Bombay High Court
Janak Alias Jaykar Sharadchandrad ... vs Jayesh Rameshchandra Savla on 22 February, 2024
Author: R.I. Chagla
Bench: R.I. Chagla
2024:BHC-OS:3823
Kavita S. J.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION (L) NO.28865 OF 2022
Janak @ Jaykar Sharadchandra Doshi ....Petitioner
Versus
Jayesh Rameshchandra Savla ...Respondent
WITH
INTERIM APPLICATION (L) NO.28025 OF 2023
WITH
INTERIM APPLICATION (L) NO.33527 OF 2022
IN
COMMERCIAL ARBITRATION PETITION (L) NO.28865 OF 2022
AND
COMMERCIAL ARBITRATION PETITION (L) NO.29374 OF 2022
Janak @ Jaykar Sharadchandra Doshi ...Petitioner
Versus
Kiran Purshottamdas Goradia ....Respondent
WITH
INTERIM APPLICATION (L) NO.28303 OF 2023
WITH
INTERIM APPLICATION (L) NO.33519 OF 2022
IN
COMMERCIAL ARBITRATION PETITION (L) NO.29374 OF 2022
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Mr. Chirag Mody, Counsel a/w Dhiraj Chavan & Sagar Pillai i/b
Deven Dwarkadas & Partners for the Petitioner in both the
Commercial Arbitration Petitions.
Mr. Karl Tamboly, Counsel a/w Aadil Parsurampuria, Mr. Tejas
Agarwal and Mr. Hrishikesh Tajane i/b IC Legal for the Respondent in
CARBP(L) 28865/2022.
Mr. Karl Tamboly, Counsel a/w Aadil Parsurampuria i/b Mr. P.Y.
Shankar a/w Ms. Sandhya Yadav for the Respondent in CARBP(L)
29374/2022.
Mr. Amey Deshpande a/w Harsh Nishar, Dhiraj Chavan i/b Deven
Dwarkadas & Partners for Applicant in IA(L) No.41330/2022 & IA(L)
No.41323/2022.
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CORAM : R.I. CHAGLA, J.
DATED : 22ND FEBRUARY, 2024.
COMMON JUDGMENT :
1. The above commercial Arbitration Petitions were heard together as they raise similar challenges to the almost identical impugned Orders dated 12 August 2022 and 16 August 2022. The impugned Order dated 12th August, 2022 is the subject matter of challenge in Commercial Arbitration Petition (L) No.28865 of 2022 and impugned Order dated 16th August, 2022 is the subject matter of challenge in Commercial Arbitration Petition (L) No.29374 of 2022. For ease of reference, the Petitioner is referred to as " Doshi" and the 2/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: Respondent in Commercial Arbitration Petition (L) No.28865 of 2022 is referred to as "Savla" and the Respondent in Commercial Arbitration Petition (L) No.29734 of 2022 is referred to as "Goradia".
2. The facts which are relevant for the present Commercial Arbitration Petitions are set out as under:
(I) The Petitioner referred to as Doshi in both the Commercial Arbitration Petitions was the Owner and Lessor of portion of land bearing CTS No. 226.10, Matunga Division, Dadar with structure known as "Shree Krishna Nivas" standing thereon.
Savla and Goradia were tenants of Doshi, having area admeasuring 2110 sq. ft. each in the old building standing on the said property.
(II) Doshi entered into two Agreements for permanent alternate accommodation, which Agreements are dated 22 nd January, 2013 ("the said Agreement") with Savla and Goradia respectively. Under the said Agreements and in particular Clause (5)(a), thereof, Doshi agreed to provide free of cost on ownership basis two self-contained Flats each admeasuring 1312.50 sq. ft. having aggregate carpet area of 2625 sq. ft. 3/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: plus additional fungible areas such as flower bed, dry balcony etc. and two car parking spaces. Further, under Clause 14(b) of the said Agreements, Doshi agreed to pay monthly rental of Rs.2,11,000/- for first 30 months with periodical escalation till alternate premises are handed over with occupation Certificate to Savla and Goradia. The escalation was as under:
i. 15% escalation from 31st to 36th month.
ii. 25% escalation from 36th to 42nd month.
iii. 35% escalation for every 6 months thereafter till
Occupation Certificate ("O.C.") and hand over new Flats. Under Clause 15 of the said Agreements, Doshi agreed to complete construction of new building within 36 months from tenants including Savla and Goradia handing over possession of their old rooms. Further, under Clause 23(d) of the said Agreements, Doshi agreed not to hand over possession of sale component Flats to purchasers unless Savla and Goradia are put into possession.
4/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: Further, under Clause 29 of the Agreements, the disputes were to be resolved by Arbitration.
(IV) Maharashtra Housing and Area Development Authority ("MHADA") issued its No Objection Certificate ("NOC") on 13 th April, 2015 to Doshi for re-development of the said property under Regulation 33(7) of the Development Control Regulations, 1991. Under the NOC, and in particular Clause 9 thereof, the NOC holder was to provide rent to tenants during the period of reconstruction. Further under Clause 13 of the NOC, construction was to be completed within 30 months from the date of NOC.
(V) On 25th April, 2016 Doshi got Building Plans approved by Municipal Corporation of Greater Mumbai ("MCGM") showing Savla's entitlement as Flat No.702 and 801 and Goradia's entitlement as Flat No.703 and 901.
(VI) Pursuant to the sanctioned Plans on 21 st May, 2016, Savla and Goradia handed over possession of their respective premises to Doshi. Thus, Doshi was required to hand over new Flats with O.C. by April, 2019.
