Bombay High Court
Westin Sankalp Developers vs Ajay Sikandar Rana And 2 Ors on 19 March, 2021
Equivalent citations: AIRONLINE 2021 BOM 483
Author: G. S. Patel
Bench: G.S. Patel
21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005-
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Atul
REPORTABLE
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION (L) NO. 221 OF 2020
WITH
COMM ARBITRATION APPLICATION (L) NO. 1914 OF 2021
Westin Sankalp Developers
A registered partnership firm, having its
registered office at 103, Shree Gokul CHS
Ltd, Gokhale Road, Dahanukar Wadi,
Kandivali (West), Mumbai 400 067 ...Petitioner/Applicant
~ versus ~
Atul G. 1. Ajay Sikandar Rana
Kulkarni
An adult, of Mumbai, Indian
Digitally signed
by Atul G.
Kulkarni
inhabitant, having his place of
Date:
2021.03.22 residence at Flat No. 11, third floor,
11:18:20 +0530
Kandivali Basant Bahar Cooperative
Hsg. Soc. Ltd., Plot No. 21, Gokhale
Road, Dahanukar Wadi, Kandivali
(West), Mumbai 400 067
2. Richard Peter Denis
Goveas
An adult, of Mumbai, Indian
inhabitant, having his place of
residence at Flat No. 7, second floor,
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Kandivali Basant Bahar Cooperative
Hsg. Soc. Ltd., Plot No. 21, Gokhale
Road, Dahanukar Wadi, Kandivali
(West), Mumbai 400 067
3. Kandivali Basant Bahar
Cooperative Hsg. Soc.
Ltd.,
A society registered under the
provisions of the Maharashtra Co-
operative Societies Act, 1960,
Registration No. BOM/HSG/PR
7447/2315/1981 havings its address at
Plot No. 21, Gokhale Road,
Dahanukar Wadi, Kandivali (West),
Mumbai 400 067 ...Respondents
AND
INTERIM APPLICATION (L) NO. 3007 OF 2021
IN
COMM ARBITRATION PETITION (L) NO. 221 OF 2020
WITH
INTERIM APPLICATION (L) NO. 3005 OF 2021
IN
COMM ARBITRATION APPLICATION (L) NO. 1914 OF 2021
1. Ajay Sikandar Rana
An adult, of Mumbai, Indian
inhabitant, having his place of
residence at Flat No. 11, third floor,
Kandivali Basant Bahar Cooperative
Hsg. Soc. Ltd., Plot No. 21, Gokhale
Road, Dahanukar Wadi, Kandivali
(West), Mumbai 400 067
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2. Richard Peter Denis
Goveas
An adult, of Mumbai, Indian
inhabitant, having his place of
residence at Flat No. 7, second floor,
Kandivali Basant Bahar Cooperative
Hsg. Soc. Ltd., Plot No. 21, Gokhale ...Applicants
Road, Dahanukar Wadi, Kandivali (Orig. Respondents Nos.
(West), Mumbai 400 067 1 and 2)
~ versus ~
1. Westin Sankalp
Developers
A registered partnership firm, having
its registered office at 103, Shree
Gokul CHS Ltd, Gokhale Road,
Dahanukar Wadi, Kandivali (West),
Mumbai 400 067 ...Orig. Petitioner
2. Kandivali Basant Bahar
Cooperative Hsg. Soc.
Ltd.,
A society registered under the
provisions of the Maharashtra Co-
operative Societies Act, 1960,
Registration No. BOM/HSG/PR
7447/2315/1981 havings its address at
Plot No. 21, Gokhale Road,
Dahanukar Wadi, Kandivali (West),
Mumbai 400 067 Orig. Respondent No.3
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A PPEARANCES
FOR THE PETITIONER Mr Rajesh G Singh, i/b Nidhi
Singh
FOR THE 1ST AND 2ND Mr RS Pachundkar
RESPONDENTS
FOR THE 3RD RESPONDENT Mr Nilesh S Parte.
