Bombay High Court
Nellichery Shivaram Seshadri And 23 Ors vs Shree Ram Builders And 8 Ors on 13 March, 2020
Author: G.S. Patel
Bench: G.S. Patel
909-NMS94-20.DOC
Shephali
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
NOTICE OF MOTION NO. 94 OF 2020
IN
SUIT NO. 203 OF 2020
Nellichery Shivram Seshadri & Ors ...Plaintifs
Versus
Shree Ram Builders & Ors ...Defendants
Mr Dinyar Madon, Senior Advocate, with Sharon Fernandez &
Hiral Joshi, i/b M/s Solicis Lex, for the Plaintiff
Mr Girish Godbole, with Parag Tilak, i/b Aditya Shirke, for
Defendant Nof1f
CORAM: G.S. PATEL, J
DATED: 13th March 2020
PC:-
1.Mr Madon for the Plaintifs seeks leave to amend to substitute the name of Plaintif No. 24. That amendment is necessary. Plaintif No. 24 is an Advocate. She is not a tenant of the premises. Her name has been wrongly added as a Plaintif. Leave granted. There is a consequential amendment required to paragraph 17 of the Plaint. That amendment is also permitted. Amendment to be carried out by 20th March 2020. Reverifcation dispensed with.
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2. I will proceed on the basis that the amendment is carried out both to the title of the Suit and the Notice of Motion.
3. Notice of Motion No. 94 of 2020 seeks the following reliefs:
"(a) That pending the hearing and fnal disposal of the suit Defendant No.1 be ordered and directed to pay to the Plaintif a sum of Rs.81,15,120/- (Rupees Eighty one lakhs fiteen thousand one hundred and twenty only) ior a period oi 12 months, thereiore the total claim i.e. Rs.
2,43,45,360/- (Two crores iorty three lakhs iorty fve thousand three hundred and sixty) (excluding the 10% increase levied yearly on expiry oi every licensee period ior 12 months) ior the term oi 3 years or till the handing over of the fats to the tenants as per the Development agreement;
(b) That pending the hearing and fnal disposal of the suit the Hon'ble Court be pleased to order and direct the Defendant No.1 to execute Individual Registered Permanent Alternate Accommodation Agreement (PAAA) with all the Plaintifs' within 7 days of the institution of the present suit and as per the clauses mentioned in the Development Agreement and provisions of DCPR 2034;
(c) That pending the hearing and fnal disposal of the suit this Hon'ble Court be pleased to order and direct the Defendant No.1 to submit/upload all the requisite documents through Defendant No. 9 as per the provisions of DCPR 2034 for proposal of redevelopment of the said suit property.
(d) That pending the hearing and fnal disposal of the suit the Hon'ble Court be please to restrain Defendant No.1 along with the partners by a temporary order and injunction from creating encumbrances or in any manner dealing with, Page 2 of 11 13th March 2020 ::: Uploaded on - 16/03/2020 ::: Downloaded on - 09/06/2020 02:34:00 ::: 909-NMS94-20.DOC disposing of, transferring or creating any third party right or interest in respect of the suit property so as to prejudice the rights of the Plaintifs so allotted as per the Development Agreement;
(e) That pending the hearing and fnal disposal of the suit the Hon'ble Court be pleased to direct Defendant No. 1 to produce a Bar Chart placing on record the exact construction and time line within which the project to be completed which shall not be more than 3 (three) years from the date of the institution of the suit;
(f ) That pending the hearing and fnal disposal of the suit this Hon'ble Court be pleased to appoint a Court Receiver having all powers under O. 40 of the Code of Civil Procedure, 1908 to take possession of the suit property and hand over the said property to the Plaintifs under the orders and directions of this Hon'ble Court and to do any other acts to secure the rights of the Plaintif;
(g) Pending the hearing and fnal disposal of the present suit, the Defendant and/or its Directors, partners, agents be directed to extend the validity of the Bank Guarantee of Rs. 5,00,00,000/- (Rupees Five Crores) valid till satisfactory possession/handover of the permanent accommodation with OC & BCC;
(h) Pending the hearing and fnal disposal of the present suit, this Hon'ble Court be further pleased to pass an order of temporary injunction restraining the Defendant, their servants, agents or any person claiming by through or under them from in any manner selling, transferring, alienating, creating any security upon, encumbering creating third party right, title or interest in or in any manner dealing with the properties so disclosed on afdavit by the Defendant;
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(i) Pending the hearing and fnal disposal of the present suit, this Hon'ble Court be pleased to direct the Economic Ofences Wing, Mumbai and/or any such law enforcement agency and/or the Local Police Station as this Hon'ble court may deem ft to enquire and investigate into the afairs of Partners in control at the relevant time and submit a report to this Hon'ble Court in that regard."
4. Plaintifs Nos. 1 to 23 and the newly substituted Plaintif No. 24 are all monthly tenants of the 1st Defendant, Shree Ram Builders, a partnership frm in the business of real estate development. There is undoubtedly now a relationship of landlord and tenant between the Plaintifs and the 1st Defendant. How this afects the reliefs sought is the question that falls for consideration.
