-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 1490 OF 2009 IN SUIT NO. 970 OF 2009 Vincent Dias & ors ........ Plaintiffs versus The Salsette Catholic Co-operative Housing Society and ors. ........Defendants. Mr. Hiralal Thakkar with M.P. Narayanswamy i/b.Shroff & Co. adv. For the Plaintiffs Mr. Ravi Kadam Sr. Adv. With Birendra Saraf i/b. Nitin Raut adv. For the Defendant no.1. Mr. Janak Dwarkadas with Pesi Modi i/b. IC Legal for defendant no. 2. CORAM: A. P DESHPANDE, J. DATED : 9th July, 2009. P. C.: 1. The Plaintiffs are the members of the defendant no.1 Co- operative Society, which is registered under the Maharashtra Co- operative Societies Act 1960. The defendant no.1 has 310 members. Out of 310 members, 61 members were enrolled by the defendant no.1 when it decided to develop a scheme known as Orlem scheme. The present Plaintiffs are the members who are enrolled with a view 1 to extend them benefit under the said scheme and constitute a part of group of 61 members. The said scheme was in relation to the development of lands by the defendant no.1 admeasuring area of about 1,50,000 sq. yards situated at Orlem, Malad West. The scheme was formed and was to commence sometime in the year 1962-63 and hence the defendant no.1 had enrolled 61 members with a view to allot fully developed open plots. Initially it was envisaged that on allotment of the plots the members would construct their houses. The Plaintiff and other members from the group of 61 have contributed a sum of Rs. 2400/- each aggregating to Rs. 1,77,000/- only. The land at Orlem was purchased in the name of the defendant no.1 in accordance with the scheme and bye- laws. There was no development till the year 1980 of the said Orlem scheme. In the year 1981 the defendant no.1 had signed a development agreement with the defendant no.4 CONWOOD developers private limited and the developer was to develop the property and give 61 plots of 500 sq.mtrs. each to the 61 members and the balance of the land was to be utilised by defendant no.4 for its own benefit and was also to pay an additional monetary consideration of 67 lacs to the defendant no.1. The defendant no.4 developer was engaged for development of Orlem scheme after passing necessary resolution by the society. In view of changed circumstances two supplementary development agreements was subsequently executed by the defendant no.1 with the defendant no. 4 in the year 1985 and 1988 respectively which substantially modified the original 1981 development agreement. Under the 2 supplementary agreement, the defendant no.4 instead of providing 61 plots, agreed to give 122 flats having built up area of 600 sq.ft. free of costs at the site with a view to provide two flats to each of the 61 members. No one objected to the change effected to the main development agreement by executing supplimentary development agreement in 1985 and 1988. As there was no progress in the construction, even after execution of supplimentary agreements some of the members of the Orlem scheme filed a dispute before the Co-operative Court at Bombay, alleging that they apprehend that the defendant no.1 may cancel the Orlem scheme. The Co-operative Court by an ad-interim order dated 16-9-1991 restrained the defendant nos. 1 and 4 from canceling the Orlem scheme. The ad-interim order dated 16-9-1991 was modified by an order dated 20th August 1996. By the said order the society was restrained from canceling the Orlem scheme and fromrefunding the money to the members of Orlem scheme and creating third party interest in the land under the Orlem scheme and from handing over possession of the flats to be constructed to any purchaser unless two flats each of 600 sq.ft. area are reserved for the disputants. The dispute was filed by 34 members out of 61 members of Orlem scheme. Thereafter the society also filed a suit in the High Court against the defendant no.4 as the society was apprehending that the developer would construct the building and will not hand over the flats to the society and/or its members. The High Court passed an interim order in the suit filed by the society on 17th July 1998 and had granted prayer clauses (a) and (b) of the Notice of Motion 3 against the defendant nos. 1 to 4. The prayers made in prayer clauses (a) and (b) of the Notice of Motion reads thus: (a) That pending the hearing and final disposal of the suit the defendant nos. 1 to 4 their servants and agents, be restrained by an order and injunction of this Hon’ble court from proceeding with any further construction upon any portion of the suit property, viz. the property more particularly described in Exhibit `A’ hereto, save and except constructing 122 flats of 600 sq.ft. built up area each to be provided by the defendants to the plaintiffs. (b) That pending the hearing and final disposal of the suit, the defendant nos. 1 to 4, their servants and agents, be restrained by an order and injunction of this Hon’ble court from parting with possession of any of the flats in the building shown in red wash to the plan annexed at Exhibit `C’ hereto comprising of CTS No.207 (Part), CTS No.204 (Part) and CTS No.149 and/or permitting any person or persons from taking possession of any of the said flats.” 