CORAM: G.S. PATEL, J
DATED: 19th March 2021
ORAL JUDGMENT:-
1. This is the second case in as many weeks of dissenting members of a cooperative society holding up its re-development, though this re-development is approved by a vast majority of the general body. Mr Pachundkar urges the same point of law that has been raised and negatived repeatedly by this court. He claims that since his clients, Respondents Nos. 1 and 2, have not signed the development agreement, they are not bound by the arbitration clause and no relief in Section 9 can be made against them. The question is no longer res integra. It has not been res integra for many years. Every dissenting member of society after society constantly repeating the same jaded mantra again and again, totally unmindful of the law, is a practice that must now be deprecated in the strongest possible terms. This is now the very last time I will refrain from imposing severe costs. These are claims in the Commercial Division of this court and we are under the Commercial Courts Act, 2015. That Act amended the provision for costs in Section 35 of the Code Page 4 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC of Civil Procedure, 1908. One of the factors to be borne in mind while awarding costs -- which can be actual costs and even exemplary costs -- is the frivolity of the defence and whether the party against whom costs are to be made has wasted the Court's time. Every such untenable and unsustainable objection by a dissenting member is a colossal waste of judicial time. The next such matter will receive, first, an order of immediate eviction of the dissenting member (i.e., vacating that very day, or at best the next), and, second, an appropriately severe order of costs. That order will be made keeping in mind the costs incurred by the Society, the loss to other society members, and the actual loss suffered by the developer on account of the delay occasioned by such members. Consequently, the order of costs is unlikely to be moderate or modest. This is, in my view, only fitting, for there is nothing moderate or modest about the opposition by these dissenting members. They behave as if they are not bound by orders of this Court or by the law. They are.
2. An identical question came before me only a few days ago in Chirag Infra Projects Pvt Ltd v Vijay Jwala Coop Hsg Soc Ltd & Anr.1 The entire case law on the subject has been considered there: in particular the decisions of a Division Bench of this Court in Girish Mulchand Mehta & Ors v Mahesh S Mehta & Ors.;2 the decision of a learned Single Judge of this Court (the Hon'ble Mr Justice KK Tated) in Aditya Developers v Nirmal Anand Coop Hsg Soc Ltd & 1 Arbitration Petition (L) No. 108 of 2021, decided on 12th March 2021. 2 2019 SCC OnLine Bom 1986.
Page 5 of 2819th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC Ors.;3 and the decision in Sarthak Developers v Bank of India Amrut- Tara Staff CHSL.4
3. I refuse to waste time by re-visiting the same law again and again. I will simply quote the relevant portions of my decision in Chirag Infra Projects Pvt Ltd to set the stage for a brief factual discussion.
17. It is entirely true and correct that the 2nd Respondent has not himself signed this agreement.
18. This is the point of law raised in opposition. The submission is that the development agreement and its arbitration clause cannot possibly bind a non-signatory, namely, Kondvilkar. Reliance is placed on the decision of the Supreme Court in Indowind Energy Ltd v Wescare (I) Ltd & Anr.,[2010 5 SCC 306] but this decision lends no support to the argument in question because this was not a case where one of the parties sought to be bound by the agreement was a member or affiliate of a signatory. The petitioner before the Supreme Court sought an order under Section 11 against two parties. One of them resisted the petition saying that the agreement did not contemplate any contractual relationship between the petitioner and itself and there was no arbitrable dispute. It was in that context that Wescare was decided. Then reliance is placed on the decision of the Supreme Court in Reckitt Benckiser (India) Pvt Ltd v Reynders Label Printing India Pvt Ltd & Anr [2019 (4) ALL MR 955 (SC)]. This again is not apposite. This was a question whether the agreement was an international or a domestic arbitration and whether one of the 3 2016 SCC OnLine Bom 100: 2016 (3) Mah LJ 761. 4 Appeal (L) No 310 of 2012.
Page 6 of 2819th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC respondents was the parent company or not. Interestingly, Reckitt Benckiser made reference to the decision of the Supreme Court in Chloro Controls (I) P Ltd v Severn Trent Water Purification Inc & Ors [(2013) 1 SCC 641]. where the Supreme Court itself said, although in a case that that may not be directly appropriate here, that it is not in every situation that a party needs to be a signatory to be bound by an arbitration agreement.
19. Then there is a reference to a decision of the learned Single Judge of this Court in Housing Development and Infrastructure Limited v Mumbai International Airport Pvt Ltd & Ors [Arbitration Petition (L) No. 902 of 2013, decided on 23rd August 2013]. This is cited for its reliance on Wescare, noted above. But these decisions will not carry the 2nd Respondent the necessary distance.
