wp7389-09.doc 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.7389 OF 2008 Kiran Baburao Vanjari & Ors. .. Petitioners Versus M/s.Goregaon Unnati CHS Ltd. And Ors. .. Respondents Mr.Shailesh Naidu i/b. M/s.India Law Alliance for petitioners Mr.P.K.Samdani, Senior Advocate with Mr.Aniruddha Joshi & Nikhil Karnawat i/b. Viraj Maniar Associates for respondent No. 1 Mr.V.C.Ghosalkar for respondent No.2 Mr.G.H.Mattos AGP for respondent No.4 Mr.R.M.Patne, AGP for respondent No.3. CORAM : S.C.DHARMADHIKARI, J. Reserved on : 20th JUNE 2011. Pronounced on : 21st JULY 2011 ORAL ORDER:- 1] This petition under Articles 226 and 227 of the Constitution of India is placed under the caption “for orders” because it was admitted but parties pressed for interim reliefs. At the stage at which the matter was placed today, viz., for wp7389-09.doc 2 interim reliefs, both sides agreed that the same may be disposed of finally. 2] Initially when this petition was filed the prayer was to quash and set aside the orders dated 12th September 2009 and 3rd October 2008 being Annexures A and C to the petition. These were orders made by the Maharashtra State Cooperative Appellate Court (MS Court for short) in A.O.No. 112 of 2008 and that of the Cooperative Court No.III in Dispute No.CC/IV/96/08. Petitioners are the original disputants/ appellants. The concurrent orders reject their prayers for interim reliefs in the dispute which is filed under section 91 of the Maharashtra Cooperative Societies Act, 1960 (MCS Act for short). 3] However, upon liberty being granted by the Supreme Court and the orders made in that behalf, the petition came to be amended and a Writ of Certiorari seeking to quash and set aside an order dated 11th January 2011 of respondent No.4 is wp7389-09.doc 3 also inserted. 4] With these reliefs and prayers the petition is filed and now proceeded with. The dispute that is filed in the trial court by the petitioners has a grievance pertaining to redevelopment of the property of M/s.Goregaon Unnati Cooperative Housing Society (the society for short) that is impleaded as respondent No.1 to this petition and is the original opponent No.1. The developer engaged to carry out the re-development is respondent No.2 M/s.S.D.Corporation. It is original opponent No.2. These are the original parties to the petition. Upon amendments the State Government, Maharashtra Housing and Area Development Board, unit of Maharashtra Housing and Area Development Authority (MHADA) and the Executive Engineer of the said MHADA are impleaded as respondent Nos. 3 to 5 to this petition. 5] The case of the petitioners is that they are members of the society and residing in the building of the society for wp7389-09.doc 4 several years. The further case of the petitioners is that they have been residing with their family members in tenaments/ flats, precise area of which is set out in para 3 of the dispute. They have also given the year from which they have been residing in these tenaments. It is their case that, upon information being available under the Right to Information Act, 2005 they became aware of the fact that they are residing in building/ chawls bearing Nos.19, 20, 21 and 24. The society decided to demolish these chawls and re-develop the property and the documents disclose that a Development Agreement has been executed with respondent No.2, developer. It is stated that a meeting was held on 17th April 2005 at which certain resolutions were passed. A reference is also made to a further meeting dated 2nd April 2006. In pursuance of these meetings and the decisions taken thereat, the re-development agreement dated 30th April 2006 and the supplementary agreement dated 3rd August 2007 have been executed. The petitioners have pointed out that the land on which the present building/ chawls are existing or constructed belong to the wp7389-09.doc 5 MHADA. The petitioners then pointed out that there is a lease agreement executed by MHADA in favour of this society. Thereafter, there is a sale deed in favour of the society. Armed with these documents of title, the society approached MHADA for the purpose of re-development of the buildings which are numbering from 19 to 25 by exploiting the available FSI. That No Objection Certificate (NOC) is dated 2nd February 2000. On the basis of this NOC, the occupants of building Nos. 22, 23 and 25 were to demolish their own buildings and construct structures of ground plus two upper floors by exploiting the FSI. It is stated that, therefore, the extra ordinary general body meeting was convened and the proposals for re-development of three buildings bearing Nos. 20, 21 and 24 were discussed. A resolution was passed, a reference to which has been made hereinabove. It appears that the developer did the