Bombay High Court
Viraj Kamman Real Estate Developers Pvt ... vs Gopal Terrace Co-Operative Housing ... on 5 April, 2023
Author: Bharati Dangre
Bench: Bharati Dangre
2023:BHC-OS:3566
1 carbp 37219-22 J.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMM. ARBITRATION PETITION (L) NO. 37197 OF 2022
M/s.Viraj Kamman Real Estate Developers P.Ltd .. Petitioner
Versus
Gopal Terrace Co-op Housing Society Ltd & ors .. Respondents
WITH
COMM. ARBITRATION PETITION (L) NO. 37219 OF 2022
M/s.Viraj Kamman Real Estate Developers P.Ltd .. Petitioner
Versus
Gopal Terrace Co-op Housing Society Ltd .. Respondent
...
Mr. Mayur Khandeparkar with Mr.Sanjay Kadam, Sanjeel Kadam,
Mr.Nitisha Lad i/b M/s.Kadam & Co. for the petitioner.
Mr.Gauraj Shah with Anand Mohan, Pratik Jani and Princee
Vaishnav i/b Prime Legem for the respondent no.1 in both matters.
Mr.Rashmin Khandekar with Ekta Mayanvashi for respondent
no.3 in CARBPL 37197/2022.
CORAM: BHARATI DANGRE, J.
RESERVED : 3rd MARCH, 2023
PRONOUNCED : 5th APRIL, 2023
JUDGMENT:-
1 By an Arbitration Petition (L) 37219/2022, filed under Section 37 of the Arbitration and Conciliation Act, the Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 2 carbp 37219-22 J.doc petitioner Company engaged in the business of Real Estate development has raised a challenge to the an order dated 9/11/2022, passed by the Sole Arbitrator, appointed by this Court, in two petitions filed before it by the petitioner and the contesting respondents, Co-operative Housing Society Limited. Upon permission being granted to convert the respective petitions into applications u/s.17 before the arbitrator, the interim relief was refused to the petitioners who was the claimant, by recording, it is open for it to prove the alleged monetary loss/damages at trial as the balance of convenience was in favour of the respondent Society.
It is this order which is clamped as patently illegal, erroneous, manifestly arbitrary and perverse, and this Court is therefore, called upon to exercise it's power u/s.37 of the Arbitration and Conciliation Act, by passing appropriate orders and directions, so as to protect and safeguard the petitioner's right accruing under the Development Agreement dated 3/2/2018.
The petitioner developer has also filed a petition u/s.9 of the Arbitration and Conciliation Act, 1996, BACKGROUND FACTS 2 The respondent is the owner of a plot described in the petition, in village Eksar, Taluka Borivali, being situated at 'Kastur Park', Shimpoli Road, Borivali (West), together with a building standing thereon, comprising of ground plus three upper storeys Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 3 carbp 37219-22 J.doc known as 'Gopal terrace'. The said building and the plot constitute 'the property', which consist of residential as well as commercial holdings in occupation of 15 residential flat holders and 9 shop owners, who are the Members of the respondent Society).
The building being constructed around 42 years ago, has become inhabitable, calling for extensive repairs, constrain the members of the Society to consider the proposal for it's redevelopment and a resolution to that effect was passed in it's Annual General Meeting (AGM) held on 6/7/2013. It was decided to invite offers from the reputed builders to carry out the work of redevelopment of the said property, by demolishing the existing building and constructing a new building to accommodate the existing 24 unit holders of the Society and also confer upon them the additional benefits, in terms of additional area as well as hardship compensation and for sale of the remaining constructed area of the flats/shops, units, etc, in the open market to the prospective buyer by consuming available FSI and utilizing the Fungible FSI as well as Transferable Development Rights (TDR) in accordance with the DCR of 1991 of Municipal Corporation of Greater Mumbai (MCGM).
3 Upon such offers being invited, the petitioner developer submitted it's offer for redevelopment of the subject property belonging to the Society and on 20/12/2015, the Society passed a Resolution appointing the petitioner as the preferred Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 4 carbp 37219-22 J.doc developer. After a series of discussions, a Development Agreement (DA) was entered between the petitioner and respondent for redevelopment of 'the property' and it was registered on 3/2/2018.
4 The Development Agreement comprise of several recitals, which were agreed to form an integral part of the Development Agreement, and it contained a declaration of the Society about the plot area and the specifications of the building constructed thereon, consisting of ground and three upper storey, which housed 24 tenements. The agreement contemplated grant of development rights to the developer and it also specify that the Society shall render full and necessary co-operation for it's development and shall execute the necessary Power of Attorney (POA) in order to facilitate the development project.
The other terms in the DA contemplated the manner in which the developer was entitled to explore it's potential and the utilization of FSI and TDR. The consideration payable by the developer was also specifically incorporated, by providing that the developer shall construct and provide flats with additional carpet area of 20% to each existing residential flat owner and 13% additional carpet area to the shop owner members, on the existing BMC approved carpet area. This, was appended with an additional stipulation, that under no circumstances, shall the Society or its members be required to pay any construction cost or any charges, whatsoever in respect of the new premises agreed to Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 5 carbp 37219-22 J.doc be provided to the members. Apart from the additional fee of cost area agreed, the developer also agreed to pay hardship compensation and the tranches of corpus fund was also provided in the agreement.
The Members of the Society were held entitled for the amenities in each new flat and shop to be handed over, which was specifically set out in Annexure 10 of the Agreement.
5 The Development Agreement provided the time limit for completion of the entire project to be 30 months from the date on which the first commencement certificate is issued by MCGM, with an entitlement to a grace period of six months.
The obligations cast upon the developer were specifically set out, with a right to sell the flat/shops/offices/ premises to third parties, to the exclusion of those, which are meant to be constructed for the existing members of the Society. Certain obligations were also cast on the Society of not creating any sort of third party rights, and of not entering into any arrangement/agreement with any person or persons, except in case of breach of terms and conditions of the existing Development Agreement, including the failure of the developer to complete the redevelopment within the time stipulated. Clause no.18 conferred a right of specific performance to an aggrieved party, upon the situation, where either party to the agreement commits any default of the terms and conditions and Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 6 carbp 37219-22 J.doc in such an event, it was held entitled, to seek and enforce specific performance of the agreement.