20. As against this, there is a settled body of law that speaks to the contrary.
21. On the first proposition that I have noted above, there is the decision of a learned Single Judge of this Court (the Hon'ble Mr Justice KK Tated) in Aditya Developers v Nirmal Anand Co-op. Hsg Soc Ltd & Ors [2016 SCC OnLine Bom 100 : 2016 (3) Mah LJ 761]. I cite this because this decision was also under the Arbitration and Conciliation Act 1996. It was also a Section 9 Petition. It was also a case where a party obstructed on the ground that he was not a signatory and the agreement was bad. In paragraph 15, Tated J noted the submission that there was no privity of contract and, therefore, the petition was not maintainable. In paragraph 19, Tated J observed:
"19. The objection raised by the respondents are not sustainable at this stage because admittedly, there is an agreement between the petitioner and respondent no.1 Page 7 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC Society who is the owner of the suit property for re-development activities. The society by its General Body Meeting decided to carry out re-development of the suit property and for that purpose, they appointed the petitioner by re-development agreement dated 25.9.2013. The said agreement was duly registered with the Sub-Registrar of Assurance, Bombay. It is to be noted that the objection raised by the respondent members about the maintainability of the present petition, their rights and other objections are not maintainable in law. Bare reading of the re- development agreement shows that the Society who is the owner of the Suit Property decided to hand over vacant and peaceful possession to the petitioner for carrying out development. Not only that the petitioner was also ready and willing to comply the terms and conditions of the said agreement i.e. payment of charges/compensation to the respondent/occupants of the suit flats. It is to be noted that Municipal Corporation has also issued IOD in favour of the petitioner on 24.9.2014. Though the petitioner called upon the respondent nos.3 to 7 they failed and neglected to do so."
Then in paragraphs 21 and 22, the Court said:
"21. It is to be noted that once the person becomes a member of the Co-operative Society he loses his individuality with the Society and has no independent rights except which is given to him by the statute and bye-laws. Hence, objection raised by Page 8 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC the respondent nos.3, 4, 6 and 7 that there is no privity of contact between them and petitioner, is not maintainable.
22. Considering the above mentioned facts and the law declared by our High court and also out of 18 members, 13 members already handed over vacant and peaceful possession of the flats to the petitioner to carry out re-development, I am of the opinion that the petitioner has made out a case for allowing this Arbitration Petition. Hence, following order is passed:
(A) Petition is allowed in terms of prayer clause (a) and (b) which reads thus:
"(a) that pending the commencement and culmination of the arbitral proceedings between the Petitioner and Respondent No.1, this Hon'ble Court be pleased to appoint the Court Receiver, High Court, Bombay or any other fit and proper person as receiver of the Property described in Exhibit 'A' hereto with all powers under Order XL Rule 1 of the Code of Civil Procedure including power to take physical possession of the Subject Premises described in the Exhibit 'B' hereto from Page 9 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005-
2021.DOC Respondents No.2 to 7, their family members and / or any person found in possession thereof, with the help of police assistance, if necessary, and to hand over the same to the Petitioner for demolition and re-
development of the Property in accordance with the said Agreement being Exhibits 'C' hereto.
(b) that pending the commencement and culmination of the arbitral proceedings between the Petitioner and Respondent No.1, this Hon'ble Court be pleased to grant an order and injunction restraining the Respondents No.2 to 7, their family members, servants, agents and any person claiming by, through and/or under them or any one or more of them from in any manner selling, transferring, alienating, dealing with, disposing off and/or creating third party rights and/or encumbrances in respect of the subject premises described in Exhibit 'B' hereto or any part thereof and/or parting with possession thereof and/or obstructing, interfering with and/or creating hurdles in Page 10 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC re-development of the Property described in Exhibit 'A' hereto by the Petitioner under said Agreement (being Exhibit 'C' hereto), in any manner whatsoever."
(B) Petitioner is directed to deposit cost and/or compensation payable to non-cooperating members/respondents in the office of Court Receiver as per Re-development Agreement dated 25.9.2013 before taking possession.
(C) Non-cooperating members/ respondents are entitled to withdraw said amount after possession is taken by Receiver and handed over to the Petitioner.
(D) No order as to costs.
(E) At this stage, the learned counsel for the respondent nos.3, 6 and 7 seek stay of the order.
(F) Considering the facts and circumstances of the case, Court Receiver is directed not to take physical possession of the suit premises for three weeks from today.
(G) Court Receiver to act on copy of this order duly authenticated by the Sheristedar of this court."
(Emphasis added)
22. There is no attempt made, and in my view rightly so, to distinguish this decision from the case before me. This is undoubtedly binding on me. I have no reason to depart from the view taken. I am in most respectful agreement with it.
