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Laxmi Venkat Bhinala and Others V/S Pratham Varadvinayak Developers LLP and Others.

    Appeal (Lodg) No. 82 of 2017 in Arbitration Petition No. 141 of 2017

    Decided On, 07 April 2017

    At, High Court of Judicature at Bombay


    For Petitioner: Sanjay Jain and Manjiri Parsnis And For Respondents: Ravi Kadam, Senior Counsel, Rupesh Geete and Vikramjit Garewal i/b IC Legal

Judgment Text

1. This Appeal challenges an order passed by the learned single Judge in the above Arbitration Petition. By the impugned order dated 24th February, 2017, the learned single Judge made the Arbitration Petition absolute in terms of prayer clauses (a) to (c).

2. Since the operative order and directions are termed as drastic and disposing of this Arbitration Petition finally, we only reproduce those hereinbelow:

"(a) The Court Receiver of this Court is appointed the Receiver of the rooms/tenements occupied by Respondents Nos. 2 to 5 (as mentioned in the cause title of the Petition), i.e., Room Nos. 677 (2nd Floor), 663 (Ground Floor), 667 (1st floor) and 683 (3rd Floor) of Building No. 37, Azad Nagar Shivsagar CHS Ltd, Azad Nagar No. 2, Veera Desai Road, Andheri (W), Mumbai 400 053 The Court Receiver will have all powers under Order XL Rule 1 except the power of sale.

(b) Respondents Nos. 2 to 5 shall deliver vacant possession of these four rooms to the Court Receiver by 5 pm on 10th March 201 7. In default, the Court Receiver will proceed, from 11th March 201 7, to take physical and, if necessary, forcible, possession of these four rooms. Upon obtaining possession, he will deliver possession of all four rooms to the Petitioner for re-development. This will be done no later than by 5:00 pm on 14th March 2017

(c) If taking forcible possession, the Court Receiver will inventory the articles in these four rooms. The Petitioner will keep the articles in safe custody at its cost and will rel

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ease them to Respondents Nos. 2 to 5 on request within one week of a written demand but without charge. Neither the Court Receiver nor the Petitioner will be liable or responsible for any damage or loss caused during the removal and subsequent storage of these articles.

(d) On or before 6th March SOI 7, the Petitioner will deposit with the Court Receiver the amount of compensation in lieu of temporary alternate accommodation ("transit rent") computed at the rate applicable to all other members from the date that the Court Receiver obtains vacant possession for IS months computed from that date (10th March SOI 7) and no earlier. If possession is delivered earlier, the Petitioner will deposit the necessary pro rata additional amount. The Petitioners is required to make this deposit as a precondition to the Court Receiver taking possession from Respondent Nos. 2 to 5. This is sufficient protection to these Respondents.

(e) All future payments, if any, will also be deposited with the Court Receiver.

(f) As regards payments towards corpus, shifting charges and one-time brokerage, these will be computed for each of the Respondent Nos. 2 to 5 and will be deposited by the Petitioners with the Court Receiver within three weeks of the Petitioners obtaining vacant possession of those premises.

(g) Upon possession being obtained by the Court Receiver, Respondent Nos. 2 to 5 will be at liberty to apply to the Court Receiver for withdrawal of the amount of transit rent. If they do not apply within ten days of such deposit, the Court Receiver will invest the amount in accordance with the usual practices of his office. Respondents Nos. 2 to 5 will also thereafter be entitled to apply for withdrawal of the additional amounts deposited toward corpus, shifting charges and one-time brokerage. If no application is made within ten days of such deposit, the Court Receiver will invest the amount. The Respondents Nos. 2 to 5 are not entitled to any interest on the amounts deposited.

(h) On completion of the redeveloped building, the Petitioner shall deliver possession of the premises allotted or re-allotted to Respondents Nos. 2 to 5 to the Court Receiver, who is to hold these till further orders of the Arbitral Tribunal. Respondents Nos. 2 to 5 may make an application to the Arbitral Tribunal for an interim order in this behalf. If no application is made, the Arbitral Tribunal shall consider whether these premises in the re-developed building should be handed over to MHADA or the 1st Respondent."