This agreement also comprised of a Dispute Resolution Clause in case of any dispute arising between the parties and provided the manner of resolving the same, and if a dispute could not be resolved amicably between the parties, the agreement contemplated reference to a Sole Arbitrator to be appointed jointly.
6 It is this Development Agreement with it's specific clauses, which is the fulcrum of the dispute between the parties.
According to the petitioner developer, it paid corpus fund to the Society as agreed and shared the draft of the Power of Attorney on 9/3/2018 with the Society. It is the case of the petitioner that it continued to perform its part of obligations, as contemplated in the Development Agreement and continuously persuaded the respondent from May 2018 to December 2021 for approval of plans and execution of the Power of Attorney (POA), but there was abject failure on part of the respondent as it raised unnecessary issues and allegations, without discharging its corresponding obligations under the Development Agreement.
The petitioner project it's case, by submitting that it made all bonafide attempts to resolve the alleged disputes raised by the respondent and also requested meeting of the members of the Society, but the respondent remained adamant on it's Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 7 carbp 37219-22 J.doc approach and it went ahead and appointed one Polo Infra as developer and terminated the development agreement with the petitioner. It is only when the petitioner's sign board installed on the property was removed mischievously, the above development was made known to them.
It was on 19/4/2022, the respondent intimated the petitioner about termination of the Development Agreement, pursuant to a resolution passed in the general body meeting of the Society held on 27/3/2022.
The notice, being received on 19/4/2022, the petitioner filed Arbitration Petition u/s.9 of the Arbitration Act. Upon it's listing, the High Court was informed that the respondent Society had already executed an unregistered MOU on 8/5/2022 with Polo Infra Developers Pvt. Ltd, appointing it as the new developer, and it was also informed that they have instituted a Section 9 Arbitration Petition against the petitioner for injunctive reliefs.
In the wake of the aforesaid event, the High Court upon agreement of both the parties on 10/5/2022, appointed a Sole Arbitrator to adjudicate the disputes arising between them out of the development agreement, by keeping all the rights and contentions open, and permitted both the parties to convert their respective petitions into applications u/s.17 and seek appropriate relief before the Tribunal.
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 8 carbp 37219-22 J.doc 7 Pursuant to this, the Arbitral Tribunal concluded the hearing of both the applications filed u/s.17 of the Arbitration and Conciliation Act, and reserved them for passing orders. Pending the orders by the Arbitral Tribunal, Polo Infra requested for grant of IOD and on 20/9/2022, the registered Development Agreement was entered by the respondent with Polo Infra. On 14/10/2022, Polo Infra received IOD for 'zero' FSI from MCGM. After the aforesaid sequence of event, the Arbitrator passed the impugned order on 9/11/2022, rejecting the request for interim measures, pending the arbitration proceedings by recording that a finding that the petitioner has failed to make out a prima facie case in it's favour, as sufficient material suggested that the termination was neither pre-matured nor illegal, and since far, no work has commenced, as the IOD was not obtained by the petitioner, despite the fact that the building is dilapidated, and since only 10% of the corpus amount was paid by the claimant/developer, there was a failure to discharge obligation on its part.
The list of breaches which were set out in the termination notice, being failure to obtain IOD, failure to get the plot sub-divided, failure to get the plans approved and failure to act in accordance with the Development Agreement was found to be sufficient justification for termination of agreement. By recording that there is no justification in making the respondent Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 9 carbp 37219-22 J.doc wait to develop their property and putting the blame entirely upon the petitioner, and taking note of the tremendous hardship having been caused to the members of the society, a finding was clearly recorded that the respondent Society must be permitted to complete the balance constructions at it's own cost by appointing a new developer.
It is this order which is the subject matter of Appeal filed u/s.37 of the Arbitration and Conciliation Act.
8 Another petition u/s.9 is also filed by the petitioner developer seeking interim measures, restraining the respondent Society as well as Polo Infra i.e. respondent no.3 from acting upon, and in furtherance of the Development Agreement dated 20/9/2022, and injunction is also sought against MCGM and it's Executive Engineer from sanctioning building plans and granting any development permission in respect of the building(s) proposed to be constructed by Polo Infra on the subject property.
Submissions Advanced 9 I have heard learned counsel Mr.Mayur Khandeparkar for the petitioner, learned counsel Mr.Gauraj Shah for the respondent no.1 and Mr.Rashmin Khandekar representing the new developer Polo Infra.
Mr.Khandeparkar appearing for the petitioner would assert that the alleged termination is without adherence to the pre-conditions contemplated in the Development Agreement, Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 10 carbp 37219-22 J.doc and relying upon clause no.18 in the Agreement, in the wake of the default of the terms and conditions by the Society, the Developer is entitled to seek and enforce specific performance of the agreement. By relying upon the decision of the Apex Court in case of Nathulal Vs. Phoolchand (1969) 3 SCC 120 , as regards the sequential discharge of obligations, he would submit, that the obligations to be discharged by him and which have been construed as non-performance, as set out in the termination notice, was dependent upon execution of the Power of Attorney by the Society in the petitioner's favour.
By inviting my attention to 10 letters placed on record, the submission of the learned counsel is, the petitioner had repeatedly asked the Society to approve the draft of POA, but there was utter failure on it's part as a sequence of which the petitioner could not discharge the other obligations cast upon it, including the sub division of the plot, mutating the name of the Society, obtaining necessary permissions for the purpose of development etc. Instead, according to him, respondent has attempted to place the blame entirely upon the petitioner for not discharging its obligations, which were dependent on the execution of POA and in its absence, no further steps could have been taken. In short, the submission is, the Development Agreement require execution of POA before the petitioner could proceed to discharge the obligations on it's part.
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 11 carbp 37219-22 J.doc 10 Justifying his claim for specific performance of the Agreement, by relying upon the decision of the Apex Court in case Sushil Kumar Agrawal vs. Minakshi Sadhvi and ors, 2019 (2) SCC 241, Mr.Khandeparkar would submit that the petitioner is entitled for the grant of specific performance as it satisfy the two conditions contemplated u/s.14(3)(c) of the Specific Relief Act, 1963 and as laid down by the said authoritative pronouncement, as a developer, he has to satisfy only two conditions laid down in sub-clauses (i) and (ii) of Section 14(3)(c), for a Suit for specific performance to be maintainable against the owner.
