R.D. Dhanuka, J.@mdashBy this petition filed u/s 9 of the Arbitration & Conciliation Act, 1996 (hereinafter referred as ''the Act'' for short), the petitioner seeks appointment of Court Receiver in respect of the flats occupied by respondent Nos. 2 to 6c with a direction to take physical possession from them if necessary with police help and hand over the same to the petitioner for demolition and reconstruction of new buildings. The petitioner also seeks injunction against the said respondents from alienating, encumbering or parting with possession of their respective flats occupied by them except hand over possession to the respondent society. Some of the relevant facts for the purpose of deciding this petition are as under. Petitioner is carrying on business as Builder and Developer. Respondent No. 1 society is owner of a piece and parcel of land bearing CTS No. 575 original plot No. 1 and 2 and final plot No. 22A and 22B admeasuring 2002.5 sq. mt. Vide a conveyance deed dated 10th September, 1968, the first respondent society became owner of the said property. The property is consisting of two buildings i.e. A and B. Building A is consisting of ground plus three upper floor with a total of 21 flats therein, while building B is consisting of ground plus three upper floors with a total of 20 flats therein. The said two buildings were constructed more than 40 years back and are stated to be in dilapidated condition.
2. On 19th August, 2009, the society invited tenders from various developers for development of the buildings of the society. Nine developers submitted their tender to the society including the petitioner.
3. The society passed a resolution on 21st March 2010 and resolved to appoint the petitioner as developer. On 8th April 2011, the petitioner and the society executed a development agreement. On 5th January 2012, the petitioner obtained IOD from the Municipal Corporation. It is the case of the petitioner that as per Clause 55 and 58.2 of the development agreement, petitioner submitted bank guarantee in the sum of Rs. 2.50 crores in favour of the society.
4. Petitioner informed the society about the IOD having been obtained by the petitioner. Vide letter dated 7th July 2012, the society informed the petitioner that 27 out of 41 members have executed tripartite individual agreements and have vacated their respective flats. Society requested the petitioner to issue cheques for compensation to all 22 members. It is not in dispute that the petitioner society and 32 of its members executed tripartite agreements prior to 1st September 2012. As on the date of filing this petition, 37 members out of 41 members executed tripartite agreements with the petitioner and the society and have vacated their respective flats and are receiving rent/compensation for occupying alternate accommodation. During the pendency of this petition, respondent No. 4 also vacated flat No. B-3 and entered into tripartite agreement. Thus, out of 41 members, 38 members have already vacated and have entered into tripartite agreement with the petitioner and the society.
5. It is the case of the petitioner that as respondent No. 2 to 6c did not hand over vacant possession of their respective flats and therefore society did not hand over possession of those flats to the petitioner, petitioner filed the present proceedings for interim measures.
6. On 24th January 2013, petitioner and the society tendered Minutes of Order. The society declared that it had received physical possession of 38 flats belonging to various members of the society excluding the possession of the flats occupied by respondent Nos. 2, 2a, 2b, 5, 6a, 6b and 6c (hereinafter after referred as '' the said respondents'' for short). The petitioner handed over cheques to first respondent society for the balance corpus amount and 21 months post dated cheques towards compensation for occupying alternate accommodation excluding the amount payable to the said respondents. The petitioner acknowledged that the society has handed over physical possession of all the 38 flats belonging to the members of the society except flats occupied by the said respondents against the society receiving the cheques for the balance corpus amount and 21 months post dated cheques. The society also gave its no objection if the petitioner demolishes these 38 flats of which possession is handed over by the society to the petitioner and proceeds with the reconstruction work as per the development agreement.
7. The said respondents filed Dispute bearing No. CC-IV/10/2013 under Sections 91 to 96 of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred as ''MCS Act'' for short) in the Co-operative Court No. 4 at Mumbai and filed interim application therein against the petitioner, society and its committee members. By an Order dated 18th February 2013, the learned Judge of Co-operative Court No. 4 rejected the interim application filed by the said respondents. It is stated that the said respondents have filed an appeal against the said order (AFO 94/13) before the Maharashtra State Appellate Court and the said appeal is pending.
