NMS1645-10 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.1645 OF 2010 IN SUIT NO.1631 OF 2010 Ekta Supreme Corporation .. Plaintiff Versus Vimla Kapoor & Ors. .. Defendants Mr.P.K.Dhakephalkar, Senior Advocate with Mr.S.G.Walam for plaintiffs Mr.Ajay Panicker i/b. Ajay Law Associates for defendant No.3 Mr.R.A.Lokhande for defendant No.3A Mr.V.S.Kapse i/b. Gordhandas & Fozdar for defendant No.4 Mr.Bharat Joshi for defendant No.2. CORAM : S.C.DHARMADHIKARI, J. Reserved On : 14th December 2010. Pronounced on : 6th January 2011. P.C.: 1] With the consent of parties and their counsel this motion is heard and disposed off finally by this order. This is a notice of motion for interim reliefs in a suit filed by the plaintiffs – developers and builders, for a declaration that defendant Nos. 1 to 3 are jointly and NMS1645-10 2 severally bound by the covenants and representations made by them to the plaintiffs in terms of development agreement dated 26th July 2006 read with supplemental agreement dated 5th April 2010 Exh.D-1 and D-2 to the plaint and are bound and liable to vacate the flat Nos.1, 2, 3 and 8 so as to enable the plaintiffs to demolish the building. 2] By prayer clause (b) permanent injunction is claimed in the following terms:- “28. (a) That it be declared that the defendant Nos.1 to 3 are jointly severally bound by the covenants and representations made by them to the plaintiffs in terms of the development agreement dated26/4/2006 read with supplemental agreement dated 5/4/2010 being Exh.D-1 and D-2 to the plaint and are bound to vacate the said flat Nos. 12, 18, and 3 and that defendant Nos. 1 to 3 be accordingly jointly and/or severally ordered and directed to vacate the said flats occupied by them and to hand over quiet, vacant NMS1645-10 3 and peaceful possession thereof to the plaintiffs for the purpose of demolition of the existing building as contemplated under the said agreements dated 26/4/2006 and 5/4/2010 respecetively. (b) That this defendant Nos.1, 2 and 3 by himself/herself/his/her servants and agents and all those claiming through under them be restrained from, by a permanent order and injunction of this Court in any manner or from interfering with/ obstructing and/or creating any impediment in the performance of obligation under the development agreement dated 26/4/2006 read with supplemental agreement dated 5/4/2010, annexed hereto as Exh.D-1 and D-2 respectively. (c) That the defendant Nos. 1 to 3 be ordered and decreed to pay to the plaintiff jointly and/or severally sum of Rs.2,50,000/- as and by way of damages/ compensation NMS1645-10 4 as per the particulars of claim being Exh.H hereto along with interest thereon at 21% from the date of filing of this suit will payment and/or realisation (d) That pending the hearing and final disposal of the suit this Court be pleased to appoint Court Receiver, High Court, Bombay or any other fit and proper person as Receiver of the suit premises being Flat Nos. 12, 18 and 3 on the ground floor and first floor in Corner View Coop. Housing Society situated at Plot Nos.378 and 379, Corner of 33rd and 15th roads, Bandra (West), Mumbai 400 050 with all power under order XL Rule 1 of the Code of Civil Procedure, 1908 including power to take possession of the suit premises if necessary with the help of the police and deliver the possession thereof to the plaintiffs for the purpose of demolishing and redevelopment in terms of the said agreements dated 26/4/2006 and 5/4/2010 respectively, with further directions as this Court may deem fit and NMS1645-10 5 proper in the facts and circumstances of the case. (e) That pending the hearing and final disposal of the suit, the defendant Nos. 1, 2 and 3 by themselves, their servants and agents be restrained by an order and injunction of this Court from in any manner inerfering with/ obstructing or impeding the performance of obligations under the development agreement dated 26/4/2006 read with supplemental agreement dated 5/4/2010 including by addressing or making any correspondence/ letters to the Municipal Corporation of Gr. Mumbai or any local authority / authorities or in any manner taking action that may hinder the redevelopment of the said property.” 3] It is in furtherance of the aforementioned declaration and permanent injunction that this notice of motion has been filed seeking interim reliefs and particularly in mandatory form enabling plaintiffs to demolish the existing building after securing eviction therefrom of NMS1645-10 6 all these defendants. 4] It is prayed that if there is continued obstruction as alleged, then, this Court should appoint Court Receiver, High Court, Bombay or some other fit and proper person as Receiver of these flats and such area which is in possession, occupation and use of defendants with all powers under Order XL Rule 1 of the CPC including to take physical possession of these premises with the help of police and deliver them to the plaintiffs so as to facilitate demolition and re-development in terms of these agreements. 