According to Mr.Khandeparkar, the Development Agreement has created interest in him and therefore, there cannot be a unilateral termination and in such a situation, specific performance is a matter of right, though he is conscious of the situation that the Apex Court has directed it to be prospective in operation.
11 The learned counsel would submit that it is not a case where the petitioner is in breach or in slumber, and in fact, his readiness and willingness could be inferred from his various acts, which include the payment of corpus fund in favour of the respondent Society and if the POA was not executed, according to him, it is not he who can be blamed for the same. Mr.Khandeparkar would thus submit that the petitioner is entitled for specific performance, as he satisfy both the conditions laid down in Sushil Kumar Agrawal (supra), and this important Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 12 carbp 37219-22 J.doc aspect has been completely ignored by the learned Tribunal, which has rendered the order passed by it, perverse and if an incorrect finding is recorded by the Arbitrator, this Court is perfectly within its powers to rectify the same u/s.37 of the Arbitration and Conciliation Act. He would also place reliance upon the decision of this Court in case of Bhanumati Jaisukhbhai Bhuta vs Ivory Properties And Hotels Pvt Ltd and Anr, 2020 SCC Online Bom 157.
12 Mr.Gauraj Shah, learned counsel for the respondent Society, in response to the submission advanced by Mr.Khandeparkar, and specifically upon the test laid down by the Hon'ble Apex Court in case of Sushil Kumar Agrawal (supra), would pose a question about whether any right in the land is created in favour of the petitioner. By inviting my attention to clause 4.9 of the Development Agreement, which clearly stipulate that the property is not intended to be transferred to the developer and the developer has been assigned the rights only to redevelop, reconstruct and sell the developer free sale premises, as per terms and conditions of the agreement, he would submit that a limited right is vested in the petitioner, being only to redevelop the property. He would submit that no interest in land is created in favour of the developer and hence, according to Mr.Shah, the ratio laid down in case of Sushil Kumar is far from it's application to the case of the petitioner. Apart from this, by relying upon clause 11.7 of the Development Agreement, he would submit that Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 13 carbp 37219-22 J.doc the developer is expected not to create any mortgage, charge or deal with, or dispose off, or create third party in respect of the property and the areas to be constructed.
In addition, Mr.Shah would dispute that the obligations were required to be discharged sequentially, and he would contest the submission of Mr.Khandeparkar that it is the respondents who were at fault in not approving the draft of the POA. As a sequel, the petitioner developer continued to sit idle and commit the breaches, which was the cause for termination of the Development Agreement. The respondent specifically submit that for the purpose of preparation of plans and getting it's approval from the competent authority, there was no need for execution of the POA, as sought to be canvassed by Mr.Khandeparkar and by inviting my attention to the correspondence entered between the parties, the learned counsel would submit that on failure to discharge the obligation by the developer, it had lost confidence of the members and hence, the Development Agreement was terminated.
13 Mr.Shah would submit that the petitioner has failed to satisfy mandatory requirement under the Specific Relief Act, 1963 for grant of specific performance, which would entitle him for any interim reliefs. Relying upon the very same authority of law, in form of Sushil Kumar Agarwal (supra), Mr.Shah would urge that since the petitioner has failed to satisfy the mandatory, cumulative conditions for grant of specific performance of the Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 14 carbp 37219-22 J.doc Development Agreement as laid down u/s.14 (c)(i) and (ii) of the Specific Relief Act, no relief can be granted in it's favour.
Another point on which Mr.Shah would rest his case is, the compliance in form of Section 14(3)(c)(i), under which 'building or other work' must be described in 'sufficiently precise' terms for the Court to be able to determine 'exact nature of the building', and according to him, mere specification of FSI/Area shared, is no compliance of the said requirement. The clauses in the Development Agreement in form of clause no.18, 13, 9.6 r/w Annexure 10, according to him, are insufficient to give an insight of the exact nature of the building and it's other work, which would justify grant of specific performance, but the clauses contained in the Development Agreement, according to him, are fuzzy clauses which are vague and not precise, which would entail continuous supervision of decision making and hence, make it incapable for specific performance.
14 Apart from this, it is also the submission of Mr.Shah since the petitioner has failed to establish substantial interest in the performance of the contract, and has also failed to make out a case to establish that the interest is of such a nature, that compensation in terms of money for non-performance of the contract, will not be an adequate relief. His submission is, the petitioner's case is only that of financial harm and loss and injury, which by itself is not sufficient to claim interim relief and according to him, the Tribunal has rightly recorded that there is Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 15 carbp 37219-22 J.doc no prima facie case in favour of the petitioner nor the balance of convenience lie in it's favour.
As against this, the submission is, that the building which is sought to be redeveloped is 45 years old, and being in a dilapidated condition, is unfit for human habitation and though the members of the Society had waited for it's redevelopment for over 4 years, no steps are taken towards taking the project ahead and this has constrained the Society members to appoint a new developer by a majority decision taken and accordingly, an MOU is entered with the new developer, on 8/5/2022 who has even received IOD and also executed Permanent Alternative Agreements (PAAs), under which rents are payable to the respondent's member.