preparatory work prior to execution of the development agreement in his favour and, therefore, the Municipal Corporation entered into correspondence with him. The allegation is that the Managing Committee of the society holds a meeting on 23rd January 2006 wp7389-09.doc 6 and includes Building No.19 also for re-development work along with building Nos. 20, 21 and 24. The offer from the builder was received on 17th February 2006. Thereafter, there is a meeting which is convened to discuss this offer along with other offers and the same is held on 2nd April 2006. It is in pursuance of the same that the development agreement dated 30th April 2006 came to be executed. Subsequently, on 8th November 2006, the MHADA granted NOC to the society and the developer for re-development of the building. Subsequently, the Municipal Corporation gave necessary approval and permission. The society issued a letter to the petitioners dated 29th December 2006 asking them to give their consent. A reference is then made to the Intimation of Disapproval (IOD) from the B.M.C. and subsequent correspondence between parties. It is pointed out that there is correspondence on the issue and the petitioners make a reference to the AGM of 5th August 2007 wherein the General Body approves the re-development of the four buildings. It is in these circumstances and alleging that the society is calling wp7389-09.doc 7 upon the petitioners to comply with the resolutions and the clauses of the re-development agreement and apprehending that they would be dispossessed without due process of law that a suit was filed being Suit No.515 of 2007. An application for interim reliefs therein was made vide Notice of Motion No.60 of 2008. Finding that the suit was not the remedy but the petitioners will have to approach the Cooperative Court that the instant dispute was filed. The prayers in the dispute read thus:- (a) For an order of this Court giving a declaration that the execution of the Agreement dated 30th April 2006 between the Opponent No.1 society and the Opponent No.2 builder/ developer is bad and illegal under the law; (b) for an order of this Court giving a declaration that the execution of the supplementary agreement dated 3rd August 2007 between the Opponent No.1 society and the Opponent No.2 builder/ developer is bad and illegal under the law; (c) for an order of this court giving a declaration that the execution of the deed of declaration and confirmation dated 3rd August 2007 between the opponent No.1 society and the opponent No.2 builder/ developer is bad and illegal under the law; (d) for an order of this Court giving a wp7389-09.doc 8 declaration that the meeting held on 17th April 2005 by the opponent No.1 society is bad and illegal under the law; (e) for an order of this Court giving a declaration that the resolutions passed at the meeting held on 17th April 2005 by the opponent No. 1 society is bad and illegal under the law; (f) for an order of this Court giving a declaration that the resolutions passed at the meeting held on 17th April 2005 by the opponent No. 1 society are only restricted to building/ chawl Nos. 20, 21 and 24 and not for building/ chawl No.19; (g) for an order of this Court giving a declaration that the meeting held on 2nd April 2006 by the opponent No.1 society is bad and illegal under the law;” 6] In furtherance of these prayers, an application for interim reliefs was made which was numbered as Exh.5. Therein , a relief was sought restraining the respondents herein who are original opponents from acting in furtherance of the development agreement referred to above and to maintain status quo as prevailing at the time of institution of the dispute. 7] When the papers and proceedings were served on wp7389-09.doc 9 the respondent Nos. 1 and 2 to this petition, they appeared and filed an affidavit in reply, contending that there are 7 buildings in the first respondent society. Construction is going on in building Nos.19, 20, 21 and 24. In four buildings there are 32 members and all have unanimously agreed to go ahead with re-development scheme. The meetings were convened and the decisions have been taken unanimously. At these meetings, even the petitioners were present. Out of 32 members, 22 have already shifted to the alternate accommodation. The IOD and CC has been obtained from B.M.C. The work at site, therefore, cannot be said to be illegal. The petitioners must comply with the resolutions as they are unable to point out any illegality or infirmity in the decisions of the General Body. In fact, they had filed a suit in the City Civil Court which suit has also been dismissed. 