5/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: (VII) Doshi entered into a Deed of Mortgage with State Bank of India ("SBI") on 25th February, 2019, whereby inter alia the entire 7th Floor has been mortgaged in favour of SBI for a loan of Rs.22.5 Crores advanced to Borrower M/s Sree Jron Adobes LLP (Doshi & his son Rohan Doshi are Partners). The Schedule of Mortgaged Assets refers to 5 BHK admeasuring 189 sq. meters on the 7th Floor. It is pertinent to note that there is no 5 BHK on the 7th Floor. No unsold / unallotted 189 sq. meters was available to mortgage.
(VIII) On 30th March, 2019 and on 9h April, 2019 un-notarized and unregistered Request-cum-Affidavit-cum-Declaration purported to have been executed by Goradia and Savla in favour of Doshi, where under they had purportedly relinquished their right, title and interest in excess of 2625 sq.ft. in favour of Doshi.
(IX) Thereafter on 6th June, 2019, Doshi got revised Plans sanctioned by MCGM where also Savla and Goradia were shown as entitled to Flat Nos.702 plus 801 and 703 plus 901 respectively.
(X) In February / May 2020, Doshi stopped paying rent to 6/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: Savla and Goradia respectively.
(XI) Doshi failed to obtain O.C. on 14 th October, 2021. Further, Doshi had failed to pay rent to the tenants Savla and Goradia who filed their respective complaints before the MHADA against Doshi for failing to adhere to timelines and committing breach of rent obligations etc. (XII) On 18th January, 2022 Savla and Goradia filed a Section 9 Commercial Arbitration Petition before this Court against Doshi inter alia for directing Doshi to pay arrears of rent, payment of future rent, restrain Doshi from dealing with Flat Nos. 702, 703, 801 and 901.
(XIII) Doshi filed a Section 11 Application for appointment of an Arbitrator on 19th January, 2022.
(XIV) An Affidavit-in-Reply was filed by MHADA on 3 rd February, 2022 in Section 9 Petition filed by Savla and Goradia confirming that as per sanctioned Plans they are entitled to Flat No. 702 plus 801 and Flat No.703 plus 901 respectively. (XV) An order dated 5th April, 2022 was passed by the learned Single Judge of this Court whereby a Sole Arbitrator was 7/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: appointed by consent of parties as well as Doshi was restrained from creating third party rights in respect of Flat Nos. 702 plus 801 and Flat Nos.703 plus 901 till the Section 9 Petition which stood converted to Section 17 Application was adjudicated. (XVI) Further Plans came to be sanctioned by MCGM on 26 th April, 2022 where Savla and Goradia had been shown to be eligible to Flat Nos.702 plus 801 and Flat Nos.703 plus 901 respectively.
(XVII) Thereafter, the parties filed Statement of Claim, and Statement of Defence / Counter Claim before the learned Arbitrator.
(XVIII) The impugned Orders dated 12 th August, 2022 and 16th August, 2022 came to be passed in the respective Section 17 Applications filed by Savla and Goradia.
(XIX) The present Petitions were filed by Doshi on 8th September, 2022 challenging the Orders dated 12 th August, 2022 and 16th August, 2022.
(XX) Thereafter, there were orders passed by this Court in the 8/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: execution proceedings being Orders dated 7 th December, 2022, 10th October, 2023 and 16th January, 2024, whereby Doshi had undertaken to deposit amounts towards the unpaid rent as well as undertaken not to dispose of Flat Nos.801 and 901, as security pending the hearing of captioned Section 37 Petition as well as agreeing that on deposit, injunction against sale component (except 702 and 703) shall stand lifted. The withdrawal of deposits were permitted by this Court from time to time.
(XXI) Doshi filed a Writ Petition (L) No.13172 of 2022 before this Court on 9th May, 2023 which Petition was for obtaining full O.C. for the said building.
(XXII) The Division Bench of this Court on 11th August, 2023 directed Doshi to apply for O.C. including for portions on the 7th to 9th Floor.
3. Mr. Chirag Mody, learned Counsel appearing for Doshi in the above Commercial Arbitration Petitions has made submissions in support of the Petitions which have been filed under Section 37 of the Arbitration and Conciliation Act, 1996 seeking a setting aside of the 9/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: Orders dated 12th and 16th August, 2022 passed by the learned Arbitrator.
4. Mr. Mody has submitted that the learned Arbitrator in the impugned Orders has gone beyond the purview of the Permanent Alternate Accommodation Agreement ("PAAA") / the said Agreements by granting injunctive reliefs over Flat No.702 and 703 which were never part of the said Agreements.
5. Mr. Mody has submitted that as per the terms of the said Agreements and in particular Clause 5(a) thereof, it was agreed between Doshi and Savla / Goradia that upon Savla / Goradia handing over quiet, vacant and peaceful possession of their tenanted premises for the purpose of demolition of the tenanted premises and for erection of new building, Doshi agreed to provide Savla / Garodia free of cost on ownership basis, two flats comprising of aggregate carpet area of 2625 sq.ft. on the second habitable floors.
6. Mr. Mody has submitted that upon considering the said Agreements, the learned Arbitrator has granted injunction over Flat No. 801 on the 8th floor, Flat No.901 on the 9th floor as well as injunction over Flat Nos.702 and 703 on the 7 th floor which is in 10/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: contravention to the terms as agreed in the said Agreements whereby Doshi had agreed to provide Flats only on one single floor.
7. Mr. Mody has submitted that pursuant to the signing of the said Agreements and after issuance of MHADA NOC dated 13th April, 2015, Doshi had submitted building Plans before MCGM for approval. MCGM after considering the Plans submitted by Doshi and considering the current policies approved the building Plan by issuance of IOD dated 25th April, 2016 which showed Flats admeasuring 2625 sq.ft. on the 8th Floor and 9th floor belonging to Savla and Goradia respectively. Prior to handover of tenanted premises by Savla and Goradia for demolition, a copy of IOD Plan was duly shared by Doshi with Savla and Goradia, to which they did not raise any objection.