5. There is a brief Afdavit in Reply fled by the 1st Defendant. Mr Madon has a copy.
6. The entire basis of this plaint and its cause of action is founded on a Development Agreement dated 20th November 2008. This was made between one Jaswanti Jitendra Parikh, the 2nd Defendant (Asit Jitendra Parikh), one Neela Indravadan Parikh and Defendant No. 3 (Anant Indravadan Parikh). They were the owners of the property in question at Jaiprakash Nagar, Goregaon (East). This is CTS No. 379, 379/1 to 13 admeasuring 1742.30 square metres. On this plot, there stood three buildings with 49 tenants. Under the agreement in question of 20th November 2008, the 1st Defendant, through its partners Ramesh Mehta and Deepak Mehta, agreed to redevelop these three buildings. By this time, and on Page 4 of 11 13th March 2020 ::: Uploaded on - 16/03/2020 ::: Downloaded on - 09/06/2020 02:34:00 ::: 909-NMS94-20.DOC account of their age, the buildings were already in a severely dilapidated condition.
7. For the purposes of the present Plaintifs, all tenants, the important clause in this agreement is Clause 3 at page 140:
"3. It is expressly agreed by and between the parties hereto to rehabilitate all 49 existing Tenants in the present buildings on the said property by providing them alternate temporary accommodation during the time of construction and thereafter providing them alternate permanent accommodation on ownership basis in the newly constructed building/s on the said property after negotiating and entering into separate agreements with tenants and obtaining their consent. It is agreed by and between the parties hereto that funds for entire expenses for shifting the existing 49 Tenants, cost of providing them alternate temporary accommodation and cost of fnally providing tenants permanent accommodation in newly constructed building/s including other incidental expenses thereto is to be provided, invested, made available without any interest thereon by the Party of the Second Part herein and all said expenses incurred and spent for rehabilitation of tenants should be debited to Joint Venture account and be construed as capital investment of the party of the Second Part herein and said expenses be borne by the parties hereto in their proft sharing ratio."
8. Mr Madon's submission is that the tenants are not seeking possession, and therefore, there is no ouster of jurisdiction of this Court under the provisions of the Presidency Towns Small Causes Court Act read with the Maharashtra Rent Control Act. The tenants are seeking 'enforcement' of this Development Agreement. It Page 5 of 11 13th March 2020 ::: Uploaded on - 16/03/2020 ::: Downloaded on - 09/06/2020 02:34:00 ::: 909-NMS94-20.DOC matters not, he submits, that not one of the tenants is a party to this Agreement. Plainly read, he says, the Agreement was for the beneft of the tenants, and the provision of permanent alternative accommodation on an ownership basis was part of the consideration between the Parikhs as owners and Shree Ram Builders as developers, for without this requirement, the actual money consideration would have been much higher.
9. This submission by Mr Madon does not, prima facie, commend itself. To begin with, I am unable to see how the tenants can seek specifc performance or can claim that the agreement was 'for their beneft'. It is, in fact, more likely that they represented an attendant and unavoidable liability, given the rent-control regime and the statutory limitations on recovery of possession. There is nothing to show that the tenants were paying market rent or were contributing to re-development and that this agreement was in substitution or an alternative to a landlord-tenants joint re- development venture. There is therefore no doubt that the tenants had to be re-accommodated so that the developer could unlock the available FSI under one or the other of available redevelopment schemes (for instance, DCR 33(7) or a similar provision) to put up free sale buildings and perhaps utilise TDR. It simply makes no commercial sense to see an agreement between the owners and the developer as being "for the beneft of" sitting tenants. Second, the submission that this was part of the consideration is complete speculation. Third, there is no legally enforceable available to any tenant under the Rent Act to get a permanent alternate accommodation on ownership.
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10. In any case, all this is perhaps academic. It cannot be disputed that by shortly thereafter by a Conveyance dated 31st December 2009 the 1st Defendant acquired the earlier owners' right, title and interest in the entire property. Thus, the 1st Defendant was no longer a developer. It was now the full-fedged owner and it took this ownership title subject to existing tenancies. Indeed, the 1st Defendant as the new owner not only had tenancies attorned to it but also made demands for payments of arrears of rent.
11. The real cause for this Suit is that the buildings themselves have since sufered a notice under Section 354 of the Mumbai Municipal Corporation Act 1888. They were classifed in the C-I category and they either collapsed or were pulled down on MCGM directives. Challenges to that notice have either failed or have not been adopted. The consequence is that the tenants are not in the premises and are elsewhere. The claim therefore is, first, that the 1st Defendant must pay transit accommodation to these tenants and, second, this is a necessary consequence of the fnal relief based on an alleged 'entitlement' in law of the tenants to be re-accommodated in the reconstructed building as owners of individual fats or tenements.
