Bombay High Court
Sarah Enterprises vs Borivali Sai Suman Co-Operative ... on 6 November, 2019
Author: G. S. Patel
Bench: G.S. Patel
902-ARBAP310-18+.DOC
Atul
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION APPLICATION NO. 310 OF 2018
Sarah Enterprises ...Applicant
Versus
Borivali Sai Suman Cooperative Society Ltd & ...Respondents
Ors
ARBITRATION PETITION NO. 884 OF 2018
Borivali Sai Suman CHS & Ors ...Applicants
Versus
Sarah Enterprises & Ors ...Respondents
CHAMBER SUMMONS NO. 725 OF 2019
IN
ARBITRATION APPLICATIONNO. 884 OF 2018
Borivali Sai Suman CHS & Ors ...Applicants
Versus
Sarah Enterprises & Ors ...Respondents
And
Rasik Dhirubhai Bhadani & Ors ...Applicants
Mr Gul Atmaram Madnani, for the Applicant in ARBAP/310/2018
& Respondent in ARBP/884/2018.
Mr Rohaan Cama, with Amar Mishra, i/b SRM Law Associates, for
the Petitioner in ARBP/884/2018.
Ms Sharmila Deshmukh, for the Applicant in CHS/725/2019 ( fat
owners)
Mr Amol Shetgiti, Valuer from the Panel of the Court Receiver, is
present.
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902-ARBAP310-18+.DOC
Mr DG Kher, Court Receiver, is present.
CORAM: G.S. PATEL, J.
DATED: 6th November 2019 PC:-
1. I have before me an application under Section 11 of the Arbitration and Conciliation Act fled by one Sarah Enterprises. The respondents are the Borivali Sai Suman CHSL and its ofce bearers. There is also a petition under Section 9 of the Arbitration and Conciliation Act 1996. This is fled by the society and some of its members to which the Section 11 applicant, Sarah Enterprises, is the respondent.1
2. In the meantime, there is an intervention application fled by certain third party free-sale unit purchasers represented in Court by Ms Sharmila Deshmukh. That is Chamber Summons No. 725 of 2019 in Arbitration Petition No. 884 of 2018.
3. In the Section 9 petition, there are previous orders, including a detailed one of SJ Kathawalla J. Before I proceed further, and to lend context, I must reference some of these past orders.
4. Very broadly stated, the dispute is this: Sarah Enterprises entered into a development agreement with the society. The society has sixty members. The development agreement (the one that contains the arbitration clause) contemplated that the sixty members 1Initially the society was the 3rd respondent to the Section 9 petition but has since been transposed as petitioner No. 1.
Page 2 of 236th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC would be given newly constructed fats. I am not troubling with the details of the fat dimensions or with the other provisions as to society corpus fund contribution, transit rent, hardship compensation and so on at this stage. As the following narrative shows, Sarah Enterprises has been consistently in default of one or more of its fnancial obligations to the society members. It is also in breach of several undertakings to this court.
5. The development is on a property at Eksar Village, Borivali (West). The development proposed was the construction of two inter-connected wings. Wing 'A' was to house most of the members. A few members (possibly because of issues of the size of the new fats) were to be accommodated in Wing 'B'. All of wing 'B' 9except for these members being re-accommodated) was free sale, but some of the free sale fat purchasers were to be adjusted and accommodated in wing 'A' too.
6. Ms Deshmukh represents 28 of 60 free sale fat purchasers.
7. Wing 'A' is completed up to the ninth foor. Altogether foors are proposed. Wing 'B' is also completed to about ninth foor level and was to have the same number of foors.
8. Sarah Enterprises ran out of both money and luck. Its partners faced criminal proceedings. One is still seeking bail. The other is nearly 92 years old and cannot, therefore, be an active participant in anything that happens from this point on.
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9. With this background, I turn to some of the earlier orders in the Section 9 petition. On 21st June 2018, SJ Kathawalla J accepted an undertaking from Sadiq A Ratansi, a partner of Sarah Enterprises, to pay arrears of property tax. The Municipal Corporation of Greater Mumbai is before me. It claims that even after some payment by Sarah Enterprises (and which the frm claims was the full amount), an amount of at least Rs. 7 lakhs is yet due. That issue is kept open.