CONSIDERATION OF THE CASE OF THE PETITIONER AND THE RESPONDENT 15 The Development Agreement executed between the parties on 3/2/2018 is the genesis for the dispute that has arisen between them. It is not in dispute that the agreement was executed for redevelopment of the property mentioned in the said agreement, which was conveyed by Deed of Conveyance dated 18/10/2012, comprising of 9 shops and 15 residential flats to the respondent housing Society, and pursuant thereof, the Society became the owner of the said plot of land, together with the building standing thereon. The old dilapidated building was agreed to be redeveloped and the petitioner came to be appointed Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 16 carbp 37219-22 J.doc as a Developer, pursuant to the offer being floated for undertaking the redevelopment. The offer letter was issued in favour of the petitioner subsequent to a resolution being passed by the General Body of the Society, affirming its appointment and the scope of work, being highlighted in the agreement itself in form of the following clause :
"XIII The developers have offered to carry out the development of the said property by demolishing the existing Building and constructing in place thereof a new building/s by utilizing the entire available FSI arising out of the said property and FSI by way of TDR and Fungible FSI/area and FSI/area available by paying premium or otherwise as recited hereinafter.'' 16 The agreement granted the development rights to the developer and the relevant clauses read thus :
"4. Grant of Development Rights to the Developers: 4.1 The Society hereby grants Development Rights in respect of the said property to the Developers and the Developers shall be entitled to demolish the existing building of the Society and construct in place and stead thereof new building as per the Building Plans approved by the Society and sanctioned by the MCGM for the redevelopment of the said property and as may be permissible under the present D.C. Rules or other Rules and Regulations as may be in force currently and as may be applicable from time to time. 4.2 The Developers shall be entitled to develop the said property by utilizing the existing maximum permissible FSI in any form (including available on payment of premium, Fungible FSI or other FSI arising due to road setback, area correction etc, and loading TDR and exploiting FSI in lieu of such TDR on the property. The Developers shall also be entitled to further consume the full Fungible FSI that may Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 :::
17 carbp 37219-22 J.doc become available to them by virtue of the amendment to Development Control Regulations. The Developers shall construct one wing comprising of Ground/stilt and as may upper storey's as may be permissible and required in order to maximize the utilization of the existing FSI and TDR as may be available in respect of the said property, including the full fungible FSI that may become available to them by virtue of the amendment to Development Control Regulations, for redevelopment of the said property.
4.6 The Developers shall utilize base FSI, Fungible FSI and/or TDR (which is to be purchased by Developers in the name of the Society at their own costs) to comply with the commitment towards the terms and conditions contained in the present Agreement and for construction of flats, shops and offices etc. All the new flat/shop/office purchasers of the Builder's sale component shall be admitted as the Members of the society after receiving Registered Title Document i.e. Agreement Copy, Entrance Fee and Share Money from the prospective purchasers for third party purchasers who will be added as Members to make the proposal viable. The Developers agree to use the said FSI Fungible FSI and/or TDR and/or any other FSI either with or without premium, as per the existing Rules, Regulations, Circulars and Notifications issued by the Competent Authorities of the State, MCGM and other statutory bodies".
17 The Development Agreement also contain a clause in form of clause no.4.8, which provide for a situation, where in future, due to change in law and policy the Corporation and/or any other Government/semi-government department, then the offer given by the developer was permitted to be modified, according to the consumable FSI and in case of reduction, the developer was expected to reduce their offer proportionately and the Society agreed and undertook to accept the same.
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 18 carbp 37219-22 J.doc Another important clause upon which the respondent lay emphasis is in form of clause no.4.9 which read thus;
"4.9 It is further clarified that the said property is not intended to be transferred to the Developers and the developers have been assigned the rights only to redevelop, reconstruct and sell the Developers' Free Sale Premises as per the terms and conditions of this Agreement and at all the material times, title/ possession of the said property shall always remain with the Society. Builder undertakes the liability and indemnify the society, its office bearers and persons claiming them or under them from any judicial or quasi judicial actions or from the M.C.G.M or any person or persons or agencies which may arise during the course of demolition/construction/redevelopment work and Society or its Member shall not be liable for any damages/losses"
18 The proposed new building was contemplated as under :-
"8 The Developers proposes to construct a New Multistory building having shops on the ground floor, commercial and/or residential area on 1 st floor and/or 2nd floor and residential area on the floors above".
The consideration payable by the developer was set out in para 9.1 as under :
"9.1 Subject to the availability of full FSI the Developers shall construct and provide flats with additional carpet area of 20% on their existing BMC approved carpet area to each existing residential flat owner Members of Society and 13% additional Carpet area to the shop owner Members on existing BMC approved carpet area (for the purpose of this Clause single Membership shall be considered for each flat irrespective of whether the flat is singly or jointly owned".
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 19 carbp 37219-22 J.doc Clause no.9.2 provided for hardship compensation to the members of society and it is worded as under :-
"9.2 In addition to the additional free of cost area agreed to be given to all the Members as stated hereinabove, the Developers have also agreed to pay a sum of Rs.751/- per square feet on existing carpet area to the residential flat owner Members and a sum of Rs.1101/- per square feet on the existing (old) carpet area to the Shop Owners as Hardship compensation. The Developers shall pay the said amount to the Members by drawing cheques individually in the names of respective Members. The said amount shall be distributed amongst the Members of the Society as per the existing carpet area, as set out in schedule marked as Annexure 7 hereto. The said amount will be paid to the Members as mentioned below.
(1) 10% of the Corpus Fund shall be paid over to the Members on or before Registration of these presents. (2) 40% on all the members vacating their respective premises and shifting to Temporary Transit accommodation after IOD.
(3) 50% to be paid to members on handing over of the permanent alternate accommodation"
19 Another relevant clause is in the agreement is in form of clause no.9.4 and 9.6 which read thus :-
"9.4 The Developers shall also pay a lump sum amount of Rs.15,000/- to each Member of the Society including Shop keepers as one time compensation towards shifting charges which shall include for shifting out from the existing building and shifting back into the new building constructed by the Developers".
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 20 carbp 37219-22 J.doc 9.6 As further consideration to the Members of the Society the Developers shall provide amenities in each new flat and shops to be handed over to the Members which amenities are more particularly set out in the schedule marked as Annexure 10 to the Agreement".
20 Clause no.9.8 contemplated provided the the period of completion of the project and it read as under :-
"9.8 The Developers shall commence and complete the entire project within 30 months from the date on which the First Commencement Certificate is issued by the MCGM. However, the Developers shall be entitled to a grace period of 6 months as provided herein above"
21 The DA also cast obligation upon the petitioner developer for carrying out the construction as per the rules/bye- laws for the time being in force and of obtaining necessary sanction of statutory and/or authorities in respect of, or the proposed redevelopment of the property, and strictly act in conformity with the plans approved for that purpose.
A right was also conferred upon the developer to sell the flat/shops/office premises to third parties and this was specifically provided in the following manner :
"Right to Developers to sell the flats/shops/ offices/premises to third parties:-
15.1 Save and except the flats/premises which are meant to be constructed for the existing Members of the Society, the Developers shall, subject to the above mentioned permissions of MCGM and provisions of these Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 21 carbp 37219-22 J.doc parents, be entitled to allot and sell in their own name and at their risk and responsibility and without creating any liability upon the Society therein, the residential flats/shops/ offices/premises to be constructed/ developed by them by use of the F.S.I and/or additional FSI and/or TDR and the fungible FSI as per existing new DCR on the said property, on 'Ownerhip basis' to such person or persons as they may deem fit and proper. The Developers shall also be entitled at their costs and responsibility to enter into necessary Arrangements and/or arrangements with such prospective purchasers in respect of the allotment or sale of the premises and allotment or parkings in favour of such prospective purchasers to give effect to this provision.