2. In the above situation the defendant no.1 ( defendant no.4 in the present suit) did not proceed with the construction for a long time. Ultimately the society convened the Special General Body Meeting of its members on 15th July 2006. In the agenda, it was proposed that the Orlem property be sold to defendant no.2 on as is were is basis for a consideration of Rs. 12 crores. The next resolution which was proposed was that out of the 12 crores which were to be received on the sale of Orlem property, Rs. 8 crores be 4 distributed among the 61 members for whose benefit the Orlem scheme was to be developed. In the meeting a resolution was passed by majority of 84 vs. 13, and the general body approved the decision of the managing committee to sell the Orlem property for Rs. 12 crores and further decided that out of 12 crores, a sum of Rs. 10 crores be equally distributed amongst 61 Orlem members and the society would retain the balance amount of Rs. 2 crores. It is this resolution passed in the meeting held on 15th July 2006 which gave raise to the dispute forming part of the present suit. 3. The societies action of terminating the agreement with the defendant no.4 dated 13th August 2005 so also the action of the society in revoking the Power of Attorney granted to defendant no.4 was approved in the said meeting of the general body dated 15th July 2006. After passing of the said resolution, the defendant no.1 society executed deeds of conveyance in respect of the Orlem property on 9-5-2007 and 29-8-2007 and sold the property to defendant no.2. These conveyances executed in the year 2007 are being challenged by filing the present suit as late as in the year 2009 and a Notice of Motion is taken out and pressed in service for grant of ad-interim relief. 4. It is the case of the Plaintiff that they had challenged the resolution by filing a dispute under section 91 of the Co-operative Societies Act. However there has occassioned some delay in filing the present suit. The learned counsel for the Plaintiff has impugned 5 the conveyance executed by defendant no.1 in favour of defendant no.2 on the following grounds: i) That in effecting sale of Orlem property, the defendant no.1 has committed breach of trust in as much as the decision to convey the property was not permitted to be taken by Orlem members who are 61 in number, but the decision was taken by all the 310 members of the society, which has resulted in deprivation of flats to the plaintiff. ii) That the decision to convey the property by the defendant no.1 in favour of the defendant no.2 has been approved in the special general body meeting with a majority to 84 :13 wherein all the members of the society has participated. Thus, the decision is nothing but oppresion of the minority by the majority. Iii) That the conveyances executed by defendant no.1 which are impugned in the suit are in violation of the orders passed by the court. And iv) The sale or Orlem property by private negotiations and without any public notice is itself bad in law as it lacks transparency. 5. Per contra, the learned counsel for the defendant no.1 has submitted that the decision to sell the property which was struck up in litigation and wherein there was no progress for more than 25 6 years was in the best interest of the society and its members. It is also submitted that out of Rs.12 crores received as consideration in the sale of the property, Rs.10 crores are to be distributed equally amongst 61 members and thus each member receives a sum of more than Rs. 16 lacs as against initial contribution of Rs. 2400/- each. It is pointed out that only two crores are retained for the benefit of the society. Whereas no amount is given to the members other than the members of Orlem scheme. 6. It is contended that the resolution passed by the general body approving the sale of the property for Rs. 12 crores and consequential distribution of Rs. 10 crores in favour or Orlem scheme members is just, fair and equitable. It is next submitted that the conveyances are not executed by defendant no.1 in breach of any order passed by the court and lastly it is contended that sale of societies property by private negotiations perse does not result in any illegality warranting quashing of the conveyance. 