10. Sarah Enterprises said it would inform the Court within a week of the dates on which it received Rs. 22 crores from the third party free sale fat purchasers. It also promised to explain why it had stopped paying transit rent to the society members though it had received this money, and despite having given undertakings to the City Civil Court in earlier proceedings to pay Rs. 3 crores towards arrears of transit rent.
11. Sarah Enterprises claimed that it was allowed by the MCGM to pay property tax in instalments.
12. On 5th July 2018, the MCGM clarifed that it had not extended to Ratansi any facility for payment of property tax in instalments, and quite rightly so. Ratansi had only sought this indulgence. The Ward Inspector, to whom that request was made, had no authority to grant it. Mr Madnani for Sarah Enterprises then claimed on instructions that there was a 'verbal agreement' for paying property tax arrears in instalments. Kathawalla J quite understandably rejected this out of hand. I am not even waiting for Page 4 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC this to be said to me at some point in future. I reject it outright now and forever as being entirely beyond contemplation. I make it clear that the MCGM is not to aford any such easy-payment facility to Sarah Enterprises. It has no authority in law to do so. In fact, Sarah Enterprises' request was turned down. On 5th July 2018, Kathawalla J noted the MCGM's statement that it had received Rs.5 lakhs by demand draft. The 5th July 2018 order also noted repeated dishonours of cheques issued by Sarah Enterprises. Mr Madnani on instructions gave an undertaking that Sarah Enterprises would pay the entire arrears of property tax of Rs. 19,37,808/- within a week. That undertaking was accepted.
13. On 12th July 2018, Kathawalla J was compelled to note that there was yet another breach of the undertaking. He was told that the developer was ready with a demand draft of Rs. 10 lakhs. The balance amount was promised by 23rd July 2018. This undertaking was accepted. Predictably, until 23rd July 2018 nothing had been done. Sarah Enterprises made claims of hospitalization, death and illness.
14. I believe I should now start reproducing the orders of Kathawalla J. The order of 23rd July 2018 says this:
"This Court has repeatedly recorded how Mr. Sadiq S. Ratanshi, Partner of Sarah Enterprises, has not only cheated the tenants/members from whom he took possession of their fats and promised to give them fats of larger areas but has further cheated them by not paying them their dues towards temporary alternate accommodation. He has therefore brought them virtually on the streets. He has also Page 5 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC not paid property taxes since 2013 and most of the cheques handed over to the Corporation since 2013 have been dishonoured and the property of the Society is sealed. When this Court directed him to fle an Afdavit disclosing assets, he got himself admitted for 1-2 days in the hospital and fled an Afdavit after more than fve adjournments which too is not complete. Thereafter, he fled an Appeal from Order passed by this Court and he was allowed not to fle particulars/disclosures of his immediate family members. After several adjournments and false submissions, made before the Court, he made part payment to the Corporation and promised to pay the balance amount of Rs.9,37,808/- within a few days, but failed to do so. In view thereof, this Court once again by its order dated 12 th July, 2018, he was directed to pay the balance on or before 23rd July, 2018. However, today his Advocate states that his father-in-law has passed away on 14 th July, 2018 and will return to Mumbai on 25th July, 2018. It is also pertinent to note that though he was restrained by an order of this Court from leaving the country, he has left for Dhaka without seeking permission of this Court. In view thereof, stand over to 26th July, 2018."
15. Then comes the order of 26th July 2018 which reads as follows:
"1. Mr. Madnani, learned Advocate for Respondent Nos.1 and 2 states that his client Mr. Sadiq S. Ratanshi is on his way and he will be reaching Court within half and hour along with the balance amount payable to the Corporation by demand drafts towards arrears of property taxes. The above matter shall therefore be taken up at 03.00 p.m.