8. The said respondents and also society, have filed separate affidavits. The said respondents have opposed the grant of interim measures on various grounds. Mr. S.U. Kamdar, the learned senior counsel and Mr. Panickar, the learned counsel appearing on behalf of the said respondents made following submissions:
a) Petitioner did not give notice u/s 164 of the MCS Act to the Registrar before filing the present petition which is mandatory and thus, petition is liable to be dismissed on this ground;
(b) This Court has no jurisdiction to decide this petition as the dispute, only between the members and society and with the contractor/agent can be adjudicated only by the Co-operative Court established under the MCS Act, jurisdiction of other courts is barred u/s 163 of the Act;
(c) Petitioner has no locus standi and authority to file the present petition;
(d) Society has not followed the directives dated 3rd January 2009 issued by the Government of Maharashtra u/s 79(A) of the Act to all the societies directing the societies to include in the agreement that if any dispute arises in the work of development, provision should be made in the agreement to resolve the same as per the provisions of Section 91 of the MCS Act. The learned counsel placed reliance upon paragraph 11 of the said directives dated 3rd January 2009 annexed to affidavit in reply filed by the said respondents. It is submitted that directives issued by the Government of Maharashtra are binding on the respondent society and in view of such directives, dispute having arisen in the work of redevelopment, such dispute could be resolved only by Co-operative Court u/s 91 of the MCS Act and not by arbitral tribunal under the provisions of Arbitration and Conciliation Act. It is submitted that thus there is no valid arbitration agreement and therefore present proceedings filed u/s 9 which is in aid of the final relief is not maintainable and is without jurisdiction;
(e) There are serious allegations of fraud and forgery against the petitioner developer and also the managing committee members of the society who have colluded with each other and have not acted in the interest of society. The learned counsel referred to the Supreme Court Judgment in case of
(f) It is submitted that arbitration petition is premature as the plan is not sanctioned for all the floors of the new building and thus, members are not liable to vacate the premises in their occupation. It is submitted that total area to be constructed is maximum 4400 sq. mt. by the petitioner, whereas petitioner proposed to construct area more than 4400 sq. mts. It is submitted that the petitioner has got the plan sanctioned only up to 8th floor and not in respect of the upper floors proposed to be constructed. The learned counsel placed reliance upon various certificates obtained from Architect to show difference in area proposed to be given to the members of the society including the said respondents and the area which is available for development to the petitioner. It is submitted that though the petitioner is entitled to develop larger area and is entitled to avail of the new guidelines issued by the Government of Maharashtra on 6th January 2012, petitioner does not give the benefit thereof to the society and its members. The learned counsel submits that if any additional area is available as provided under Clause-4.1 of the development agreement, the said respondents are ready to pay Rs. 10,000/- per square ft. for such additional area to the petitioner;
(g) It is submitted that the said respondents have already filed an appeal against the order of learned Judge, Co-operative Court No. 4 before the Maharashtra Co-operative Appellate Court and the same is pending;
(h) In the alternate to the aforesaid submissions, the learned counsel submits that the petitioner in collusion with respondent society has appointed an arbitrator and the said respondents have apprehension that the society would surrender the rights and interest of the members in favour of the petitioner developer which would cause tremendous prejudice and hardship to the members.
9. Mr. Vashi, the learned counsel appearing on behalf of the petitioner on the other hand submits as under.
The directives issued by the Government of Maharashtra on 3rd January 2009 u/s 79(A) of the MCS Act is binding on the society and not the petitioner. It is submitted that society has already approved the development agreement in its General Body Meeting and had authorized some of the committee members to execute the same which recorded an arbitration agreement. It is submitted that society has not raised any such objection about the alleged breach of the directives issued by the Government of Maharashtra. It is submitted that in any event, such objection cannot be raised in the present proceedings by the minority members of the society who have already challenged the resolution by filing Dispute u/s 91 of the MCS Act which is pending. It is submitted that notice u/s 164 of MCS Act was thus, not mandatory in case of redevelopment. Reliance is placed on the copy of Dispute filed by the said respondents before the Co-operative Court to indicate that the said respondents have already challenged the resolution passed by the society and the same is pending. In the Order dated 18th February 2013, the Cooperative Court, prima facie, held that the society had passed a resolution for inviting tenders from the concerned developers for redevelopment of the buildings of the society. It is observed that Disputant No. 3 Mr. Deepak Maniar had participated in the discussion in which it was resolved to appoint the petitioner as developer. In the General Body Meeting held on 17th April 2011, the development agreement was approved by the members and the power was given to Chairman, Secretary and Treasurer to execute the develop agreement including for its registration. A Special General Body Meeting was held on 29th May 2011 which was attended by Disputant No. 1 i.e. Smt. Jyoti Mehta and the original member for flat No. B/20 i.e. the original member of flat of Disputant Nos. 4, 5 and 6 in which it was resolved unanimously to award the redevelopment work of the society to the petitioner. It is observed that the said respondents had not taken any objection in respect of the notice of meeting or anything. The resolution was passed by the society unanimously and also the development agreement was unanimously approved by the members of the society. The members present did not object to the resolution. Minutes of Meeting was also not objected by the Disputants at the relevant time. The Co-operative Court recorded that except the Disputants (the said respondents), all other members of the society have vacated their flats and possession of those flats were already handed over to the petitioner for redevelopment. The Co-operative Court also observed that the perusal of the contents of the dispute application, fraud is not established and the allegation in the dispute application without any documentary evidence, shall not constitute any fraud. The Co-operative Court observed that prima facie, the disputants failed to establish the case of fraud while appointing the petitioner as a developer and also while executing the development agreement. It is also observed that that the petitioner is duly appointed as developer of the society and while executing the development agreement, the guidelines/directives issued by the Government of Maharashtra dated 3rd January 2009 are followed by the society in its actual spirit. Court also observed that balance of convenience was not in favour of the disputants. The Co-operative Court rendered a finding that majority of members were in favour of the petitioner and the disputants failed to prove prima facie fraud committed by the opponents in the process of redevelopment of the property of the respondent society. The Co-operative Court observed that as a member of respondent society or the person claiming through the member of the society, the disputants (the said respondents) are duty bound to vacate their flats and deliver vacant possession to the petitioner and the society for redevelopment. It is also observed that if the relief as claimed by the disputants is granted, that would amount to irreparable loss and great hardship to the petitioner, society and also to its 38 members who have already vacated their flats.
