JUDGMENT:-
The Petitioner-developer, has invoked Section 9 of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act, 1996) in view of existence of Arbitration clause between the parties in the redevelopment agreement.
2. Rusi Ruttonshaw Todiwalla (since deceased), Dara Ruttonshaw Todiwalla (since deceased), Phiroze Ruttonshaw Todiwalla, Coomi Sheriar Patel, Perin Homi Dastur, Soona Adi Lalkaka and Mehroo Keki Bengali were the owners of the property mentioned in the Petition. They granted development rights to one Mr. Virendrakumar Jhamb. They executed two Powers of Attorney in favour of Mr. Jhamb on 4 March 1980 and a third Power of Attorney dated 7 October 2002, authorizing him to develop the property, and sign and executed conveyances in favour of the Society (Respondent No. 1). On 24 January 1983, Respondent No. 1 Society registered, having 160 members. Between the year 1985 to 1986, the two buildings with eight wings (A to H) were constructed on Plot bearing CTS No. 1231/5, Village Versova, Yari Road, Andheri (West), Mumbai. Respondent No. 1 Society proposed for a redevelopment in the year 2006. The Deputy Registrar directed Respondent No. 1 Society to carry out the structural audit in accordance with the approved byelaw No. 77. Under bye-law 158(c), Respondent No. 1 Society was directed to give tender Notice for the redevelopment. The entire redevelopment process was as directed, re-started.
3. On 10 July 2007, Respondent No. 1 Society, decided to go for redevelopment, which was supported by 142 members out of 160 members. The minority members gave complaint to the Deputy Registrar making various allegations. The Deputy Registrar vide a letter dated 10 July 2007, gave directions to Respondent No. 1 Society to take proper steps for redevelopment scheme.
4. On 12 January 2008, as per directions of the Deputy Registrar of Co-operative Society, Respondent No. 1 Society took all the steps and in Special General Body meeting a resolution was passed sanctioning the redevelopment scheme and appointed the Petitioner as a Developer.
5. On 13 April 2008, the Petitioner paid a sum of Rs. 3 crores to the original developer Mr. Jhamb for taking conveyance in favour of Respondent No. 1 Society.
6. On 25 May 2008, Respondent No. 1 Society and the Petitioner got Development Agreement executed. The Power of Attorney in favour of one of the partners of the Petitioner also got executed by Respondent No. 1 Society. On 7 August 2009, the Agreement/conveyance was registered.
7. In the month of October 2009, as alleged there are 160 members of Respondent No. 1 Society, out of which 142 members have executed the tripartite Member Agreements in favour of the Petitioner, giving their consent for the redevelopment.
8. On 16 August 2010, the Petitioner in anticipation getting IOD from Mumbai Municipal Corporation, sent letter to Respondent No. 1 Society to carry out its part of contract by furnishing the consent of all the members of the Society to the Petitioner and arrange to give vacant possession of 160 flats.
9. On 25 August 2010, Respondent No. 1 Society vide a reply through its Advocate informed the Petitioner that out of 160 members, 19 members including Respondent Nos. 2 to 19 are obstructing and/or Not co-operating in the redevelopment scheme.
10. On 6 September 2010, the Petitioner has obtained I.O.D for which Petitioner has paid Rs. 21,09,110/- to MCGM towards the payment of the scrutiny fees, development charges, premium and deposits etc., and simultaneously the Petitioner has handed over cheques to Respondent No. 1 Society for a sum of Rs. 75,52,820/- being 25% of the hardship compensation to 145 members of the Respondent Society, out of which 142 members have encashed the cheques to the extent of Rs. 73,25,007/-. On 30 September 2010, the Petitioner addressed letters to Respondent Nos. 2 to 19 placing all the facts on record, to give consent and vacate their respective premises.
11. On 4 October 2010, Respondent No. 6 vide letter replied the Notice addressed by the Petitioner's Advocate and contended that the Deputy Registrar vide letter dated 12 June 2009, refused permission to Respondent No. 1 society to grant the redevelopment rights to the Petitioner. Respondent Nos. 3, 4, 7, 8, 12, 16 and 19 have vide their Advocate's letter made similar allegations. On 21 October 2010, the Petitioner denied all the false contentions raised by the Respondents. On 23 October 2010, the Petitioner vide his Advocate's letter addressed to Respondent No. 1 Society, invoked the Arbitration clause and called upon Respondent No. 1 to give consent for appointment of sole Arbitrator. On 29 October 2010, the Petitioner has filed the present Petition.
