accommodation Agreements with Respondent Nos.1 to 4 (along with the Petitioner), I still do not see how this can be a ground available to Respondent Nos.1 to 4 for not vacating their respective premises. The Development Agreement clearly contemplates (Clause 10 thereof) that the existing members of the Society shall vacate their respective premises and hand over vacant and peaceful possession of their respective flats to the Petitioner within a period of 30 days from the date of receipt of intimation from the Petitioner in that regard after obtaining IOD for construction of the proposed new building on the said property. It is not in dispute that the IOD was received by the Petitioner Laxmi 42/49
7. ARBPL 17007-21.docx on 22nd January, 2021 and an intimation to vacate the premises has admittedly been given to all the members of the Society. In fact, pursuant thereto, barring Respondent Nos.1 to 4, all other members have vacated their respective premises. I, therefore, do not think that a stay of the Resolution dated 23rd December, 2018 would in any way assist Respondent Nos.1 to 4 to contend that by virtue thereof, the Petitioner is not entitled to ask Respondent Nos.1 to 4 to vacate their respective premises.
28. The second resolution of which the Co-operative Court has granted a stay is the resolution dated 22nd September, 2019. This resolution basically authorizes the Petitioner to obtain approval of the Society's plans as per the various provisions of DCPR, 2034 which includes a change in the permissible additional FSI by paying a premium and/or quantum of TDR to be purchased from the market etc. This resolution can be found at pages 103 and 104 of the paper book and reads thus:
"CERTIFIED TRUE COPY OF THE RESOLUTION PASSED IN THE ANNUAL GENERAL BODY MEETING OF THE SOCIETY HELD ON 22/09/2019 AT SOCIETY PREMISES.
Pursuant to the Registered Development Agreement Dated 09/08/2016, executed between the Developers i.e. M/S. MP SPACE DYNAMICS PVT. LTD., and the Society i.e. NEW ASHWIN CO-OP. HSG. SOC. LTD., duly Registered on 09/08/2016 bearing Registration No. Laxmi 43/49
7. ARBPL 17007-21.docx BRL-5/8113/2016, there is a change in Development Control Regulation for Greater Mumbai. It is understood from Society's PMC and other relevant sources that the Society's Redevelopment proposal will now be scrutinised under the new sanctioned Provisions of Development Control and Regulation of 2034 (DCPR) as against modified Development Control Regulation of 1991 (DCR 1991). Hence the scrutiny of our Society Redevelopment Proposal will be subject to various changes in the regulations and policies of approval. This changes include change in the permissible additional FSI by paying premium and / or quantum of TDR to be Purchased from Market as per the Road width and/ or setback advantage and / or FSI due to release of 15% deductible R.G. and / or FSI or Amenity under reg. 14 of DCPR 2034 and / or change in rate and quantum of fungible FSI for Residential / Commercial Areas.
Further, As per Regulation 33(7) (B) of sanctioned DCPR 2034, Additional FSI for Redevelopment of existing authorised Residential housing societies, which are of 30 years of age or more, is permitted wherein Developer can use incentive additional BUA in lieu of TDR from market, to the extent of 15% of existing BUA or 10 Sq. Mtr. Per tenement, whichever is more without premium for a redevelopment proposal re - accommodating existing society Members. This Provision does not allow any additional BUA to the developer then what is permitted under DCPR 2034.
IT IS HEREBY RESOLVED THAT the Developers be allowed to obtain approval of Society plans as per the various Provisions of DCPR 2034 which includes charge in the permissible additional FSI by paying premium and / or quantum of TDR to be Purchased from market as per the road width and / or setback advantage and / or FSI due to release of 15 % deductible R.G. and / or FSI of Amenity under reg. 14 of DCPR 2034 and / or change in rate and quantum of fungible FSI for Residential / Commercial areas and / or FSI under Reg. 33 (7) (B) for the use of Developer."
29. This resolution has been signed by Respondent Nos. 1, 3 and 4. As far as this resolution is concerned, Mr. Tamboly correctly pointed out that this resolution has worked itself out as the Petitioner Laxmi 44/49
7. ARBPL 17007-21.docx has already applied for planning permissions under DCPR 2034 and in fact even got the IOD long before any stay was granted by the Co-
operative Court. He pointed out that the IOD was obtained by the Petitioner, as far back as on 22nd January, 2021 and the stay granted by the Co-operative Court is on 8th October, 2021. According to me, therefore, the stay of this resolution would not in any way, stall the entire re-development as sought to be contended by Respondent Nos. 1 to 4. In any event, the stay of this resolution does not absolve Respondent Nos. 1 to 4 to vacate their respective premises as set out in clause 10 of the Development Agreement.