10. The petitioner placed reliance upon the judgment of Division Bench of this Court delivered on 1st August 2012 in Appeal (L) 474 of 2012 (Mohinder Kaur Kochar Vs. Mayfair Housing Private Ltd., & Ors) in support of the plea that the dispute arising from redevelopment, which becomes necessary by passage of time, is not ''business'' of the society and such activity cannot be considered as ''touching the business'' of the society and is not relatable to the business of the society.
11. The petitioner placed reliance upon the Judgment delivered by Division Bench of this Court in case of
12. On the allegation of fraud and forgery made by the said respondents, it is submitted by Mr. Vashi, the learned counsel that the society had not disputed the development agreement at any stage including in the present proceedings. Members of the society except the said respondents, have already implemented and acted upon the said development agreement with the petitioner. The petitioner had signed the development agreement alone and had submitted for adjudication to obviate any further delay in execution of the agreement. In view of the document having been signed only by the petitioner before adjudication, the document was impounded on 7th May 2011. The stamp authorities adjudicated the stamp duty and penalty which was duly paid by the petitioner on 7th June 2011 when the said document was released. The said document was thereafter signed by the managing committee members of the society and was lodged for registration. On 9th June 2011, the document was duly registered. It is submitted that thus, there is no question of fraud or forgery as falsely alleged by the said respondents. The society has not pleaded any alleged fraud or forgery on the part of the petitioner.
13. Mr. Vashi placed reliance upon the documents signed by the members through whom the said respondents are claiming rights, annexed to the affidavit in rejoinder dated 14th February 2013 by which, those members had sought not only alternate accommodation from the developer but has also demanded extra area of 18 to 18.5 % of carpet area. Respondent Nos. 6a to 6c are claiming through Mr. Vishnu Khandelwal who had also given his consent to the buildings'' reconstruction, to the Managing Committee of the society to negotiate, prepare, invite tenders, obtained sanction for proposal of development etc. Mr. Vishnu Khandelwal had also authorised, by executing a writing to the Managing Committee of the society to proceed with the redevelopment procedure and invite expression of interest from the builders of repute on behalf of the society. Mr. Vashi also placed reliance upon a copy of the carpet area statement annexed to the floor plan at Exh-A-3 to the said affidavit. The said document shows floor, location and the carpet area in the plan of proposed redevelopment in lieu of flat No. B-20 which was finally accepted by him. Mr. Vashi also placed reliance upon the Minutes of Special General Body Meeting held on 21st March 2010 which was also attended by respondent No. 5 who had also obtained compensation from the developer and had agreed for extra carpet area of 18 to 18.5.% It is submitted that the respondents having accepted the additional area and benefit from the petitioner, cannot challenge the development agreement and/or resolution passed by the society. In any event, the same is subject matter of Dispute pending before the Co-operative Court. Mr. Vashi submits that dispute between the petitioner and the society is arbitrable dispute. The said respondents who are members of the society, are bound by the outcome of the said dispute.
14. It is submitted that in view of Clause-11 of the Development Agreement, sanction of the plan of the entire building is not permitted till the petitioner constructs and hands over possession of the respective flats to the members of the society. The petitioner, therefore cannot apply for sanction of plan of the floors over and above 8th floor. There is no fraud or forgery committed by the petitioner. In view of the society having rejected the proposal of the petitioner to avail of the benefit of Circular dated 6th January 2011 issued by the Government of Maharashtra to use fungible FSI, the petitioner had not submitted any plan of amendment to the existing plan. The argument of the said respondents, therefore, that the petitioner would get additional benefit by invoking Circular dated 6th January 2011, is totally frivolous and untenable.