2. The above statement made in the morning session, by the learned Advocate for Respondent Nos.1 and 2 on Page 6 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC instructions of his client Mr. Sadiq S. Ratanshi was as usual, incorrect. Mr. Sadiq S. Ratanshi has come with a demand draft in the sum of Rs.5 Lakhs only and he now states that he will issue a post dated cheque of Rs.4,37,808/- being the balance amount payable to the Corporation. I have already recorded in my earlier orders that most of the cheques issued by Mr.Sadiq S. Ratanshi to the Corporation since the year 2013, were dishonoured. It is only because the developer - Mr. Sadiq S. Ratanshi again undertakes to deposit on 27th July, 2018, a pay order in the sum of Rs.4,37,808/-, that the Court is not taking any action against him in this regard for repeatedly disobeying the orders / directions of this Court. Stand over to 27th July, 2018 at 3.00 p.m."
16. After several such further hearings, on 9th August 2018 the Court took on record a report submitted by Mr Amol Shetgiri on the present status of the project. This date is important because at my request Mr Shetgiri is present in Court and I will turn to those directions a little late. Certain other directions were issued on that date with which we are not immediately concerned.
17. Then we come to the elaborate order of 6th September 2018 which encapsulates the history of the matter up to that date. Even at the risk of adding to the length of the present order, I think it is best now to set this out in full:
"1. Respondent No.1 -- Sarah Enterprises is a partnership frm whose partners are Shri. Sadiq Ratansi and his father. Since the father of Shri. Sadiq Ratansi is very old, it is Shri. Sadiq Ratansi only who is carrying on business in the name of Respondent No.1 as builder and developer.Page 7 of 23
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2. The Petitioners are senior citizens/pensioners who have executed a Development Agreement with the Respondents sometime in the year 2008. The Petitioners handed over possession of their fats to the Developer in the year 2010, after which the Developer demolished the same. Though under the Development Agreement, it was agreed that the ownership fats will be provided to the original members within a period of 22 months, a Supplementary Agreement was thereafter executed (which is unregistered) in which possession was promised by 31st October, 2015. The original members have therefore not received possession of their fats in the last almost eight years. The Petitioners have admittedly, also not received compensation towards temporary alternate accommodation from the Developers from November 2015 till date, except an ad-hoc amount of Rs.50,000/- each. The property tax aggregating to Rs.24,00,000/- was also not paid by the Developers on the pretext that they were disputing the same, because of which the property of the members was sealed by the Corporation.
3. According to the Petitioners, the arrears of compensation payable by the Developer is about Rupees Five Crores. Today Shri. Sadiq Ratansi has for the frst time agreed that the arrears payable to the members towards compensation in lieu of temporary alternate accommodation is Rs.5.40 Crores, after giving him credit of Rs.30 Lakhs, which was paid by him in August 2017. In fact, the City Civil Court had directed the Developer/Shri. Sadiq Ratansi as far back as on 16th February, 2017 to pay compensation of Rs.3,10.69,900/- to the Society/its members. Three extensions were sought by the developers from the City Civil Court which were granted. However, despite obtaining extensions from the City Civil Court, the Developers did not pay the said compensation. It will not be out of place to mention here that the developer has already Page 8 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC collected Rupees Twenty Two Crores from the purchasers of fats under the free sale category but has not paid the agreed compensation in lieu of temporary alternate accommodation to the original members who are out of their fats since the year 2010. Even today, the Developers state that they will pay only 10% of the compensation amount after ffteen days and will clear the entire arrears in installments and some part of it will be paid only at the time of possession. The Developers cannot be trusted as set out hereinafter.
