1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY & ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 2090 OF 2009 IN SUIT NO. 1404 OF 2009 M/s. Acknur Constructions Pvt. Ltd. } A Private Limited Company registered under } the Indian Companies Act, 1965, having its } office at 601, 6th Floor, God Gift Tower, } Junction of Hill Road & S.V. Road, } Bandra (W), Mumbai – 400 050. } ... Plaintiff. V/s. 1.Sweety Rajendra Agarwal Adult, Indian Inhabitant Occupying Shop No.1, } Fardoon Apartment CHS Ltd., 6th Road, } Khar (W), Mumbai – 400 052. } } 2. Rajendra Kumar Agarwal Adult, Indian Inhabitant Occupying Shop No.2, } Fardoon Apartment CHS Ltd., 6th Road, } Khar (W), Mumbai – 400 052. } } 3. Prakash D. Shivlani, Adult, Indian Inhabitant Occupying Flat No.3, } Fardoon Apartment CHS Ltd., 6th Road, } Khar (W), Mumbai – 400 052. } 4. Rashmi K. Bidichandanni } Adult, Indian Inhabitant Occupying Flat No.3, } Fardoon Apartment CHS Ltd., 6th Road, } Khar (W), Mumbai – 400 052. } 5. Fardoon Apartment, Co-op. Hsg.Soc. Ltd., } A Co-op. Hsg. Soc. Registered under the } Maharashtra Co-op. Societies Act, 1960 } and having its registered office at } 6th Road, Khar (W), Mumbai – 400 052. }... Defendants. 2 Mr. Narendra Walawalkar, Sr. Counsel i/b. M.A. Sayed for the Plaintiff. Mr. M.M. Vashi, Sr. Counsel i/b. M.P. Vashi & Assoc. for Defendant Nos. 1 and 2. Ms. Asha Bhambwani, for Defendant Nos.3 and 4. Mr. Vipin Kamdi i/b. V.K. Lex & Associates for Defendant No.5. CORAM : S.C. DHARMADHIKARI,J. JUDGMENT RESERVED ON : 23rd SEPTEMBER 2009. JUDGMENT PRONOUNCED ON : 05th DECEMBER 2009. ORAL JUDGMENT :- This is a Suit by a Builder and Developer against the Co- operative Housing Society and the occupants, who are in the occupation of flats/tenaments and shops in a building known as Fardoon Apartment, Co-operative Housing Society, situate at 6th Road, Khar (West), Mumbai – 400 052. 2. The relief claimed by the Plaintiffs in the Suit proceeds on the basis that the Co-operative Housing Society has, at its General Body Meeting, passed a Resolution, pursuant to which, it is resolved that the existing structure/building would be pulled down or demolished and a new building/structure would be constructed on the plot of land belonging to the Co- operative Housing Society. In this new building all the members would be provided housing accommodation of the same area by the Plaintiffs/Developers. To enable them to construct new building and hand over the flats and tenaments to the members of the Co-operative Housing Society that it 3 was resolved that an agreement can be executed incorporating specific clauses and details so that membership rights are not prejudicially and adversely affected. The Plaintiffs have also executed individual agreements with the members. Thus, the Society and its members are supporting the action of the Plaintiffs and therefore, in furtherance of the Agreement executed in their favour. They can proceed to demolish and pull down the existing structure/building and construct a new building on the land. To enable them to do so, it was expected that all existing members and occupants vacate the premises presently in their occupation and possession. However, although, the majority has decided to confer rights as above on the Plaintiff and have consented to the agreement, some persons claiming to have rights in the tenaments/shops/premises in their possession are resisting the execution of the agreement. It is alleged that these persons have no right to obstruct the development work at site. They are bound by the Resolution of the majority and the decision of the Co-operative Housing Society. Even if they are having dispute with the Society, the Plaintiffs are ready and willing to earmark and keep aside shops and flats for such persons/Defendants. Thus, it is not as if they would not have any protection. As and when they succeed in their challenge to the actions of the Society, they would be allotted the flats and shops earmarked and reserved for them. These premises would remain untouched and would not be disposed off until such time as this Court deems fit and proper is the stand of the Plaintiffs. Thus, the Plaintiffs and the Society urge that 4 they are ready and willing to protect the minority rights, if any, but at no cost should the development work be stopped or obstructed or else all would suffer. 