1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2483 OF 2008 IN SUIT NO.2136 OF 2008 Sai Mangal Enterprises .... Plaintiffs. v/s Ajoy Co-op. Hsg. Socy. Ltd. and Ors. ... Defendants. Mr. A.Y Sakhare, Senior Counsel i/b G.N. Pandit for plaintiffs. Mr. A.V. Menon for defendant No.1. Mr. C.P. Deogirikar for defendant No.4. Mr. D. Mishra for defendant Nos. 2 and 5. Mr. P.G. Lad for defendant No.3. CORAM: V.M. KANADE, J. DATE : 4TH SEPTEMBER, 2009 P.C.: 1. Plaintiffs are a registered partnership firm and engaged in the business of development of properties and Builders of real estate. Defendant Nos. 2 to 5 are members of 1 st defendant – Ajoy Co-operative Housing Society Ltd. and are in occupation of their respective flats in the suit property. It is 2 an admitted position that a registered agreement dated 7/2/2007 was entered into between the 1 st defendant and plaintiffs for redevelopment of the Society. The Society also executed a registered Power of Attorney whereby plaintiffs have been appointed as Constituted Attorney of the Society to carry on its business and necessary work of redevelopment. 2. The 1 st defendant – Society is the owner of freehold land bearing Survey No.87, Hissa No.1-B, 1-C and 1-D and bearing C.T.S. No.904, 905 and 887 of Village Kandivali, Taluka Borivali. Society has constructed two buildings on the said plot and said buildings are about 39 to 40 years old and are in dilapidated and dangerous condition. The structural audit report was invited by Society in 2006 which, in clear terms, stated that the buildings require immediate structural repairs. The Society and its members unanimously decided to demolish the existing buildings and to reconstruct new buildings. There 3 is no dispute that present defendants also were parties to the said Resolution which was passed for the purpose of redevelopment of the Society. Tender Notice, accordingly, was issued in the local news papers on 09/08/2006 and offers from various developers were invited. According to plaintiffs, they applied in the name of their Sister Concern M/s Sai Deep Associates and their proposal was unanimously accepted in the Special General Body Meeting of the Society held on 15/10/2006. According to plaintiffs, they submitted their proposal and negotiations were held between plaintiffs and the Society and it was agreed by the Society considering the fact that both were Sister Concerns, to proceed with the reconstruction of the Society Buildings. The Society, accordingly, issued a fresh letter of appointment dated 02/01/2007in favour of plaintiffs. The development agreement dated 07/02/2007, as stated above, was executed. The said appointment was ratified by the Resolution passed in the Special General Body Meeting of the Society which was held on 4 20/04/2008. In the development agreement, plaintiffs had undertaken to take various steps. Over and above that, plaintiffs also agreed to pay Rs 38,28,000/- inter alia to be paid to each member a sum of Rs 66,000/- by way of refundable deposit and further to pay Rs 6,000/- per month to each of the members of the Society towards monthly compensation payable for temporary alternate accommodation for 24 months and to pay 12 post-dated cheques in the sum of Rs 6,000/- to each of the members of the Society. Plaintiffs, after execution of the said agreement, started taking steps for the purpose of reconstruction of the said buildings. Accordingly, IOD was issued by the B.M.C on 26/04/2007. 3. According to the agreement, members were supposed to vacate their existing flats within 30 days from the receipt of intimation from plaintiffs and out of total 58 members, 54 members were willing to vacate their respective 5 flats immediately. It was further agreed that 58 new flats would be reserved for the members of the Society and the said flats shall be allotted by drawing Lottery in the Special General Body Meeting. Out of 58 members, 49 members have entered into individual agreement with plaintiffs and these agreements are duly registered. Five other members have given their consent to execute the agreement and their agreement also shall be registered. 4. Defendant Nos. 2 to 5, however, did not give their consent and were opposing the redevelopment by plaintiffs on one ground or the other, as a result the entire redevelopment process was stalled by these defendants and the entire redevelopment work was held up on account of the indifferent attitude on the part of defendant Nos. 2 to 5. 