15.2 For the aforesaid purposes, the Society hereby authorized and empowers the Developers to bring in the prospective flat/shop purchasers and/or Commercial Area Purchaser, as new Members of the Society and thereafter the Society agrees and undertakes to allot the Membership of the Society to the prospective flat purchasers, subject to the new Members conforming to the current Membership norms of the Society as provided by the byelaws of the Society or otherwise. The Society shall for the purpose of involving the prospective flat/shop/commercial area purchasers as Members, increase its authorized and paid up share capital as may be required.
15.3 The Society hereby agrees and undertakes to admit the new Members, who may be brought in by the Developers as prospective Members of the Society and such new Members shall be liable to deposit with the Society, a sum of Rs.250/- only towards the cost of five shares together with Membership fees of Rs.100/- per Member.
The Society shall not in any event charge any other amount in the nature of premium etc. to admit the prospective purchasers of the flats from the Developers as Members of the Society"
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22 carbp 37219-22 J.doc 22 In addition, clause no.18 prescribed a Right of specific performance in the following manner :-
"18 Right of Specific Performance: If either party of the Agreement commits any default of the terms and conditions of this Agreement, in that event the aggrieved party shall be entitled to seek and enforce Specific Performance of this Agreement"
The agreement contain a clause for dispute resolution, which prescribe arbitration as a mode for resolving the disputes.
23 On the development agreement being executed on 3/2/2018, the petitioner developer claim that it shared the draft Power of Attorney and was awaiting final approval at the end of the Society and several reminder letters were forwarded, but since the POA was not received, it could not proceed further. It is the specific case of the developer that the obligations to be discharged, were consequential in nature and in absence of the POA, it could not have discharged its other obligations. However, on account of failure to discharge it's obligations, including forwarding of the plans for approval, obtaining necessary permission, the work of redevelopment could not proceed further for almost four years, and in the termination notice, the cause for termination is reflected as (a) failure to get plots subdivided (b) failure to incorporate society named in property card (c) failure to obtain IOD (d) failure to get it's plan Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 23 carbp 37219-22 J.doc approved (e) failure to act in accordance with Development Agreement.
In short, for want of the project of redevelopment being taken ahead, the Development Agreement was terminated by the Society.
The bone of contention between the parties is, whether in absence of the Power of Attorney being executed in favour of the petitioner, it could not have taken the necessary steps for the redevelopment of the property and whether the performances expected in the development agreement, were sequential in nature.
24 The development agreement has cast distinct obligations and conferred rights on the developer as well as the Society. While granting the development rights in respect of the property to the developer, who is permitted to demolish the existing building and construct in it's place a new building as per the building plans approved by the Society and sanction by the MCGM, as may be permissible under the DC Rules and Regulations, the developer was expected to apply to MCGM and submit the tentative approval plans in the name of the Society, for approval from the planning authority, for utilizing the available and Fungible FSI and also the FSI to be purchased by the developer by way of TDR, which necessarily had to be in the name of the Society.
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 24 carbp 37219-22 J.doc Clause No.4.5 of DA made it imperative for the Society to render full co-operation to the Developers and for the same, execute the necessary POA, in order to facilitate the developer to take the redevelopment project ahead and complete the same. The developer is entitled for utilization of the FSI and/or TDR which is purchased in the name of society to comply with it's commitment and for undertaking construction of the flats/shops/offices.
25 Perusal of the distinct clauses in the agreement, by no stretch of imagination, convey that they are sequential in nature. Though Mr.Khandeparkar has invited my attention to the distinct letters, as regards the approval for POA, and document from Annexure B-1 to B-17, is the reiteration of demand of execution of POA, it is seen that the respondent Society also sought for certain compliances, the first being deputation of an authorized personnel to attend the Society meeting for discussion of redevelopment matters. Apart from this, the Society kept on demanding the tentative plans containing the floor plans of the proposed building, the block plans of individual members, indicating the incremental area accrued on account of road width and informing that the Society has rejected the proposal of parking tower in the Society and therefore, a need was expressed to amend the plans accordingly. The Society kept on insisting that the approval to POA can be conferred only after the completion of the requirement indicated by the Society.
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 25 carbp 37219-22 J.doc Pursuant thereto, the petitioner wrote to the Society that the plot of the Society is narrow and to deal with the disagreement about the plan of redevelopment, at instance of one of the member, it is informed that the sub-division and the revenue related process is pending for want of POA. Apart from this, the attention of the Society is also invited to the area mismatch, in terms of the old approved plan.
It is in this way, the correspondence was being exchanged between the parties, both playing blame game, as to who should take the first step, and admittedly, no progress took place. The Society blamed the petitioner for not moving ahead, whereas the petitioner developer shifting the blame to the Society that it has not granted the POA, for want of which it is unable to move ahead.
Perusal of the distinct clauses in the DA, do not, in any manner, suggest that execution of the obligation cast upon the petitioner developer was sequential in nature and in fact, nothing prohibited the developer from preparing the plan and exchanging it with the Society members and redressing their grievance through the communications exchanged between the parties. I am, therefore, not convinced to accept the submission of Mr.Khandeparkar, that because the POA was not granted in its favour, no further steps could have been taken.
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 26 carbp 37219-22 J.doc 26 On the issue as to whether the specific performance of the agreement can be granted in favour of the petitioner developer, in the wake of section 14(3)(c)(i),(ii),(iii), the position of law has been crystallized in case of Sushil Kumar (supra).