3. In furtherance of the final relief of removal of obstructions and all impediments to the development work at site, the Plaintiffs seek a mandatory interim order and direction so as to remove or cause to remove the non- consenting parties as according to the Plaintiffs their claim is supported by the Co-operative Housing Society and a majority of the members. Thus, they have a strong prima-facie case and they have satisfied the Court that irreparable harm and injury will be caused to all occupants if development work is not permitted to be completed at site. More so, when the structure presently at site is unsafe and unsound, it is not fit for human occupation. Therefore, the balance of convenience is also in favour of the Plaintiffs and the mandatory interim orders, as prayed, be granted. 4. That is how, the Notice of Motion proceeds and afore- recorded pleas are set out in an affidavit of one Deepak Rao, Managing Director of the Plaintiffs. The Plaintiffs have stated that they are a Company registered under the Indian Companies Act having their Office at the address mentioned in the title. Defendant No.1 is the occupier of Shop No.1 and Defendant No.2 is the occupier of Shop No.2. It is alleged that they are expelled by Defendant No.5 – Co-operative Housing Society. It is stated that Defendant Nos.3 and 4 are claiming 5 to be legal heirs of Ms. L.D. Shivlani. The deceased was member of the 5th Defendant – Society and she was occupying Flat No.3. It is alleged that Defendant Nos.3 and 4 are in arrears of the dues of the Society. Further, they have not produced any documents for enabling transfer of the flat. 5. Defendant No.5 is a Co-operative Housing Society registered under the Maharashtra Co-operative Societies Act, 1960. The 5th Defendant is registered as a tenant Co- Partnership Housing Society bearing No.BOM/HSG/2639. The Society is registered in the year 1970 and it is owner of final Plot No.647, CTS No.F/188 admeasuring about 499.15 sq.mtrs. and situate at 6th Road, Khar Pali Road, Khar, Mumbai. 6. It is then alleged that there are 12 members of the Society. The Society in a General Body Meeting dated 30th May 2004 by a majority of 9 out of 12 members decided to demolish the old building and construct a new building by purchasing FSI/utilising TDR. The necessary Resolution was passed and offers were invited from various builders and developers for re-development of the property. The 5th Defendant after receiving these offers duly scrutinized them and ultimately decided that the offer made by the Plaintiffs is in the best interest of its members. This offer was accepted and the Managing Committee was authorised to take necessary steps for re-development of the property. Annexure ‘A’ is a copy of the Resolution dated 6th January 2008. 6 7. Thereafter, the Society executed a Development Agreement dated 30th January 2008 which came to be subsequently registered. In paragraph 4 of the plaint this is what is stated :- “4. In pursuance of the said resolution, Defendant No.5 – Society entered into a Development Agreement dated 30th January 2008 registered on 5th April 2008 under No.2942 for grant of development rights in respect of the said property to the Plaintiff. By and under the said agreement, the said Society appointed the Plaintiff herein as developers to redevelop the said property on certain terms and conditions and some of the salient feature of the said agreement are as follows :- a. The Plaintiff is entitled to develop the said property by demolishing the existing building and constructing new building known as Fardoon Apartments Co-operative Society Ltd. in its place stead, by utilizing entire F.S.I. And T.D.R. That can be utilized or as may be available on the said property. b. The Plaintiff agreed to give each of the members occupying their respective premises, 30% additional carpet area on the existing carpet area 7 with ultra modern amenities free of costs as per list annexed to the plaint against the existing area occupied by them. Similarly, Defendant Nos.1 and 2 will be provided shops/commercial premises, as 30% additional carpet area on the existing area occupied by them. The reconstructed premises will be provided as more particularly set out in the said Development Agreement. Further, salient features of the said agreement are as follows :- c. The Developers shall pay to the Society as and by way of Corpus Fund a sum of Rs.1,500/- per sq.ft. Of the existing carpet area (Rupees one thousand five hundred only), which constitutes to the Sum of Rs.76,35,000/- on all the Members vacating their respective Flats/Shops and handing over the vacant possession of the said Flats/Shops to the Developers; the payment and receipt whereof the Society hereby admit and acknowledge. d. The Developers hereby agree to provide to the 9 members a flat of Carpet Area 600 sq.f.t equivalent to 840 sq.ft. Built-up Area and to the one member Mr. Mohd. Salim Hussein Shaikh flat of Carpet Area 786 