8] In these circumstances, the application for interim relief was placed before the learned Judge of the Cooperative Court, who by an order dated 12th September 2008 was wp7389-09.doc 10 pleased to reject it. The learned Judge agreed that General Body of the society is the final authority. Every member of the society has right to participate in the activities and discussions and deliberations at the meeting. But, ultimately the decision of the majority would bind them. This is a case where all buildings and properties of the society are sought to be re- developed and the majority has taken this decision. At this stage, when the agreements have been executed, preparatory steps have been taken and 24 out of 32 members have shifted to temporary sites, neither prima facie case nor balance of convenience is in favour of the petitioners and, therefore, application deserved to be dismissed. 9] It is this order which was challenged by way of Appeal before the M.S.Co-op Appellate Court and by an order dated 3rd October 2008 the learned Member concurred with the trial court on all three grounds resulting in dismissal of the said appeal. wp7389-09.doc 11 10] These orders led to filing of this petition. 11] It must be noted that when this petition was admitted on 2nd December 2008, the MHADA issued eviction notices to the petitioners under section 95A of the MHADA Act, 1976, read with Regulation No.33(5) of the Development Control Regulations, 1991. This eviction notice is dated 27th February 2009. While making a reference to the earlier show cause notice, it was alleged that the petitioners are members of a registered society and since the building required to be pulled down for re-development, the petitioners must vacate the same. The petitioners denied that the building are in dilapidated condition. They replied to the show cause notices. They filed a petition being W.P.(Lod) No.431 of 2009 impugning and challenging the eviction notice dated 27th February 2009. That petition came to be disposed of on 3rd April 2009. The said order was challenged before the Supreme Court and the Special Leave Petition (Civil) No.10173 of 2009 was allowed on 9th April 2010. The order dated 13th April 2009 wp7389-09.doc 12 was set aside and the Supreme Court permitted the petitioners to challenge the eviction notice of MHADA by amending the instant petition. Thereafter, a reference is made to several further events and correspondence and it is alleged that the notice issued by MHADA is bad in law. The petitioners have pointed out as to how MHADA in furtherance of these events withdrew the show cause notice dated 27th February 2009 but issued a fresh one dated 24th November 2010. That came to be replied by the petitioners on 15th December 2010. It is on this show cause notice that MHADA passed a final order under section 95A of the Maharashtra Housing and Area Development Act, 1976. It is in these circumstances that the petition is amended to challenge the order of MHADA dated 11th January 2011. 12] Mr.Naidu, learned Counsel appearing for petitioners submitted that the impugned order passed by MHADA dated 11th January 2011 is bad in law and ought to be quashed and set aside. The order has been impugned on various wp7389-09.doc 13 independent grounds. If the petitioner succeeds in establishing even one ground then the order impugned deserves to be quashed and set aside. The first ground on which the order has been impugned is that the jurisdictional fact essential, necessary and a condition precedent for invoking powers vested in the authority under D.C.Regulation 33(5)(7) did not exist. It is undisputed fact that power vested in the authority under D.C.Regulation 33(5)(7) can be invoked to enforce a redevelopment sanctioned by MHADA under D.C.Regulation 33(5). If the NOC is not under the said regulation then the jurisdictional fact essential or a sine-qua-non for exercise of powers vested in D.C.Regulation 33(5)(7) read with section 95A of MHADA Act does not arise. 13] In fact is is common ground that NOC from MHADA ought to be under D.C.Regulation 33(5) in order to exercise powers under section 95A of MHADA Act. The aforesaid requirement is a condition precedent or sine-qua non for the exercise of power by the Executive Engineer MHADA under wp7389-09.doc 14 section 95A. If the NOC is not under D.C.Regulation 33(5) then exercise of jurisdictional fact necessary for exercise of power being absent the authority will not have jurisdiction to entertain the application under section 95A of the MHADA Act. 14] The action under section 95A was initially commenced by MHADA upon notice issued by Advocate for respondent No.1 society dated 25th October 2008 followed by Advocate's notice dated 3rd December 2008. MHADA treated the same as show cause notice and proceeded to issue the first order of eviction dated 27th February 2009. That order was challenged in the