5] Mr.Dhakephalkar, learned Senior Counsel appearing for plaintiffs submits that the fourth defendant is a cooperative housing society registered under Maharashtra Cooperative Societies Act, 1960. Mr.Dhakephalkar submits that this society has 35 members who are owners of their respective flats/ shops. These flats and shops are in the existing building standing on plot nos.378 and 379 more particularly mentioned in plaint and notice of motion. NMS1645-10 7 6] It is submitted by him that existing buildings are over 40 years old and have deteriorated as set out in the plaint and in the report of the Structural Engineer. Mr.Dhakephalkar submits that with a view to facilitate demolition of this old building and re-development of the property, the society convened a meeting and discussed at length the proposals received from interested parties of re-development of the property. Ultimately, a resolution was passed, a copy of which is at page 100 of the plaint paperbook. Thereafter, the agreement with the plaintiffs has been executed. 7] Inviting my attention to the clauses 10 and 11, 14.1, 14.7 and 16.1 of the agreement Mr.Dhakephalkar submits that these agreements are clear. Each one of the members is going to be provided with permanent alternate accommodation, details of the existing premises, details of the area that would be made available in terms of the carpet/ built up have been spelt out. Further, as far as the temporary accommodation is concerned that also has been identified. In these NMS1645-10 8 circumstances and assurances coming from the plaintiffs of re- construction within 18 months from the date of obtaining of the approvals and permissions, then, there was no reason why the plaintiffs should have been obstructed by the defendant Nos. 1 to 3. Mr.Dhakephalkar points out that the society has observed complete transparency inasmuch as when it first passed a resolution in 2005, that came to be challenged by defendant No.1 by filing a dispute in 2nd Cooperative Court Case No.646/05. Therein, an interim order was made by the Cooperative Court directing the society and its Managing Committee members to commence the process of re-development afresh by following complete procedure so also in tune with the MCS Act and Rules and by-laws. 8] Accordingly, the society reconvened meetings and invited sealed tenders from several bidders. Effectively, 9 tenders were received out of which 5 were brought in by the defendant No.2 including of one M/s.R.S.Builders. The defendant No.2 became aware that M/s.R.S.Builders have backed out of the deal with the Co- NMS1645-10 9 operative Society and the same is likely to be struck with the plaintiffs that he started obstructing and objecting the re-development itself. Mr.Dhakephalkar submits that IOD has been issued by the B.M.C. and before executing development agreement the plaintiff paid stamp duty and registration charges. Twenty nine members out of 35 signed the agreement with plaintiffs. The plaintiff has paid 10% of corpus money i.e. Rs.40,17,211/- and Rs.6,00,166 being 10% of the corpus funds to shop premises. Further, the plaintiff has deposited Rs. 2,85,890/- towards 22 months rent for alternate accommodation payable during the period of construction. 9] Mr.Dhakephalkar submits that despite this defendant No.2 has filed dispute in 2nd Cooperative Court being case No.CC/II/449/07 and has sought temporary injunction, restraining implementation of this development agreement. 10] Mr.Dhakephalkar submits that the structural audit report and other documents in relation thereto would show that the structural NMS1645-10 10 condition of the building is very poor. Therefore, the delay will cause prejudice to the society and its members. Mr.Dhakephalkar submits that in April 2010 a supplemental agreement was executed with three more members totalling to 33 out of 35. Mr.Dhakephalkar submits that before supplemental agreement as well the plaintiffs deposited stamp duty and registration charges of Rs.8 lakhs approximately. Now the position is that 33 out of 35 members are with the plaintiff and cooperating with the development. After institution of the suit, even defendant No.1 has executed necessary agreement and it is only defendant No.2 who has obstructed the project. As far as defendant No.3 is concerned, Mr.Dhakephalkar submits that the defendant No. 3A is a member holding flat No.3. However, defendant No.3 is occupying this flat. His status is that of a permissive occupant and at the most licensee claiming through original member. The plaintiff has no privity with such occupant and licensee. 