sq.ft. i.e. Built-up 1100 sq.ft. With pocket terrace admeasuring 414 sq.ft. And the 2 shops to the members of Carpet Area 505 sq.ft. Each i.e. Built-up area of 707 sq.ft. (which includes 8 Flowerbed, Elevation Treatment, thickness of wall, passages, lift, lobby, staircase Niches etc.) to each of the members herein a flat having a Carpet Area 30% more than the existing carpet area presently occupied by the Developers on the said property as and by way of permanent alternate accommodation, free of cost and on ownership basis. The said 10 flats and 2 shops occupied by the members of the Society are shown in the list annexed hereto and marked as Exhibit ‘B’ giving the details as to the names, flat numbers, floors, present carpet areas, additional 30% carpet areas. None of the members and/or the Society shall be liable to pay any amount to the Developers in respect of the said new Flats/Shops numbering in all 10 flats and 2 shops to be given by the Developers to the members herein. However, if any of the members opt for additional or lesser area in the Flats/Shops in the new building agreed to be constructed by the Developers, then, the Developers shall duty sell or buy the said additional or lesser area to or from such member/s herein for the price and on the terms and conditions to be agreed mutually between the Developers and the concerned member/s. The said 10 Flats / 2 Shops in the new building agreed to be allotted by the Developers to the members herein shall be held by them as members of the Society and for the said 9 purpose, the membership of the Members shall continue to be in existence irrespective of the fact that the existing 10 flats and 2 shops which shall be demolished. e. The allotment of the said 10 flats shall be from the 2nd floor onwards in view of the fact that the Developers shall be putting up basement car parking spaces and exploiting the 1st floor and the part ground floor for commercial purpose including two (2) shops of and for the members of the society as agreed, other than clubs & beer bar. The Developers shall however provide copies of the sanctioned plans to the Society for its perusal immediately on the said plans being sanctioned by the MCGM. The Developers shall provide 1o car parking spaces for the said 10 members in the basement and the remaining car parking space shall belong to the Developers. f. The Developers hereby agree to complete the construction of the entire building in all respect within a period of 18 months from the date of the Society and Members handing over the vacant possession of all the flats, building and land to the Developers. In the event of delay of completion of the building within 3 months of the stipulated period, the Developers shall be liable to pay a 10 penalty of Rs.1,50,000/- (Rupees One Lakh Fifty Thousand only) per month to the Society, subject to however that the Developers shall not be liable to pay the said penalty if the delay is on account of circumstances beyond their control such as ; i) War, Civil commotion or Act of God. ii) Any notice, order, rule, notification of the Government or other public competent authority, provided the same is not on account of any act of omission or commission on the part of the Developer. Iii) Scarcity of Cement, Steel or any other building material. g. It is agreed by and between the parties hereto that, if the Developers having failed to complete the new building within 18 months of the last of the members existing Flats/Shops being vacated for development purposes and thereafter, within the total grace period of 6 months, the Society shall without prejudice to their rights and remedies under this Agreement or in law be entitled to utilize the amount of Corpus Fund so realized as they deem fit including towards completing the incomplete work. It is further agreed that the Developers undertake 11 to provide the agreed rent amount to the members as specified in Clause 10 as above, for the further extended amount, if such event of delay in construction arise before the parties. In such an event, the Society shall not be accountable to the Developers or the purchasers of free sale Flats/Shops. The Developers shall continue to be liable to the purchasers of free sale Flats/Shops. If, for any reason the cost of completing the building should exceed the said amount of the Corpus Fund, the difference shall be borne and paid by the Developers alone forthwith on demand.” 8. It is stated that the construction of the new building was to be completed within a period of 18 months from the date of issuance of a commencement certificate by the Competent Authority. It is stated that the Plaintiff has already submitted the plans for construction of the new building. They were sanctioned on 30th June 2008. 