30. The last resolution of which the Co-operative Court has granted a stay is a resolution dated 4th October, 2020. This resolution can be found at pages 384 to 394 of the paper book. By this resolution, in Agenda 10, it was resolved that certain hutment dwellers will be given membership in the 5th Respondent Society, after they follow all the rules of the Society. I fail to see how this resolution would hold up the entire re-development. If this resolution is set aside, the consequence would be that the hutment dwellers would not be members of the 5th Respondent Society. This does not in any way, hinder the re-development of the said property. I, therefore, at least prima facie, find that the limited order passed by the Co-operative Court does not in any way stay the re-
Laxmi 45/497. ARBPL 17007-21.docx development of the said property belonging to the 5th Respondent Society. This is apart from the fact that the Petitioner is not a party to the dispute between Respondent Nos. 1 to 4 and the 5th Respondent Society, which is pending before the Co-operative Court.
31. Even otherwise, on the facts of this case, I find that there is no merit in the contentions canvassed by Mr. Carloz. 32 out of 33 members of the Society are present before this Court. 28 members (being represented by Mr. Rebello) are supporting the Petitioner even today. Today also, they have stated that they want to proceed with the re-development of the said property with the Petitioner. They have also canvassed before this Court that they have vacated their respective premises and are eager for the re-development to proceed as expeditiously as possible, so that these 28 members can be put back in their newly constructed building. It is only Respondent Nos. 1 to 4 who are throttling this entire process. Even looking at it from this point of view, I am of the opinion, that Respondent Nos. 1 to 4 cannot hold up the entire re-development because they have some disputes with certain members of the 5th Respondent Society.
32. In view of the foregoing discussion, and taking an overall view of the matter, the following order is passed:
Laxmi 46/497. ARBPL 17007-21.docx
(a) Respondent Nos. 1 to 4 and who are occupants of Flat No.A/9, Flat No.A/20, Flat No.A/21, Flat No.A/22 and Flat No.B/22 (Respondent No.4 being the Occupant of Flat Nos.A/22 & B/22) respectively, are directed to vacate and hand over vacant and peaceful possession of their respective flats to the Petitioner within a period of six weeks from today.
(b) In the event of Respondent Nos.1 to 4 failing to comply with the aforesaid direction, the Court Receiver, High Court, Bombay shall stand appointed forthwith with all powers under Order XL Rule 1 of the Code of Civil Procedure, 1908 including the power to take physical possession of Flat No.A/9, Flat No.A/20, Flat No.A/21, Flat No.A/22 & Flat No.B/22 from Respondent Nos.1 to 4 and/or any other person found in occupation thereof. The Court Receiver shall have the power to break upon the locks, if necessary, to take physical possession of the said Flats and vacate whoever is found therein. The Senior Police Inspector of the local Police Station shall give all necessary assistance (including deputing adequate number of police personnel) to the Court Receiver to ensure compliance of this order, failing which the concerned Senior Police Inspector shall be liable for contempt.
(c) Once the Court Receiver takes physical possession of Flat No.A/9, Flat No.A/20, Flat No.A/21, Flat No.A/22 and Flat No.B/22, he shall hand over the same to the Petitioner. The Laxmi 47/49
7. ARBPL 17007-21.docx Court Receiver shall thereafter stand discharged without taking accounts but on the payment of his costs, charges and expenses. The costs, charges and expenses of the Court Receiver shall be paid by the Petitioner/Advocate for the Petitioner within a period of one week of the Receiver raising his bill in that regard.
(d) If the Court Receiver finds any articles in Flat No.A/9, Flat No.A/20, Flat No.A/21, Flat No.A/22 and/or Flat No.B/22, the Court Receiver shall hand over the same to the concerned Respondent/s. If for any reason, the concerned Respondent/s refuse to take away their articles from their respective Flats, the Petitioner shall make arrangements to have the same stored at its costs in the first instance, and shall be subject to any further orders passed by this Court in that regard. Before handing over the said articles to the Petitioner, the Court Receiver shall prepare an inventory of the same.
33. The above Arbitration Petition as well as the above Interim Application are disposed of in the aforesaid terms. However, there shall be no order as to costs. It is needless to clarify that all the observations made herein are only prima facie and shall not be binding on the Arbitral Tribunal whilst deciding the lis between the parties.
34. All parties to act on an authenticated copy of this order Laxmi 48/49
7. ARBPL 17007-21.docx digitally signed by the Personal Assistant /Private Secretary/Associate of this Court.
[ B. P. COLABAWALLA, J. ] Laxmi 49/49