12. The prayer clauses are reproduced as under:-
“a. That pending the arbitral proceedings the Court receiver High Court Bombay or any other fit and proper person be appointed receiver in respect of the old tenements occupied by the Respondent No. 2 to 19 with direction to take physical possession from Respondent No. 2 to 19 of their old tenements, if necessary, by taking police help and by breaking open locks.
b. That the Court Receiver of High Court Bombay be further ordered and directed to handover the possession of old tenements of Respondents No. 2 to 19 to the Petitioner so that the Petitioner can demolish all the eight wings of Respondent No. 1 society, reconstruct the new buildings and allot new flats to the Respondent No. 2 to 19 and other members of the Respondent No. 1 Society.
c. That pending the arbitral proceedings, the Respondent No. 2 to 19 be restrained by an order and injunction of this Hon'ble Court from alienating, encumbering, parting with possession or creating third party rights in favour of any third party in respect of the old tenements of Respondent Nos. 2 to 19.
d. That an officer of this Hon'ble Court or an Advocate or any other proper person be appointed as a commissioner to visit the site, take photographs and make a report to this Hon'ble Court about the structural condition of eight wings of Respondent No. 1 society.
e. Ad interim reliefs in terms of prayer (a) to (d) be granted.”
13. The Petitioner has relied upon Girish Mulchand Mehta v. Mahesh S. Mehta 2010 2 Mh.L.J 657, Mahesh S. Mehta v. Harini Cooperative Housing Society Ltd. 2009 5 Bom. C.R 89 and Harsha Co-operative Housing Society Ltd. v. Kishandas S. RajpalWrit Petition No. 10285 of 2009 dated 8 March 2010. The Respondent-Society basically supported the contention of the Petition.
14. Respondent No. 2 has raised various objections and oppose all the prayers. They relied on Sundaram Finance Ltd. v. Nepc India Ltd. 1999 2 S.C.C 479, Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd. 2007 7 S.C.C 125, State of U.P v. Ram Sukhi Devi 2005 9 S.C.C 733, State of U.P v. Visheshwar 1995 Supp. 3 SCC 590, Ivory Properties & Hotels Pvt. Ltd. v. Nusli Neville Wadia 2011 2 Bom. C.R 559 and N. Radhakrishnan v. Maestro Engineers 2010 1 S.C.C 72.
15. Respondent Nos. 3, 4, 7, 8, 11, 12, 18 and 19 have also relied on similar case i.e Ivory Properties & Hotels Pvt. Ltd. (Supra). The Petitioner and the Respondents read and referred circular dated 3 January 2009, for the development of Co-operative Housing Society referring to the obligations of the developer/society while undergoing any such project.
16. Admittedly, though the Petition is filed on 29 October 2010, the Petitioner and the Society in view of the agreement of Arbitration clauses, till this date, unable to appoint the Arbitral Tribunal to settle their disputes, if any. Section 11 Petition under the Arbitration Act, is still pending. The Respondents are Not members of those agreements and therefore, being third party, were Not even otherwise, entitle to participate in the Arbitration proceedings. The grant of such prayers at this stage, would cause injustice and hardship, as No other member even yet shifted to any other place. The project is Not in progress. There is No reason to pass such order, at this stage, in view of this uncertainty. There is No case to grant such drastic order only against these members. The Petition is pre-mature. The Petitioner may take such steps if all other members willing and/or actually shifted to some other alternative places or received compensation for the same. Such Petition and the reliefs so sought, is impermissible.
17. As Noted, out of 160 members, 140 members of the Society are in favour of redevelopment and given their consent also. Respondent Nos. 5 and 15 have also consented for the development. On 12 January 2008, the Respondent Society passed a resolution sanctioning the redevelopment scheme and appointing the Petitioner as developer. The said meeting was attended by 85 members out of 160 members. All the present members voted in favour of redevelopment. Therefore, there was 100% voting in favour of the Petitioner. As Noted, decision to allot the redevelopment work to the Petitioner was taken on 15 October 2006. The objection of Respondent Nos. 2 to 19, except mentioned above, was Noted. However, till this date, because of it the development could Not be proceeded though there is a dire need to repair the Society buildings which are in dilapidated conditions. The project is at the stage of plan only. The alternate accommodations are to be offered or provided. The development, as Noted, just Not possible without the finance from third person or party like the developer. The Society, as Noted, does Not have even facility of municipal water and the occupation certificate. The agreement dated 25 May 2008 based upon the conveyance dated 13 April 2008 in which Mr. Jhamb, the confirming party and the Petitioner, has already spent huge amount including a sum about Rs. 75 lacs to 145 members being 25% of the hardship compensation, Rs. 21,09,110/- with the BMC towards the security fees, development charges and about Rs. 6 lacs towards stamp duty and registration charges for the conveyance. The BMC has issued IOD dated 6 September 2010 is also additional factor. No members till this date, challenged the resolution dated 12 January 2008 and agreement dated 25 May 2008 in independent proceedings. The Suit filed by Respondent No. 2 though pending, but Not decided for want of jurisdiction in view of Section 91 of the Maharashtra Co-operative Societies Act. The Petitioner as Noted, is developer and builder and has No concern with the dispute between the opposite members which are minor in numbers, to halt the development of the Society. The issue is as contended, whether the case is made out for grant of interim order as prayed. In the result, thereby claiming eviction only against the Respondent Nos. 2 to 19, except those subsequently consented.