4. After recording some of the aforestated facts in my order dated 5th May, 2018, I have recorded that I am prima facie satisfed that the Developer has cheated the original members and has after demolition of their property since 2010, left them and their family members without a roof and completely in the lurch. The partners of Respondent No.1 were therefore directed to fle their Afdavits disclosing the assets of the frm as well as their personal assets (encumbered and unencumbered) and the assets of their immediate family members including statements of their bank accounts of the last three years and also their Income Tax returns. They were also directed to set out in their Afdavits the particulars of fats sold by them and the fats which they have agreed to sell under the free sale category, the amount received from fat purchasers and the amount yet to be received. An independent Architect was appointed to visit the suit premises on 10th May, 2018 at 12 noon and after inspecting the construction carried out by the Developers inform the Court the status of construction and whether the construction is carried out by the Developers as per the approved plan/s. The Architect was directed to also provide particulars of the approximate amount required to complete the construction upto 11th foor. The matter was adjourned to 10th May, 2018.Page 9 of 23
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5.On 10th May, 2018, Mr. Madnani appearing for the developers sought extension of time to comply with the order dated 5th May, 2018 and gave an undertaking to fle the disclosure Afdavit as directed by this Court in Paragraph 1 of the Order dated 5th May, 2018 on or before 16th May, 2018.
6. Shri. Sadiq Ratansi breached the undertaking given to this Court. He failed to fle his disclosure Afdavit. Instead his Advocate Mr. Madnani informed the Court that the Developer is admitted in hospital. When a query was raised whether any medical papers/report pertaining to his sickness is available, the answer was in the negative. Shri. Sadiq Ratansi was directed to fle the disclosure Afdavit by an order dated 5th May, 2018 and thereafter at his request by 16th May, 2018. Shri. Sadiq Ratansi got himself admitted in hospital only in the morning of 16th May, 2018 on the ground of chest pain. The Advocate for the Developer then informed the Court that an Appeal is fled from the Order datend 10th May, 2018. It therefore became clear that the developers on one ground or the other committed breach of the orders passed by this Court dated 5th May, 2018 and 10th May, 2018 which conduct is unacceptable to the Court. I was therefore convinced that Shri. Sadiq Ratansi got himself admitted in hospital with a view to avoid complying with the orders passed by this Court and instead move an Appeal. By order dated 16th May, 2018, Shri. Sadiq Ratansi was therefore once again directed to comply with the orders on or before 22nd May, 2018.
7. Though Mr. Sadiq Ratansi was discharged from the hospital immediately on the next day i.e. on 17th May, 2018, he again failed to comply with the order. Mr. Madnani, Advocate for Mr. Sadiq Ratansi now informed the Court that the Developer is advised open heart surgery. No documents advising open heart surgery were produced Page 10 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC before this Court nor his discharge card was produced before the Court. In view thereof, Dhirubhai Ambani Hospital was directed to hand over copies of all the medical records of Shri. Sadiq Ratansi to the representative of the Prothonotary and Senior Master of this court. From the records received by the Court it became clear that no open heart surgery was advised as alleged.
8. Mr. Madnani states that he had fled an Afdavit on 21st May, 2018. However, he admits that in the said Afdavit he had only disclosed income-tax returns of three fnancial years. The entire conduct of the Developer i.e. from getting himself admitted in hospital on the day he ought to have fle his Afdavit and the incorrect statements made before this Court qua his health are in detail set out in my order dated 29th May, 2018. On that day i.e. 29th May, 2018, Mr. Madnani also stated that his client is ready with the proposal to settle the matter. As regards the proposal to settle the matter, this Court recorded that the Developer cannot be trusted at all; he has cheated the innocent tenants/members as well as the fat purchasers of fats under the free sale category by not constructing and handing over possession of their fats since the last eight years; he has not paid the tenants/members the compensation in lieu of temporary alternate accommodation amounting to Rs.3,10,69,900/-, despite taking three extensions from the City Civil Court and receiving Rs.22 Crores from the purchasers of fats under the free sale category; he failed to pay property tax because of which the property of the members was sealed by the Corporation; he left no stone unturned to disobey and not comply with the orders dated 5th May, 2018, and 10th May, 2018. In paragraph 7 of the order dated 29th May, 2018, this Court recorded as follows :-Page 11 of 23
6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC "7. These days the Court has to regularly deal with such conduct, both on the part of the litigants and some Advocates representing such litigants. Though Advocate Mr. Madnani is able to get a proposal from Shri. Ratansi/Respondent No.2, he is unable to get disclosures from his clients since 5th May, 2018 despite admittedly Mr. Ratansi/Respondent No.2 as set out hereinabove, was admitted in hospital only on 16th May, 2018 for a period of two days as set out hereinabove. Such conduct on the part of the litigants like Respondent No.2 cannot be tolerated or accepted any further, more so when, the Respondent No.2 has been dishonest with the members of the public since the last several years and now also with the Court as set out hereinabove."