8. Mr. Mody has then referred to Request-Cum-Affidavit-cum- Declaration dated 30th March, 2019 and 9th April, 2019 which were executed by Goradia and Savla respectively and under which, they had agreed on terms as recorded in the Request-Cum-Affidavit-cum- Declaration that they were well aware regarding their entitlement in the re-development Project which was restricted to an area of 2625 11/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: sq.ft. on the 8th and 9th floor respectively. Savla and Goradia at the time of vacating the tenanted premises in the year 2016 was well aware of the IOD Plan and was also well aware of the amended Plans of 2019. However, from 2016 till October 2021 they did not make any written claim or demand with Doshi for Flat Nos. 702 and 703 respectively. It was only in the MHADA complaint dated 14 th October, 2021 where Doshi and Savla for the first time sought their claim over Flat Nos.702 and 703 respectively. On receipt of the MHADA compliant, Doshi filed reply whereby Doshi relied upon the Request- cum-Affidavit-cum-Declaration whereby Savla and Goradia had declared their entitlement restricted to an area of 2625 sq.ft carpet area on the 8th and 9th Floor respectively.
9. Mr. Mody has submitted that the learned Arbitrator in the impugned Order dated 12th August, 2022 has considered the contradictory views taken by Savla and Goradia in the Request-Cum- Affidavit-cum-Declaration dated 9th April, 2019 and observed that the issue required to be considered at the time of trial. Despite which, the learned Arbitrator erroneously granted injunction over Flat Nos. 702 and 703 in favour of Savla and Goradia respectively. 12/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 :::
10. Mr. Mody has submitted that not only did the learned Arbitrator grant interim injunction in favour of Savla and Goradia for Flat Nos. 702 and 703 respectively but also gave direction to Doshi for vacating mortgage of SBI over Flat No. 702 (Similar direction in the impugned Order was not given to Goradia in respect of Flat No.703.). While passing the impugned Orders, the learned Arbitrator failed to consider the aspect that interim mandatory injunction can only be granted in rare case / exceptional circumstances. Thus, by passing the interim mandatory injunction, the Arbitrator has not maintained the status quo, rather the Arbitrator had created new state of affairs.
11. Mr. Mody has in the context of mandatory injunctions relied upon the decisions of the Supreme Court in Samir Narain Bhojwani Vs. Aurora Properties and Investments & Anr., 1 ;Mohd. Mehtab Khan and Ors., Vs. Khushnuma Ibrahim Khan & Ors., 2 and Dorab Cawasji Warden Vs. Coomi Sorab Warden & Ors., 3. He has submitted that the Supreme Court in Dorab Cawasji Warden (supra) laid down the guidelines, referred to as the "Triple Test", for the party to satisfy for being granted as mandatory injunction, namely:- :
1 (2018) 17 SCC 203 2 (2013) 9 SCC 221 3 (1990) 2 SCC 117 13/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: i. The plaintiff has a strong case for trial that is it shall be of a higher standard than a prima facie case that is normally required for a prohibitory injunction;
ii. It is necessary to prevent irreparable or serious injury which normally cannot be compensated in terms of money; iii. The balance of convenience is in favour of the one seeking such relief.
12. Mr. Mody has submitted that Savla and Goradia were at complete failure to clear the "Triple Test" and despite which the learned Arbitrator granted mandatory injunction in favour of them and against Doshi.
13. Mr. Mody has thereafter referred to the decision of the Supreme Court in Grasim Industries Vs. Agarwal Steel 4 which is in context of his submission that there is presumption, that Savla and Goradia by signing Request-Cum-Affidavit-cum-Declaration restricting their entitlement for the area of 2625 sq.ft carpet area each on 8 th and 9th Floor of the re-developed building, have read the document properly and understood it and only then affixed their signatures thereon. It is 4 Civil Appeal No.5994/2004 decided on 20th October, 2009 14/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: only when there is proof of force or fraud, that the presumption will not apply. He has submitted that Savla and Goradia cannot be heard to contend that they had not read the Request-Cum-Affidavit-cum- Declaration which they have executed.
14. Mr. Mody has submitted that the denial on the part of Savla and Goradia as to their signature on the Request-Cum-Affidavit-cum- Declaration is mischievous in nature, while though well observed by the learned Arbitrator, despite which the learned Arbitrator erroneously went ahead with granting relief in favour of Savla and Goradia.
15. Mr. Mody has submitted that in view of the stand taken by Savla and Goradia that they had not signed the respective Request-Cum- Affidavit-cum-Declaration, a Handwriting Expert Opinion was referred to and relied upon by Doshi. Further, it is imperative to note that the respective Request-Cum-Affidavit-cum-Declaration was referred to by Doshi before MHADA Authorities on 12 th November, 2021 in their Reply to the MHADA complaint filed by Savla and Goradia. However, till date the respective Request-Cum-Affidavit- cum-Declaration has never been challenged by Savla and Goradia. 15/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 :::
16. Mr. Mody has made submissions with regard to the Applications moved by Savla and Goradia for striking off the defence of Doshi to the Counter Claims of Savla and Goradia due to failure on the part of Doshi in complying with the interim mandatory injunction for vacating the mortgage of SBI over Flat No. 702. He has referred to the order passed by the learned Arbitrator for striking off the defence of Doshi. Thereafter, Doshi had moved a necessary Application in the present Arbitration Petitions and pursuant to the directions issued by this Court in Order dated 19th April, 2023, Doshi complied with the statement given to this Court by addressing letters to SBI for over getting the mortgage vacated over Flat No.702 as well as Flat No.
