Bombay High Court
Kalpana Yogesh Adhia vs Gada Enterprises on 2 February, 2024
Author: Bharati Dangre
Bench: Bharati Dangre
2024:BHC-OS:2805
(3)ARBPL-27067-27068.doc
rajshree
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION (L) NO.27067 OF 2023
WITH
ARBITRATION PETITION (L) NO.27068 OF 2023
Kalpana Yogesh Adhia & Anr. ] .. Petitioners
vs.
Gada Enterprises & Ors. ] .. Respondents
Mr.Ashish Kamat, Senior Advocate a/w Rohan Savant, Kazan Shroff, Bharat Jain and Romin Singoi i/b IC Legal for the Petitioner. Mr.Sarosh Bharucha a/w Dishang Shah i/b Piyush Shah for Respondent No.2.
Mr.Vikramjit Garewal a/w Krishkumar Jain i/b Ritesh Jain for Respondent No.3.
Mr.Malcolm Siganporia a/w Dhiren Durante and S. Pradhan i/b Lexicon Law Partners for Respondent No.4.
CORAM : BHARATI DANGRE, J
DATE : 2nd February, 2024.
P.C.
1] One Kalpana Yogesh Adhia alongwith Mira Prashant Godiwala
Nee Mira Natwarlal Adhia, have filed two Petitions invoking Section 9 of the Arbitration and Conciliation Act, 1996, praying for certain directions, pending the commencement, hearing and final disposal of the arbitral proceedings and the making and enforcement of the Arbitral Award. 1/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:26 :::
(3)ARBPL-27067-27068.doc The reliefs prayed read thus :-
"(a) This Hon'ble Court be pleased to pass an order and direction, directing Respondent Nos.1 to 3 to immediately execute and register Supplemental Agreement in favour of the Petitioners which is similar as executed with other tenants/persons entitled to permanent alternate accommodation (being Exhibit I hereto).
(b) This Hon'ble Court be pleased to pass an order and direction, directing Respondent Nos.1 to 3 to immediately make payment of compensation towards temporary alternate accommodation for a period of 1st August 2014 to 31st January 2021 as per the Particulars of the Claim."
Apart from the aforesaid reliefs, an order of injunction restraining the Defendant/Respondent Nos.1 to 4 from making any application for sanction of the Plans, to the Municipal Corporation, by using any part of the potential relatable to Room Nos.3 in Building No.B/1 and Room No.6 in Building No.B/2, standing on the subject land, which is subject matter of the Registered Agreement and when has been transferred and assigned in favour of the Petitioners, is also prayed for.
The aforesaid reliefs are sought by the Petitioners, as it is their claim that, they have been for no reason dragged in the internal dispute between Respondent Nos.2 and 3, who are the partners of Respondent No.1-Gada Enterprises, a Partnership firm and though Respondent No.3 is supporting their claim, they are constrained to approach this 2/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:26 ::: (3)ARBPL-27067-27068.doc Court as they face opposition from Respondent No.2, one of the partner of Respondent No.1 who is denying their lawful rights, flowing from the transfer of rights by the original tenant in their favour.
In order to ascertain the entitlement of the Petitioners to the aforesaid reliefs, in the two Petitions, it is necessary to briefly refer to the background facts :-
a] Gada Enterprises is the owner of and possessed of and otherwise well and sufficiently entitled to plot of land admeasuring 2732 sq. mtr. Bearing Survey No.164 and Survey No.4, corresponding to CTS No.55 and 55/1 to 18 of Village Magathane, Taluka Borivali, Mumbai Subarban District, Borivali (W), Mumbai. Prior to 2015, structures were standing on the said land in form of Building No.A/1, A/2, B/1, B/2 and C, popularly known as 'Shanti Nagar'.
The land and the buildings are collectively referred to as "the property".
b] The buildings were occupied by various tenants including one Sadhana Sureshchandra Morjaria (occupant of Room No.3, Building No.B/1) and Meena Tejpal Shah (occupant of Room No.6, Building No.B/2), being impleded as Respondent No.5 in the two distinct Petitions.
c] Gada Enterprises was desirous of redeveloping the property by demolishing the existing structures and accordingly 3/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:26 ::: (3)ARBPL-27067-27068.doc requested the tenants for their co-operation. A consensus was arrived between the tenants in occupation and Gada Enterprises, which was encapsulated in the Agreements executed in favour of the Tenants, which are almost identical on all material terms.
d] The Agreements in form of PAAA, came to be executed with each individual tenant including Sadhana Morjaria and Meena Shah and the Agreements were signed on behalf of Gada Enterprises, either by Respondent No.2 Vijay Damji Shah or Respondent No.3 Surendra Damji Shah.