9. Mr. Sadiq Ratansi was once again called upon to fle his Afdavit on or before 7th June, 2018 and show cause as to why action should not be taken against him for his aforestated conduct of not complying with the orders passed by this Court since 5th May, 2018.
10. Shri. Sadiq Ratansi once again gave an undertaking to fle the disclosure Afdavit of his father, Sultan Ali Ratansi on or before 26th June, 2018. On 28th June, 2018, this Court passed the following order :-
"As recorded in the earlier orders passed by this Court, Respondent Nos. 1 and 2 are on one pretext or the other repeatedly not complying with the orders passed by this Court. If the order dated 21st June, 2018 is not complied with by Respondent Nos. 1 and 2 on or before 2nd July, 2018, the Court shall be constrained to take stern Page 12 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC action against Respondent Nos. 1 and 2. Stand over to 2nd July, 2018, FOB."
11. On 2nd July, 2018, Mr. Madnani, Advocate for the Developers on instructions from Mr. Sadiq Ratansi informed the Court that the Corporation had extended to him the facility to pay the arrears of property tax aggregating to Rs.24 Lakhs in installments and that he has paid the frst installment of Rs.5 Lakhs and issued post- dated cheques for the balance amount. The Advocate for the Corporation was directed to forthwith take instructions and inform the Court whether any such facility was extended to Shri. Ratansi and to also produce the order extending such facility on 3rd July, 2018 at 11.00 a.m. Corporation was also called upon to inform the Court whether post-dated cheques for the balance payment were received by them from the Developers.
12. On 5th July, 2018, Advocate for the Corporation informed the Court that the submissions made before this Court by Shri. Sadiq S. Ratansi on 5th July, 2018 were incorrect. The Corporation has not extended any facility to Shri. Ratansi to pay the arrears of property tax aggregating to Rs.24 Lakhs in installments. Shri. Ratansi has only submitted a letter to the Corporation dated 29th June, 2018 alongwith post-dated cheques which letter was accepted by the Ward Inspector, who has no authority to grant any such facility to any individual / entity. Advocate Madnani on instructions now stated that Mr. Jadhav, Assistant Assessor and Collector, R-Ward had verbally agreed to allow payment of the property tax in installments by Sarah Enterprises i.e. Shri. Sadiq S. Ratansi. Mr. Jadhav, Assistant Assessor and Collector, R-Ward was therefore directed to remain present in Court at 3.00 p.m. on the same day. Mr. Jadhav appeared on the same day and informed the Court that a demand draft of Rs.5 Lacs was received from Shri. Sadiq Ratansi;
Page 13 of 236th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC however, he (Shri. Jadhav) has not agreed to provide installment facility to Shri. Sadiq Ratansi; he had forwarded the letter received from Respondent No. 1 along with the post dated cheques to the Deputy Assessor and Collector, who has rejected the ofer of the Developer to pay the amount in installments and the cheque / demand draft of Rs.5 Lacs was encashed by mistake. On that day, Advocate for the Corporation has submitted a table showing several cheques issued by the Shri. Sadiq Ratansi to the Corporation right since December-2013, which have been repeatedly dishonoured by his bankers. This Court therefore in its order dated 5th July, 2018 recorded that :
"Only because the Corporation has encashed the demand draft of Rs. 5 Lacs by mistake, the Corporation cannot be forced to accept property taxes by installments from the Respondent No. 1 more so when several cheques issued by Respondent No. 1 to the Corporation towards property taxes have bounced since December- 2013."
13. Thereafter Mr. Madnani on instructions once again gave an undertaking to pay to the Corporation the entire arrears of Rs.19,37,808/- within a period of one week from the date of the order i.e. 5th July, 2018. The undertaking was accepted. The Developer, who was present in Court, was put to notice that if he again breaches the undertaking given by him to the Court, the consequences will follow.
