Bombay High Court
Manohar M.Ghatlia And Ors vs State Of Maharashtra And Ors on 26 October, 2023
Author: G.S. Patel
Bench: G.S. Patel
902-OSWP-1380-2001+.DOC
Arun
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 1380 OF 2001
WITH
NOTICE OF MOTION NO. 484 OF 2005
IN
WRIT PETITION NO. 1380 OF 2001
WITH
NOTICE OF MOTION (L) NO. 434 OF 2012
IN
WRIT PETITION NO. 1380 OF 2001
WITH
NOTICE OF MOTION NO. 381 OF 2011
IN
WRIT PETITION NO. 1380 OF 2001
WITH
INTERIM APPLICATION (L) NO. 26072 OF 2022
IN
ARUN
RAMCHANDRA WRIT PETITION NO. 1380 OF 2001
SANKPAL
Digitally signed by
WITH
ARUN
RAMCHANDRA
SANKPAL
Date: 2023.10.27
NOTICE OF MOTION NO. 107 OF 2017
10:42:12 +0530
IN
WRIT PETITION NO. 1380 OF 2001
WITH
Page 1 of 14
26th October 2023
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902-OSWP-1380-2001+.DOC
IN PERSON APPLICATION NO. 94 OF 2017
IN
WRIT PETITION NO. 1380 OF 2001
WITH
NOTICE OF MOTION NO. 484 OF 2005
IN
WRIT PETITION NO. 1380 OF 2001
Manohar M Ghatlia & Ors ...Petitioners
Versus
State of Maharashtra & Ors ...Respondents
Mr Pradeep Sancheti, Senior Advocate, i/b Mehul Rathod, for the
Petitioner in WP/1380/2001.
Mr Amit Shastri, AGP, for State.
Mr PG Lad, with Sayli Apte, for Respondent No.4-MHADA.
Ms Rupali Adhate, for the MCGM.
Mr Mayur Khandeparkar, with Rohan Aggarwal, i/b Joshua Borges,
for Respondent No.9-RP.
CORAM G.S. Patel &
Kamal Khata, JJ.
DATED: 26th October 2023 PC:-
1. For 22 years this Petition has been pending in Court. It is almost entirely a story of the most terrible loss and tragedy. As we have earlier noted it goes back to 1998. That was the year when a seven storey building called Govinda Tower at Kherwadi, Bandra Page 2 of 14 26th October 2023 ::: Uploaded on - 27/10/2023 ::: Downloaded on - 28/10/2023 02:33:19 ::: 902-OSWP-1380-2001+.DOC collapsed on 3rd August 1998. 80 persons are said to have been injured. Several persons died. We were once told that there were 33 deaths, but the figure may be more, as high as 42.
2. The prayers in this Petition, which itself is in a state of disrepair, are very broad. There is a prayer clause for compensation. There is a prayer clause for investigation. But of immediate concern to us is prayer clause (c) which seeks an appropriate Writ for the rebuilding of Govinda Tower within 18 months to house the Petitioners free of cost. Rule was once made partly absolute in terms of that prayer. But no reconstruction has taken place. The survivors of that crash are still without their homes.
3. Mr Sancheti appears for the Petitioners. He says that all of them are members of the Kherwadi Rajhans CHSL. Two office bearers are present in Court, viz., the Chariman, Mr Dilip Datwani and the Honorary Treasurer, Nagesh M Suvarna.
4. Mr Lad for the Maharashtra Housing Area and Development Authority ("MHADA") confirms that there was a draft lease of the property in favour of the Society.
5. There have been some recent developments that we must note. The first is our order of 25th August 2023. It reads as follows:
"1. This is a most unfortunate matter. It goes back to the year 1998. That year, a building known as Govinda Tower collapsed. In that disaster, 33 lives were lost. Nothing seems to have been done since and in 2001, this Petition was filed. It remained pending, although several years later, in 2012 a Page 3 of 14 26th October 2023 ::: Uploaded on - 27/10/2023 ::: Downloaded on - 28/10/2023 02:33:19 ::: 902-OSWP-1380-2001+.DOC Senior Counsel of this Court, the late Ms Rajni Iyer, was appointed as Court Commissioner and mediator by an order of 10th February 2012.
2. The plot is owned by MHADA. Originally, Respondent Nos. 7 and 8 were the lessees from MHADA. They agreed to reconstruct the building. They brought in Respondent No.9, AA Estates Pvt Ltd, a company of the RNA Group. That group is in all kinds of difficulties and has been in such difficulties for a long time. AA Estates itself is now before the NCLT and an Interim Resolution Professional or IRP has been appointed. He has now been joined by amendment as Respondent No. 13.
3. The Petitioners are members of a society which is not a party. There was no registered agreement with AA Estates; the agreement as it was, remained unregistered.