Section 14 of the Specific Relief Act, enumerate the contracts, which cannot be specifically enforced and sub-section (3) provide an exception by prescribing, notwithstanding anything contained in clause (a) or clause (c) or clause (d) of sub- section (1), the Court may enforce specific performance in the cases set out therein and the clause relevant for the present case, is clause no.(c) which read as under :-
(c) where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land;
Provided that following condition are fulfilled
(i) the building or other work is described in the contract in terms sufficiently precise to enable the Court to determine the exact nature of the building or work;
(ii) the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-performance of the contract is not an adequate relief; and
(iii) the defendant has, in pursuance of the contract, obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed"
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 :::
27 carbp 37219-22 J.doc Sub-section (3) of Section 14 is thus an exception to clauses (a)
(c) and (d) of sub-section (1), indicating that a Suit of specific performance of contract in respect of construction of any building or execution of any other work on land, will be maintainable if the conditions set out in sub-clause (i), (ii) and (iii) as enumerated above are satisfied.
Thus, though the Courts would not normally order specific performance of a contract to build or to execute any work on land, it is subject to important exceptions which are enumerated in form of sub clauses (i), (ii) and (iii).
27 Their Lordships of the Apex Court in Sushil Kumar (supra) set out the exceptions by quoting Hudson's Building and Engineering Contracts, Eleventh Edition, Volume 1, page 677 as declared in the case of Price Vs. Strange, 1978 CH 337 to the following effect:-
"16 The requirements to be satisfied by the plaintiff bringing forth a suit for specific performance have been analysed in Hudson's Building and Engineering Contracts and in Price v Strange, where the rule has been settled that the court will order specific performance of an agreement to build if:
16.1 (i) the building work is sufficiently defined by the contract, for example by reference to detailed plans; 16.2ii) the plaintiff has a substantial interest in the performance of the contract of such a nature that damages would not compensate him for the defendant's failure to build; and Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 :::
28 carbp 37219-22 J.doc 16.3(iii) the defendant is in possession of the land so that the plaintiff cannot employ another person to build without committing a trespass.
Distinct type of development agreements were classified by working of all the possible combinations, being either a pure construction contract or an agreement where the owner or right holder may, in effect, create an interest in the property in favour of developer for monetary consideration or an agreement where the owner grants right to other person, to carry out development and in consideration, the developer undertake to hand over part of the constructed area to the owner. Another contingency contemplated is, where a developer is assigned right to develop a plot, which is occupied by slum dwellers and he undertake to rehabilitate the occupants or, as the case may be, the slum dwellers and share the saleable constructed area with the owner.
Admittedly, the case of the petitioner would fall with the situation contemplated under para 17.3, in case of Sushil Kumar (supra), which reads thus :-
"17.3 An agreement where the owner or a person holding any other rights in an immovable property grants rights to another person to carry out development. In consideration, the developer has to hand over a part of the constructed area to the owner. The developer is entitled to deal with the balance of the constructed area. In some situations, a society or similar other association is formed and the land is conveyed or leased to the society or association"
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 29 carbp 37219-22 J.doc 28 The pronouncement of law is clear. Amongst the aforesaid contingencies, where a pure construction contract is entered into, the contractor has no interest in either the land or the construction which is carried out. On the other end, lies the various other categories, where the developer may have acquired the development right either in the property or in the constructed area.
Ultimately, it has been held that the terms of the agreement are crucial in determining whether the interest has been created in the land or in respect of the rights in favour of the developer and if so, the nature and extent of the rights.
In determining the distinction of various contemplated contracts, one shall feel guided by the observation of their lordships in para 19 which is reproduced as under :-
"19. In a construction contract, the contractor has no interest in either the land or the construction carried out on the land. But, in other species of development agreements, the developer may have acquired a valuable right either in the property or the constructed area. There are various incidents of ownership of in respect of an immovable property. Primarily, ownership imports the right of exclusive possession and the enjoyment of the thing owned. The owner in possession of the thing has the right to exclude all others from its possession and enjoyment. The right to ownership of a property carries with it the right to its enjoyment, right to its access and to other beneficial enjoyments incidental to it. (B Gangadhar v BG Rajalingam). Ownership denotes the relationship 13 (1995) 5 SCC 239 at para 6 between a person and an object forming the subject matter of the ownership. It consists of a complex of Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 30 carbp 37219-22 J.doc rights, all of which are rights in rem, being good against the world and not merely against specific persons. There are various rights or incidents of ownership all of which need not necessarily be present in every case. They may include a right to possess, use and enjoy the thing owned; and a right to consume, destroy or alienate it. (Swadesh Ranjan Sinha v Haradeb Banerjee). An essential incident of ownership of land is the right to exploit the development, potential to construct and to deal with the constructed area. In some situations, under a development agreement, an owner may part with such rights to a developer. This in is essence is a parting of some of the incidents of ownership of the immovable property. There could be situations where pursuant to the grant of such rights, the developer has incurred a substantial investment, altered the state of the property and even created third party rights in the property or the construction carried out to be carried out. There could be situations where it is the developer who by his efforts has rendered a property developable by taking steps in law. In development agreements of this nature, where an interest is created in the land or in the development in favour of the developer, it may be difficult to hold that the agreement is not capable of being specifically performed. For example, the developer may have evicted or settled with occupants, got land which was agricultural converted into non-agricultural use, carried out a partial development of the property and pursuant to the rights conferred under the agreement, created third party rights in favour of flat 14 (1991) 4 SCC 572 purchasers in the proposed building. In such a situation, if for no fault of the developer, the owner seeks to resile from the agreement and terminates the development agreement, it may be difficult to hold that the developer is not entitled to enforce his rights. This of course is dependent on the terms of the agreement in each case. There cannot be a uniform formula for determining whether an agreement granting development rights can be specifically enforced and it would depend on the nature of the agreement in each case and the rights created under it.'' 29 The question which arose for consideration upon the interpretation of the requirement u/s.14(3)(c) of the Specific Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 31 carbp 37219-22 J.doc Relief Act, as regards the maintainability of a Suit by a Developer for specific performance, against the owner of the property for breach of the conditions of the development agreement. The difficulty posed was, as regards the compliance of the conditions of possession, as clause no.(iii) of Section 14 (3)(c) require that the defendant had obtained possession under the agreement. A problem, however, arose in a case, developer has filed a Suit for specific performance in favour of the owner, and the owner is in possession of the land, by virtue of a lawful title, then the defendant (i.e. the owner) cannot be said to have obtained possession of land, under the agreement by way of the agreement and the anomalous situation of compliance with 14(3)(c) would not be fulfilled, in a such Suit. However, by applying the principle of statutory interpretation, it was authoritatively held that the developer will have to satisfy only two conditions set out in sub-clause (i) and (ii) of Section 14(3)(c), if at all a Suit for specific performance is to be maintained against the owner. This was only worked out as a way to maintain an equilibrium between the two parties, seeking the relief of specific performance.