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23. But if there was the slightest controversy about this then surely it must be said to have been put to rest in a manner such that the contention raised by Ms Parmar can no longer even said to be res integra by the celebrated Division Bench decision of this Court in Girish Mulchand Mehta & Ors v Mahesh S Mehta & Ors [2019 SCC OnLine Bom 1986].
24. This again was a question of a development agreement between a developer and the society and of some members saying that they were not bound by it, not having signed, and opposing the development. The Division Bench considered a large body of law and the argument that the dispute between the developer and the individual descending member was not arbitrable. In paragraph 18, the Division Bench said that it had no hesitation in taking the view that since the dissenting persons were members of the society and held flats in the society they were bound by the decision of the general body of the society as long as the decision is in force. This puts the matter exactly in perspective; and this is why I noted at the forefront the importance or significance of the 2nd Respondent never having even attempted to challenge the general body decision. In Girish Mulchand Mehta the dissenting members had not challenged the decisions of the general body and the Division Bench said that the general body 'is supreme' in so far as redevelopment of the property in question or of appointing of the developer is concerned. The overwhelming majority approved the appointment of the developer. These found voice and incorporation in the development agreement, and then the Division Bench said that the decision and acts of the society would bind the dissenting members unless the resolutions were quashed and set aside by a forum of competent jurisdiction. The Division Bench said:
Page 12 of 2819th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC In other words, in view of the binding effect of the resolutions on the appellants it would not necessarily follow that the appellants were claiming under the society, assuming that the appellants have subsisting proprietary rights in relation to the flats in their possession."
Later in the same judgment the Supreme Court observed on the facts in that case that the developer was under a time-limit to complete construction; and in that case 10 out of 12 members had already vacated. Our position is worse because here 19 out of 20 have vacated, plus the building is in a dilapidated condition.
25. At some point in the hearing, I indicated to Ms Parmar that should he persist, Kondvilkar would be put to terms and asked to deposit costs. She indicated that of course that he could not do so. I understand that. But the reason for putting the question is that even in Girish Mulchand Mehta the same question arose. The Division Bench in appeal noted that the learned Single Judge had ascertained that the appellants were in no position to secure the amount invested and incurred including future expenses and costs if the project was to be stalled.
25. Finally, there are the observations in paragraph 20 which deprecates the approach of the dissenting members in stalling the development for years together at the costs of the society.
26. On the general principle invoked by Ms Parmar, the Girish Mulchand Mehta Court held that it does not limit the jurisdiction of the Court to pass orders of interim measures against non-signatories. It, too, was confronted with precisely this issue. Indeed, in that case it held that the Court would certainly have jurisdiction by way of interim measures even against the dissenting members:
Page 13 of 2819th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC 'irrespective of the fact that they are not party to the arbitration agreement or the arbitration proceedings.'
27. This is the clearest possible pronouncement of this branch of law but it is by no means the only one.
28. Now Wescare has been cited against this principle and has been distinguished by the learned Single Judge of this Court in Calvin Properties and Housing v Green Fields CHSL [2013 SCC OnLine Bom 1455 : (2014) 2 Bom CR 398, (RD Dhanuka J). This decision, therefore, distinguished Wescare, but, importantly, the matter before Dhanuka J also related to the redevelopment of a property and some dissenting members. Calvin Properties also relied on the decision of the Division Bench in Girish Mulchand Mehta. That part of the law has, therefore, not been disturbed.
29. It was reaffirmed by the Division Bench of this Court in its 5th December 2012 decision in Sarthak Developers v Bank of India Amrut-Tara Staff CHSL [Appeal (L) No 310 of 2012]. The observations and findings in Sarthak Developers, after reaffirming the Girish Mulchand Mehta ratio, are singularly appropriate to the present case.
14. A member of a co-operative society cannot assert a right in respect of a flat occupied by him independent of the rights of the cooperative society. Each of the dissenting members continues to be a member of the Co-operative Society and continues to be bound by the agreement that was entered into by the Society with the developer. Under Section 9 of the Arbitration and Conciliation Act, 1996, a party to an arbitration agreement is entitled Page 14 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC to apply to a Court for an interim measure of protection including for appointment of a receiver. The property in respect of which a Receiver is sought to be appointed may well be in possession of a third party. The crucial test for the application of Section 9 is whether the party moving the application under Section 9 is a party to the arbitration agreement and whether the appointment of a receiver is sought in respect of property which forms the subject matter of the arbitration agreement. In the present case, the dissenting Respondents are subsumed within the identity of a cooperative society of which they are members. Each one of them is bound by the agreement which was entered into by the co-operative society of which they are members, with the Appellant. The First Respondent Society has supported the redevelopment through the Appellant. In these circumstances, a Petition under Section 9 would be maintainable.