11] The original member – defendant No.3A has agreed and accepted the development agreement so also the plaintiffs right NMS1645-10 11 thereunder. He is ready and willing to sign the documents but it is defendant No.3A who has to be evicted therefrom. Mr.Dhakephalkar on instructions makes a statement that the plaintiff would construct a flat for the Member and provide permanent alternate accommodation to defendant No.3A but as far as it is use and occupation is concerned, the defendant No.3 will be put in possession thereof. However, all this would be without prejudice to the pending litigation between the defendant Nos. 3 and 3A. Thus, it is only two persons who have held up the implementation of the entire project and in such circumstances, strong prima facie case is made out for grant of the temporary injunction in mandatory form and in any event, it is just and convenient to appoint Court Receiver, High Court so as to enable plaintiffs to complete the project. 12] Mr.Bharat Joshi appears for contesting defendant No.2 and submits that the affidavit in reply of defendant No.2 must be perused carefully before any conclusion can be reached with regard to the alleged unreasonable and untenable stand of the defendant No.2. That NMS1645-10 12 he has not been unreasonable would be clear if the correspondence referred to in this affidavit is perused. 13] Mr.Joshi has invited my attention to the development agreement and as per the same, it is clear that the society has not stated that the resolution binds the members like defendant No.2. It is the plaintiff developer who has agreed with the society to negotiate with and deal directly with those members who have not executed the agreement. It is the plaintiff who has to obtain the concurrence of such non co- operation or confirming members at the costs and expenses of the developer. Thus, in the absence of such concurrence and a specific agreement in terms of clause 4 of the development agreement, there is no question of vacating the flat for demolition of the building and its reconstruction. For the reasons directly attributable to the plaintiff, a separate agreement has not been executed with defendant No.2. Mr.Joshi has invited my attention to page 184 of the plaint and it is submitted that the subsequent agreement dated 5th April 2010 recites that plaintiffs are in the process of entering into a separate writing to NMS1645-10 13 obtain his consent for re-development of this property. It is stated that the developer shall furnish photo copy of the consent, that may be obtained from Mr.Shyam Chatwal, to the society prior to the members of the society being given notice for vacating and handing over their respective premises to the Developers. 14] Mr.Joshi submits that there is no compliance with these covenants. Further, relying upon page 302 of the paper book, he submits that it is the plaintiff who has backed out because they sent three different drafts and there was no firm commitment. It is stated in the affidavit in reply of defendant No.2 that the plaintiff agreed to give an area in new building of 1241 sq.feet carpet along with payment of Rs.5 Crores out of which 4.25 Crores was deposited towards performance guarantee and will be refunded by defendant No.2 after OC is issued and plaintiff gives sixty days advance notice for getting vacant possession. Relying upon para 14 of this affidavit Mr.Joshi submits that only photocopy of payorders of Rs.3.50 Crores were forwarded but that is contrary to the understanding reached NMS1645-10 14 between the parties. In these circumstances, once there is no conclusive agreement as contemplated in the documents executed in favour of the plaintiffs and when plaintiffs are backing out, then, it will have to be held that they have no prima facie case as they are not ready and willing to execute a separate agreement with the defendant No.2. Further, the dispute in the Co-operative Court is still pending. There are serious allegations made that certain changes in the Development Agreement in favour of the plaintiff about the area of the permanent alternate accommodation. They have been made at the instance of the office bearers of the Co-operative housing society in question. 15] For these reasons, he submits that the motion be dismissed. 16] As far as defendant No.3 is concerned, Mr.Panickeer submits that he is not opposing re-development. The defendant No.3A has purchased suit premises with monies of defendant No.3, in 1979. Defendant No.3A’s mother filed an eviction suit against him but the NMS1645-10 15 same was dismissed by the Court of Small Causes on 13th September 1988. He submits that the tenancy was sought to be terminated on 6th March 1979, no rent is collected but defendant No.3 is in possession since 1979. He submits that the present suit and the claim therein is barred by law of limitation and in that behalf he relies upon Article 67 of the Limitation Act, 1963. 