30 In the wake of the aforesaid authoritative pronouncement, the case of the applicant developer will have to be tested on two aspects, and in terms of Sushil Kumar (supra) to the following effect :-
"24.4.1 The courts do not normally order specific performance of a contract to build or repair. But this rule is Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 32 carbp 37219-22 J.doc subject to important exceptions, and a decree for specific performance of a contract to build will be made only upon meeting the requirements under law;
24.4.2 The discretion to grant specific performance is not arbitrary or capricious but judicious; it is to be exercised on settled principles; the conduct of the plaintiff, such as delay, acquiescence, breach or some other circumstances outside the contract, may render it inequitable to enforce it"
31 Dealing with the aspect, whether the petitioner has a substantial interest in the performance of the contract, I have perused the specific clauses in DA and thereupon, it clearly evident that the contract allotted to the petitioner developer is for redevelopment of the property belonging to the Society and through the development agreement, the Society granted development rights to the developer, who is entitled to demolish the existing building of the society and construct a new building, by utilizing the FSI of the plot, FSI available as token of premium, Fungible FSI or any other FSI arising due to road set back or correction and loading of the TDR and exploiting the FSI in lieu of such TDR .
The agreement contemplated that the developer shall construct one wing comprising of ground/stilt and as many upper storeys, as may be permissible and required in order to maximize the utilization of the existing FSI and TDR available against the property.
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 33 carbp 37219-22 J.doc The proposed building to be constructed by the developer is a multi-storeyed building with shops on ground floor, commercial and/or residential units on first floor and/or second floor, and residential areas on the floors above.
32 Clauses 9.1, as quoted above, determine the entitlement of the existing residential flat owner member and the shop owner member.
Clause no.12 gave a right to the developer to allot and sell in their own name and at their risk and the responsibility and without creating any liability upon the Society, residential flats/shops/offices/premises to be constructed/developed by them by use of FSI, additional FSI, Fungible FSI and/or TDR, on 'ownership basis' to such person or persons, as they may deem fit and proper. The very said clause enable the developer to enter into necessary agreement and/or arrangement with such prospective purchasers in respect of the allotment or sale of the flats/shop/offices/premises and allotment of belongings in favour of the prospective purchaser to give effect to the provisions.
Thus, the developer, save and except the flats/premises, which were meant to be constructed from the existing member of the Society was permitted to sell it in the open market by executing necessary agreement, or any arrangement that the prospective buyer for such purchase of the Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 34 carbp 37219-22 J.doc units, and not only this, the development agreement also contemplate that all the new flat/shops/office purchases of the builders, sale component shall be admitted as members of Society after receiving the registered title documents i.e. agreement copy and share money from the prospective purchaser.
Though the Development Agreement in clause no. 4.9 clarify that the property is not intended to be transferred to the developer, who has been assigned the rights only to develop, reconstruct and sell the developer's free sale premises, it also contemplate that, at all the material times, the title/possession of the property shall always remain with the Society.
33 Perusal of the agreement based upon the understanding between the parties, the submission advanced on behalf of the respondent that the developer has no interest in the land at present, and his interest is yet to fructify and it is only upon construction of a new building, it may come into existence, is a hollow argument. When the recitals in the Development Agreement along with it's various clauses are minutely gone into, the salient feature of the agreement emerges in form of, a right of development conferred upon the petitioner developer, to construct and provide flats/shops to the Members of the Society with additional carpet area of 20% in case of flats and 13% in case of shop owner members on the existing approved carpet area.
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 35 carbp 37219-22 J.doc This obligation coupled with a liability to pay a sum of Rs.751/- per sq.ft on the existing carpet area to every residential flat owner member and sum of Rs.1101/- to the shop owner as hardship compensation. It was open to the developer to sell the saleable component, and upon such a contingency, the prospective purchasers are to be admitted to the membership of the Society.
With this important aspect being kept in mind, I fail to appreciate the submission of Mr. Shah, that the petitioner developer has no substantial interest in the performance of the contract. The interest in the right in the land and to avail it's potential upon redevelopment should be of such a nature that compensation in money for non-performance is not an adequate relief. The petitioner developer is entitled to enjoy the fruits of the potential of the land by selling the saleable area, after satisfying the claim of its members, and that is how the petitioner has developed a substantial interest in the performance of the contract and obviously, for this interest, to be realized, unless and until, he undertake the work of redevelopment and avail his right to sell the saleable component, no amount of money in form of compensation would give him adequate relief, as he is entitled to explore the potential of saleable area in the open market and secure his consideration for redevelopment of the property, the work which has been assigned to him under the various clauses of development agreement.
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 36 carbp 37219-22 J.doc The submission of Mr. Shah that no 'substantial interest' in the performance of the contract, is created in favour of the petitioner. In my considered opinion, it is not a plausible argument. The interplay of words between 'substantial interest' in the performance of the contract, also does not hold any merit and as in my considered opinion, it cannot be read in a restrictive sense, since what is contemplated u/s.14(3)(c)(ii) of the Specific Relief Act, is the substantial interest in performance of the contract, and it cannot be necessarily restricted at presented, and in the light of particular DA before me, where the developer has agreed to undertake the redevelopment and hand over the units to it's members along with the agreed additional component, in consideration, he is entitled for sale of the saleable component, and hence the case of the petitioner fall within clause 17.3 in Sushil Kumar (supra) which recognize the rights, are granted by owner or a person of an immovable property to carry out development and in consideration, the developer has agreed to hand over a part of constructed area to the owner and he by himself is entitled to deal with the balance of the constructed area.
34 The petitioner's right to exploit the development, it's potential and to deal with the constructed area, is sufficient to recognize his interest in the development agreement, but the question that arise for consideration is, whether pursuant to the grant of such rights, the developer has incurred a substantial investment, altered the status of the property and created third Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 37 carbp 37219-22 J.doc party rights in the property or the construction to be carried out. In cases where the developer has taken visible efforts and has moved the project ahead, then he can enforce the agreement by specific performance and when interest which is created, is of such a nature that compensation in terms of money for non- performance of the contract is not an adequate relief.