4. It is our view that the Petition itself cannot be kept pending like this indefinitely. That serves no purpose.
5. The present application seeks the deletion of the name of AA Estates and the deletion of the names of Respondent Nos.11(a) to 11(c). The original Respondent No.11 was one R V Kothawale. He died and his heirs were added as 11(a) to 11(c). They have now sold their interest of their entitlement and have gone out of the picture. These are the first two prayers in the IA.
6. The third prayer is to permit the Petitioners to appoint a builder developer of their choice and to commence the reconstruction or redevelopment. There is no difficulty in granting relief in terms of prayer clauses (a) and (b). The amendment sought is to be carried out by Monday, without need of re-verification.
7. So far as prayer clause (c) is concerned, we will need to see that it is the society, not some individual, that Page 4 of 14 26th October 2023 ::: Uploaded on - 27/10/2023 ::: Downloaded on - 28/10/2023 02:33:19 ::: 902-OSWP-1380-2001+.DOC appoints a developer. To that extent prayer clause (c) will need to be modified.
8. We are shown a letter from the Society of 14th August 2023. This is the Kherwadi Rajhans CHSL. It is to be joined as a party respondent to the Petition by our direction today. A copy of the resolution letter is taken on record and marked "X-1" for identification with today's date. The resolution is that one Rosate Estate Pvt Ltd / Roxwell Maxam Construction Ltd should be appointed as a developer. Roxwell Maxam is a special purpose vehicle. The terms and conditions are obviously to be negotiated between the society and the chosen developer. We do not see how the IRP or Respondent No.9 or anybody else can have any objection to this provided that it is made clear that our order today does not dispense with compliance with all MHADA requirements, compliances, rules, regulations, payments etc. In addition, if there are any property tax issues these will also have to be addressed.
9. We believe that this is sufficient in itself to dispose of this Interim Application. We have also considered the prayers in the Writ Petition, in which. there are still prayers for an investigation into the incident, affixing liability and deciding compensation. It is unfortunate that the Petition has to be kept pending for that purpose. We do not want to drive the Petitioners after all this time to the remedy of a civil suit with the attended complications.
10. Accordingly, only the IA is disposed of in the above terms.
11. The Petition itself will be taken up on 3rd October 2023 for a consideration of prayer clauses (a)(i), (a)(ii), (b) and, if necessary, prayer clause (d). The present order on the Interim Application is sufficient to dispose of prayer clause (c) of the Petition.Page 5 of 14
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12. It is lastly clarified that the planning authority is not to insist on an NOC or a release document from any previous developer or architect when the Society decides on a developer and submits a proposal. The planning authority will act on production of an authenticated copy of this order."
6. There is an order of 3rd October 2023 which we also reproduce below.
"1. The Petition is of 2001. The facts go back to 1998 when a building called Govinda Tower collapsed causing the loss of 33 lives.
2. On 25th August 2023, we took up an application filed by one of the Petitioners. It sought certain amendments in regard to existing Respondents and the 3rd prayer was to permit the Petitioners to appoint a builder-developer of their choice. The Petitioners were otherwise not separately represented. We were shown a letter from the society of 14th August 2023. This was the Kherwadi Rajhans Cooperative Housing Society Ltd. We noted this in paragraph 8. We also noted that original Respondent No. 9, AA Estates Private Limited, a company of the RNA Group was now in a Corporate Insolvency Resolution Process ("CIRP").
3. Today, Mr Khandeparkar appears for the Resolution Professional ("RP"). He points out that by an order of 28th June 2012, to which our attention was not drawn on the last occasion, an order was passed in terms of consent minutes partly disposing of the Writ Petition. Since Respondent No. 9 is in CIRP, obviously there will be the question of moratorium. It is also clear that the rights created under the consent minutes are assets protected under the CIRP. The short point that Mr Khandeparkar makes is that there is no Page 6 of 14 26th October 2023 ::: Uploaded on - 27/10/2023 ::: Downloaded on - 28/10/2023 02:33:19 ::: 902-OSWP-1380-2001+.DOC question of the society now independently appointing any outside developer of its choice.
4. To that extent, therefore, paragraphs 8 and 12 of our order dated 21st August 2023 cannot be allowed to continue and will have to be recalled. They read thus:
"8. We are shown a letter from the Society of 14th August 2023. This is the Kherwadi Rajhans CHSL. It is to be joined as a party respondent to the Petition by our direction today. A copy of the resolution letter is taken on record and marked "X-1" for identification with today's date. The resolution is that one Rosate Estate Pvt Ltd / Roxwell Mxam Construction Ltd should be appointed as a developer. Roxwell Maxam is a special purpose vehicle. The terms and conditions are obviously to be negotiated between the society and the chosen developer. We do not see how the IRP or Respondent No. 9 or anybody else can have any objection to this provided that it is made clear that our order today does not compliances, rules, regulations, payments etc. In addition, if there are any property tax issues these will also have to be addressed.