5. It is the case of plaintiffs that, in the meantime, they 6 had purchased TDR for the said project by incurring heavy cost. Necessary permission for loading of TDR for the project was also granted by the Corporation in the Special General Body Meeting dated 20/04/2008. The members of the Society, by majority, passed a resolution for ratification of the appointment of plaintiffs and the manner in which allotment of flats was to be made to all members of the Society in new buildings. It is the case of plaintiffs that more than one year had passed but due to non-cooperation of defendant Nos.2 to 5, plaintiffs are suffering huge losses and damages every day. According to plaintiffs, they have spent Rs 1,49,68,000/- for purchase of TDR and they have been paying daily interest on the amounts borrowed and invested in the project. It is the case of plaintiffs that four members of the Society have stalled the entire project, though, unanimously, a resolution has been passed by the Society appointing plaintiffs as developers. Plaintiffs, therefore, filed this suit seeking the following reliefs viz. (a) for specific 7 performance of the agreement dated 07/02/2007, (b) for a mandatory order and injunction directing defendant Nos. 2 to 5 to (i) execute the agreement for permanent alternate accommodation with plaintiffs, (ii) vacate and handover to plaintiffs their respective premises for demolition of the building and (iii) not to obstruct and/or create any obstacles in the development work carried out by plaintiffs in any manner whatsoever and (c) for appointment of Court Receiver. 6. In this suit, Notice of Motion has been taken out by plaintiffs seeking an order of appointment of the Court Receiver and for mandatory order, directing defendant Nos. 2 to 5 to vacate the premises and for other consequential reliefs. 7. Defendant No.1 – Society has filed its reply and supported the case of plaintiffs. It is stated in the affidavit that all other members had agreed to give redevelopment rights to 8 plaintiffs. Resolution was passed in the Special General Body meeting from time to time and the majority of the members have supported plaintiffs. Defendant No.1 has given details and the manner in which the various meetings were held. They have annexed various documents such as notices which were issued for the purpose of convening meetings, the number of members who attended the meetings and who have given their signatures etc. 8. Defendant Nos. 2 to 5 also have filed their affidavits in reply. It is firstly alleged that this Court has no jurisdiction to decide and entertain the dispute since the dispute could be decided only by Co-operative Court under section 91 of the Maharashtra Co-operative Societies Act, 1960. It is stated that this suit is not maintainable for want of notice under section 164 of the said Act, 1960. It is further stated that development agreement and power of attorney for development dated 9 07/02/2007 are null and void since the said agreement was entered by the former Managing Committee of the Society. It is further stated that the agreement was duly ratified in Special General Body Meeting held on 20/04/2008. It is further stated that there was no privity of contract between defendant No.2 and plaintiffs. It is further stated that 17 members have objected to the ratification of the said agreement. Further, reply was filed on behalf of plaintiffs dated 03/11/2008 in which it was stated that after the term of administrator was over, fresh elections were held and a new Managing Committee was appointed and in the Special General Body Meeting held on 20/04/2008, members have ratified the appointment of plaintiffs as developers and had further passed the resolutions in furtherance of the redevelopment project carried by plaintiffs. It is submitted that 48 members out of the total 58 members have already signed and executed registered agreements for permanent alternate accommodation. 10 9. Mrs Jyoti U. Sonpal – defendant No.3 has also filed her affidavit in reply. In the affidavit in reply filed by defendant Nos. 2 to 5, the main objections appears to be that, firstly, the defendant No.1 entered into unauthorized agreement with plaintiffs. According to them, Circular dated 10/02/2007 was circulated by Secretary of the Managing Committee, informing the members that they have entered into redevelopment agreement duly registered on 08/02/2007 with M/s Sai Mangal Enterprises (Sai Deep Associates). Secondly, it is their case that all members were kept in dark about the fact that there existed any Sister Concern of the of the tenderer – firm i.e M/s Sai Deep Associates and, further, Registrar, according to these members, has given a finding that development agreement is with unknown builder and it is against the interest and benefit of the Society. Thirdly, it was contended that out of seven tenderers, three were short-listed viz. Sai Deep Associates, Right Channel and R.K.E. Builder & Developer. Out of these 11 three, R.K.E. Builder & Developer was more competitive as he was offering 430 sq.ft. carpet area as against 395 carpet area offered by M/s Sai Mangal Enterprises. It is their case that Society has accepted tender submitted by Sai Deep Associates. It is further case of these defendants that instead of correcting the said mistake, the newly elected Managing Committee in its Resolution dated 20/04/2008 ratified plaintiffs as developers of the Society. 