15. The petitioner submitted that in view of the society not willing to hand over possession of all 41 flats, dispute had arisen between the parties and thus, an arbitrator has been already appointed and the present petition u/s 9 for interim measure cannot be considered as premature. It is submitted that respondent Nos. 5 and 6a to 6c are actually not occupying their respective flats and have shifted somewhere else. Only respondent Nos. 2a and 2b have occupied their flats and are deliberately not handing over them to the society with a view to obstruct the redevelopment work. It is submitted that the petitioner has already spent substantial amount on this project and any further delay would cause further loss to the petitioner and also to the society as well as other 38 members who have already vacated their respective flats and they would have to be put back in possession of new flats on reconstruction of the building. Mr. Vashi, the learned counsel appearing for the petitioner has no objection to pay compensation as are already paid by the petitioner to other 38 members in accordance with the development agreement and tripartite agreements entered into between the petitioner and respondents. Mr. Vashi also submits that he has no objection if the said respondents also appear before the learned arbitrator.
16. Mr. Samudrala, the learned counsel appearing for the first respondent society placed reliance upon the affidavit filed by the society in the present proceedings in support of his submission and submits that society has no objection if the relief as claimed by the petitioner is granted and the petitioner is allowed to commence redevelopment of the property, which would be in the interest of the society and its members.
17. The Division Bench of this Court, in case of Mohinder Kaur Kochar (supra) had held that the dispute arising from redevelopment which becomes necessary by passage of time is not ''business of the society''. Paragraph 19 of the said Judgment reads thus:
19. When a co-operative housing society initially constructs the buildings for its members, it is not a redevelopment, but the initial development of the property. The initial construction of the property for a cooperative housing society is one of its prime objects. The two activities namely, initial construction of a building and its redevelopment are different activities. By passage of time, as the building becomes older, the Housing Society may take a decision to repair or redevelop the property. Such activity is totally different from initial development of the building. The dispute arising from such redevelopment, which becomes necessary by passage of time, is not "business" of the society. Such activity cannot be considered as ''touching the business'' of the society. The dispute involving members, developers, managing committee in respect of redevelopment of the property which becomes necessary in view of passage of time, is not relatable to the business of the society. The initial development of the co-operative housing society of constructing the building may be business of the society, but the subsequent redevelopment is not.
18. The society had passed a resolution to invite tenders for redevelopment of property and has executed agreement for redevelopment in favour of the petitioner in view of the condition of the building being dilapidated. Dispute arising out of such redevelopment is not the business of the society or touching the business of the society. In my view, thus notice u/s 164 of the MCS Act was not mandatory in the facts of this case. I am bound by the decision of the Division Bench of this court rendered in case of Mohinder Kaur Kochar (supra).
19. As far as submission of the said respondents that in view of the directives issued by the Government of Maharashtra u/s 79A of the MCS Act, arbitration clause could not have been inserted in the development agreement and the dispute is not arbitrable is concerned, in my view, directives issued by the Government of Maharashtra u/s 79A of the MCS Act to the societies, would not bind the third party. Even if for any reasons, the society has not complied with the said directives issued by the Government of Maharashtra in an agreement entered into between such society with third party, such directives cannot be read as if part of such agreement between society and third party. In this case, the first respondent society has entered into development agreement with the petitioner after passing of resolution by the society, which development agreement incorporates arbitration agreement between the parties. By applying the directives issued by the Government of Maharashtra u/s 79A of the MCS Act, arbitration clause in the agreement between the society and the third party cannot stand deleted. Parties to the agreement are bound by the said arbitration clause. In my view, thus there is no substance in the argument of Mr. Kamdar, the learned senior counsel that in view of the Government directives issued u/s 79A, arbitration clause would not have any effect or that only the Co-operative Court u/s 91 of the MCS Act would have exclusive jurisdiction to adjudicate upon such dispute. In my view arbitration agreement exists between the petitioner and the society.
20. As far as submission of the said respondents that they are not party to the arbitration agreement and therefore arbitration clause, if any, contained in the agreement between the petitioner and the society would not bind them and they could not have been impleaded as party respondents to the present proceedings is concerned, reference to the decision of the Division Bench of this Court in case of Girish Mulchand Mehta (supra) would be relevant. Paragraphs 15, 16, 18, 19 and 20 of the said Judgment read thus:
15. The Appellants would then rely on the decision of the Apex Court in
16. In the present case, it is not in dispute that the General Body of the Society which is supreme, has taken a conscious decision to redevelop the suit building. The General Body of the Society has also resolved to appoint the Respondent No. 1 as the Developer. Those decisions have not been challenged at all. The Appellants who were members of the Society at the relevant time, are bound by the said decisions. The Appellants in the dispute filed before the Cooperative Court have only challenged the Resolution dated 27/4/2008, which challenge would merely revolve around the terms and conditions of the Development Agreement. As a matter of fact, the General Body of the Society has approved the terms and conditions of the Development Agreement by overwhelming majority. Merely because the terms and conditions of the Development Agreement are not acceptable to the Appellants, who are in minuscule minority (only two out of twelve members), cannot be the basis not to abide by the decision of the overwhelming majority of the General Body of the Society. By now it is well established position that once a person becomes a member of the Cooperative Society, he looses his individuality with the Society and he has no independent rights except those given to him by the statute and Bye-laws. The member has to speak through the Society or rather the Society alone can act and speaks for him qua the rights and duties of the Society as a body (see
R803E. Notice of Filling Application to persons likely to be affected.--
Upon any application by petition under the Act, the Judge in chambers shall, if he accepts the petition, direct notice thereof to be given to all persons mentioned in the petition and to such other persons as may seem to him to be likely to be affected by the proceedings, requiring all or any of such persons to show cause, within the time specified in the notice, why the relief sought in the petition should not be granted.