12. It is lastly clarified that the planning authority is not to insist on an NOC or a release document from any previous developer or architect when the Society decides on a developer and submits a proposal. The planning authority will act on production of an authenticated copy of this order."Page 7 of 14
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5. We will consider the question of the appointment of a substitute developer afresh if permissible and if possible, in accordance with the applicable law.
6. We clarify that we will be reconsidering prayer clause
(c) of the Petition as well and to that extent, Interim Application (L) No. 26072 of 2022 is restored to file.
7. Today learned Advocate on behalf of the Petitioners seeks time to take further instructions in the matter.
8. List the matter on 16th October 2023."
7. These two orders now show that the original developer AA Estates Private Limited ("AA Estates"), part of the infamous RNA Group, is under the Corporate Insolvency Resolution Process ("CIRP"). It actually now does not matter how AA Estates came to be appointed as a developer for the rebuilding of Govinda Tower.
8. Since AA Estates is now under the CIRP, the Resolution Professional ("RP") is represented by Mr Khandeparkar before us. The contest is now between the Society, and we use that term compendiously to include all Petitioners, all other members and the individual who claims to be entitled to appear in person because he too is a member of the Society, on the one hand and the RP of AA Estates on the other.
9. We remind ourselves that we should not lose sight of a common shared objective, one that has been far too long pending before this Court: the reconstruction of Govinda Tower and the rehousing of the members of the Society in that rebuilt tower. This is, after all, a Writ Petition, and we will therefore be confining Page 8 of 14 26th October 2023 ::: Uploaded on - 27/10/2023 ::: Downloaded on - 28/10/2023 02:33:19 ::: 902-OSWP-1380-2001+.DOC ourselves to such matters as fall within the realm of public law. This case now is squarely within that frame as the following brief discussion shows.
10. We proceed for today on the footing that the Society is a Petitioner before us. Towards the end of this order, we will be issuing directions for the formal joinder of the Society as a Petitioner so that there is no remaining ambiguity nor any potential discord between member and member going forward.
11. Only because this Petition has been pending for the length of time that it has, we believe it would not only be useful but is essential that we do two things today. First, that we identify as closely as possible but without expressing an opinion the issues or matters that will fall for consideration; and second, that we chalk out a structured plan for hearing the matter and to bring it to as satisfactory a close as lies within our powers.
12. To appreciate this controversy, we need to step back a little in time to the appointment of AA Estates as the developer for the project. It was then a viable company. According to Mr Khandeparkar, AA Estates not only had a Development Agreement but, importantly for his purposes, was in actual and physical possession of the Govinda Towers project site. Indeed, following the Development Agreement and having obtained certain permissions, AA Estates had begun excavation work.
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13. This is relevant because Mr Khandeparkar maintains that the entire "project" is an "asset" of AA Estates and, consequently, now that AA Estates is in the CIRP process is an asset of which the RP of AA Estates has or must be deemed to have taken charge.
14. Therefore, Mr Khandeparkar opposes any proposal or prayer by the Petitioner to appoint a developer of its choice to complete the construction in substitution of AA Estates. That is the prayer in the separate Interim Application.
15. Is this project factually or in law an asset of AA Estates? Can it ever be said to be in the possession of AA Estate's RP? These are the questions that Mr Sancheti poses. He founds his argument on a simple premise that in any redevelopment proposal under DCR 33(5) or DCR 33(7), the portion of the project that is meant for redeveloped, rebuilt or reconstructed homes for members of the Society is never an asset of the developer. It is part of the contractual obligation of the developer to build that structure. The 'asset' of the developer, if there is one, is only the right to the free sale units, if he constructs for the members of the Society. At no point, in law, Mr Sancheti submits, can the developer ever be said to have the re-accommodation building, i.e., the building meant for re- accommodation of Society members as its 'asset'. If the developer does not construct the re-accommodation building (or defaults in transit rent, and other obligations), there is a failure of consideration and the developer stands to lose even the only possible asset, viz., the free-sale component. Under no circumstances, therefore, in his submission is the re-accommodation building ever an asset of the Page 10 of 14 26th October 2023 ::: Uploaded on - 27/10/2023 ::: Downloaded on - 28/10/2023 02:33:19 ::: 902-OSWP-1380-2001+.DOC corporate developer. If it is not the asset of the developer, it cannot be an asset in the hands of the RP.