703. Further, the direction of the learned Arbitrator in the impugned Orders for identifying the car parking spaces for Savla and Goradia was complied with by Doshi submitting that the parking spaces adjoining each other at podium 4 will be given to Savla and Goradia. Further, the status of the free sale component Flats in the new building have also been complied with by Doshi. Despite complying with all directions given by this Court, the order passed by the learned Sole Arbitrator for striking off the defense of Doshi to the Counter Claim is prima facie bad in law and requires to set aside as has been prayed in Interim Application No.28025 of 2023 which has 16/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: been taken out by Doshi in the present Commercial Arbitration Petitions.
17. Mr. Mody has submitted that the learned Arbitrator by the impugned Orders also directed Doshi to pay an ad-hoc rent amount @ Rs.3 Lakh per month from March 2020 till 31 st August, 2022. The learned Arbitrator in so directing, failed to consider the fact that though the construction of the new building was completed, Doshi was unable to procure O.C. for the redeveloped building due to pending MHADA complaint dated 14 th October, 2021 filed by Savla and Goradia.
18. Mr. Mody has thereafter referred to the impugned order dated 12th August, 2022 passed by the Division Bench of this Court in Writ Petition (L) No.13172 of 2023 by which the Petitioner has sought relief for issuance of O.C. for re-development of the Project. The Division Bench by the said order had directed MCGM to decide upon the issuance of O.C. for Doshi's re-development Project. Pursuant to passing of the said order, Doshi by letters dated 23 rd August, 2023 and 28th August, 2023 submitted relevant documents before Chief Officer M.B.R&R Board, MHADA and Deputy Chief Engineer Building 17/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: Proposal, MCGM. However, Doshi was not able to procure O.C. for the re-development Project as it has been observed in remark dated 28th August, 2023 that MHADA NOC to O.C. had not been obtained. He has submitted that Doshi's prime concern is to get O.C. for Flat Nos. 801 and 901, which requires MHADA NOC to O.C. MHADA was not issuing its NOC to O.C. solely because of the pending complaint of Savla and Goradia. Thus, MHADA NOC to O.C. has been blocked due to the MHADA complaint thereby blocking full O.C. for the re- development Project.
19. Mr. Mody has submitted that despite filing of MHADA complaint and blocking of full O.C. for the re-development Project, Savla and Goradia are claiming rent at the rate of Rs.3 Lakh being an ad-hoc rent amount decided in the impugned Order. Pursuant to the passing of impugned Order the Petitioner had paid an amount of Rs.1,20,00,000/- and Rs.1,11,00,000/- to Savla and Goradia respectively. Savla and Goradia continue to demand rent amount from Doshi and continue to block O.C. for the re-development Project as aforementioned. This has caused severe financial loss and prejudice to Doshi and his re-development Project. 18/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 :::
20. Mr. Mody has submitted that Savla and Goradia had never made any written demand with Doshi for Transit Rent or any claim over Flat Nos. 702 and 703 respectively since March 2020 when Savla and Goradia had taken possession of Flat Nos. 801 and 901 respectively for fit out works and carried out unauthorized additions and alterations of permanent nature for which Doshi through his advocates had addressed Legal Notice. It was only on 14 th October, 2020 that Savla and Goradia had filed their complaint before MHADA Authorities objecting for issuance of MHADA NOC to OC.
21. Mr. Mody has submitted that there are other objections raised by Savla and Goradia in the MHADA complaint with regard to height of Flat not being clear 11 feet and area of flat not being 2625 sq.ft. Respectively. Further, the issue with regard to the Flat not being constructed as per sanctioned Plan. He has submitted that these objections are frivolous as evident from the sanctioned Plans and thus, Savla and Goradia had with all mala-fide and dishonest intention made a false complaint against Doshi to the MHADA Authorities objecting to all processes leading to grant of O.C. to Doshi, so as to compel Doshi to their dictates and demands. 19/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 :::
22. Mr. Mody has submitted that the impugned Order directing Doshi to pay Ad-hoc Rent amount of Rs.3 Lakh per month is bad in law and requires to be set aside. So also, the mandatory injunction over Flat Nos.702 and 703 as well as direction to Doshi for vacating SBI mortgage over Flat No. 702 though the flats were never part of the arbitration agreements are also bad in law and require to be set aside. Thus, on this ground the impugned Orders are required to be quashed and set aside.
23. Mr. Tamboly has submitted that it is an admitted position, even by Doshi that Savla and Goradia are entitled for Flat Nos.801 and
901. Thus, there cannot be any challenge to the impugned Orders which have granted an injunction in respect of Flat Nos. 801 and 901 in the Section 17 Application filed by Salva and Goradia respectively. Further, at the time of hearing of Section 17 Application, Doshi had admitted that Flat Nos. 801 and 901 belongs to Savla and Goradia and are their entitlement. This has also been confirmed by Doshi before the Division Bench of this Court as recorded in Paragraphs 5, 8 and 9 of the Order dated 11th August 2023 passed in Writ Petition No.13172 of 2023 filed by Doshi against Savla and Goradia. Therefore, the learned Arbitrator's orders of granting injunction in 20/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: respect of Flat Nos. 801 and 901 is perfectly justified.
24. Mr. Tamboly has submitted that with regard to the mandatory injunction qua Flat Nos. 702 and 703 as well as mandatory injunctions with regard to release of SBI mortgage in respect of Flat Nos.702 are concerned, the grounds of challenge are entirely misconceived. He has submitted that as per Clause 5(a) of the said Agreements, Doshi contractually agreed to provide in the new building, two self-contained tenements to Savla and Goradia. In addition to the self-contained tenements having an aggregate area of 2625 sq. ft., other areas such as dry balcony, deck, niches, flower-bed or any other area of projected elevation architectural features on 2 nd habital floor were also provided. He has submitted that there is no premium payable for these fungible areas and if in the future there is any premium payable, Savla and Goradia shall pay such premium as have been recorded in Clause 5(a) of the said Agreements.