15. The material which has been placed on record indicates that out of 160 members of the co-operative society, 149 have in fact consented to the redevelopment by the Appellant. Respondent Nos. 2 to 19 were initially the eighteen dissenting members. At present, in view of the settlement which has been effected with a further seven of the dissenting members, only 11 out of 160 members are opposing the process of redevelopment. Neither before the learned Single Judge who has entered a finding of fact nor for that matter before this Court is it in Page 15 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC dispute that (i) the premises of the Co-
operative Society are dilapidated and are in dire need of repair; (ii) the existing buildings do not possess an occupation certificate since their construction in 1985-86; and (iii) regular municipal water supply is unavailable. On these facts, it was, in our view, erroneous for the learned Single Judge to proceed on the basis that the application for appointment of a receiver is liable to be rejected merely on the ground that 142 members of the Society who have supported redevelopment had not vacated their premises on the date of the order. A dissenting member of a Cooperative Society cannot be heard to say that he or she will continue to obstruct redevelopment and would not be liable to vacate his premises until the last of the consenting members vacates. Obviously, as the facts of the present case would indicate, the consenting members were ready and willing to vacate their premises, having entered into agreements with the Society and the developer, but it was as a result of the intransigence of a few dissenting members that the redevelopment was obstructed. As a matter of fact, as of date, most of the members who have consented to the redevelopment have vacated their premises. 149 out of 160 members have vacated. They have left their homes in the expectation of an early redevelopment. The Appellant has disclosed that it has incurred expenses of Rs.6.36 crores so far. Conveyance has been obtained of the land in favour of the Co-
Page 16 of 2819th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC operative Society on 13th April 2008 and the deed of conveyance has been registered on 7th August 2009. Though the amount of Rs.3 crores was paid to the erstwhile developer between 10th October and 31st December 2006, there is no dispute about the factual position that the society has on 13th April 2008 obtained conveyance which was since registered. The Appellant has paid an amount of Rs.1.14 crores between April and November 2012 towards rentals due and payable to the members who have vacated their flats. In this state of the matter, it is neither in the interests and welfare of the large majority of members constituting the co-operative society or of the Appellant, who is a party to the Development Agreement to allow a state of impasse to continue. The submission that the development agreement that was entered into with the Co-operative Society on 25th May 2008 proceeds on the basis of a misrepresentation that the Appellant had paid an amount of Rs.3 crores to the erstwhile developer for obtaining conveyance cannot be, prima facie, accepted. The fact that the Appellant paid an amount of Rs.3 crores to the erstwhile developer has not been disputed during the course of hearing. The only suggestion is that since this payment was made between October and December 2006 prior to the execution of the conveyance on 13th April 2008, this payment could not have been a consideration for the execution of the conveyance, but for the surrender of Page 17 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC development rights. The dissenting members of the Society cannot be heard to challenge the title which the Society has obtained by execution of a deed of conveyance which has since been registered. The title enures to the benefit of the Co-operative Society of which the dissenting members are a part.
16. The material before the Court is sufficient to indicate that the Appellant has a strong prima facie case for the appointment of a receiver, having invested valuable consideration towards and in execution of the agreement. But most significantly, the appointment of a Receiver is warranted having due regard to the fact that unless such an order were to be passed, 149 members of the society, who are supporting the redevelopment and of whom 143 have vacated their flats, would be left in the lurch at the behest of a miniscule minority.
17. The appointment of a receiver is undoubtedly a drastic order, but the Court is empowered to do so on well-established principles of it being just and convenient. There are several reasons which must weigh in favour of the appointment of a receiver. Firstly, the condition of the property in question is a matter of importance in the City of Mumbai which is affected by a high degree of saline corrosion. The buildings are admittedly dilapidated and in urgent need of repair or redevelopment. The Society was not in a Page 18 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC position to carry out repairs having regard to the fact that in August 2007 the cost of repair was estimated at Rs.1.65 crore by its structural consultant. Hence, the option of redevelopment which has been accepted in the resolution passed by the Society would have to be respected. Secondly, in the present case, an overwhelmingly large proportion of the members of the Society have consented to the scheme of redevelopment and have in fact vacated their premises. The interests of those 149 members who are supporting redevelopment and of whom 143 have vacated are of paramount concern.