18. We have no hesitation in taking the view that since the Appellants were members of the Society and were allotted flats in question in that capacity at the relevant time are bound by the decision of the General Body of the Society, as long as the decision of the General Body is in force. As observed earlier, the Appellants have not challenged the decisions of the General Body of the Society which is supreme, in so far as redevelopment of the property in question or of appointment of the Respondent No. 1 conferring on him the development rights. The Appellants have merely challenged the Resolution which at best would raise issues regarding the stipulations in the Development Agreement. The General Body of the Society has taken a conscious decision which in this case was after due deliberation of almost over 5 years from August 2002 till the Respondent No. 1 came to be finally appointed as Developer in terms of Resolution dated 2nd March, 2008. Moreover, the General Body of the Society by overwhelming majority not only approved the appointment of Respondent No. 1 as developer but also by subsequent Resolution dated 27th April, 2008 approved the draft Development Agreement. Those terms and conditions have been finally incorporated in the registered Development Agreement executed by the Society in favour of Respondent No. 1. That decision and act of the Society would bind the Appellants unless the said Resolutions were to be quashed and set aside by a forum of competent jurisdiction. In other words, in view of the binding effect of the Resolutions on the Appellants, it would 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. It is noticed that as of today the Appellants have been expelled from the basic membership of the Society. Their right to occupy the flat is associated with their continuance as member of the Society. It is a different matter that the decision of expelling the Appellants from the basic membership of the Society will be subject to the outcome of the decision of the superior authority where the appeals are stated to be pending. If the decision of the Society to expel the Appellants is to be maintained, in that case, the Appellants would have no surviving cause to pursue their remedy even before the Co-operative Court much less to obstruct the redevelopment proposal. As a matter of fact those proceedings will have to be taken to its logical end expeditiously. Even if the Appellants were to continue as members, they would be bound by the decision of the General Body whether they approve of the same or otherwise. In any case, keeping in mind that the Development Agreement does not absolutely take away the rights of the Appellants in the flats in question, as after demolition of the existing building, the Appellants would be accommodated in the newly constructed flats to be allotted to them in lieu of the existing flats, on the same terms as in the case of other members, provided the Appellants continue to remain members of the Society. Under the Development Agreement, the Respondent No. 1 is obliged to complete the project within 18 months from the date of receipt of full Commencement Certificate from the Corporation. The full Commencement Certificate would be issued only upon the vacant possession of the entire building is delivered to the Respondent No. 1 who in turn would demolish the same with a view to reconstruct a new building in its place. Significantly, out of twelve (12) members, ten (10) members have already acted upon the Development Agreement as well as have executed separate undertaking-cum-agreement with the Respondent No. 1 Developer. They have already vacated flats in their occupation to facilitate demolition of the existing building and have shifted to alternative transit accommodation as back as in February 2009. The project has been stalled because of the obstruction created by the Appellants herein who are in minuscule minority. The said ten members of the Society who have already shifted their premises, they and their family members are suffering untold hardship. At the same time, the Respondent No. 1 who has already spent huge amount towards consideration of the Development Agreement and incurred other incidental expenses to effectuate the Development Agreement in addition will have to incur the recurring cost of paying monthly rent to the ten members who have already shifted to transit accommodation. The learned Single Judge has noted that the Appellants are not in a position to secure the amount invested and incurred including the future expenses and costs of the Respondent No. 1 herein in case the project was to be stalled in this manner. Even before this Court the Appellants have not come forward to compensate the Respondent No. 1 herein and the other ten members of the Society for the loss and damage caused to them due to avoidable delay resulting from the recalcitrant attitude of the Appellants. Considering the impact of obstruction caused by the Appellants to the redevelopment proposal, not only to the Respondent No. 1 Developer but also to the overwhelming majority of members (10 out of 12) of the Society, the learned Single Judge of this Court opined that it is just and convenient to not only appoint the Court Receiver but to pass further orders for preservation as well as protection and improvement of the property which is subject matter of Arbitration Agreement. We have already noticed that the Court''s discretion while exercising power u/s 9 of the Act is very wide. The question is whether in the fact situation of the present case it is just and convenient to appoint Court Receiver coupled with power conferred on him to take over possession of the entire building and hand over vacant and peaceful possession thereof to the Respondent No. 1 who in turn shall redevelop the property so as to provide flats to each of the members of the Society in lieu of the existing flats vacated by them as per the terms and conditions of the Development Agreement, as ordered by the learned Single Judge. For the reasons noted by the Learned Single Judge which we have reiterated in the earlier part of this decision, we find that it would be just and convenient to not only appoint Court Receiver to take over possession of the property but also pass further order of empowering the Court Receiver to hand over vacant possession of the suit building to the Respondent No. 1 to enable him to complete the redevelopment work according to the terms and conditions of the Development Agreement.