25. Mr. Tamboly has submitted that the said Agreements were executed at the time when Plans for the new building were not sanctioned and in view of which there was no identification of Flats much less Flat Nos.702 and 703 or 801 and 901.
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26. Mr. Tamboly has submitted that Doshi had secured approval to its Plans on 25th April, 2016 for the new building from the competent authority being the MCGM. A perusal of these Plans will reveal that Flat Nos. 801 and 901 on the 8th and 9th Floors respectively as well as Flat No.701 (later changed to Flat No.702) and Flat No.702 (later changed to Flat No.703) on the 7th Floor were shown against Savla and Goradia's name respectively as Savla and Goradia's entitlement as per the tenants statement. As the size of the plot cannot be increased and the floor plate of the new building could only accommodate an approximate 2600 sq.ft. Carpet area on one floor, Savla and Goradia's entitlement by way of fungible FSI was earmarked for Savla and Goradia on the 7 th Floor by way of separate Flats.
27. Mr. Tamboly has referred to the Plan which was approved on 25 th April, 2016 and handed over the same to Doshi on 21 st May, 2016. On the basis of these Plans, Savla and Goradia vacated their own tenements and handed over the same to Doshi on 21st May, 2016.
28. Mr. Tamboly has referred to the provision of Regulations 31(3) of the Development Control and Promotion Regulations, 2034, wherein 22/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: the fungible FSI made available to Doshi free of cost can statutorily only be utilized for providing rehab component to the tenant, in this case Savla and Goradia, and there is a prohibition against using the same for sale purposes. As per sanctioned Plans, Doshi availed of this free of cost 35% additional fungible FSI and had been compensated by equivalent FSI. This has been noted by the learned Arbitrator in the impugned Orders.
29. Mr. Tamboly has submitted that Doshi's entire defence to the issue of Flat Nos. 702 and 703 is that Savla and Goradia had purportedly executed an unnotarized and unregistered Declarations dated 30th March, 2019 and 9th April, 2019 whereby Goradia and Savla had purportedly restricted their rights in the new building to 2625 Sq.ft. Carpet area and nothing more. Based on this defence, Doshi contends that Savla and Goradia are only entitled to Flat Nos. 801 and 901 respectively and had effectively given up their rights to Flat Nos.702 and 703 respectively in Doshi's favour.
30. Mr. Tamboly has referred to the case of Savla and Goradia in the arbitration, namely that the purported Declarations dated 30 th March, 2019 and 9th April, 2020 are fabricated documents. The learned 23/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: Arbitrator has framed this as one of the issues which is pending final adjudication. He has submitted that whether these purported Declarations have or have not been signed by them is a matter of trial and can be adjudicated only after both sides lead evidence and the learned Arbitral Tribunal rules on the same. The learned Arbitrator had in impugned Orders proceeded on the assumption that the said Declarations are documents validly executed by Savla and Garodia. Thus, Savla and Garodia are accordingly proceeding on the same basis before this Court, without of course in any manner giving up their contention that the said Declarations are forged and fabricated documents.
31. Mr. Tamboly has submitted that the said Declarations are unregistered documents and by virtue of the bar contained in Section 49 of the Registration Act, 1908, the same cannot affect any right in immovable property. The scope of looking at an unregistered document for a collateral purpose is very narrow and restricted to purposes which themselves do not require registration and is a purpose which is independent of the transaction of which the law requires registration. In this context he has relied upon decision of the Supreme Court in K.B. Sahu and Sons Pvt. Ltd. Vs. Development 24/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: Consultant Ltd. 5 at Paragraph 34.
32. Mr. Tamboly has submitted that the said Agreements are registered documents and it is settled law that the terms of registered documents can be varied only by a subsequent registered document. He has placed reliance on the Judgments in Chandrakant Machale Vs. 6 Parubai Mohite at Paragraph Nos. 12 and 15 and Vignesh Paramguru Vs. Arulmigu Kovil 7 at Paragraph 37. He has submitted that assuming without admitting that the said Declarations have been executed by Savla and Goradia, the same cannot purport to extinguish their rights in Flat Nos. 702 and 703 respectively.
33. Mr. Tamboly has submitted that the purported Declarations are without consideration and do not identify any particular Flat, which has been given up and thus, the Declarations are void. Therefore, the said Declarations even if found to be executed by Savla and Goradia cannot operate to extinguish their rights over the immovable property.
34. Mr. Tamboly has submitted that the fact that Savla and Goradia 5 2008 8 SCC 564 6 2008 6 SCC 745 7 Decision Dt.31 March, 2021 25/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: continue to be entitled to Flat Nos. 702 and 703 is evident from the Plans which have been submitted by Doshi for approval to MCGM even after the said Declarations dated 30th March, 2019 and 9th April, 2019 were executed. The Plans have been sanctioned on 26 th July, 2019, as per which, Savla and Goradia having been shown to be entitled to Flat Nos.801 plus 702 and Flat Nos.901 plus 703 respectively.
35. Mr. Tamboly has submitted that after the present proceedings have commenced, Doshi has submitted Plans for approval which had been sanctioned by MCGM on 26 th April, 2022 as per which, Savla and Goradia continue to be shown entitled to Flat Nos.801 plus 702 and Flat Nos.901 plus 703 respectively.
36. Mr. Tamboly has submitted that in the Section 9 Arbitration Petition which had been filed by Savla and Goradia respectively, for various interim relief, MHADA had filed an Affidavit dated 3 rd February, 2022 where it confirmed that as per its records and as per the sanctioned Plans, Savla and Goradia are entitled to the Flat Nos. 801 plus 702 and 901 plus 703 respectively. Thus, MHADA record does not reflect any such a purported Declaration.