14. On 12th July, 2018, the Developer once again breached the undertaking recorded in paragraph 4 of the order dated 5th July, 2018. However, Advocate Madnani for the Developers stated that Shri. Sadiq Ratansi is ready with the Demand Draft of Rs.10 Lakhs drawn in favour of the Corporation. He further gave an undertaking to pay the Page 14 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC balance amount to the Corporation on or before 23rd July, 2018. The undertaking was accepted and the matter was adjourned to 23rd July, 2018.
15. On 23rd July, 2018, Advocate Madnani stated that the father-in-law of the Developer/Shri. Sadiq Ratansi has passed away on 14th July, 2018 and he will return to Mumbai on 25th July, 2018. Thereupon, this Court in the order dated 23rd July, 2018 inter-alia recorded that :
"It is also pertinent to note that though he was restrained by an order of this Court from leaving the country, he has left for Dhaka without seeking permission of this Court. In view thereof, stand over to 26th July, 2018."
16. On 26th July, 2018, Advocate Madnani informed the Court that the Developer has come with a demand draft in the sum of Rs.5 Lakhs only and he will issue a post-dated cheque of Rs.4,37,808/- being the balance amount payable to the Corporation. Again time was granted upto 27th July, 2018 to pay the balance amount of Rs.4,37,808/- to the Corporation. It is only on 30th July, 2018, that a Demand Draft of Rs.4,37,808/- was handed over to the Corporation by the Advocate for the Developer. Thereafter, the seal afxed on the property of the Society was removed by the Corporation. On 3rd August, 2018, Advocate Madnani sought time upto 6th August, 2018 to fle the Afdavit-in- reply of the Developers. He informed the Court that he shall annex to the said Afdavit, all bank accounts of Sarah Enterprises, Shri. Sadiq Ratansi and his father.
17. Advocate Madnani thereafter raised an objection that the Petitioners are not the present managing committee members of the Society and therefore they have no right to fle the above Arbitration Petition and the members of the Page 15 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC Society do not support the present Petition. In view thereof, this Court on 9th August, 2018 passed the following order :-
"1. Mr. Amol Shetgiri has submitted his report dated 21st May, 2018 setting out the status of the project. He shall submit his further report qua the development potential of the suit building and the structural stability.
2. The present managing committee shall call a general meeting of the members on 26th August, 2018 which will be presided over by Mr. Ketan Trivedi, Additional Prothonotary and Senior Master and the following questions shall be put before the house for being answered by secret ballot :
(a) Whether the members support the present petition as fled ?
(b) Whether the present managing committee members are authorized to represent the members in the above Court proceedings and to take decision with regard to the subject matter of the above Petition ?
3. The learned Advocate for the Petitioner has made a grievance that when inspection was ofered to the developer in the presence of his Advocate, one Mr. Suresh Khedekar, Senior Clerk, from the Ofce of the District Deputy Registrar, Dadar, came there and started taking inspection. The name of Mr. Suresh Khedekar is found on the attendance sheet prepared by the parties. When the Advocate for the Petitioner saw that Mr. Suresh Khedekar is taking inspection, he stopped him from doing so. Mr. Suresh Page 16 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC Khedekar started showing tantrums and threw his pen on the lady junior of the Advocate for the Petitioner. The lady junior is present in Court and confrms the conduct of Mr. Suresh Khedekar. In view thereof, a copy of this order shall be forthwith forwarded by hand delivery to Mr. Veer, District Deputy Registrar, Dadar, Mumbai. Stand over to 28th August, 2018."
18. As recorded in the order dated 28th August, 2018, a General Body Meeting of the members of the Society was called by the Additional Prothonotary and Senior Master Mr. Ketan Trivedi on 26th August, 2018. Out of 60 members, 56 members attended the said meeting. All the 56 members have responded to the efect that they support the present Petition as fled and the present Managing Committee members are authorized to represent the members in the above Court proceedings and to take decision with regard to the subject matter of the above Petition. Shri. Sadiq Ratansi was by the said order directed to submit in Court the Foundation Drawings on 29th August, 2018. Advocate Madnani states that he is not aware where the foundation drawings are. Mr. Cama has produced an e-mail dated 3rd September, 2018 informing the Developer what they mean by foundation drawings. Mr. Sadiq Ratansi is not ready with the foundation drawings and he states that he will submit the same on 10th September, 2018.