This condition, however, is not satisfied by the petitioner-developer at all, as in the present case, it has not taken any steps and it has even failed to seek approval to the plans. The 45 year old building is in a dilapidated condition and has been rendered unfit for habitation, but the project is still at infancy stage and except payment of corpus fund, of a meager amount, no other investment comes from the petitioner, nor is there any alteration in the status of the property, which was to be redeveloped and as on date, no third party rights are created in the proposed building. The limited interest, in form of right conferred upon the developer, however, is not of such a nature, that it's non-fulfillment cannot be adequately compensated in terms of money. The petitioner-developer has not invested any money except certain corpus, being infused, which can always be directed to be refunded.
The necessary requirement of Section 14 (3)(c)(ii) requires compliance of two speculations, plaintiff having substantial interest in the performance of contract and interest being of such a nature that, the compensation in money for non- Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 38 carbp 37219-22 J.doc performance of contract is not an adequate relief. Since petitioner developer fail to satisfy this condition, hence it is not entitled for the Specific performance of DA, as prayed for.
35 On the other front, the requirement as laid down in Sushil Kumar (supra) in form of condition no. 14(c)(i) i.e. the building or every work to be sufficiently and precisely described, is also not satisfied in the present case. Mr. Khandeparkar would vehemently submit that the development agreement has contemplated the description of the units to be allotted to the existing members in the new building, and he would place reliance upon the details appended to the DA in form of Annexure-10, which has enlisted the amenities and it cover the civil work, doors and windows, floorings, electric work etc. Apart from this Annexure-3, provide the new flat area to be allotted to each developer and also specify the exact carpet area that would be made available in form of Annexure-2.
36 In my considered opinion, in the wake of clauses in DA, along with annexures appended thereto, cannot be construed to be in compliance with Section 13(C)(i) as observed in Sushil Kumar (supra).
No approved plans are accompanying the DA and the clauses which are included in it when minutely looked into, they fall short of determining the exact nature of building or work, into the nature of the proposed building are enumerated as under:-
Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 39 carbp 37219-22 J.doc "3.2.1 Clause 8: Proposed New Building" shall be "a New Multistorey building having shops on the ground floor, commercial and/or residential area on the 1 st floor/2nd floor and residential areas on the floors above 3.2.2 Clause 13 L "The Standard and quality of work of construction will be same for all the buildings and material used shall conform to the best standard and quality as prevalent in the construction industry" (Emphasis supplied) 3.2.3 Clause 9.6 r/w Annexure 10 contemplates that the petitioner was to provide:
* beautiful and excellent elevation (....) with extraordinary color scheme, making your society building one of the best buildings in the locality"
* Decorative Compound walls.
* Lift of reputed I.S.I make;
* reputed brand makes C.P Hote and cold Water Mixes"
and
* tastefully decorated ornamental AC entrance lobby"
37 The learned counsel Mr. Shah is justified in
submitting that the specification in Annexure-3 which has enlisted the area to be allotted to every member in the Society in the new building and the enumeration of the amenities in Annexure-10 is not sufficient compliance of Section 14(3)(c)(i). On this count also, the petitioner fails to make out any case.
FINDING AND CONCLUSION 38 In this background, when the impugned order passed by the Tribunal refusing to grant interim relief is perused,in my Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 40 carbp 37219-22 J.doc considering opinion, the Tribunal has rightly recorded that it is not a fit case to grant reliefs to the claimant and the Tribunal has rightly focused, on the defunct approach of the petitioner, who has not commenced the work of redevelopment and mere payment of minimal corpus fund, is held not sufficient,for being entitled any relief in it's favour. Pitched against this in operative developer is the respondent Society and its members who, on being frustrated with it's approach has appointed a new developer.
Tribunal has therefore rightly struck a balance between the unrest of two entities before it, by assessing the factual scenario.
In fact, the Tribunal will determine the validity of the termination of the Development Agreement, in the proceedings pending before it and would ultimately decide the claim of petitioner and ascertain whether the termination was justified or not. Though an incorrect finding is recorded by the Tribunal to the effect that the Society had executed the Power of Attorney in favour of the claimant, which, in any case, do not further the case of the petitioner developer, as it had failed to demonstrate before the Tribunal that it had taken any positive steps towards the redevelopment of the project. The petitioner developer kept waiting to move ahead, on the pretext that POA is not executed in its favour. Merely pointing out the repeated communications, is not sufficient for the developer to demonstrate any pro-active steps, and as I have already stated above, the alarm of discord is already sounded in these communications, as the members Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 41 carbp 37219-22 J.doc expressed their complete dissatisfaction over the progress of the redevelopment work.
As against this, the Tribunal rightly considered the agony of the members of the Society, largely senior citizens, who have been put to tremendous inconvenience as the new premises are not handed over to them, down the line of expiry of period of four years, after the development agreement is entered into.
39 Whether the termination of the development agreement is sustainable or not, is a matter of determination before the sole Arbitrator, but recording that the interim measures are in aid of final relief, and that the property cannot be frozen, by asking the parties to maintain status quo, and particularly when the respondent Society has already appointed a new developer, who has moved with alacrity , got the plans approved and also received the IOD, the Tribunal has rightly held that the claimant can always prove their monetary loss/damages at trial and recover the same.
In the wake of the above, I find no illegality/perversity in the impugned order passed by sole arbitrator and by upholding the same, CARBP(L) No. 37219 of 2022 is dismissed.
40 For the very same reason which I have recorded above, in deciding the petition filed u/s.37, the petitioner is not entitled for an order of injunction prayed in Section 9 Petition Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 ::: 42 carbp 37219-22 J.doc against respondent Society and the newly appointed developer (Polo Infra) from proceeding ahead towards redevelopment of the project, in terms of the new development agreement that came to be executed on 20/9/2022. Since the respondent Society and it's members have suffered delay in getting their homes in the new building, no fault can be found in their approach in deciding to move ahead with the new developer.
Hence, Commercial Arbitration Petition (L) No. 37197/2022 is also dismissed.
( SMT. BHARATI DANGRE, J.) Tilak ::: Uploaded on - 27/04/2023 ::: Downloaded on - 14/06/2023 08:39:22 :::