2] For the sake of convenience, the facts relating to the contents of the Agreements executed between the parties, are taken from Arbitration Petition (L) No.27068/2023.
a] The Permanent Alternate Accommodation Agreement dated 03.05.2011 entered with Sadhana Marjoria was registered with the Sub Registrar of Assurances and the relevant clause of the PAAA recorded that after obtaining IOD, the landlords shall call upon the tenants to vacate the premises for demolition and reconstruction of the new building, which act shall be reciprocated by handing over of the cheque for payment of compensation for temporary alternate accommodation and brokerage, and the landlords agreeing to bear the compensation for temporary alternate accommodation at the rate of 4/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:26 ::: (3)ARBPL-27067-27068.doc Rs.15,000/- per month, which shall be topped up with 10% rise.
Clause 27 of the said Agreement recorded thus :
"27. In the event of any dispute or differences, which may arise by and between the parties hereto, the same shall be resolved in accordance with the provisions of the Indian Arbitration & Conciliation Act, 1996 as amended up to date by referring to the Arbitrator/s as may be mutually agreeable by and between the parties hereto."
An Agreement of similar lines was also executed with Meena Shah, Respondent No.5 in ARBP(L) No.27068/2023 on 24.01.2012, in respect of Room No.6, occupied by her and it was agreed that permanent alternate accommodation on ownership basis admeasuring 317.12 sq. carpet area shall be allotted in her favour. 3] Petitioner No.1 and her husband, who is also brother and the constituted attorney of Petitioner No.2 are lawyers by profession and have been representing Gada Enterprises, in various matters including legal proceedings and hence are known to the Respondent Nos.2 and 3 for more than a decade.
The Petitioners being desirous of acquiring residential premises in the vicinity of Kandivali-Borivali, were informed about some tenants desirous of transferring their entitlements under the PAAA and upon due diligence being carried out, Sadhana Morjaria and Meena Shah, 5/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:26 ::: (3)ARBPL-27067-27068.doc agreed to transfer their entitlement under the PAAA in favour of the Petitioners in relation to the rooms in their occupation alongwith all the proportionate benefits accruing to them under the PAAA.
Pursuant to the discussions held, by involving the Respondent Nos.2 and 3 , it was agreed that Sadhana Morjaria and Meena Shah shall transfer/assign all benefits/entitlements under PAAA in favour of the Petitioners for payment of consideration and Respondent Nos.2 and 3 accorded their approval to the said arrangement and assured that the Petitioners shall be allotted one single unit/flat admeasuring 475 sq. ft. which would be a combination of area transferred and assigned by Sadhana Morjaria and Meena Shah.
4] As per the understanding, two Transfer Deeds came to be executed on 18.03.2013 for transfer of the entitlements under the PAAA and all the rights, entitlements and benefits including the right to receive permanent alternate accommodation in respect of Room No.3 of Building No.B/1 and Room No.6 of Building No.B/2.
The two Transfer Deeds were duly registered and accordingly the Petitioners made payment of requisite consideration to Sadhana Morjaria and Meena Shah.
Since the Transfer Deeds in respect of the two rooms are identically worded, the relevant extract from the Deed executed by 6/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:26 ::: (3)ARBPL-27067-27068.doc Sadhana Morjaria in favour of the Petitioners, is relied upon :-
Vide a Deed of Transfer executed on 18.03.2013, Sadhana Morjaria (Transferor) , residing in Room No.3, Ground Floor, B/1 and M/s.Gada Enterprises, referred to as the 'Owners', acquired the tenancy rights of the transferor in respect of the premises including the right to receiver, use, occupy and enjoy the said new flat on ownership basis and all other rights, benefits, advantages, claims etc. under the said Agreement as the Transferor was desirous of selling, transferring, assigning and conveying the said property unto and in favour of Transferees for a consideration , for the terms and conditions set out therein.
Worth it to mention that the said Deed clearly recorded that the owners i.e. M/s. Gada Enterprises, a registered partnership firm has agreed to consent to such sale , transfer, assignment and conveyance of the property in favour of the Transferee.
The Deed of Transfer dated 18.03.2013, between Sadhana Morjaria, residing at Room No.3, ground floor, B/1, referred to as 'Transferor' and the Petitioners referred to as 'Transferee', also had the presence of Gada Enterprises , a Partnership Firm being referred to as 'the Owners'.
That, Gada Enterprises are the owners and landlords of the structures standing on the plot of land bearing Survey No. 164, CTS no.7/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:26 :::
(3)ARBPL-27067-27068.doc 55 and 55/1 to 55/18, Borivali, Mumbai, referred to as "Shanti Nagar"
as described in the Schedule and the Transferor is the Tenant of the owners in respect of Room No.3 admeasuring 262.34 sq. ft. and the Transferor alongwith her husband were in exclusive possession of the old premises.