present petition and during the hearing on 24th November 2010, the order was withdrawn. The initial proceedings were thus commenced at the behest of the respondent No.1 society. Office bearers of the respondent No. 1 society are directly interested in partial redevelopment as it would allow them to maintain their row house/ bungalow at the cost and expense of 32 members, whose dwellings have been demolished to facilitate redevelopment through respondent No. wp7389-09.doc 15 2. Even the show cause notice issued after the order of this Court does not spell out how the NOC dated 8th November 2006 for redevelopment is attributable to modified D.C.Regulation 33(5). The Executive Engineer has assumed that NOC of 8th November 2006 is in terms of modified D.C.Regulation 33(5) and merely because society vide letters dated 8th July 2010 and 9th July 2010 has informed MHADA that transit accommodation is available, the Executive Engineer has proceeded to prima facie conclude that the petitioners have not cooperated with development scheme. The entire action is at the behest of respondent Nos. 1 and 2 and hence there is a colourable exercise of power. 15] It is a facet of equity and fair play that an order, which is founded on an NOC can only be made if NOC is valid. If NOC is pending investigation it is axiomatic and validity of NOC should be first decided and only if found valid then proceedings to enforce the NOC can be instituted. According to Mr.Naidu MHADA has gone exact in the reverse direction. This is wp7389-09.doc 16 contrary to all known principles of fair play and equity. In the circumstances, the order deserves to be set aside. 16] Mr.Naidu further states that it was brought to the knowledge of the Executive Engineer that Indemnity Bond executed by society dated 19th September 2006 is false and NOC issued on the basis of false document can never be countenanced. It was specifically pointed out that para 3 of Indemnity speaks of application dated 24th May 2005. This application is for redevelopment of building Nos.20, 21 and 24. Further, para 5 of the indemnity bond states that the application dated 24th May 2005 and condition of offer letter dated 28th July 2006 together with format of the indemnity bond was placed before the special general body meeting held on 17th April 2005. The entire statement is ex facie false and hence the NOC granted is a fraud and cannot be enforced by an order as sought by the respondent Nos. 1 and 2. It is trite law that fraud vitiates all action. wp7389-09.doc 17 17] The Executive Engineer ignored the fact that indemnity bond was required to be placed before Special General Body meeting and approved in the said meeting of the society. This is a mandatory requirement under terms and conditions of the offer letter. On reading of the indemnity bond it was clear that this term was not complied with. Non- compliance of essential and mandatory condition of offer letter renders the NOC bad in law. Hence, NOC was prima facie invalid on this count also. It was, therefore, incumbent on the authority to prima facie examine this aspect before seeking to enforce the NOC by the impugned order. It was also stated that respondent Nos. 1 and 2 have colluded to defraud the petitioners and members similarly situated. In this connection the authority failed to notice that the entire FSI, which fell to the share of the petitioners and the members similarly situated on account of TDR was being usurped by the builder. 18] Mr.Naidu further stated that the share in development by TDR in respect of the 24 members who own row houses has wp7389-09.doc 18 been reserved for their utilisation. However, the petitioners and similarly situated members are deprived of the above under the redevelopment agreement. The petitioner and similarly situated members are entitled to FSI already consumed by the building and balance of unconsumed FSI i.e., under NOC dated 2nd February 2000 for which the petitioner has made pro rata payment. The builder is thus being assigned the entire share of petitioner and similarly situated members in TDR without consideration. Such an act on the part of the society amounts to defrauding its members. It is further contended that a statutory authority cannot and ought not to countenance a fraud when brought to its notice. The impugned order puts an imprimatur on the fraud played by the society and the builder upon members including the petitioners. 