Thirdly, unless a receiver was to be appointed, it will be open to a dissenting minority of a few members to obstruct and defeat the will of the large majority.
Fourthly, each of the dissenting members is also, like all the members of the Society, entitled to permanent alternate accommodation free of cost in the redeveloped building. An enhancement of the existing areas in occupation is envisaged in the redeveloped building. In the meantime, each of the members shall be entitled to compensation for transit accommodation as agreed with the Co-
operative Society and as paid to all other members. This is not a case where a scheme of redevelopment is oppressive to the legitimate interests of a minority nor has any such submission been urged.
(Emphasis added) Page 19 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC
30. Sarthak Developers, to my mind, provides a complete answer in this case. All the decisions cited by Mr Singh are binding and are apposite. I find no means to distinguish them from the case at hand. They are not the only ones.
31. There is also a decision of the Hon'ble Mr Justice GS Kulkarni in Kamla Homes and Lifestyles Pvt Ltd v Pushp Kamal Coop Hsg Soc Ltd & Ors.[ 2019 SCC OnLine Bom 823 : (2019) 5 Bom CR 731]. There again, some minority members sought to act against stated will of the majority. Kulkarni J also drew upon the Division Bench judgment in Girish Mulchand Mehta and said this was impermissible.
32. I have absolutely no cause to depart from this view. Indeed I will go a step further. I am not even permitted by law to depart from these views. If it is suggested that Girish Mulchand Mehta was a case of tenants, then that argument fails once we see that it has been used again and again in cases involving members of a cooperative society -- including Sarthak Developers -- just as the 2nd Respondent is today. To accept Ms Parmar's argument would be to act in a manner wholly outside what is permissible in law and wholly contrary to nearly a dozen binding judgments on this law. The invitation by the 2nd Respondent to take this perilous hazardous and adventurous route is one that I must respectfully decline.
(Emphasis in the original)
4. This tells us that the very arguments that Mr Pachundkar tries to raise today are no longer available to him. These two dissenting members have, as the Hon'ble Mr Justice KK Tated put it, and as the Division Bench also said, no separate identity from that of the society. Their identity is subsumed and merged into that of the society. They do not have the right to oppose the decision of Page 20 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC the society taken in a properly convened meeting. They cannot hold the society to ransom. They cannot prejudice the rights of their fellow members and neighbours in the society. They cannot insist on getting their own way. They cannot be heard to say that they and they alone will determine the future of the society, its property and its redevelopment project. As I said in Chirag Infra Projects, these dissenting members will bend their knee to the law and to the decision of the general body. However unpalatable it may be for them, this is the only method the law recognizes of safeguarding the rights of the society as a legal entity recognized by the Cooperative Societies Act 1960.
5. As in Chirag Infra these two members, Respondents Nos. 1 and 2, have never challenged the decision of the general body nor the development agreement. Certainly, they do not have any protective order of any Court of competent jurisdiction. Mr Pachundkar says that the development agreement was challenged only last month before the Cooperative Court or authority under the Maharashtra Cooperative Societies Act, 1960. Apparently, even that is incorrect. There is no challenge to the development agreement but only to a Section 79-A circular of the Government of Maharashtra. The entire question of law on that circular was decided in Maya Developers v Neelam R. Thakkar & Ors.5 Even if it be so, this is too little too late. It is not open to a dissenting member to 5 2016 SCC OnLine Bom 6947 : (2016) 6 Bom CR 629; Settled by filing Consent Terms in appeal, without the order being set aside. See also: Supreme Mega Construction LLP v Symphony CHSL, Notice of Motion (L) No. 2056 of 2014, decided on 12th March 2015, per SC Gupte J; and Bharat Infrastructure & Engineering Pvt Ltd v Park Darshan CHSL, Arbitration Petition No. 199 of 2013, decided on 18th March 2013, per RD Dhanuka, J.
Page 21 of 2819th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC come years and years after the development agreement, having failed everywhere else, to now say that the agreement is bad.