5] In the wake of the decision of the owner to redevelop the subject property, it had entered into an Agreement for Permanent Alternate Accommodation dated 03.05.2011, where the owners had agreed to provide, in lieu of the old premises, to the Transferor, Permanent Alternate Accommodation on ownership basis, being Flat admeasuriing 317.12 sq. ft (new flat) in the building, in which all the tenants/occupants are to be provided alternate accommodation. The entitlement of the Transferor was categorically capsulated in the Agreement to the following effect :-
"(E) The Transferor is thus entitled to receive, use, occupy and enjoy the said new flat on ownership basis in the building to be constructed by the owners. The tenanacy rights of the Transferor in respect of the said old premises, the right to receive, use, occupy and enjoy the same new flat on ownership basis and all other rights, benefits, advantages, claims, etc. under the said Agreement are hereinafter alternatively referred to as "the said property".8/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:26 :::
(3)ARBPL-27067-27068.doc The arrangement worked out for transfer of the rights of the Transferor in favour of the Transferee, is recorded as under :
"(F) The Transferor is desirous of selling, transferring, assigning and conveying the said property unto and in favour of the Transferees for the consideration and on the terms and conditions mentioned hereinafter. At the request of the Transferor, the Owners have agreed to consent to such sale, transfer, assignment and conveyance of the said property unto and in favour of the Transferee."
Clause (g) clearly stipulated that the parties are desirous of recording the terms and conditions for the sale, transfer, assign and conveyance of the property in favour of the Transferees and it is stipulated as under -
"The Transferor doth hereby sells, transfer, convey and assign all her rights, title, interest, claims, benefits, advantages etc in the said property which includes(a) tenancy rights in respect of the said old premises being of Room No.3 in Building No. B/1, admeasuring 262.34 sq. ft. in Shanti Nagar situated at on Plot of land bearing s. No.164, S. No.4, H. No.1, CTS No.55, & 55/1 to 55/18, Village, Magathane, Taluka Borivali, MSD situate at S. V. Road, Nr. Vijay Sales, Borivali (W), Mumbai-400092, (b) the right to receive, use, occupy and enjoy the said new flat on ownership basis, namely Flat admeasuring 317.12 square feet ("the said new flat") under the said Agreement dated 3rd May 2011 for Permanent Alternate Accommodation duly registered under Serial No. BDR- 6/4013/2011, in the Building to be constructed by Owners, and (c) all other rights, benefits, advantages, claims etc. under the said Agreement dated 3rd May 2011, unto and in favour 9/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc of the Transferees on the terms and conditions and for the consideration mentioned hereinafter, to the end and intent that the Transferees shall become the tenant of the Owners in respect of the said old premises and shall be entitled to receive all the benefits, advantages etc. under the said Agreement dated 3 rd May 2011, including the said new flat on ownership basis upon the completion of construction of the building in which the said new flat will be allotted by the Owners."
In the Deed, the Transferor further declare and confirm as under :-
"With the consent of the Owners obtained hereunder, the Transferor is entitled to sale, transfer, assign, assure, convey the said property unto and in favour of the Transferees In the manner hereby stated."
Another important clause in the Agreement reads thus :
"8. The Owners have simultaneously on execution hereof accepted the Transferees as the assignees and beneficiaries of the said property, including all the right, title, interest, claims, benefits etc. under the said Agreement, who will be entitled to receive, inter alia, the said new flat from the Owners. The Transferees agree and undertake to observe and perform all the terms and conditions of the said Agreement as if the Transferees were parties to the said Agreement and also other tenancy in respect of the said old premises. The Transferees shall use and/or permit to use the said old premises and the said new flat only for residential purposes."10/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 :::
(3)ARBPL-27067-27068.doc As a consideration of the aforesaid , the Deed recorded that the Transferees shall pay to the Transferor an agreegate consideration of Rs.10,00,000/- on or before execution of the Deed and on its execution, the Transferor and her husband shall hand over the peaceful and vacant possession of the old premises alongwith the original of the Agreement dated 03.05.2011 to the Transferee. It is also agreed that the Transferor shall not have and shall not claim any rights, title, interest of whatsoever nature in the old premises or any part thereof, or the said new flat or any part thereof, or any other benefit under the Agreement or against the Transferees or the owners on any account whatsoever.