12. Mr Madon places reliance on an order passed by the City Civil Court, Dindoshi in Regular Civil Suit No. 482 of 2019 fled by one Jyotsana Pravinchandra Shah where apparently, the 1st Defendant, on 27th February 2019 agreed to pay some compensation or transit compensation to this tenant. I am unable to see how that order is enforceable in law by the present Plaintifs who were not parties to that suit and had not fled such proceedings of Page 7 of 11 13th March 2020 ::: Uploaded on - 16/03/2020 ::: Downloaded on - 09/06/2020 02:34:00 ::: 909-NMS94-20.DOC their own. The 1st Defendant has made no such statement or commitment to any Court as regards the present Plaintifs. This order gives the Plaintifs no legally enforceable right.
13. Perhaps realising this, Mr Madon reiterates that he is seeking 'enforcement' and specifc performance of the Development Agreement of 2008.
14. As I have noted, there are two distinct problems with this formulation. Whether the Plaintifs as tenants are even entitled to such an order of specifc performance is unclear and I cannot possibly say that there is a prima facie case in that regard. Further, whether the Development Agreement itself will survive the subsequent event, i.e. the acquisition on 31st December 2009 by the 1st Defendant, Shree Ram Builders, of the fullness of ownership title is extremely doubtful. To clarify, today the 1st Defendant is not in the property nor holding it under a power of attorney from the original owners. The 1st Defendant is now the full owner of the property with efect from the date of the Conveyance of 31st December 2009. There is no question of the 1st Defendant now being 'required' to redevelop the property or re-accommodate tenants on behalf of the earlier owners, i.e. the Parikh family. There could be no such limitation or condition attached to the Conveyance or to transfer of title. As a full owner, it is for the 1st Defendant and for the 1st Defendant alone to decide whether it wants to redevelop the property or not.
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15. Mr Madon says that in the Conveyance of 2009 there is an obligation on the 1st Defendant to give the tenants, including a Plaintifs, permanent alternative re-accommodation. Mr Godbole points out that by a subsequent document, the original landlords surrendered any residual interest including their right to get a fractional percentage of redeveloped premises. Thus there is now a complete vesting of title in favour of the 1st Defendant.
16. The Plaintifs' rights as tenants to compel redevelopment are specifcally found in the Maharashtra Rent Control Act. There are adequate provisions in that Act to temporarily obtain possession from a tenant pending reconstruction and also provisions for tenants to carry out the necessary essential repairs. The tenants' rights to be provided premises on tenancy basis once the dilapidated building is reconstructed are fully covered by the provisions of the Rent Control Act. That Act provides for a complete ouster of jurisdiction of all other Courts.
17. The application by the Plaintifs is not to compel the 1st Defendant to complete reconstruction or to give them premises that they can occupy on a tenancy basis but is elevated to a claim by which the Plaintifs say they are entitled in law to convert that tenancy into ownership as a matter of a contractually enforceable right. Prima facie I am unable to see how this can be said to be correct.
18. For the reasons set out above, there will be no ad-interim relief. I note Mr Godbole's statement that on reconstruction all the Page 9 of 11 13th March 2020 ::: Uploaded on - 16/03/2020 ::: Downloaded on - 09/06/2020 02:34:00 ::: 909-NMS94-20.DOC Plaintifs will be given tenancy accommodation in the reconstructed building. His instructions are to make a categorical statement that the 1st Defendant is not willing and not agreeable to convert a single one of these tenancies into ownership.
19. The statements made by Mr Godbole are refected in paragraphs 9 and 10 of the Afdavit in Reply:
"9. I say and submit that Defendant No.1 as the Landlord of the suit property will abide all the obligations as per law and will hand over the possession of the newly constructed premises to the Plaintifs/Tenants only on tenancy basis as per the area certifed by the MCGM/Defendant No.4 while carrying out demolition of the building subject to the right of the Defendant No. 1 to claim & seek enhanced rent as per the Maharashtra Rent Control Act, 1999, to be payable from the date such tenant is put in possession of new premises after obtaining O.C. and to be determined by the Court of Small Causes at Mumbai under the said Act. I say that this Defendant does not wish to avail of the benefts provided under DCR 33 (7A) of the DCR of MCGM, 2034 and will not be consuming the proportionate fungible FSI entitlement in respect of the old tenanted premises where only tenanted premises will be provided in new building but will use such proportionate fungible FSI entitlement in respect of tenants with whom the Defendant No. 1 has executed Permanent Alternate Accommodation on ownership basis.
10. I say and submit that the Defendant No. 1, while submitting the Building Plans of the Tenants' Building or a Composite Building where the fats of the tenants on tenancy basis as well as fats for free sale will be constructed and we will ensure that areas of the fats of tenants will be Page 10 of 11 13th March 2020 ::: Uploaded on - 16/03/2020 ::: Downloaded on - 09/06/2020 02:34:00 ::: 909-NMS94-20.DOC proposed as per the certifed area of MCGM. The same is annexed hereto as Exhibit B."
20. These statements are accepted as undertakings to the Court.
21. The 1st Defendant will fle a detailed Afdavit in Reply on or before 31st March 2020. Afdavit in Rejoinder, if any, is to be fled and served on or before 9th April 2020. Having regard to the position of the parties I will list the Notice of Motion for hearing and fnal disposal on 28th April 2020.
22. It is clarifed that these are only prima facie observations and Motion will be decided on its merits.
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