37. Mr. Tamboly has submitted that the findings and the injunction 26/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: orders with respect to Flat Nos. 702 and 703 of the learned Arbitrator ought not to be interfered at this stage, given the narrow contours of Section 37 of the Arbitration and Conciliation Act, 1996.
38. Mr. Tamboly has submitted that Doshi has purported to mortgage Flat No.702 to SBI. Thus, if Doshi's LLP which had taken the loan from SBI defaults in repaying the same, Savla will be put to great prejudice as this will render his Flat No. 702 vulnerable to any action which can be initiated by the bank basis such mortgage. Therefore,the Learned Arbitral Tribunal having prima facie found that Savla and Goradia are entitled for Flat No.702 has correctly found that Doshi had no right to mortgage Flat No. 702. The learned Arbitral Tribunal had further found Doshi to be in breach of Clause 23(e) of the PAAA / said Agreements for having mortgaged the said Flat. He has submitted that thus it is extremely necessary and urgent to secure the release of Flat No. 702 from the SBI mortgage since the same belongs to Savla and it is not open for Doshi to create security interest over the same in favour of SBI. Thus, in the impugned Order in the case of Savla, Doshi has been directed to secure release of Flat No.702 from the SBI mortgage in the interest of justice. The learned Arbitrator has recorded that all that Doshi has to do is to offer 27/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: substituted security as available with Doshi or his entities to SBI to have Flat No.702 released.
39. Mr. Tamboly has submitted that it is pertinent to note the contention of Doshi now taken that a mandatory injunction could not have been ordered since the same was not to ensure status quo. He has submitted that this contention has not been taken up before the learned Arbitral Tribunal. The same is evident from a perusal of the impugned Order as well as from perusal of the Affidavit-in-Reply dated 1st February 2022. More pertinently, the same is not even a ground taken in the Memo of Appeal in the captioned Arbitration Petitions and as such, the above contention is a wholly new contention taken up by Doshi at the time of hearing of the Section 37 Appeal.
40. Mr. Tamboly has submitted that it is settled law that a mandatory injunction can be ordered even at the interim stage to maintain the last undisputed status quo. He has placed reliance upon the case Dorabji Cawasji Warden (supra). He has submitted that the last undisputed status between the parties, even as per the sanctioned Plan of 25th May 2016, basis on which Savla handed over his old 28/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: tenements to Doshi, was that Savla is entitled to two Flats which includes Flat No.701 (later changed to Flat No.702). The mortgage was created by Doshi by entering into the Deed of Mortgage dated 25th February 2019 in respect of Flat No.702. The document was executed by Doshi behind the back of Savla and without his knowledge. This is evident from the fact that the Section 9 Petition initially filed by Savla on 18 th January 2022 does not deal with the mortgage and does not have any prayer related to the same. The Section 9 Petition was later amended on 16 th February, 2022 by Savla to add prayer for securing release of Flat No.702 from the mortgage, once Savla gained knowledge of the Mortgage Deed.
41. Mr. Tamboly has submitted that the discretion exercised by the learned Arbitral Tribunal in granting mandatory injunction given the facts, circumstances and necessities of the case cannot be interfered lightly.
42. Mr. Tamboly has submitted that with respect to the contention on behalf of Doshi that prayers relating to Flat Nos. 702 and 703 could not be granted as Flat Nos. 702 and 703 were not a part of the PAAA / said Agreements and thus not within the scope of arbitration 29/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: is thoroughly dishonest as is evident from the material on record. He has submitted that the said Agreements did not identify any Flat. Further, the said Agreements contained the arbitration agreement which was of the widest amplitude containing the words "arising out of" and "in relation to" and included any difference which may arise between the parties. Savla and Goradia had filed a complaints addressed to MHADA raising various grievances against Doshi as aforementioned. One of the specific grievance is that Doshi had not executed an agreement with Savla and Goradia in relation to Flat Nos. 702 and 703 respectively. Doshi had filed an Application on 5 th January, 2022 supported by an affidavit before MHADA, contending that in view of the arbitration agreement, MHADA does not have the jurisdiction to address the grievance of Savla and Goradia.
43. Mr. Tamboly has submitted that Savla and Goradia have addressed Notices dated 25th November, 2021 and 10th December, 2021 in response to the Doshi's Notices, inter alia asserting their rights to Flat No. 702 and 703. In response to the same, Doshi through his Advocate addressed a reply dated 3 rd January, 2022 invoking Arbitration under clause 29 of the said Agreement. He has submitted that in the Commercial Arbitration Petitions filed by Savla 30/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: and Goradia before this Court under Section 9 of the Arbitration Act, Savla and Goradia had asserted their rights to Flat No. 702 and 703. and sought reliefs in respect thereof. However, in Affidavit-in-Reply dated 1st February, 2022 filed by Doshi, the issue of non-arbitrability with respect to the said Flats which is now sought to be raised, was not raised by Doshi. Further, by the order dated 5 April, 2022 passed by this Court referring the dispute to arbitration by consent of parties and converting Section 9 Petition into Section 17 Petition, Doshi was directed not to create any third party rights in respect of Flat Nos.702 and 703 respectively.
44. Mr. Tamboly has referred to the Application filed by Doshi under Section 16 of the Arbitration Act on the ground that the Arbitral Tribunal had no jurisdiction as the issue of Flat Nos. 702 and 703 are non arbitrable and beyond the scope of the said Agreements. This Application came to be dismissed by the learned Arbitrator as no grounds were made out by Doshi. He has placed reliance upon Order dated 23rd January, 2023 passed in the Section 16 Application.