3. Mr. Sanjay Jain, learned counsel appearing in support of this appeal would submit that the learned single Judge has, without any affidavit-in-reply, or any opportunity to defend the allegations in the Arbitration Petition, allowed the Arbitration Petition finally That was allowed at the ad-interim stage itself.

4. Assuming without admitting that there is a power in law and it was open for the learned single Judge to dispose of an Arbitration Petition finally at an ad-interim stage, still, Mr. Jain would submit that the learned single Judge should have noted the various irregularities and illegalities pointed out orally by the counsel appearing for the appellants. These were pointed out from the documents produced by the original petitioner-first respondent to this Appeal. Thus, from the petitioners documents if these glaring irregularities and illegalities were pointed out, then, at the instance of such a petitioner, equitable and discretionary reliefs should not have been granted. That respondent No. 1 - original petitioner was disentitled from claiming the same. Mr. Jain submits that the order of the learned single Judge proceeds on the footing that a few people or those in minority cannot resist the redevelopment project. Mr. Jain submits that, with respect, that is not the law. In the present case, the learned Judge proceeds on the footing that the appellants are unnecessarily and without any justifiable cause or reason, obstructing the redevelopment of the property. They are resisting the demolition of their structures even though they are entitled to obtain the same benefits and on par with the majority. That is the presumption based on which the reliefs are granted. Mr. Jain would submit that if an opportunity to file a written reply and produce the relevant record had been granted, the appellants would have demonstrated as to how they are not obstructing the redevelopment project, but are inviting the attention of the Court to the fact that once they vacate the premises, their existing structures are demolished, they would be rendered homeless. There is absolutely no guarantee of a new construction coming up expeditiously or in a reasonable time and, therefore, so long as this apprehension is not taken care of, it was not proper to have appointed a Court Receiver and with all powers, including to forcibly evict the appellants.

5. In the above process, Mr. Jain has taken us through the allegations in the Arbitration Petition and particularly paragraph 3(x) and (xiii) thereof. Our attention is also invited to the assignment agreement, copy of which is at page 139 of the paper-book. Mr. Jain would submit that the first respondent had no locus or authority to present a petition. The first respondent is not the original developer. The first respondent has stepped in after M/s. Milind Developers, the original developer, has allegedly assigned its rights in the project in favour of the first respondent to this appeal. The cooperative housing society of which the appellants are members may have apparently agreed to this arrangement, but the land belongs to the Maharashtra Housing and Area Development Authority (for short "MHADA"). There is nothing to indicate that a No Objection Certificate was obtained from MHADA for the deal, namely, the assignment. Further, it is submitted that there is a serious dispute about the contents of the development permission and whether there is any approval to built the upper storeys or beyond the plinth level. There is no clarity in that behalf. All the more, therefore, this Appeal should be allowed, the impugned order be quashed and set aside and the Arbitration Petition be dismissed.

6. On the other hand, Mr. R.M. Kadam, learned senior counsel appearing for the contesting respondent No. 1 would submit that even if any affidavit-in-reply had been filed to the Arbitration Petition, that would have hardly made any difference. The appellants are just four out of the total thirty two members who are all beneficiaries of the redevelopment project. Twenty eight out the thirty two members have consented to this redevelopment. They have signed the necessary documents. They are fully cooperating with the first respondent. They are ready and willing to vacate their premises and have indeed done so. Once the learned single Judge was convinced that the appellants were not acting bona fide, but at the instance of a third party developer, then, this was a fit case and the learned single Judge was justified in appointing the Court Receiver so as to remove the recalcitrant and obstructing members from the site. All permissions and approvals are granted. Therefore, we should not entertain any request on behalf of the appellants nor interfere with the order under appeal. The discretion has been exercised in accordance with law. The same is not exercised arbitrarily or capriciously. The impugned order cannot be termed as perverse or vitiated in law, enabling us to interfere in our appellate jurisdiction. Consequently the appeal must be dismissed.

7. With the assistance of Mr. Jain and Mr. Kadam, we have perused the entire Memo of Appeal. We have also perused an affidavit-in-reply, to the Arbitration Petition, affirmed on 23rd February, 2017. We have carefully perused the impugned order. We have already reproduced the operative directions. While it is true that the learned single Judge has not considered it fit and proper to grant any adjournment, he has assigned reasons for the same. We find that the learned Judge has proceeded on the footing that every single fact is undisputed and there is no material to controvert or falsify the contents of the written documents. One of the reasons why he did not grant time to file an affidavit is because the project was already delayed. In paragraph 10 of the order under challenge, the learned single Judge has observed that the development has not progressed at all for the past ten years. The building is over half a century old. It is dilapidated. The building is certified as dangerous. All its occupants and society members, including the contesting respondents are compelled to live in subhuman conditions. Thus, there is a threat to the safety, life and property of the members of the society.