6. Mr Pachundkar relies on the decision of a learned single Judge of this Court in Acknur Constructions Pvt Ltd v Sweety Rajendra Agarwal & Ors.6 This was an order in a Notice of Motion in a civil suit on the Original Side of this Court. The developer plaintiff in that case claimed interests in the land. The same contention regarding minority dissenting members was raised, but, on facts, found favour with the court. The Acknur Constructions decision cites no law at all. In any case, it is a decision of 5th December 2009. The Girish Mulchand Mehta Division Bench decision came five days later, on 10th December 2009. Clearly, therefore, on the question that minority dissenting members can hold up re-development despite a society's general body resolution and despite an agreement signed by the society, Acknur Constructions is no longer good law. It stands impliedly over-ruled by the decision in Girish Mulchand Mehta.
7. As to the remaining facts, this summary will suffice. The Society's property is a plot of about 720.78 sq mts at CTS Nos 988, 988/1 and 988/2 at village Kandivali, taluka Borivali. On this, there is a structure with, in all, 14 residential tenements. The Society was formed sometime in 1981. On 1st October 2009, the Municipal Corporation of Greater Mumbai declared the Society's structure to be in a ruinous condition, unfit and unsafe for human habitation. The Society issued an advertisement on 24th January 2018 inviting tenders. The Petitioner-developer collected the tender documents 6 2009 SCC OnLine Bom 1951 : (2010) 1 Bom CR 15.
Page 22 of 2819th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC from the Society's consultant. It submitted its final offer on 26th April 2018. Negotiations followed. The Society held a special general meeting on 27th May 2018, following a circular notice dated 11th May 2018. That notice was also sent to the Registrar of Cooperative Societies as required by Section 79A of the Cooperative Societies Act and the Maharashtra Government circular of 3rd January 2009. The meeting was conducted under the supervision of a representative deputed by the Deputy Registrar of Cooperative Societies. The conduct of this meeting was recorded by the Deputy Registrar in a letter of 2nd June 2018 communicated to the Petitioner by the society on 10th June 2018. On 10th June 2018, the Society told the Petitioner that its offer had been accepted and asked that the Petitioner to accept its appointment as a developer. On 11th June 2018, the Petitioner accepted the Society's offer. Draft agreements were exchanged thereafter. On 22nd October 2018, the Society held another special general body meeting to approve the development plan proposed by the Petitioner. On 5th November 2018, the Petitioner sent individual notices to all members to remain present at the office of Sub-Registrar of Assurances to execute the approved Development Agreement. On 21st December 2018, the Petitioner sent separate letters to Respondents Nos. 1 and 2 to come to the office of the Sub-Registrar of Assurances on 27th December 2018. Finally, on 27th December 2018, 12 of the 14 members of the Society signed the Development Agreement. Only the 1st and 2nd Respondents stayed away. The Intimation of Disapproval for construction was first received on 20th November 2019. By December 2019, the Petitioner obtained TDR. By February 2020 (when this Petition was filed), all members except these two Respondents have agreed to vacate their respective tenements and Page 23 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC are willing to do so even now. It has been extended thereafter. Till date, the Petitioner has incurred expenses of about Rs. 1,47,22,240/.
8. Now coming to the development agreement in question, this is dated 27th December 2018. A copy is at page 99 of the Petition. That it contains an arbitration clause 20 is not in dispute. Every member of the Society is named in this agreement. The names of Respondent No. 1 appears at serial No. 11, and that of Respondent No. 2 appears at serial No. 7 at page 100 (internal page 2 of the Agreement). Their names -- and only their names -- have been scored out. All 12 of the other members signed the Agreement. On the last page of the Agreement too, the names of the two Respondents are crossed out. This is why Mr Pachundkar is instructed to submit that the development agreement and its arbitration clause is not binding on Respondents Nos. 1 and 2. As we have seen, that is not the law. In fact, the law is exactly to the converse and is wholly freighted against these two Respondents.
9. But more importantly, there is inherent evidence in the Agreement itself that the benefits of the Agreement inure to all 14 members of the Society, including Respondents Nos. 1 and 2. This can be seen inter alia from clause 7.7, which speaks of a mutual agreement between 'the 14 members of the society and the developer'. Clause 8.1 assures all members of new flats in the new building, and clause 9.1 speaks of amenities being given to all 14 members of the Society.
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10. The law is that these two Respondents must vacate. That is the Development Agreement signed by the Society, and it binds Respondents Nos. 1 and 2. The Development Agreement is itself backed by an undisturbed general body resolution of the Society. The Agreement itself provides them equal treatment in all respects, and the Developer stands by that commitment. The two Respondents are unwilling to vacate. They have no choice in the matter. They will do what the law requires them to do. The conduct of these two Respondents is undeserving of the slightest indulgence.