The Schedule of the property categorically referred to as the larger property known as 'Shanti Nagar' and Room No.3 situated on ground floor of Shanti Nagar. It is accompanied with a receipt of Rs.10,00,000/- as consideration received from the Transferees vide Cheque dated 12.03.2013 drawn on Union Bank of India,Mumbai. 6] Similarly worded Deed of Transfer is executed on 18.03.2013 with Meena Shah referred to as "the party of first part", the Petitioners referred to as "Parties of the Second Part", and Gada Enterprises, a Registered Partnership Firm, referred to as "the Owners".
The said Deed was executed in relation to Room No.6 in 11/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc Building No.B/2 which is occupied by "the Party of the First Part", tenanted room and being a tenant of "the Owners".
The covenants in the said Deed are identically worded as the Deed of Transfer in case of Sadhana Morjaria except that the description of the property in the second Deed is in respect of room admeasuring 135 sq. ft. (usable carpet area) and consideration agreed was Rs.10,00,000/- to be paid to the "Party of the First part", on or before execution of the Deed.
The Deed is accompanied with the schedule of properties being referred to as Room No.6, Building No.B/2, on ground floor of Shanti Nagar admeasuring 135 sq. ft and is accompanied with receipt of Rs.10,00,000/- by Meena Shah acknowledging the bank transfer/RTGS from Union Bank of India into her Savings Account in UCO Bank. 7] Both the Transfer Deeds, referred to as above, have the presence of Gada Enterprises and even the Deed is signed by one of its Partner of Gada Enterprises, Mr.Surendra Shah and it is evident from perusal of both the Deeds, which are annexed to the Petitions, that the Petitioners continued to avail benefit after execution of the Deed in the year 2013, until the Respondent No.2 Vijay Shah addressed a communication to the Petitioners on 09.03.2021 in relation to the creation of tenancy of Room No.6, in Shanti Nagar, where for the 12/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc first time, quibble was raised that the Deed of Transfer dated 18.03.2013 wherein M/s. Gada is a Confirming Party and Smt.Meena Tejpal Shah is a Transferor , it is executed without his authority and approval and hence the aforesaid document is invalid and void ab initio.
The malafides are attributed to the Petitioners, by alleging that they had malicious intention and to derive profit and benefit knowing well that the building was to be demolished and it was demolished in the year 2014.
The notice dated 09.03.2021, contain the following averment :-
"I hereby give you Notice to Cancel the said Agreement immediately, otherwise, I will not allow you to execute any Agreement of Permanent Alternate Accommodation and the firm will not pay any Transit Rent, which is paid by SURENDRA SHAH without my knowledge. I will lodge complaint before Collector of Stamps, borivali for undervaluation of the said Agreement and necessary criminal complaint for criminal conspiracy between you and SURENDRA SHAH at your cost, risk and consequences, which lease note."
The notice was immediately responded on 27.04.2021 on behalf of the Petitioners, by clearly indicating that the Deed of Transfer which was executed, was with the authority and approval of the partners of the Firm and hence it cannot be said to be invalid or void ab initio.
On 10.06.2021 a communication was addressed to M/s. Gada Enterprises on behalf of the Petitioners requesting for acknowledging 13/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc payment of transit rent of five and half months and also requesting to make payment of further payment of transit accommodation charges. 8] It is worth to note that, Respondent Nos.2 and 3 are undergoing arbitration in the wake of the existing dispute between them and in the CARBP(L) No.1612/20222 and CARBP(L) No.1693/2022, the proceedings filed by Respondent Nos.2 and 3 against each other, the consent of minutes, were recorded and an arrangement was worked out between the parties, in regard to the redevelopment in project of 'Shanti Nagar' and the parties decided upon the modalities in that regard and to move ahead.
The Petitions came to be disposed off, in the light of the Consent Minutes of Order, which record various terms and conditions and Mr. Kamat has particularly invited my attention to Para 6 of the said Consent Minutes of Order, which recorded as under :-
"6. Mr. Vijay Shah is disputing 6 tenancies out of the tenant of the Shanti Nagar Project. It is clarified that for the purposes of inviting bids, submission and finalization of bids, the contractor/developer and M/s.Shtegiri and Associates would consider 56 tenements for rehabilitation. The contractor/developer to be appointed is required to make provision for 56 permanent alternate accommodation as per the agreements in their favour, subject to orders of the appropriate court, if any which may be passed in the proceedings, if any, adopted by Mr. Vijay Shah. As far as transit rent is concerned, it 14/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc shall be paid to the tenants/occupant as being paid till date as per the Exhibit VV to the Petition filed by Mr. Surendra Shah which also includes the tenancy challenged by Mr.Vijay Shah."