19. Our attention was invited to the decisions of our High Court in the case of Raja Construction Co. v/s. Sahara Cooperative Housing Society Ltd. & ors. in Notice of Motion No. 2753/2007 decided on August 31, 2007 and another decision of the Division Bench in the case of Whiz Enterprise Private Ltd. v/s. State of Maharashtra & ors. in WP (L) No. 28/2009 decided on 30/7/2009. We are conscious of the fact that in both these decisions the member who was in minority did not bother to challenge the decision of the General Body of the Society. Even in the present case, the Appellants have not challenged the relevant decisions of the Society to redevelop the suit property and to appoint the Respondent No. 1 as the Developer. At best, the Appellants have challenged the Resolution dated 27th April, 2008 which in turn relates to the approval of the Development Agreement, which has already been executed between the Respondent No. 1 Developer and the Respondent No. 2 Society. Indeed, in those cases the relief was not on an Application u/s 9 of the Act, but for the reasons recorded hitherto the relief to be granted in this petition would nevertheless be the same.
20. It was also argued that the property was in good condition and there was no need to redevelop the existing building. In the first place, as noted earlier, the decision of the General Body of the Society to redevelop the suit property has not been challenged at all. Besides, no provision in the Cooperative Societies Act or the rules or any other legal provision has been brought to our notice which would curtail the right of the Society to redevelop the property when the General Body of the Society intends to do so. Essentially, that is the commercial wisdom of the General Body of the Society. It is not open to the Court to sit over the said wisdom of the General Body as an Appellate Authority. Merely because some members in minority disapprove of the decision, that cannot be the basis to negate the decision of the General Body, unless it is shown that the decision was the product of fraud or misrepresentation or was opposed to some statutory prohibition. That is not the grievance made before us. In the present case, the General Body took a conscious decision after due deliberations for over five years to redevelop its property. Even with regard to the appointment of the Respondent No. 1 as the Developer, the record shows that it was decided by the General Body of the Society after examining the relative merits of the proposals received from the developers and interviewing them. Even the proposed development agreement to be entered with the Developer (Respondent No. 1) was approved by the General Body. The Appellants raised untenable pleas to cause obstruction and have belatedly filed proceedings in the Cooperative Court as a counter blast only to protract the redevelopment work to be carried out by the Respondent No. 1 herein.
21. This Court has held that merely because the terms and conditions of the development agreement are not acceptable to the members who are in minuscule minority, cannot be the basis not to abide by the decision of the overwhelming majority of the General Body of the Society. This Court held that once a person becomes a member of the Co-operative Society, he looses his individuality with the Society and has no independent rights except those given to him by the stature and Bye-laws.
22. After considering Rule 803-E of the Bombay High Court (Original Side) Rules, the Division Bench of this Court held that the impleadment of the members, who are not party to the arbitration proceedings would be affected if any order is passed in view of Rule 803-E of the High Court (O.S.) Rules. This Court accordingly rejected the submissions made by the minority members that they could not have been impleaded as party respondents to the petition filed u/s 9 of the Act. It is not in dispute that the said respondents did not sign any tripartite agreement with the petitioner and the society so far. However, it cannot be disputed that the said respondents are either members and/or claiming through the members of the society, which has passed a resolution to appoint the petitioner as developer and has entered into development agreement. Such resolutions are under the subject matter of separate proceedings filed by the said respondents before the Co-operative Court. Co-operative Court has already declined to grant any interim relief in favour of the said respondents. The society, on behalf of all the members, had agreed to hand over vacant possession of the flats to the petitioner for redevelopment. Society has failed to hand over the possession of the flats now occupied by the said respondents to the petitioner for redevelopment though agreed to hand over. The petitioner is thus, entitled to file in filing this proceedings for interim measures with a view to commence redevelopment of the property under the development agreement entered into by the society and to comply with their part of obligation under the said agreement. The said respondents would be indirectly affected by the order passed by this Court and thus would be necessary party to the present proceedings filed u/s 9 of the Act. I am, therefore, not inclined to accept the submission made by Mr. Kamdar, the learned senior counsel and Mr. Panicker the learned counsel that the said respondents being not party to development agreement or not having signed the arbitration agreement, cannot be impleaded as party respondents to the present proceedings.