9. It is stated that in compliance with the terms of the Development Agreement, the Plaintiff has paid to the members corpus funds and rents as per the Statement of Account. 10. It is stated that in terms of the agreement, the Developers/Plaintiff were entitled to sell on ownership basis all other remaining shops and/or flats as may be constructed by 12 them on the said property. As per the said agreement, the said Society had agreed and authorized the Plaintiff to demolish the existing building standing on the said property and has also agreed to hand over vacant and peaceful possession of the flats so as to enable construction of a new building. A Power of Attorney has also been executed in that behalf. It is stated that in pursuance of this agreement and Power of Attorney, the Plaintiff has spent substantial time, money and energy. They have paid Rs.38,34,465/- towards the fund and rent. 11. However, it is alleged that the Plaintiff is unable to demolish the old building, as Defendant Nos.1 to 4 are refusing to vacate the premises in their possession. It is stated that out of 12 members, 9 have already shifted to the respective alternate accommodation. It is stated that Defendant No.5 took a decision to demolish the old building and re-develop the property after prolonged discussions and meetings. Details of the same are set out in paragraph 9. Further, the defaults, allegedly committed, by Defendant Nos. 1 to 4 are mentioned in paragraph 10 of the plaint. The details of the expulsion proceedings and complaints are set out in paragraphs 11 to 13 of the plaint. The application to vacate the premises to enable construction of a new building are referred to in paragraph 14 of the plaint. The condition of the building is stated to be very bad. It is dilapidated and structurally unstable. In these circumstances, the obstacle and hindrance of Defendant Nos.1 to 4 to the re-development 13 at site is high-lighted. There are several orders allegedly passed in identical circumstances referred in paragraph 20 of the plaint. The project cost is stated to be R.11.75 crores and it is alleged that Defendant Nos.1 to 4 have remained absent at the meeting of the Shareholders/Members. They have not challenged the Resolution till date. In these circumstances, the rights conferred on the Plaintiff can be enforced by them. This is the reason for institution of the present Suit. The prayer clauses (a) and (b) of the plaint read thus :- “(a) That this Hon’ble Court may be pleased to order and decree that Defendant Nos.1 to 4 are specifically bound by the covenants/terms contained in the agreement dated 30th January 2008 being Exhibit “D” to the plaint and are to vacate and handover the suit premises i.e. Shop No.1 and Shop No.2 in occupation of Defendant Nos.1 and 2 respectively, and Flat No.3 occupied by Defendant Nos. 3 and 4, in Defendant No.5 society buidling i.e. Fardoon Apartments Co-operative Housing Society Ltd., situated at 6th road, Khar (West), Mumbai – 400 052 for the purpose of demolition and/or for the purpose of redevelopment and for commencement of construction work, for the Plaintiff. (b). That Defendant Nos.1 to 4 be ordered and decreed to pay to the Plaintiff Rs.16,92,000/- (Rupees Sixteen Lakhs Ninety Two Thousand Only) 14 the amount payable to Defendant Nos.1 to 4 as corpus fund in respect of their respective Suit premises as more particularly explained in the particulars of claim which is annexed herein as Exhibit “H” on accounts of loss and damages caused to the Plaintiffs and further be pleased to order and direct Defendant Nos.1 to 4 each to pay the Plaintiff Rs.50,000/- (Rupees Fifty Thousand Only) the amount per month from the date of filing of the above Suit till they vacates their respective suit premises occupied by them on account of loss, rent, legal expenses suffered by the Plaintiffs due to non- vacation of the premises occupied by the Defendant Nos.1 to 4.” 12. It is in terms of these final prayers that interlocutory reliefs are claimed by the Plaintiff in the present Notice of Motion. The interim relief is of appointment of a Court Receiver and a temporary order and injunction restraining Defendant Nos.1 to 4 by themselves/their servants and agents from interfering with and/or obstructing or creating any impediment in the performance of the obligations under the Development Agreement. 