9] Admittedly, the discord in respect of the 6 tenancies, on which Vijay Shah created a cloud, which was entombed, but ultimately it is informed that, barring the two tenancy agreements, with which the Petitioners are concerned, the objection against others was not prosecuted further and in any case what is recorded, is the Developer shall make provision for 56 PAAA, as per the Agreement which included the Petitioners and it was agreed that this would be subject to the order of the appropriate Court if any which may be passed in the proceedings adopted by him, but the transit rent shall be paid to the tenants/occupants as per Exhibit appended to the Petition, filed by Mr. Surendra Shah, which included the tenancy challenged by Vijay Shah. This Agreement, therefore, covered the tenancy acquired by the Petitioners, from the two tenants viz. Sadhana Morjaria and Meena Shah.
10] One of the parties of Gada Enterprises, therefore, belatedly denied the Petitioners their rights under the Transfer Deeds, i.e. 8 years after the execution and registration of the Transfer Deeds on account of the interse disputes. However, it is the case of Mr.Kamat that the 15/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc Petitioners started receiving compensation towards alternate accommodation from 01.02.2021 till date.
The Respondent No.3 addressed a communication to the Respondent No.2, expressing his readiness and willingness to deposit his 50% shares of the arrears of compensation towards temporary alternate accommodation in the joint account of the firm and called upon him to inform once the share is deposited.
A Supplemental Agreement was received by the Petitioners, in last week of March 2023, which was signed by them and returned as it was intended to propose certain terms and conditions of PAAA. Though they were intimated that they will have to remain present for registration, the stage for the same has not yet arrived. 11] On 31.03.2013, Gada Enterprises, executed a Development Agreement in favour of Respondent No.4 and as per the terms contained therein, the PAAA being a permanent alternate accommodation is agreed to be given to the Petitioners on ownership basis by identifying Flat No.C-703 , admeasuring 468 sq. ft. Mofa carpet area.
However, when the time came for translating its terms, the Petitioners are provided information that though it is signed by Surendra Shah, Respondent No.3, the other partner Vijay Shah, has 16/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc refused to put his signature and has raised an objection to its execution and registration only as regards the Petitioners, out of all the tenants, in respect of some of whom he had earlier raised the dispute. 12] In furtherance of the arrangement worked out between the parties, Supplementary Development Agreement came to be executed on 31.03.2023 between M/s. Gada Enterprises, a partnership firm and M/s. Reliance Corporation, another Partnership firm for redevelopment of the property and worth it to note that the Agreement Annexure enlisted, the tenancy list of Shanti Nagar and and Item No.27 the name of the Petitioners is mentioned as against Flat No.B-1-3 and in the column of Agreement details, following finds mentioned.
"i] Agreement dated 03.05.2011 bearing Registration No.BDRS 4013/2011 executed between M/s., Gada Enterprises and Sadhana Morjaria.
ii] Deed of Transfer dated 18.03.2013 executed between Sadhana Morjaria of the first part, M/s. Gada Enterprises of the second part and Kalpana Adhia and Meena Shah on third part."
Apart from this, in annexure D, where the details of the tenants are referred, the name of the Petitioners is included at Item NO.7 as against Flat No.B-1-3 and with the new flat being allotted as C-703 with area of 474.00 sq. ft as per the Agreement.
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(3)ARBPL-27067-27068.doc 13] It is thus evident that Respondent No.2 had clearly accepted the claim of the Petitioners through the Deed of Transfer and there is no reason why the dispute between the two partners of Gada Enterprises would cause inconvenience to the Petitioners as for almost a decade, the Transfer Deed, was never questioned by Respondent no.2, the Partner of Gada Enterprises.
14] The Affidavit in Reply filed by Surendra Shah, another partner of Gada Enterprises, makes an interesting revelation, when it makes reference to the background facts about execution of PAAA in favour of Respondent No.5, the tenants in respect of Room No.3 and in respect of Room No.6.
The relevant averment in the said Affidavit reads thus :
"4.10. Thereafter, Respondent No.5 and Mrs. Sadhana Morjaria executed Deeds of Transfer both dated 18th March 2013 (Exhibits "C" and "D" respectively to the Petition) in favour of the Petitioners, whereby (i) Mrs. Sadhana Morjaria transferred and assigned her entire rights, entitlements, benefits and advantages etc. (including Sadhana's PAA) under the aforesaid Agreement dated 3rd May 2011, and (ii) Respondent NO.5 transferred and assigned Portion of Meena's PAA and proportionate rights, entitlements, benefits and advantages etc. under the Agreement dated 24th January 2012. Respondent No.1 is a confirming party to such Deeds of Transfer. As per the 18/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc agreement between me and Respondent No.2, I have signed such Deeds of Transfer on behalf of Respondent No.1. It was agreed that Respondent NO.1 would provide one combined permanent alternate accommodation ("said PAA") to the Petitioners in lieu of Sadhana's PAA and Portion of Meena's PAA."