45. Further, in the Order dated 11th August, 2023 passed by the Division Bench in WP (L) No. 13172 of 2023 at Paragraph 10, the 31/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: Division Bench had noted that disputes between Doshi and Savla concern Flat Nos. 702 and 703 and all claims for rent will be decided by the learned Arbitral Tribunal. Thus, the issue now raised about non- arbitrability of disputes relating to Flat Nos. 702 and 703 is liable to be rejected at the threshold.
46. Mr. Tamboly has dealt with contention with regard to the payment of Transit Rent which had been directed by the learned Arbitrator in the impugned Orders. He has submitted that till date admittedly, there is no O.C. issued by the MCGM for Flat No.801 and 901 and as such, Doshi cannot claim Flat Nos. 801 and 901 has become capable of lawful habitation.
47. Mr. Tamboly has submitted that till date, even possession for carrying out fit-outs works in Flat Nos.801 has not been handed over to Savla. This is evident from the fact that at the time of hearing of Section 17 Application, Doshi himself, through Counsel, suggested that he is ready and willing to hand over possession of Flat Nos.801 to Savla for fit-out purpose. This is specifically recorded in the impugned Order. This has not been disputed by Doshi in the present Arbitration Petition.
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48. It is settled law that possession for carrying out fit out works does not amount to possession for habitation. In the present case Salva and Goradia have till date not been able to lawfully occupy Flat Nos.801 and 901 for the purpose of habitation.
49. Mr. Tamboly has further submitted that it is well settled that until and unless the tenant is put in possession of his new premises with a valid Occupation Certificate, he is entitled to be paid rent by the Landlord/Developer. He has referred to the decision of this Court in Rajawadi Arunodaya CHSL Vs. Value Projects (P) Ltd., 8 at Para Nos.54, 56 and 64. The learned Single Judge of this Court has in the said decision held that rental obligations must be fulfilled and rent must be paid to the tenants on a month to month basis and that non- payment of rent is breach of a fundamental term. The learned Single Judge also held that balance of convenience clearly lies in paying rent to the tenant as payment of rent is a matter of survival for the tenant and non-payment thereof is a social evil.
50. Mr. Tamboly has submitted that it has been erroneously contended on behalf of Doshi that MHADA NOC for O.C. is required for the said Flats. He has submitted that MHADA NOC for O.C. is not 8 2021 SCC Online Bom 9572 33/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: required for rehab component, in law. Further, Doshi had obtained part O.C. dated 9th September, 2022 for "Rehab Component Only for building comprising of Ground / Stilt + 1st and 2nd podium floors + 6th floor +7th floor (pt) + service floor between 9th to 10th floor + 14th (pt) refuge +17th part floor + 18th & 19th (pt) floor as marked on plan". Thus, all premises forming part of the Rehab Component except Savla and Goradia's and the other Tenants' Flats on the remaining floors, have received an O.C.. This is due to the fact that Doshi had in the first place never applied for the same. This is evident from a perusal of the Report dated 26 th August, 2022 for O.C. which mischievously does not seek an O.C. for Savla and Goradia's Flats.
51. Mr. Tamboly has submitted that Savla and Goradia had not been rehabilitated in Flat Nos.702, 801 and 703, 901 and which is clear from a perusal of the Order dated 11 th August, 2023 passed by the Division Bench of this Hon'ble Court in WP (L) No. 13172 of 2023 filed by Doshi. By the said order, the Division Bench granted its imprimatur to Savla and Goradia's contention that there can be no lawful occupation of Flat Nos. 801 and 901 by Savla and Goradia without a valid O.C. 34/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 :::
52. Mr. Tamboly has made submission with regard to disclosures directed to be made by learned Arbitral Tribunal. However, these directions are not impugned in the present Arbitration Petition as Mr. Mody has submitted that these directions will be complied with and thus, they are not subject matter of the dispute.
53. Having considered the rival submissions, I am of the view that this Court in exercise of jurisdiction under Section 37 of the Arbitration and Conciliation Act, 1996 has a very narrow scope of interference with the impugned Orders. The impugned Orders being interim orders in exercise of discretion by the learned Arbitral Tribunal in granting the aforementioned injunctions in respect of Flat Nos. 801, 901 and 702, 703 cannot be inferred with unless the orders are found to be patently illegal and / or perverse.
54. I have perused the impugned orders passed by the learned Arbitrator in the applications filed by Savla and Goradia under Section 17 of the Arbitration Act. The impugned Orders are reasoned orders and though mandatory order of injunction has been granted, in my view the mandatory injunction order meets the "Triple Test"
laid down by the Supreme Court in Dorabji Cawasji Warden (supra). 35/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: The Arbitral Tribunal has found that Savla and Goradia have a strong case for trial. The case is of a higher standard than a prima facie case that is normally required for prohibitory injunction. Further, the learned Arbitral Tribunal has held that a mandatory injunction order is required in respect of Flat No.702 which has been mortgaged to SBI and without such order being passed, the rights of Savla to Flat No.702 would be defeated in the event SBI to whom the mortgage has been created by Doshi seeks recovery of its dues by enforcing the mortgage in SARFAESI proceedings which is more than a likely probability. This after finding that Savla and Goradia have established their right to Flat Nos.702 and 703 apart from Flat Nos.801 and 901 in the new building. Thus, the learned Arbitral Tribunal has found that irreparable or serious injury which normally cannot be compensated in money would result if such mandatory injunction order is not passed. Further, the learned Arbitral Tribunal has held that the Balance of Convenience is in favour of the one seeking such relief namely in this case Savla and Goradia.