11. I do want to emphasize one other point here. If these dissenting members believe they can continue to obstruct the Society without liability, they are wrong. It is abundantly clear to me that if there is a delay in the project, not only the Developer but the Society and other members can always, in an appropriate proceeding, hold these dissenting members liable both to make restitution and in damages. The Petitioner may seek such monetary relief against the Society, and the Society, in turn, will be entitled in law to recover the entire amount awarded against it from Respondents Nos. 1 and 2. That is the trajectory of the law. On merits, all contentions in this regard are left open.
12. Accordingly, and for these reasons, there will be an order on this Petition in terms of prayer clause (a).
13. Respondent No. 1 and Respondent No. 2 will vacate their respective tenements by 30th April 2021. They will deliver vacant possession to the Chairman and Honorary Secretary of the 3rd Page 25 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC Respondent Society, which, in turn, will deliver possession to the Petitioner.
14. The Court Receiver is appointed of Flats Nos. 11 and 7 in the Kandivali Basant Bahar Coop Hsg Soc Ltd situated at CTS No. 988, CTS No. 988/1 and CTS No. 988/2, Village Kandivali, Taluka Borivali. At this stage, the Court Receiver will take only symbolic possession of the two flats.
15. If Respondents Nos. 1 and 2, or either of them, fail to vacate by 5:00 pm on 30th April 2021, the Court Receiver will proceed to forcibly evict and eject Respondents 1 and 2 (or such of them as have not vacated) from their respective premises. The Court Receiver will deliver possession of the vacated premises to the Society, represented by the Chairman and Honorary Secretary, and the Society will, in turn, deliver vacant possession of those two tenements to the Petitioner-developer. The Court Receiver will be at liberty to take the assistance of the Kandivali Police Station at all times. Those police authorities will act on production of an authenticated copy of this order or a digitally signed copy of this order and will not insist on a certified copy.
16. The 1st and 2nd Respondents will be entitled to all benefits under the Development Agreement on parity with all other members of the Society. As to transit rent or compensation, the 1st and 2nd Respondents will be entitled to receive it on the same terms as other members, but only from the date they deliver vacant possession and from no earlier date. The Petitioner-developer will Page 26 of 28 19th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC deposit all other monetary entitlements (corpus, relocation compensation or shifting charges, etc.) to which the 1st and 2nd Respondents are entitled with the Court Receiver. The 1st and 2nd Respondents will be entitled to withdraw those amounts but only after the Petitioner obtains vacant possession of the respective tenements of Respondents Nos. 1 and 2.
17. Having regard to the financial condition of Respondents Nos. 1 and 2, I have today not made an order of costs. But, as I noted at the start of this judgment, this is the last time I will refrain from doing so.
18. Mr Pachundkar's Interim Applications No 3005 of 2021 and 3007 of 2021 filed on behalf of these two Respondents for perjury have no substance whatsoever. In these applications, the 1st and 2nd Respondents maintain that other Society members have not vacated. Not only is that no ground to deny relief, but it is contrary to the record, and the stand by both the Society and the Developer is that all other members have executed Permanent Alternate Accommodation Agreements and have undertaken to vacate. In the Affidavit in Rejoinder, the Petitioner says that only the 1st and 2nd Respondents have refused to vacate. The 1st and 2nd Respondents say this is perjury because other members are still in possession. The entire submission is on an incorrect premise. Indeed, even before me today, Mr Pachundkar is compelled to state that the 1st and 2nd Respondents refuse to vacate. The Society, on the other hand, says that if not already done, all 12 other members are willing to vacate. No other member has said to the contrary. Then the 1st and 2nd Respondents raise a dispute about the title to Flat No. 11.
Page 27 of 2819th March 2021 21-CARBPL221-2020 WITH IAL3007-2021 AND CARAPL1914-2021 AND IAL3005- 2021.DOC That is not the province of this Court. Any disputes pertaining to the affairs of the Society must be taken in a court of competent (and exclusive) jurisdiction. The 1st and 2nd Respondents are not entitled to continually parrot their grievances against the Society here. They have not obtained a single order against the Society. The two interim applications by the 1st and 2nd Respondents are entirely without merit and are dismissed.
19. There is a pending Section 11 application. It will be taken up in due course. Liberty to the present Petitioner to have it listed.
20. This order will be digitally signed by the Private Secretary of this Court. All concerned will act on production of a digitally signed copy of this order.
(G. S. PATEL, J) Page 28 of 28 19th March 2021