19. Even today, the Developer is not willing to pay the arrears of rent aggregating to Rs.5 Crores. He states that he will pay the same by installments. How he has misused and breached the undertaking given to this Court, to pay a small amount of Rs.19 Lakhs to the Corporation because of which the property of the Society was sealed by the Corporation and faced the risk of the same being put up for sale by Page 17 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC public auction, is set out hereinabove. Though Shri. Ratansi has alleged that he has spent Rupees 28 Crores on the project, he has not produced any documents in support of the same. In any event, his primary duty was to pay compensation in lieu of temporary alternate accommodation to the members who have based on the said Agreement obtained alternate accommodations on leave and license basis and now do not have the funds to even secure the temporary roof. Therefore, in my view the members of Society as well as the innocent purchasers of fats under the free sale category who have paid Rs.22 Crores to the developers have been repeatedly cheated by the Developers. Mr. Sadiq Ratansi cannot be trusted at all. Today, the MHB Police Station has submitted its report qua the complaint fled by the Society with the police authorities. The same is taken on record.
20. In view of the above, the following order is passed :-
(a) The Court Receiver, High Court, Bombay is appointed as Receiver in respect of the property of the Society. The Court Receiver shall forthwith take possession of the property and submit his report to this Court.
(b) The Developer who has repeatedly given undertakings to the City Civil Court since the last two and half years that he shall deposit amount of Rs.3.10 Crores and has only deposited Rs.30 Lakhs, is now directed to forthwith deposit the admitted arrears of Rs.5.4 crores with the Prothonotary and Senior Master of this Court.
21. Stand over to 10th September, 2018, First on Board."
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18. As later orders show, there was a structural engineer one Khalid Myageri present in Court with documents or drawings in regard to the suit project.
19. By this time, Sadiq Ratansi was in jail and Mr Madnani was having difculty in taking instructions. The members of the society continued to await the long-promised arrears of maintenance. These were nowhere in site. There were allegations that Ratansi had sold to third party fat purchasers some fats earmarked for society members. Arrears of transit rent had not been deposited.
20. This continued even on 27th September 2018. Matters only went downhill from there with some controversy about improper notarization.
21. The long and short of all this is that nothing has happened on this project apart from this level of construction up to the ninth foor of the two wings. Mr Madnani for Sarah Enterprises says that his clients have invested Rs 28 crores so far in the project. He also says that Sarah Enterprises has several other properties that can be sold to provide a fund infusion, but his clients need to be released from jail to be able to do that. I cannot help him in either regard. If there is no restraint for disposal of the property, he may deal with them subject to orders of restraint in other proceedings including criminal proceedings and all other claims and encumbrances.
22. Far too many promises have been made only to be broken. I do not propose to accept any more. Mr Madnani's request for Page 19 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC lengthy adjournments in the name of what his clients conceive to be justice are entirely misconceived. I have before me 60 members of the society who are out of homes. Their old building has been demolished. There see no realistic prospect of obtaining the new homes they were promised, and which they thought they would get within a reasonable time.
23. Then there is the claim of the free sale fat purchasers, some of whom are represented by Ms Deshmukh. They too are in no better a position. They have invested in the project only to fnd that there are complications of double sales, and no immediate prospect of getting possession.