23. Perusal of the record indicates that the resolution for redevelopment of the property and appointment of the petitioner as developer was passed almost unanimously by the members of the first respondent society. However, the project has been delayed because of the objection raised by the said respondent on one or the other ground. All the occupants except the said respondent have already handed over the possession of their flats to the society and has implemented tripartite agreement. The society has handed over the possession of all the flats except flats in occupation of the said respondents to the petitioner. However, unless the flats in occupation of the said respondents are vacated and handed over to the petitioner, the redevelopment can not commence. Merely because few members of the society are opposing the project, the objection cannot negate the decision of the general body. The allegations made by the said respondent against the committee members of the society and the petitioner is pending adjudication before the cooperative court. On perusal of the record I find that the General Body took conscious decision for redevelopment of the property and to appoint developer for the same. Perusal of the order passed by the Cooperative court indicates that all the pleas raised by the said respondents before the cooperative court are rejected as the learned Judge found no substance thereon. It is also clear that the said respondent filed proceedings u/s 91 only after the present proceedings are filed by the petitioner u/s 9 of the Arbitration Act for interim measures so as to further delay the present proceedings. In my view, if the Court Receiver is not appointed with a power to take over the possession of the flats in occupation of the said respondents and to hand over the same to the petitioner for demolition and redevelopment not only the petitioner would suffer but the society and its 38 members would also suffer as the petitioner would not be in a position to demolish the existing building and to commence and complete the redevelopment and to hand over possession to the respective members their flats in the new building in lieu of their existing flats vacated by them as per the terms and conditions of the development agreement. In my view, it is just and convenient to appoint Court Receiver with a power to take forcible possession of all the facts in occupation of the said respondent Nos. 2, 2(a), 2(b), 5, 6(a) to 6(c) and hand over the same to the petitioner for demolition and redevelopment of the property.
24. As far as issue of jurisdiction raised by the said respondents that the dispute between the contractor and the society is barred u/s 163 of the MCS Act is concerned, in my view, in view of the arbitration agreement entered into between the petitioner and respondent No. 1 society, the matter has to be referred to arbitration. In my view, there is no substance in the submission made by the said respondents that jurisdiction of this Court is barred u/s 163 of the MCS Act. In my view, in view of the arbitration agreement entered into between the petitioner and the society, Co-operative Court would have no jurisdiction to entertain the dispute between the petitioner and the society.
25. As far as issue of locus standi raised by the said respondents against the petitioner in filing this petition is concerned, in my view, there is no substance in this objection raised by the said respondents. The petitioner is party to the development agreement with the society and the society not having complied with its part of obligation, petitioner is entitled to invoke Section 9 of the Act for the purpose of interim measures.
26. As far as issue raised by the said respondents that in view of serious allegations of fraud and forgery against the petitioner and also against the Managing Committee members of the society, such dispute cannot be referred to arbitration and can be decided only by a Civil Court is concerned, perusal of record indicates that on 21st March 2010, the first respondent society in the Special General Body Meeting had already approved unanimously to appoint the petitioner as the developer. The said meeting was attended by 35 out of 41 members and 34 members passed the resolution. The petitioner executed the agreement on 8th April 2011 and lodged it for adjudication with the stamp authority. On 7th May 2011, the said agreement was impounded u/s 33 of the Bombay Stamp Act 1958. On 7th June 2011, the petitioner paid the insufficient stamp duty payable under Article 5(g-a) and also penalty. The agreement indicates that below the signature of the office bearers of respondent No. 1 society, date of 6th June 2011 is mentioned. The learned counsel appearing for the society does not dispute this position in the affidavit in reply filed by the society. In my prima facie view, there does not appear to be any substance in the allegations made by the said respondents that the petitioner committed any fraud or forgery in collusion with the members of the society as alleged 38 members out of 41 members have already handed over possession of their flats to the society, which in turn, has handed over the possession of said flats to the petitioner for demolition and for commencement of redevelopment. In my prima facie view, the allegations of the said respondents lack credentials and have no basis. I am thus not inclined to accept the submission made by Mr. Kamdar the learned senior counsel and Mr. Panickar the learned counsel appearing for the said respondents that such allegations are serious allegations and have to be decided only by Civil Court and not by an arbitrator. In the facts of this case, Judgment of Supreme Court relied upon by the said respondents in case of N. Radhakrishnan, is thus, of no assistance to the said respondents.
27. In so far as submission of the said respondents that arbitration petition is premature as the plan is not sanctioned of all the floors of the new building and thus members are not liable to vacate the premises in their occupation is concerned, perusal of development agreement indicates that the petitioner was not permitted to apply for sanction of the plan over and above the area required to be developed first for accommodating the members of the first respondent society. It is not in dispute that plan up to 8th floor would cover construction of tenements which are earmarked for the members of the first respondent society, is already sanctioned by the Municipal Corporation. Under the development agreement, the society had agreed to vacate all the flats of the members and have already handed over 38 flats out of 41 flats to the petitioner. I am therefore, not inclined to accept the submission of the said respondents that the petition is premature as the plan is not sanctioned for all the floors or that the said respondents are not liable to vacate the premises in their occupation.