7. It is then submitted that the plaintiffs are seeking discretionary relief at the hands of this court in regard to the conveyances executed two years back, consequent to the resolution passed by the general body meeting held three years back. The general body meeting wherein decision to sell the property was reached was attended by the plaintiff and thus the delay of three years in questioning the correctness of decision would be fatal to the plaintiff’s case as the parties have acted upon the said decision and the property has changed hands and further third party interests are created. Thus the Notice of Motion is vehemently opposed, also on 7 the ground of unexplained delay and latches. 8. On behalf of the defendant no.2 the learned counsel has submitted, relying on an affidavit in reply filed by the said defendant that the second defendant has spent an amount of Rs. 34 crores in settling the claims of various parties in pending litigation, including the amount of Rs.12 crores paid affront to the defendant no.1. It is also stated that third party rights are created in the said lands. In the above factual matrix, it is claimed that the plaintiffs are not entitled to any ad-interim relief as prayed for. 9. The agenda of the said general body meeting scheduled and held on 15th July 2006 is placed on record by the plaintiff at page 17 at Exh.K. Infact approval was sought of the decision taken by the managing committee terminating the development agreement entered into with defendant no.4 and to the revocation of the power o attorney. The managing committee’s decision to sell the Orlem property to defendant no.2 for Rs. 12 crores was also placed before the general body meeting for approval as the managing committee had passed a resolution to sell the property subject to the approval of the general body. The agenda of the meeting also provided for distribution of Rs. 8 crores from the proceeds of the sale of Orlem scheme to the Orlem scheme members. After considering the agenda the society in its general body resolved and raised the amount from 8 crores to 10 crores to be distributed to the Orlem scheme members. It is undisputed that the Plaintiffs had attended 8 the meeting held on 15th July 2006 and they were hence aware that the said decision would be implemented. Despite the knowledge the plaintiff has chosen to file the suit after three years, which would be fatal at least for grant of ad-interim relief. Acting on the said resolution, the conveyances are executed in the year 2007, and monies are received. Out of the amount of Rs. 12 crores that are received, money has been distributed and withdrawn by 42 out of 61 members, and I am informed that at a later point of time, the amount could not be disbursed to the remaining members on account of interim order passed by the court. Thus in substance, the decision to sell the Orlem property has been long acted upon and from the proceeds received, amounts are also withdrawn by 42 members or the Orlem scheme. I am of the view that prima facie it can be held that the decision to sell the property as such was not adverse to the interest of the members of Orlem society, for the reason that for 25 years there was no development on the property and there was a potential threat of encroachment. Each of the member of Orlem scheme, under the decision taken by the society are to receive more than Rs. 16 lacs as against the contribution of Rs. 2400/-. Only three members have filed the present suit. Majority of Orlem members have also acted on the decision taken by the society and have withdrawn the amount. The legality or otherwise of the conveyance will have to be gone into at the time of trial. At this stage I am of the view that the plaintiff has failed to make out any prima facie case for grant of injunction seeking to restrain the defendant no.2 and others from dealing with the 9 conveyed property. The plaintiffs having approached this court, after lapse of about three years from the date of passing of the Resolution, are not entitled to an ad-interim injunction in as much as on account of latches, third party interests are created. It will not be out of place to mention that to substantiate the contention of the plaintiff that the conveyances are in breach of the orders passed by the court, the counsel for the plaintiff has relied upon an order dated 20th August 1996 passed by the Co-operative Court. The said order was challenged by filing an appeal and the appellate court by an order dated 1-4-2002 has modified the order passed by the trial court by substituting the order passed by the High Court dated 17th July 1998 in Notice of Motion No. 174/97 in Suit No. 1776/97. The substituted order is passed in favour of the present defendant no.1 and against the defendant no.4. Hence I am of the clear view that there was no order operating which prevented the defendant no.1 from conveying the property in favour of defendant no.2. The balance of convenience is not in favour of the plaintiff. On account of the inordinate and unexplained delay also I see no merit in the motion and hence the prayer for ad-interim relief is rejected. Notice of Motion is accordingly disposed of. (A. P. Deshpande, J.) 10