13. At the outset, it must be stated that the 5th Defendant – Society has filed an affidavit and while supporting the claim of the Plaintiff’s confirmed that Defendant Nos.1 to 4 are not co- operating in the development. Their rights to use and occupy 15 the premises in their occupation are disputed and finally it is asserted that the building requires to be pulled down. 14. The reply affidavit filed by Defendant Nos.1 and 2 and affirmed on 8th July 2009 states that there is a clause for Arbitration (Clause 40) in the Agreement dated 30th January 2008 and therefore, the Suit is not maintainable. That this argument is raised without prejudice to the earlier submission that there is no privity of contract between the Plaintiff and Defendant Nos. 1 and 2. The Agreement dated 30th January 2008 is not between the Plaintiff and Defendant Nos.1 and 2. Therefore, no Suit can be filed against Defendant Nos.1 and 2. If they are not parties to the Agreement, then, their rights are independent and if that the Plaintiff wish to proceed against Defendant Nos.1 and 2, then, they must show how they are entitled to evict them in law. In these proceedings, this fundamental aspect has not been proved and demonstrated even prima-facie. 15. It is then contended that if Defendant No.5 – Society claims to have expelled Defendant Nos. 1 and 2 from the membership, then, the Agreement dated 30th January 2008 cannot bind them. They must not proceed on the basis that the Suit Agreement binds them. In these circumstances, the Suit is not maintainable. 16. The next contention raised is that it is only Defendant No.5 – Society which can claim to have any cause of action 16 against Defendant Nos.1 and 2. It is the Society which alone can enforce the Resolution passed in the General Body Meeting. That dispute is between the Society and Defendant Nos.1 and 2. That would be covered by Section 91 of the Maharashtra Co-operative Societies Act, 1960. The Suit is, therefore, not maintainable and this Court does not in any event have jurisdiction to decide the legality and validity of such Resolution. 17. Without prejudice to all the above submissions and contentions, it is urged that the Plaintiff has not annexed the complete Development Agreement to the plaint. They have only annexed the first part of the Agreement without in any manner annexing the copies of the annexures to the Agreement. These annexures are very relevant. These annexures are deliberately suppressed from the Court. In these circumstances, the Court should not accept the claim of the Plaintiff. 18. As far as the merits of the case are concerned, in paragraph 7 of the affidavit, it is stated that Defendant Nos.1 and 2 were not given any notice of the Meeting held on 6th January 2008. Further, it is stated that in the plaint, the Plaintiff and Defendant No.5 urge that the Meeting dated 6th January 2008 was called pursuant to a Notice dated 30th December 2007. However, while annexing a copy of this notice, it is urged that the Plaintiff should have given 14 days clear notice of the meeting to all members. The Notice dated 17 30th December 2007 does not comply with the requirement of such notice stipulated in the Bye-laws. The notice is only of 7 days. The Meeting itself is, therefore, illegal. If the Meeting is illegal, then, all Resolutions passed at such illegal Meeting do not have any legal effect. If the Development Agreement is executed pursuant to the Meeting and the Resolution thereat, then, even that Agreement is bad and illegal and it cannot be enforced against Defendant Nos.1 and 2. 19. Defendant Nos.1 and 2 in their affidavit pointed out that in the information provided under the Right to Information Act, Defendant No.5 has stated that the Plaintiff will give 30% extra area to the existing members and will give corpus funds of Rs.3,000/- per sq.ft. of the carpet area. However, in clause 2 of the Development Agreement, it is mentioned that the Plaintiff will give corpus fund of Rs.1,500/- per sq.ft. Therefore, the agreement is not in the interest of the members as there are vital omissions in the same. 20. It is then stated that Defendant Nos.1 and 2 are having one shop each on the ground floor with frontage on main road of 13 ft. They have obtained I.O.D. and building plans are sanctioned but the same show that the frontage of the shop is reduced from 13 ft. to 11 ft. each. The Plaintiff intend to utilize existing open space for putting up a third shop on the ground floor. The Plaintiff also intend to use first floor for commercial purpose. Therefore, the re-development scheme is not in the interest of Defendant Nos.1 and 2. Further, 18 Defendant Nos.1 and 2 have raised an objection to the scheme on the ground that the Plaintiff does not have any experience of re-development work. This, very Plaintiff had undertaken such works in S.R.A. project. The work carried out was very shabby