17] Mr.Panicker then submits there is an agreement for purchase of the flat with defendant No.3A and the Landlady. That it is a concluded contract and since the vendors backed out therefrom, the defendant No.3 had to file a suit seeking specific performance of that agreement for sale which is dated 29th January 2005. That suit is pending. Mr.Panicker submits that in the alternative this defendant is relying upon section 53A of the Transfer of Property Act, 1882. Mr.Panicker submits that defendant No.3A is a Canadian citizen as is clear from the plaint itself. Mr.Panicker submits that the agreement to provide 511 sq. feet carpet area and additional area of 128 sq.feet separately to original member is a statement in the plaint in the NMS1645-10 16 present suit but that is not acceptable because the demand is of 551 sq.feet carpet. Mr.Panicker then submits that the instant suit is not maintainable because third defendant is a tenant. The provisions of Maharashtra Rent Control Act and Section 41 of the Presidency Small Causes Court Act would bar a suit of present nature because the plaintiff is not a landlord or the owner. It is the society which can initiate proceedings for eviction or defendant No.3A must initiate them. This suit seeks eviction of the present defendant No.3 but the Court has no jurisdiction and even otherwise considering the quantum of court fees paid this suit cannot be held to be maintainable. In any event, no right is created in favour of the plaintiff to seek eviction and Mr.Panicker in that behalf relies upon clause 16(iii) and (iv) of the Development Agreement and in support of his submission on the issue of jurisdiction, he also relied upon sections 91 and 94(3) of the MCS Act. Thus, it is submitted that the motion be dismissed against defendant No.3. 18] In rejoinder and in answer to this submission, Mr.Dhakephalkar NMS1645-10 17 submits that the plaintiff has gone by the original area in occupation of the members. Total 511 sq.feet was the original entitlement and area of the defendant No.3A in the records of the society. The defendant No.3 is not a member but claiming through defendant No. 3A. At the most, he may have an agreement for sale but there is no sale deed or conveyance and, therefore, defendant No.3 is not owner/ member and has no crystalised right in her favour. Once the membership has not been transferred, then, the said defendant has no right to obstruct the re-development work and interfere therewith. 19] As far as the arguments raised by Mr.Joshi, Mr.Dhakephalkar sought to meet them by arguing that page 302 of the plaint paperbook must be read in its entirety. Everything that is demanded by defendant No.2 was not agreed. It was not a concluded contract and in any event the same could not be concluded because it is defendant No.2 who has backed out therefrom. In such circumstances, the defendant No.2 who is a non-cooperating member should not be permitted to resist and obstruct the re-development which is in interest of all NMS1645-10 18 members. 20] Alternatively and with a view to buy peace, Mr.Dhakephalkar states on instructions that the plaintiff is ready and willing to provide a flat admeasuring 626 sq. feet to defendant No.3 and put him/ her in possession and occupation thereof subject to outcome of the legal proceedings pending between defendant No.3 and 3A in this court so also pending further orders in this suit. He, therefore, prays that the motion be made absolute. 21] With the assistance of the learned Counsel for parties, I have perused the plaint, annexures thereto and the affidavits on record. The suit is filed by the plaintiff as a developer and empowered by an agreement for development of the property of the defendant No.4 society. It is not in dispute that defendant No.1 and 2 are in occupation and possession of flat Nos.12 and 18 on the ground and first floor respectively in a building which is purely residential. It is stated that defendant No.3A is a member holding flat No.3 but that NMS1645-10 19 flat is occupied by defendant No.3. The plaintiff states that they are not aware of the status of defendant No.3. However, at the same time, it is stated that defendant No.3 has no privity with defendant No.4 society. 