"4.11. Thus, the aforesaid transfers and assignments of rights, entitlements, benefits and advantages etc. by Respondent No.5 and Mrs. Sadhana Morjaria in favour of the Petitioners are with the full knowledge and consent of Respondent No.2."
In Para 4.22, Respondent No.3 has specifically stated as under :
4.22 "Respondent No.2 for the first time on 9 th March 2021 addressed a letter to the Petitioners and me, dishonestly disputing the rights and entitlements of the Petitioners in respect of the Deed of Transfer dated 18th march 2013 executed by Respondent No.5 in favour of the Petitioners, albeit with our consent and confirmation. Respondent No.2 was always about the registered agreements executed by the Respondent no.1 inter alia in favour of the Petitioners."
15] Reading of the Affidavit would reveal that Vijay Shah in his statement of defence, before the Arbitrator has chosen to dispute 6 tenancies, without ascribing any explanation by reducing the so called challenge to six tenancies instead of 9 and it is specifically stated that, Vijay Shah has made claim of damages to the tune of Rs.3,94,00,00/- towards his alleged claim of six bogus tenancies, created by the other Partners, Vijay Shah and Surendra Shah which include the transfer of 19/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc tenancy in favour of the Petitioners.
Such monetary claim presupposes that Vijay Shah has accepted these tenancies and seek compensation for permitting creation of such rights.
16] The learned counsel Mr. Kamat relying upon the decision in case of Cox and Kings Ltd. vs. SAP India Pvt. Ltd. & Anr. 2023 SCC ONLine SC 1634, specifically submit that the Petitioners are entitled for execution of PAAA in their favour, being assignees of the tenants and since they have been assigned rights for all purposes which is evident from the terms of the Transfer Deed, though not signatory to the Arbitration Agreement, they are entitled to seek appointment of an Arbitrator.
17] Mr. Sarosh Bharucha, the learned counsel for the Respondent No.2 would strongly contest the reference of the disputes to Arbitration at the instance of the Petitioners, on the basis of the Deed of Transfer dated 18.03.2013, which according to him do not contain an arbitration clause, though the Arbitration clause is contained in the PAAA entered between M/s. Gada Enterprises in the capacity as 'Landlords' and Meena Shah/Sadhana Morjaria, the tenants of the rooms in Shanti Nagar, to which the Petitioners are not the signatories and hence 20/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc Clause 28 providing Arbitration as mode of dispute resolution cannot be invoked by them.
It is thus, canvassed by Mr. Bharucha, that since there is no Arbitration Agreement between the Petitioners and Respondent No.1, which would justify its resolution of dispute raised by the Respondent No.2, one of the partner of Respondent No.1, the dispute can not to be referred to arbitration.
Mr. Bharucha by relying upon the decision of the Apex Court in the case of MR Engineers & Contractors vs. Somdatt Builders Limited (2009) 7 SCC 696, would submit that mere reference to a document which contain an arbitration clause, would not have the effect of making an arbitration clause from that document, a part of the Contract between the Petitioners and Respondent No.1, unless there is a special reference, indicative of a mutual intent to incorporate the arbitration clause, from another document and in this case the PAAA agreement into the Contract in form of the Transfer Deed with the exception of a standard form of Terms and Condition of Trade Association or Regulatory Institutions, which publish or circulate such standard terms and conditions for the benefit of members or others who adopt the same.
According to the learned counsel, Section 7(5) of the Act of 1996, requires a conscious acceptance of the arbitration clause from another 21/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc document, by the parties as a part of the Contract before the arbitration clause is permitted to be read as a Contract before the parties, in absence of any such indication in the Transfer Deed, the argument is that Clause 24 of the PAAA, entered with the tenant, shall not govern the relationship between the Petitioners, the Transferee from the Tenant and the Respondents.
Mr. Bharucha has distinguished the decision in the case of M/s. Siemens Factoring Pvt. Ltd. vs. Future Enterprises Pvt. Ltd. relied upon by Mr. Kamat, on four counts ; a) Transfer Deed in the present case do not cover the term 'Assigns' which was the specific case in Siemens, but in the case of 'Siemens', the term found a specific mention; b) Though assignment was permissible in the Agreement in Siemen's case, in the present case, there is a clause which specifically prohibits transfer; c) In Siemens, the assignment was accepted by the party, but in the present case, Respondent No.2 has not accepted the same; and d) In Siemens, the Letter of Assignment itself contained an arbitration clause, but not in the present case.
Mr. Bharucha has, thus, strenuously asseverated that when we look at two documents in the present case i.e. PAAA executed with the tenant and the Deed of Transfer, there is no incorporation of the Arbitration clause in the Transfer Deed and the test as applied in MR Engineers is not satisfied.