55. It has been held by the Delhi High Court in Dinesh Gupta & Ors., Vs. Anand Gupta & Ors.,9 that the Court exercising its jurisdiction 9 2020 SCC OnLine Del 2099 36/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: under Section 37 of the Arbitration Act, would interfere with the discretionary orders passed by the Arbitral Tribunals only when such exercise is palpably arbitrary or unconscionable. The Delhi High Court has held that the discretionary orders have, therefore, to be handled with kid gloves, and protected from injury by any over- zealous administration, by the court, of the law as it perceives it to be. It is necessary to reproduce Paragraph 84 of the said decision which reads as under:
"84. Having said that, it is indisputable that the exercise of jurisdiction, by the arbitrator, under Section 17, is fundamentally discretionary in nature - as contrasted with Section 16(2) and (3). Judicial interference, with the exercise of discretionary power, is, classically, limited, and is even more circumscribed, where the authority exercising discretion is itself a judicial authority - as opposed to a purely administrative or executive functionary. (One uses the expression "judicial authority", here, to denote the nature - rather than the status - of the jurisdiction exercised by the Arbitrator, it having been settled, by the Supreme Court, in M.D., Army 37/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: Welfare Housing Organisation v. Sumangal Services (P) Ltd33, that an arbitrator is not a "Court", and does not exercises judicial functions.) Discretionary orders passed by arbitral tribunals have, therefore, to be handled with kid gloves, and protected from injury by any over- zealous administration, by the Court, of the law as it perceives it to be. If anything, therefore, the jurisdiction of the Court, under Section 37(2)(b), is even more limited than the jurisdiction that it exercises under Section 37(2)(a) or, for that matter, under Section 34. The discretionary jurisdiction, as exercised by the arbitrator, merits interference, under Section 37(2)(b), therefore, only where such exercise is palpably arbitrary or unconscionable."
56. I concur with the above view expressed by the learned Single Judge of the Delhi High Court. The learned Arbitrator in passing the impugned order has exercised discretion in granting the mandatory injunction order in case of Flat No.702 and as per my aforementioned finding meets the parameters for granting such order as laid down by the Supreme Court in Dorabji Cawasji Warden 38/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: (supra) and hence, the discretion exercised by the learned Arbitrator is not required to be interfered with.
57. Further, upon a mere perusal of Clause 5 (a) of the PAAA / said Agreements which has been extracted above, it is clear that when the said Agreements were executed, there was no identification of the respective Flats which would be allotted to Savla and Garodia by Doshi in the new building. Further, there is a clear reference to the Flats having an aggregate carpet area of 2625 sq. ft. and that in addition, there will be other areas such as dry balcony, deck, niches, flower-bed or any other area by reason projected elevations / architectural features as per MCGM Regulations, on the second habitable floor, as shown in sketch Plan, Annexure-B thereto in the proposed new building to be constructed on the said property. Thus, there is a clear contemplation of an additional area beyond 2625 sq. ft. which goes to the share of Savla and Goradia respectively. Further, the Plans which have been submitted by Doshi and approved by the competent authority being the MCGM from the years 2016 till 2022 have all identified the respective Flats going to the share of Savla and Goradia i.e. Flat Nos. 801 and 702 going to the share of Savla and Flat Nos. 901 and 703 going to the share of Goradia. 39/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 :::
58. Further, the complaints filed before MHADA have also identified the respective Flats and this has not been disputed in the proceedings before MHADA by Doshi. Thus, the learned Arbitral Tribunal has exercised discretion in passing the injunction orders, from the material on record. I cannot find fault with the prima facie finding of the learned Arbitrator with regard to the respective Flats going to the share of Savla and Goradia, and that the necessary protection was required to be granted by the Arbitral Tribunal in order to secure the said Flats.
59. The execution of the Request Cum-Affidavit-Cum-Declaration has been disputed by Salva and Goradia who have contended that they are fabricated. I find no fault in the finding of the learned Arbitrator that this issue is required to be considered at the time of Trial.
60. I do not find any merit in the contention now raised by Mr. Mody that Flat Nos.702 and 703 are non-arbitrable. This contention has never been raised prior in point of time and in any event this contention is contrary to the reference and material on record relied upon by Mr. Tamboly.
61. I further do not find any reason for interfering with the finding of the learned Arbitral Tribunal and directions issued in the context of 40/42 ::: Uploaded on - 07/03/2024 ::: Downloaded on - 07/03/2024 16:24:29 ::: transit rent, particularly considering that full O.C. for the new building including for the 8th and 9th Floors has not been obtained in respect of the new building. The learned Arbitrator has exercised his discretion in granting transit rent at the rate of Rs.3,00,000/- per month to Savla and Goradia respectively. This upon comparing the rent amount payable if contractual commitments were to be kept in mind, and by which Savla and Goradia would be required to be paid transit rent of approximately Rs.15.63 Lakh per month respectively on the date of the impugned Orders.
62. It has been held by this Court in Rajawadi Arundaya CHSL (supra) that rental obligations must be fulfilled and rent must be paid to the tenants on month to month basis and that non-payment of rent is a breach of a fundamental term. The Division Bench has held that the Balance of Convenience clearly lies in paying rent to the tenants as payment of rent is a matter of survival for the tenants and non- payment thereof is a social evil. Thus, where the full O.C. including part O.C. in respect of Flat Nos. 801 and 901 has till date not being obtained, it is a fundamental duty on part of the landlord/ Developer, in this Case Doshi, to pay transit rent as directed by the learned Arbitral Tribunal.
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63. Thus, I find no perversity and / or patent illegality in the impugned Orders passed by the learned Arbitrator. Given the limited scope of interference under Section 37 of the Arbitration Act, this is not an appropriate case where this Court would interfere in the exercise of discretion by the learned Arbitrator.
64. Accordingly, the Commercial Arbitration Petition (L) No.28865 of 2022 and the Commercial Arbitration Petition (L) No.29374 of 2022 are dismissed and disposed of accordingly. There shall be no order as to costs.
65. In view of the above order, the Interim Applications filed therein are accordingly disposed of.
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