24. A more presently worrying position is that this unfnished and partly-built structure has been standing in this position exposed to the elements for nearly two years. In October 2018 Mr Shetgiri made a report. We have had a severe monsoon since and the building has remained unprotected in all that time. Ms Deshmukh is understandably concerned because there is a tentative proposal from the society to demolish everything and start all over again. She fears this would adversely afect her rights and indeed there seems to be some substance to this apprehension. The reason is plain. So long as the third party free-sale fat purchasers have registered agreements and the built up area of the entire project is consumed, there is no available incentive or beneft to any new developer to take over the project. There is nothing to be gained by any new developer from it. The FSI would be fully exhausted by the current project. It remains at 2.0. The proposal from the society is as yet tentative and it is unclear whether it involves a completion of the partly completed Page 20 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC project, or a wholesale demolition and a reconstruction of both wings. In either case the situation is considerably complicated. The members, for their part, would have no fnance. They are pensioners. Since there is no possibility of a new builder and developer entering the scene, they would need to obtain this from some fnancial institutions. Equally, the rights of the third party free-sale fat purchases must be protected. As Ms Deshmukh says it is unreasonable to expect any fat purchaser to pay twice over for a single fat and that is what would happen if the free sale building was to be demolished and reconstructed with the free sale fat purchasers being asked to contribute towards the construction cost.
25. Of the many unknown factors in this entire story is the present status of the building and, more importantly, an assessment of likely costs for completion, or alternatively for reconstruction. It is for this reason that I have asked for the assistance of Mr Shetgiri. Not only is he on the panel of the Court Receiver but he has previously made a report and that will considerably assist going forward. I will require him to inspect the site and submit his report. He will also have the necessary non-destructive tests carried out. There are previous structural reports with which I am not entirely satisfed. One of the reasons is that the previous report took only one concrete core sample and I believe that to be inadequate given how long this project has remained incomplete and the size of it. It is for Mr Shetgiri as to how many are required. The previous structural report also indicates an extremely variable quality of concrete in structural elements, particularly columns. This means that going forward there would either have to be some expenditure Page 21 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC on strengthening these structural elements or, if that is too expensive, then considering a more drastic option.
26. I have broadly indicated to Ms Deshmukh's clients and to the society, some of whose members are in Court, the likely costs and fees to be paid to Mr Shetgiri and his consultant. These are very reasonable and both sides have immediately agreed that they will bear these costs equally. I am not asking them to bear any additional costs at this stage. I am deliberately keeping Sarah Enterprises out of any consideration of payment of these costs.
27. The last set of directions pertains to Sarah Enterprises and its fnancial obligations. I should not be misunderstood to suggest that the liability of Sarah Enterprises to the Municipal Corporation is of a higher level of legal or moral precedence over the liability to pay members. It is only that the liability to the Corporation is relatively small and in the amount of about Rs. 10 lakhs.
28. Leaving open all contentions of Mr Madnani as to what has been paid and to be adjusted, I will require Sarah Enterprises as a condition precedent to consider any application it seeks to make, to frst bring into Court that entire amount of Rs. 10 lakhs payable to the Municipal Corporation.
29. The amount now due to the society is Rs. 8,08,71,056/-. I had very early on warned Mr Madnani that his clients' constant prevarications and breaches of undertakings would cost them dear. Given the background, I will round this of to Rs. 9 crores because Page 22 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 ::: 902-ARBAP310-18+.DOC by the time this amount is paid and distributed it will undoubtedly have gone up.
30. Faced with this Mr Madnani says to me exactly what he was saying to all this time to Kathawalla J and with the same spectacular lack of success: that he will take instructions. That time for taking instructions is now gone. I am making it clear that unless Sarah Enterprises brings in this amount of Rs. 9.10 crores on or before 29th November 2019, it will not be heard on any aspect of either of these two matters. I will not allow it to invoke arbitration in its application or to seek rights under a contract if it is demonstrably unable to fulfl its obligations and commitments made even to Court. The consequences then will speak for themselves. The society, for its part, has fled both Section 9 petition and a Section 11 application, and orders can be appropriately made in these.
31. List the matter on 5th December 2019 at 3.00 pm for hearing.
32. Mr Shetgiri is requested to submit his report to the Court Receiver previously appointed by Mr Justice SJ Kathawalla.
(G. S. PATEL, J) Page 23 of 23 6th November 2019 ::: Uploaded on - 08/11/2019 ::: Downloaded on - 08/11/2019 21:03:17 :::