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(3)ARBPL-27067-27068.doc 18] Dealing with the argument of Mr. Kamat as regards Section 19(1) of the Partnership Act, Mr. Bharucha would rely upon Clause (g) and would submit that what is sought to be transferred in Clause (g) which, in absence of any usage or custom of trade to the contrary, do not cover transfer of immovable property belonging to the Firm under the guise of implied authority and since the 'immovable property' would cover the interest therein i.e. in the flats transferred by Deed of Transfer, the contention of the Petitioner deserve a rejection. 19] It is not in dispute that M/s. Gada Enterprises, a registered Partnership Firm referred to as the "Landlords" entered into an agreement with Sadhana Morjaria and Meena Shah as regards the two rooms i.e. Room No.3 and 6, located in Shanti Nagar. The said Agreement has described the "landlords" as deemed, to mean and include be the partner or partners for time being constituting the said Firm, the survivor or survivors of them and heirs, executors, administrators, legal representatives of such survivor of survivors Sadhana Morjaria/ Meena Shah.
The Agreement record that the landlords had agreed to redevelop the property by demolishing the standing structure of 'Shanti Nagar' and construct a building and expected co-operation from the 23/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc tenants and tenants conceded to the request of the Landlord to surrender the rooms/premises under his/her occupation and the terms of the arrangement were included in the Agreement. 20] The landlord i.e. Gada Enterprises acknowledged that the tenant is the lawful tenant in respect of the premises and the tenant assured the landlord that he/she has not created tenancy, subtenancy or given on leave and license or transferred his/her interest in the premises in any manner.
The gist of the arrangement between the parties is the entitlement of the tenant to a Permanent alternate residential accommodation, on "ownership basis" in lieu of the original rental premises in its occupation and possession and the landlord agreed and undertook to give the tenant the premises on "ownership basis"
with the amenities in the new building to be constructed at the site of the property, in consideration of the tenancy being surrendered.
As per the Agreement, the landlord is under obligation to provide to the tenant, a new flat free of cost and the tenant shall be entitled to occupy the temporary alternative accommodation till the period, landlord offer him/her the flat in the new building and he/she shall not be liable to pay to the landlord any other amount.24/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 :::
(3)ARBPL-27067-27068.doc 21] The Agreement record that the tenancy rights of the tenant shall come to an end, on putting him/her in possession of the premises in the newly constructed building.
Clause 7 of the Agreement contain the following stipulation :
"The Tenant hereby convents that he/she shall not create third party right, title and interest in respect of benefits or advantages of this agreement without the prior written permission the Landlords and/or shall not create third party right on the original premises in any manner without the prior permission of the Landlords, until the tenant is put in possession at the new permanent premises as agreed herein and the society been formed and all the amounts due and /or payable by the Tenant to the Landlords have been duly paid."
It is this Agreement, which contain a clause for referring the disputes or differences arising between the parties for arbitration. 22] Reading of the above clause in the Agreement, would make it evident, that it is between Gada Enterprises, as the landlord and this term as per the Agreement included the Partner or the Partners for the time being constituted in the said Firm, whereas the expression 'tenant' is deemed to mean and include his/her, heirs, legal representatives, administrators and executors.
The restriction on the tenant to create any third party right, title or 25/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc interest in respect of the benefits or advantage of the Agreement was restricted, by contemplating a written permission of the landlord, and in the wake of the said restriction, when a Deed of Transfer is executed, by the tenant in favour of the Petitioner, even Gada Enterprises, the owner is also party to the same, and has also inked the 'Deed of Transfer'.
23] The Deed of Transfer is a Tripartite arrangement between the landlord, the tenant referred to as the 'Transferor' and the Petitioners, the 'Transferees', and it record necessary covenant about the owner being seized and possessed of and sufficiently entitled to the subject property and the structure standing thereon known as 'Shanti Nagar"
and the 'Transferor' being a tenant in respect of a room in the said building.
The right of the Transferor to be entitled to receive, use, occupy and enjoy the new flat on ownership basis is recognized by M/s. Gada Enterprises alongwith all the rights, benefits, advantages, claims etc. under the said Agreement being collectively referred to as the the property'.
24] Reading of the two documents alongside, it is clear that all the rights, claims under the PAAA being referred to as 'the property' stand 26/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc assigned to the Petitioners and Mr. Bharucha is not correct in submitting that there is no use as the word "assignment" under the Transfer Deed. When the rights in the said property, which are conferred and bestowed upon the Transferor, by the owner, on it being assigned to the Petitioners, they have stepped into the shoes of the Transferor/tenant, in whom the ownership rights are ventured and when it come as bouquet of rights, this definitely include the right to Arbitrate, by referring the disputes to arbitration, which was an integral part the PAAA executed between the owner M/s. Gada Enterprises and tenant/transferor.