18. Undisputed position on record is, for various reasons the project could Not be proceeded further though the Society has entered into and agreed to develop the property through the Developer as the members were Not in position to bear the repairs and rehabilitation of the old buildings expenses. All the members of the Society are in possession of their respective flats till this date. It is necessary for them also to retain the possession till the alternate accommodations or compensation in lieu thereof are Not provided.
19. The “just and conversion” is the fundamental principle to appoint Receiver. The power of Court to grant an interim prohibitory or mandatory injunctions are also well defined. The concepts of balance of convenience, prima-facie case, irreparable injury are well known area. All these elements are missing in the present case, at this stage of un-started arbitration proceedings except for prayer clause “C”. There is No case of any urgency, to justify, to pass drastic order in a Section 9 Petition, filed in the year 2010. There are No change of circumstances as of Now, which are sufficient to grant prayers only against the Respondent's, though all other members have Not yet vacated the premises/flats. They are in occupation of the Society flats. The Respondents are Not denying the development, but opposing the way in which the Society is handling the project. Their opposition, even if any, that could Not have prevented the society to proceed with the development of the scheme/project as per the agreement by taking further steps with regard to other 142 members. There is No progress shown on record.
20. The dispute with regard to the area or such other related matters ought to have been settled by this time. The society and the members are bound by the majority members' decision/unchallenged resolutions. The pendency of any other proceedings, Suit cannot obstruct the project unless stayed or directed accordingly. It ought to have Not waited for such a long time to commence the project or demolition of flats of the agreed/consented members. The prayers only against the Respondents without taking further steps, in my view, is unacceptable. The steps must be taken simultaneously. These temporary displacement, action against the Respondents, at this stage is uncalled for.
21. Whosoever, obstruct once the project or action is commenced actually, the Petitioner and/or the Society, in a given situation may apply for such urgent relief, but Not in such piecemeal and/or in part manner.
22. Mere invocation of arbitration clause itself is Not enough. The party must take steps to appoint the Arbitral Tribunal. If other side is Not responding, the Arbitration Act provides and handles even such situation. The delay in getting the Arbitral Tribunal constituted, though invoked the arbitration clause, frustrates the arbitration system. Such delay destroys the modes of early settlement of the dispute through the arbitration. The intentional or unintentional delay even selecting or Nominating or getting the Arbitral Tribunal, itself is destruction area to frustrate the aim and object of the arbitration system. The arbitration proceedings must be expedited at every stage.
23. In Girish Mulchand Mehta (Supra), 2 members of 12 were opposing the project of one society building. In the present case, there are eight wings and the Respondents are opposing since 2006 but other 142 members are Not supporting the project. In that case 10 members out of 12 had vacated the flats. The situation is distinct and distinguishable. No one has yet vacated the flats.
24. There is No case of irreparable injury, substantive loss, urgency or substantive harm, unless all the flat owners ready and vacate the flats for the project. Such selective action is Not the solution, at this stage of the project. Everything should run simultaneously. At this stage, grant of prayers would Not serve the purpose, unless all the majority members and the society work together and take steps with the builder, to commence the project in all respect. The situation is Not germane to grant the prayers so made at this stage. However, liberty is granted to take out such application/petition. The parties are at liberty to settle the matter before the Tribunal or otherwise. The Respondents are also at liberty to give consent for the arbitration along with others and settle the matter in the interest of all the members of the Society. The liberty is also granted to the Petitioner and the Society to take actions in accordance with law, in case the Respondents, fail to support the majority decisions or resolutions, and obstruct the development. Every allegations of fraud or misrepresentation is Not triable issue. It depends upon the facts and circumstances including the intention of such allegations.
25. These findings are sufficient to decide this application and therefore, Not dealt with other contentions at this stage of the project, dispute and the pending arbitration proceedings.
26. Resultantly, the following order:-
ORDER
(a) The Petition is allowed in terms of prayer clause (c) only. The liberty is granted to apply for other prayers.
(b) The liberty is granted to Respondent Nos. 2 to 19, or their heirs, to consent for Arbitration to settle the disputes between the parties.
(c) The liberty is granted to settle the matter.
(d) All the points are kept open to be placed before the Arbitral Tribunal for appropriate order/reliefs.
(e) The parties to bear their own costs.