16. He counters Mr Khandeparkar's formulation of possession by saying that this is not the kind of possession as one might contemplate in, for instance, an agreement of sale where a party is put in possession pursuant to or in part performance of that agreement. This is merely possession for the purposes of executing the work which is part of the consideration payable by the developer in order to gain the free sale rights. This possession, Mr Sancheti contends cannot be protected under the Insolvency and Bankruptcy Code ("IBC") and there is no moratorium of any kind that attaches to it.
17. This is apart from the submission that according to Mr Sancheti AA Estates was never physically in possession of any part of the project site.
18. Mr Khandeparkar says. leaving aside the factual dispute which will be addressed separately, the settled law including by an undisturbed judgment of the Supreme Court, and one rendered specifically in the context of the MHADA redevelopment, is that the Society does not have a right to unilaterally appoint a new developer once the developer of such a project is in CIRP and if the developer had possession of the project site.
19. We have only set out these rival contentions to outline what we will have to address. But we do not believe that a judgment on Page 11 of 14 26th October 2023 ::: Uploaded on - 27/10/2023 ::: Downloaded on - 28/10/2023 02:33:19 ::: 902-OSWP-1380-2001+.DOC this issue is necessarily a solution. It is true that all cases require a solution. But it is not true that for every case a judgment is the solution. In any event, we are firmly of the view that whatever happens, the judgment should not become the problem. It is with this in mind that we have now suggested a way forward.
20. First, we will direct the joinder of the Society as a co- Petitioner, and in doing so we dispense with the requirement of a formal Interim Application for that purpose and exercise our inherent powers both under the Constitution and under the Code of Civil Procedure 1908 ("CPC") for this purpose.
21. Second, we will permit Mr Sancheti and Mr Khandeparkar to argue their respective positions and we will proceed to decide this one way or the other. No further Affidavits are required for this purpose. We will proceed on the basis of compilations.
22. Self-evidently there are two possible outcomes. If Mr Sancheti succeeds in his submissions, then the road ahead for the Society is clear. But should Mr Khandeparkar succeed, perhaps even then all is not lost to the Society because we intend then to hear Mr Sancheti on the alternative possibility, viz., that the Society can either itself or through any developer that it chooses to appoint following a Special General Meeting (and which we will ensure is done under orders of this Court) make an appropriate application in the CIRP process/reverse CIRP process for the exclusion of this project from the CIRP of AA Estates. It is likely, we believe, that AA Estates may have several other liabilities and debtors and therefore Page 12 of 14 26th October 2023 ::: Uploaded on - 27/10/2023 ::: Downloaded on - 28/10/2023 02:33:19 ::: 902-OSWP-1380-2001+.DOC the alternate route of the Society itself either directly or through a nominee being a Resolution Applicant may not be either advisable or even wise. But the extraction of a particular project/project site may yet remain within reach, that is to say, even if Mr Sancheti's arguments on the first question do not find favour with the Court.
23. We will need a clean copy of the Petition and the relevant Affidavits and the compilations.
24. Both sides agree that subject to any necessary administrative permissions, this matter may be treated as part-heard before this Bench. We are agreeable to this course of action.
25. We believe there is some urgency. The Petitioner and the Society have already waited for too long. Further delay would be simply unconscionable. We believe we should be able to complete the hearing within one or two afternoon sessions at best. There will be some law to be considered.
26. We note that by an order of 28th June 2012, a Division Bench of this Court made Rule partly absolute in terms of prayer clause (c). But prayer clause (c) needs to be implemented. It has remained an order on paper as a direction to build but without anything actually happening on site. And now there is the additional complication that we have outlined above.
27. In the meantime, by Monday i.e., 30th October 2023, the Petitioners Society will be joined as the 6th Petitioner. Reverification Page 13 of 14 26th October 2023 ::: Uploaded on - 27/10/2023 ::: Downloaded on - 28/10/2023 02:33:19 ::: 902-OSWP-1380-2001+.DOC is dispensed with. It is not necessary to serve a copy of the amended Petition on any of other Respondents. A copy of the amended cause title may be sent to the Advocates on record for the RP and MHADA.
28. A similar amendment is permitted to the cause title of the Interim Application that we have kept pending. It is in the Interim Application that the Petitioners have sought leave to appoint a developer of their choice.
29. On the question of possession, since this is a factual matter, an Affidavit in Reply of the RP will be necessary since there is the dispute about possession. A copy has been served. It is to be filed in the Registry by 30th October 2023. We will permit the Petitioner Society to file an Affidavit in Rejoinder by Tuesday i.e., 31st October 2023. No further Affidavits are to be filed. Both sides may rely on relevant compilations including judgments. These have to be given to us in soft copy by 3rd November 2023.
30. List these matters on 6th and 7th November 2023 at 2.30 pm. (Kamal Khata, J) (G. S. Patel, J) Page 14 of 14 26th October 2023 ::: Uploaded on - 27/10/2023 ::: Downloaded on - 28/10/2023 02:33:19 :::