22] During the course of argument, it has been stated that defendant No.1 has now settled the matter with the plaintiff and has executed a separate agreement supporting the re-development. As far as defendant No.3 is concerned, it is stated that although there is no privity of contract between her and the defendant No.4 society but sofar as plaintiffs are aware defendant No.3A has agreed to / accepted the development agreement in respect of flat No.3 and is bound by the said development agreement and is bound to vacate flat No.3 to enable re-development. In this behalf, the amended plea reads thus:- “Defendant No.3 is illegally preventing the parties to the development agreement (including defendant No.3A) from acting thereunder. Defendant No.3 has no right to NMS1645-10 20 prevent the re-development in terms of the development agreement dated 26/4/2006. The plaintiffs are ready and willing to give benefit under the development agreement to defendant No.3A in accordance with the development agreement. The plaintiffs are not concerned with the inter se Arrangement between defendant No.3 and defendant No. 3A.” 23] Since I am on this issue, it must be immediately clarified that Mr.Dhakephalkar on instructions from the plaintiff stated that the plaintiffs are ready and willing to give a flat admeasuring 626 sq. feet in the new building to defendant No.3 subject of course to the rights of the defendant No.3A therein so also without prejudice to their contentions in this suit and a suit which is stated to be pending between the defendant No.3 and 3A. 24] Prima facie, if there is no privity of contract between the defendant No.3 and defendant No.4 society as is alleged in the earlier NMS1645-10 21 part of the amended para 2A, now, a statement that is made on instructions by Mr.Dhakephalkar denotes a marked departure from the stand taken in the plaint. 25] Thus, the settled principle that a member of cooperative society has no independent existence than that of the Society and, therefore, he acts and speaks through the society, then, for the plaintiffs to plead that they would be offering a flat to defendant No.3 who, according to plaintiff and the defendant No.4 society, is not a member, would mean that the plaintiff will have to establish privity of contract with defendant No.3. The aforesaid principle is straightaway not applicable. That pleading of such privity of contract is prima facie admittedly lacking. If the pleading is that the society deals with members and the acts of the society with the developer like plaintiffs, would bind the members, then, there is no question of an individual agreement with the members being executed. However, in this case, the Development Agreement itself contemplates execution of an individual agreement with the non co-operating members, like NMS1645-10 22 defendant Nos.1 to 3. In the absence of such an agreement with defendant No.3 plaintiffs cannot seek eviction of defendant No.3. All the more, when there is no separate consent in writing by the defendant No.3 the position of lack of privity is undisputed prima facie. 26] Once, the member of the society is defendant No.3A but the flat is occupied by the defendant No.3 and the plaintiff is ready and willing to enter into a permanent alternate accommodation with either defendant No.3 exclusively or with defendant Nos. 3 and 3A jointly, then, unless and until such an agreement is executed, there is no question of this Court issuing any mandatory orders in favour of the plaintiffs directing a party like defendant No.3 to hand over vacant and peaceful possession of the existing flat to enable the plaintiffs to demolish the old building and re-developing the property. In other words, for the plaintiff to claim any relief against the defendant No.3, they must show as to how the defendant No.3 is bound and liable to comply with the terms and conditions of the development agreement NMS1645-10 23 dated 26th April 2006. In the absence of defendant No.3 being party to the said agreement nor being there any independent transaction with her, the plaintiffs cannot seek eviction of defendant No.3. 27] The aforesaid aspects become clear, if one peruses the affidavit in reply of defendant No.3. In para 2 and 3 of the affidavit issue of jurisdiction has been raised and in para 4 it is stated that defendant No.3 was a tenant of flat No.3 and that right has now taken a form of ownership of this flat. Defendant No.3A has no right, title and interest in the said flat. In para 6 of the affidavit in reply this is what is stated:- “6. I say that if the plaintiff is extending all the benefits under development and supplemental agreement and also the conditions laid down under Directive No.CHS2007/CR554/14-C dated 3rd January, 2009 and on the plaintiff executing undertaking before this Court to hand over the new flat in the new building to me. I am NMS1645-10 24 ready and willing to vacate the suit flat No.3 to the plaintiff developer.” 28] However, noting that offer made by defendant No.3 is conditional and the plaintiff being ready and willing to hand over the flat only subject to the rights of member - defendant No.3A therein being in tact and further, this offer being depending upon the outcome of the suit filed by defendant No.3 against defendant No.3A, in this Court, then, all the