10. Plaintiff were directed to file affidavit in reply pointing out their experience in the field as also their financial capacity to undertake this project. Accordingly, an additional affidavit has been filed by plaintiffs dated 13/08/2009. In the said affidavit, it is stated that plaintiff is a partnership firm which is a group member firm of renowned Builders and Developers. They have given names of other group companies of the said group viz. Vinayak Developers, Sai Deep Associates, 12 Utsav Enterprise, Vinayaka Builders, Tirupati Ventures & Sai Jivdani Builders. It is stated in the affidavit that they have an experience in the building construction line for more than 30 years and is a respected group in the real estate business. Plaintiffs have given number of ventures they have successfully completed. Plaintiffs have give names of about 9 such projects which have been completed by them. Further running projects of plaintiffs also are mentioned which are four in number and, lastly, upcoming projects are also listed which are 5 in number and one of the projects is with defendant No.1 – Society. Statement is made by plaintiffs that they are financially sound and they are willing to give Bank Guarantee of some Nationalized Bank in the sum of Rs 1 crore at the time of receiving vacant possession of the Society’s buildings. It is stated that buildings would be constructed within 24 months from the date of receipt of commencement certificate from the B.M.C. Further, plaintiffs have undertaken to pay a sum of Rs 13 7000/- per month to each member of the Society after 24 months from the date of receipt of commencement certificate from B.M.C till the completion and obtaining of occupation certificate by them. Though, time was given to defendant Nos. 2 to 5 to file their reply, no such reply has been filed by them. Averments made by plaintiffs in this additional affidavit, therefore, are uncontroverted. Plaintiffs also had offered to Counsel for defendant Nos. 2 to 5 that they are willing to show them completed projects which were undertaken by them as also the other projects which are partly completed. However, none of the defendants took that offer to take inspection of the completed projects or other projects of plaintiffs. 11. The learned Senior Counsel appearing on behalf of plaintiffs submitted that under normal circumstances, plaintiff would not be entitled to seek mandatory order of injunction which would be in the nature of seeking final reliefs which are 14 claimed in the suit. He submitted that, however, in the peculiar facts and circumstances of this case, plaintiffs and other majority members of the Society who had given their consent to this project, are entitled to claim mandatory order of injunction. He submitted that Court Receiver may be appointed to take possession of flats of defendant Nos. 2 to 5 and, thereafter handover the same to plaintiffs after evicting them for demolition of the old buildings and to reconstruct new buildings and after reconstruction of the said buildings to put defendant Nos. 2 to 5 in possession of their respective permanent alternate accommodation which was offered by plaintiffs. He submitted that, therefore, if the Court Receiver is appointed, right, if any, of defendant Nos. 2 to 5 and other members of the Society would be protected. He invited my attention to several orders of similar nature which have been passed by this Court in various cases where similar situation had arisen and where one or two members were, in fact, not cooperating with developers and 15 other members of the Society. He invited my attention to the judgment of this Court in Appellate Side Writ Petition No.3030 of 2009 alongwith other petitions decided by the learned Single Judge (Coram: A.M. Khanwilkar, J.) dated 26/3/2009 in the case of Mahabir Nuniwal vs. Neptune Co-operative Housing Society Ltd. & anr., in which similar orders were passed. Similar order was also passed by the learned Single Judge (Coram: R.V. More, J.) dated 6/8/2008 in Appellate Side Writ Petition No. 3783 of 2008 in the case of Dr. (Mrs) Swati M. Karande vs. Neptune CHS Ltd. & Anr. He also invited my attention to the order passed by learned Single Judge of this Court (Coram: A.M. Khanwilkar, J.) dated 31/8/2007 in Notice of Motion No. 2753 of 2007 in Suit No. 2105 of 2007 in the case of Raja Constructions Co. vs. Sahara Co-op. Hsg. Ltd. & Ors wherein, under similar circumstances, Court Receiver was directed to take possession and the property was to be developed under the supervision of the Court Receiver and a further direction was 16 given that if Court Receiver finds that any occupant is taking unreasonable attitude and not vacating the suit premises peacefully, will be free to dispossess the said occupant by employing police force, if necessary. 12. After having heard the learned Senior Counsel appearing on behalf of plaintiffs and the learned Counsel appearing on behalf of defendant Nos. 2 to 5, in my view, plaintiffs have made out a prima facie case for an order of mandatory injunction and for appointment of Court Receiver. 