28. As far as submission of the said respondents that the petitioner, in collusion with the first respondent society has assigned the contract to M/s. Mayfair Housing Pvt. Ltd., whose letter of intent was already cancelled by the society is concerned, the said respondents have not produced any document on record in support of this submission. Merely because the bank guarantee has been submitted by the petitioner, which was submitted on behalf of the petitioner jointly with M/s. Mayfair Housing Pvt. Ltd., would not indicate any assignment of the contract by the petitioner. In any event, society has accepted such bank guarantee and members therefore, cannot make any grievance in respect thereof.
29. As far as submission of the said respondents that the petitioner shall avail of the benefit of the guidelines issued by the Government of Maharashtra on 6th January 2012 permitting use of fungible FSI and other benefits and shall share additional benefit that the petitioner would get with the members of the society is concerned, record indicates that the proposal given by the petitioner for amendment of the plan by availing new guidelines issued by the Government, has not been accepted by the first respondent society and therefore, question of any benefit of use of fungible FSI to the society does not arise at this stage. In any event, it is matter of the agreement between the petitioner and the society. The said respondents cannot force additional terms and conditions in the agreement already entered into between the petitioner and the society what they deem fit in their interest. The said respondents have raised these issues in the proceedings before the Co-operative Court and the same is pending.
30. As far as certificates issued by Architect relied upon by the said respondents in support of their plea, that the petitioner developer would get additional area from the Municipal Corporation, which can be made available to the members of the society is concerned, the proposal of the petitioner for benefit under the new guidelines issued by the Government of Maharashtra having been rejected by the society, petitioner has shown their readiness and willingness and is ready and willing to proceed with redevelopment on the basis of sanctioned plan existing today. Reliance placed by the said respondents on such certificates alleged to have been issued by the Architect is thus, of no assistance to the said respondents at this stage. In any event, if according to the said respondents, society has not considered the benefit of all the members, remedy of the minority members of the society is subject matter of the proceedings filed before the Cooperative Court in which, resolution passed by the society is already impugned. No such grievance can be made in present proceedings by the said respondents. Most of the submissions made by the said respondents in the present proceedings were also made before the Co-operative Court which has rejected the interim application by rendering prima facie finding of fact.
31. Perusal of record indicates that resolutions have been passed by the society by overwhelming majority of members of the society and 38 members out of 41 have already handed over possession of their respective flats to the society and society in turn, has handed over possession of the same to the petitioner. The petitioner has to commence redevelopment on the plots of the society after demolition of the building and to hand over possession of the respective flats to the members of the society under tripartite agreements. The said respondents cannot be permitted to obstruct the redevelopment of the buildings under development agreement. In my view, if the said members have any claim for larger area from the petitioner developer or have any monetary claim, the same is already a subject matter of proceedings pending in Co-operative Court. This court has already appointed an arbitrator as per the arbitration clause recorded in development agreement. Mr. Vashi, the learned counsel appearing for the petitioner has no objection if the said respondents appear before the learned arbitrator appointed by this Court on the said respondents withdrawing their proceedings filed in Co-operative Court. Mr. Vashi states that all the other benefits such as compensation etc. what has been paid to the other flat buyers would be also paid to the said respondents. The petitioner is also ready and willing to execute tripartite agreement with the said respondents on the terms already agreed upon between the petitioner and the society. Statement is accepted.
32. In my view, few members of the society cannot be allowed to obstruct the development project agreed by the majority members of the society by passing a resolution, and such members having acted upon the said resolution and handing over possession of their respective flats to the society and the society in turn handing over the same to the petitioner to enable the petitioner to commence redevelopment. In my view, balance of convenience is also in favour of the petitioner and the society and if the reliefs as sought by the petitioner are not granted, the entire redevelopment project would be at standstill and the members who have already handed over their flats and are out of possession of the flats, would not be able to be provided with possession of new flats proposed to be constructed by the petitioner. Petitioner has also spent substantial amount pursuant to the development agreement which fact cannot be overlooked by this Court. In my view, petitioner has made out a case for grant of interim measure. I accordingly pass the following order.
(i) Petition is made absolute in terms of prayer clause (a).
(ii) Till the Court Receiver takes physical possession of the flats from respondent Nos. 2, 2(a), 2(b), 5, 6(a) to 6(c) there shall be interim injunction in terms of prayer clause (b).
(iii) Petition is disposed of in aforesaid terms. No order as to costs.
33. Learned counsel for respondent Nos. 2, 2(a), 2(b), 5, 6(a) to 6(c) seeks stay of operation of this order.
34. Operation of this order is stayed for the period of two weeks. It is made clear that during this period, respondent Nos. 2, 2(a), 2(b), 5, 6(a) to 6(c) shall maintain status quo in terms of prayer clause (b).