19] As far as Cooperative Court orders are concerned, it is contended that it is common ground that 70% consent of members had to be obtained before making proposal for redevelopment under D.C.Regulation 33(5). Respondent's wp7389-09.doc 19 contention that such consent was obtained in the special general body meeting held on 17th April 2005 is incorrect. Minutes of the meeting of 17th April 2005 are annexed at page 182 of the affidavit in reply. The society has 56 members. To constitute 70% out of 56 members a total number of 40 members are required. Hence, 40 members ought to have consented to the proposal. There is no dispute that 32 members attended the said meeting. The number of persons present was far below the 70% requirement. Hence, the question of 70% of members consenting to the proposal did not arise. Further, the NOC of 8th November 2006 is issued on the basis of the said resolution. The reply also clearly concedes that while issuing NOC dated 8th November 2006 the question of ascertaining whether 70% of the members had given their consent was not necessary. This is also further expressly admitted in reply of the Assistant Architect Planner dated 4th March 2011 (page 325 of the affidavit of petitioners dated 8th March 2011). Hence, the fundamental requirement of consent of 70% is admittedly not taken. It is trite law that when a Rule wp7389-09.doc 20 lays down a particular procedure and/or manner of grant then such a resolution has to be complied with in toto and failure to do so would render the action void. As NOC was not based on the fundamental requirement of 70% the rigors of modified D.C.Regulation 33(5) cannot be invoked. Consent of 70% is a condition precedent to grant NOC. This condition is admittedly not complied with. The special general body resolution dated 17th April 2005 has not been circulated amongst members. It has not been read and confirmed in subsequent special general body meting. The resolution speaks of bifurcation of society. Resolution is in violation of sections 17 and 18 of MSC Act. That resolution is impugned before the Cooperative Court. 20] On building No.19 being included it is stated that the same is beyond the application of the society and inclusion of Building No.19 in NOC is without application in that behalf. Inclusion of the said building is by the Executive Committee and not by General Body. Pursuant to the said resolution, the society addressed letter to MHADA on 25th January 2006 to wp7389-09.doc 21 include Building No.19 and based on the said letter building No.19 is included. A special general body meeting held on 2nd April 2006 was not for inclusion of Building No.19 but to appoint Architect for re-development of building Nos. 19, 20, 21 and 24. Item No.2 was for giving information in respect of inclusion of Building No.19. Item No.3 was to give information of progress of proposed multi-storeyed building. Hence the special general body meeting did not even discuss inclusion of building No.19. Therefore, inclusion of building No.19 in NOC is in violation of all norms. The special general body meeting resolution dated 2nd April 2006 was not circulated to members. The said resolution has not been read and confirmed in subsequent special general body meeting. This is the resolution which was impugned before the Cooperative court. 21] Development agreement clauses 13 and 19 clearly prescribes the mode in which demolition of the four buildings will take place. The society in collusion with the builder has created a scenario to force the petitioner out. The demolition of wp7389-09.doc 22 23 tenaments could not have been done by the builder because he does not have requisite IOD under D.C.Regulation 33(5) and has no right to enter upon the property for demolition. The NOC is for redevelopment by TDR utilisation. NOC speaks of 146 tenaments. IOD speaks of 58 tenaments. Clause 3 of Development agreement speaks of utilisation of FSI of 3475.52 of four buildings plus FSI 10800 as TDR to erect two new buildings of not more than 7 storeys. The supplementary agreement speaks of two new multi storeyed buildings having not more than 10 storeys excluding car parking and one multi storeyed tower of more than 22 floors. The permissible TDR proportionate to FSI allotted by the society to the said four buildings is now allotted to the builder free of cost thus depriving members such as the petitioners. The proposed plan of construction, which is contrary to the NOC, IOD, Redevelopment agreement is part of compilation of documents submitted by respondents. Thus, TDR FSI of the four buildings stands allotted to the builder by the society without any compensation to the petitioners. wp7389-09.doc 23 22] Thus, both the orders passed by the trial court and appellate court so also by MHADA under section 95A have been challenged and Mr.Naidu has contended that if the minutes of meeting held on 17th April 2005 were never read nor confirmed in the next special general body meeting convened on 2nd April 2006 and some non members also attended the meeting, then, it requires probe and scrutiny as to how