The observations in MR Enterprises, hold good in the facts of the said case, where the government by a Contract entrusted to Contractors certain construction work and Contractor entrusted the portion of the work to a sub contractor, by a Sub Contract postulating that the sub contract on the Terms and Conditions applicable to the main Contract. The arbitration clause in the main contract did not form part of the sub contract and on facts, the court found that it was incapable of being applied to the sub contract and on being satisfied that there was no intention to incorporate the same in the sub contract, the reference of the disputes arising out of a sub contract to arbitration was held to be not maintainable.
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(3)ARBPL-27067-27068.doc The test laid down in MR Engineers & Contractors (supra) has been summarized to the following effect :-
"The scope and intent of Section 7(5) of the Act may be summarised thus :
(I) An arbitration clause in another document, would get incorporated into a contract by reference, if the following conditions arefulfilled :
(1) the contract should contain a clear reference to the documents, containing arbitration clause, (2) the reference to the other document should clearly indicate an intention to incorporate the arbitration clause into the contract, (3) the arbitration clause should be appropriate, that is capable of application in respect of disputes under the contract and should not be repugnant to any term of the contract."
25] The scope and intent of Section 7(5) of the Arbitration and Conciliation Act, 1996, is summarized in the decision of MR Engineers and Contractors (supra), by stipulating that the arbitration clause in another document would get incorporated into a contract by reference and when the contract contains a clear reference to the document containing the arbitration clause and the reference to the document indicate an intention to incorporate arbitration clause into the contract and thirdly it should be capable of application in respect of the disputes 28/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc under the Contract and should not be repugnant to any term as the contract.
26] Applying the aforesaid test since the Respondent No.1, owner of the property clearly accepted the Transferor/tenant as owners of the flat in the newly constructed building and permitted it to create third party rights therein, and by its consent, Transferor assigned the rights into "said property" conferred upon him by the PAAA in favour of the Petitioner, this definitely would cover a right to arbitrate the disputes before the Arbitrator. Rejecting the contention of the learned counsel Mr. Bharucha, I am inclined to accept the submission advanced by the learned counsel Mr. Cama and hold that the dispute is entitled to be referred to arbitration at the instance of the Petitioners.
During the initiation, pendency and conclusion of arbitration proceedings, what the Petitioners seek, on entering into the shoes of 'Transferor' with consent of the Owner/ Gada Enterprises is execution of PAAA with them and payment of transit rent, at par with the owners/ occupiers of the flats/units, in the building, sought to be redeveloped.
Since the assignment by the Transferor in favour of the Petitioner, with consent or Gada Enterprises and even the Transfer Deed is signed by one of the Partner of Gada Enterprises, I do not think it is open for one of its Partner to woke up from slumber after a long 29/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 ::: (3)ARBPL-27067-27068.doc period of 7 to 8 years and raise an objection as regards the entitlement of the Petitioners.
The Respondent No.3, another partner of Respondent No.1 has filed Affidavit and acknowledged right of the Petitioners in the wake of Deed of Transfer and their entitlement in place of tenants/Transferors and also to avail transit rent particularly when the Transferor/Tenant has not objected to the same.
Worth it to note that for a considerable period of time even the transit rent is received by the Petitioners and therefore, I deem it appropriate to grant relief in terms of prayer clause (a) and (b) of both the Petitions which read thus :-
(A) This Hon'ble Court be pleased to pass an order and direction directing Respondent Nos.1 to 3 to immediately execute and register Supplemental Agreement in favour of the Petitioners which is similar as executed with other tenants/persons entitled to permanent alternate accommodation.
(B) This Hon'ble Court be pleased to pass an order and direction directing Respondent Nos.1 to 3 to immediately make payment of compensation towards temporary alternate accommodation of Rs.8,03,685.44/- (Rupees Eight Lakhs Three Thousand Six Hundred Eighty Five and Forty Four Paise only) (in ARBPL No.27067/2023) and Rs.19,13,536.77/- (Rupees Nineteen Lakhs Thirteen Thousand Five Hundred Thirtysix and Seventyseven Paisa only) (in ARBPL No.27068/2023), for a period of 1st August 2014 to 31st January 2021 as per Particulars of Claim.30/31 ::: Uploaded on - 21/02/2024 ::: Downloaded on - 23/02/2024 03:54:27 :::
(3)ARBPL-27067-27068.doc As far as prayer clause(c) is concerned in both the Petitions, it shall await the outcome of the arbitration proceedings.
Both the Arbitration Petitions stand disposed off in the above terms.
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