8. With all this, we still find that the learned Judge could have, instead of assigning elaborate and detailed reasons and commenting adversely on the conduct of the appellants before us, balanced the rights and equities. With great respect, mandatory orders and directions can be passed and issued when there is a strong prima facie case and the balance of convenience is in favour of those claiming such reliefs. Further, irretrievable loss and injury would be caused in the event such orders and directions are refused. However, when the development has not progressed for ten years, a new developer has come on the scene on 21st July, 2016, has presented an Arbitration Petition claiming final reliefs, then, in the facts and circumstances of this case and peculiar to it, the learned Judge should have refrained from disposing of the Arbitration Petition itself. He should have given an opportunity to the appellants to file an affidavit-in-reply and place their version on record. The Arbitration Petition could have been heard expeditiously and in a time-frame. That is routinely done. However, when the Arbitration Petition was moved, the learned Judge thought it fit to dispose it of finally at the first hearing itself. While doing so, the learned Judge has rendered some conclusive findings. From paragraph 20 he refers to the documents, namely, the Special General Body Resolution dated 31st October, 2004. He refers to an agreement between the second respondent - Cooperative Housing Society and one M/s. Milind Developers. That is dated 19th January, 2006. He refers to a No Objection Certificate from MHADA dated 13th October, 2006. So far so good. However, M/s. Milind Developers did not make any progress and for good ten years. Yet, no expediency or urgency was demonstrated, and then members of the society met to select the new developer - the first respondent before us. That is how he came on the scene. That was pursuant to the four General Body Meetings between 6th March and 16th September, 2016. There is a recent development of the Deputy Registrar, Cooperative Societies, passing an order allegedly confirming the appointment of the new developer and allegedly granting a No Objection Certificate. It is in these circumstances and when on 21st July, 2016, the assignment agreement was executed, all events and developments are of 2016, that we have expressed the above opinion.

9. We are of the view that the appellants have raised certain contentions with regard to the legality and validity of the assignment agreement, they have also raised an issue of want of No Objection Certificate, they have also raised the issue about non-sanction and non-approval of the building plans too. In the above circumstances, but at the same time bearing in mind that it is only the appellants who are resisting the redevelopment at the hands of the first respondent, the equities and the rights can be balanced. We propose to balance them by clarifying that each of the observations and findings of the learned single Judge's order be termed as tentative. They will not bind the appellants or parties at a subsequent hearing and in Arbitration proceedings too. The impugned order shall be treated as an ad-interim order. However, since the redevelopment is resisted by only four persons presently, we are of the view that interest of justice would be served if we still grant an opportunity to the appellants to cooperate by vacating the existing premises and structures in their occupation and possession. We grant them time to do so and to hand over vacant and peaceful possession thereof to the first respondent or the competent authorities so as to cause a demolition and removal of the same from the site. However, all this would be without prejudice to their legal rights and contentions, particularly noted by us and equally their statements in the affidavit-in-reply to the Arbitration Petition. Merely because they hand over vacant and peaceful possession that would not be construed as their having accepted the legality and validity of the project as a whole and particularly the documents, approvals and plans, if any, on record. They can raise all contentions as permissible in law either in reply to the Arbitration Petition or in substantive proceedings.

10. In view of the above, we direct that if the appellants do not hand over vacant and peaceful possession of the premises in their occupation on or before 10th May, 2017, then, the Court Receiver, High Court, Bombay, as appointed by the learned single Judge shall step in as an ad-interim Receiver. He shall then take such steps as are permissible in law so as to cause a removal of the appellants and their structures. Thereafter, the directions that the learned single Judge has issued, would follow.

11. The appeal is disposed of in the above terms. We clarify that beyond highlighting the controversy between the parties and the objections of the appellants, we have not expressed any opinion on any wider and larger issues, particularly on the merits. There would be no order as to costs

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