13. In the present case, an admitted position is that except four members of the Society, all other members have supported plaintiffs. Resolution has been passed in the Managing Committee Meeting which was, thereafter, ratified in the Special General Body Meeting and even after the administrator was appointed, again the Annual General Body 17 Meeting was held in which meeting also all members except these four defendants, supported plaintiffs and ratified the decision which was taken by the Managing Committee. This being the position, defendants do not have right to question the will of the majority members of the Society. According to defendants, some other Builder was offering them a better deal and that the present plaintiffs have not submitted their tender but the tender was submitted by their Sister Concern. All these minor objections which are raised, do not have any substance in the sense that in the face of the unanimous Resolution passed in the Annual General Body Meeting in favour of Plaintiffs, all these objections cannot be taken into consideration since they were taken into consideration and rejected in the Annual General Body Meeting. These defendant Nos. 2 to 5, therefore, appear to be disgruntle element who wants to postpone development of the Society by plaintiffs herein. It is an admitted position that when the buildings were completely 18 dilapidated and reconstruction of the said buildings was necessary, in fact, the defendants did not have any objection for demolition of the old buildings and reconstruction of the new buildings by redevelopment in the place of old buildings since they were party to the Resolution which was passed by the Society wherein it was agreed to demolish the said buildings. Few members of the Society who have a different point of view cannot insist that things should be done in a particular manner as decided by them when majority of the members have taken a contrary stand. In the present case, balance of convenience also is in favour of plaintiffs and other members of the Society. Plaintiffs have also invested huge amounts by buying TDR and by taking various steps for the purpose of applying for redevelopment of the said buildings. More than one year has passed but because of the adamant attitude of these four defendants, plaintiffs are not in a position to demolish the said buildings. Plaintiffs have offered substantial amount of money 19 which has to be paid in advance to all members in order to enable them to secure temporary alternate accommodation. They have also offered enhanced rate, after expiry of two years as stated by them in their affidavit dated 13/08/2009. Viewed from any angle, therefore, no case is made out by defendants for rejecting the interim reliefs which are asked for by plaintiffs. 14. Ratio of the said judgments on which reliance is placed by the learned Senior Counsel appearing for plaintiffs squarely applies to the facts of the present case and in similar circumstances, as in this case, this Court was pleased to appoint Court Receiver and under his supervision, development has been carried out in order to ensure that no inconvenience is caused to members of the Society. 15. The learned Counsel appearing on behalf of defendant No.5 has tendered written argument. He has relied on 20 the judgment in Caynes v. Global Natural Resources reported in [1984] All. ER 225. He has also relied upon the judgment of the Apex Court in Commissioner of Income-tax, West Bengal vs. A.W. Figgies & Co. and Ors reported in AIR 1953 SC 455. After having gone through these judgments, in my view, ratio of the said judgments would not apply to the facts of the present case. 16. Under these circumstances, therefore, Notice of Motion is allowed in the following terms:- (i) Court Receiver, High Court, Bombay is appointed in respect of flats belonging to defendant Nos. 2 to 5 and the said defendants are directed to hand over their respective flats to the Court Receiver within four weeks from today. 21 (ii) If the said flats are not vacated peacefully by defendant Nos. 2 to 5 then the Court Receiver shall take forcible possession and, thereafter, the said flats may be demolished by plaintiffs under supervision of the Court Receiver and in the place of the old building in which the said flats were situated new building may be reconstructed under redevelopment. (iii) Court Receiver will have all powers under Order XL Rule 1 of the Civil Procedure Code. (iv) Defendants Nos. 2 to 5 shall not create any obstacles in the development work carried on by plaintiffs in any manner whatsoever. (v) Plaintiffs shall be bound by the clauses which are mentioned in the development agreement. 22 (vi) Plaintiffs shall deposit an amount of Rs 6,000/- per member per month in this Court in respect of defendant Nos. 2 to 5 and they shall be permitted to withdraw the said amount. So far as members of the Society are concerned, plaintiffs shall directly pay them amount to each of the remaining members. Plaintiffs shall also deposit in this court an amount of Rs 60,000/- for each of the these defendant Nos. 2 to 5 which is a refundable deposit which is to be paid by these defendants to licensor while acquiring the temporary alternate accommodation on leave and license basis and after defendant defendant Nos. 2 to 5 are handed over permanent alternative accommodation in the same new building, they shall refund this amount to the Court Receiver. Defendant Nos. 2 to 5 shall be entitled to withdraw the said amount for the aforesaid purpose. 23 (vii) Plaintiffs shall file an agreement which is executed by plaintiffs with other members of the Society and shall file an undertaking within one week from today that defendant Nos. 2 to 5 shall be given same amenities as are provided to other members of the Society and an assurance to the Court that same treatment as given to other members shall be given to defendant Nos. 2 to 5. 17. Notice of Motion is disposed of in the aforesaid terms. (V.M. KANADE, J.)