GIRISH MULCHAND MEHTA Vs. MAHESH S MEHTA

JUDGEMENT

(1.) This appeal takes exception to the Judgment dated 3rd July, 2009 in Arbitration Petition (L) No. 493/2009. The said petition was filed by the Respondent No. 1 under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short). The reliefs claimed in the said Petition read thus:

(2.) The Respondent No. 1 asserted that the Respondent No. 2 Society entered into a Development Agreement dated 7th May, 2008 authorising him to redevelop the building standing on piece and parcel of land admeasuring 644.60 sq. meters bearing City Survey No.5728, Final Plot No. 257 of Ghatkopar T.P.S. III, R.N. Narkar Marg, Ghatkopar (E), Mumbai 400 077. The building standing on the said plot consists of three floors comprising of 12 residential flats. Since the building was constructed in the year 1964, due to passage of time its condition had deteriorated. As a result, the members of the Society after due deliberation unanimously decided to redevelop the building. Further, to effectuate the said decision the Society appointed Respondent No. 1 to develop the said building. Pursuant to the decision of the Society, the Respondent No. 2 Society entered into registered Development Agreement with Respondent No. 1 dated 7th May, 2008 thereby granting development rights to develop the property by demolishing the existing building "Harini" standing on the said property on terms and conditions referred to in the said agreement. The Respondent No. 1 paid the stamp duty of Rs. 1,75,030/- and also registration fees of Rs. 31,440/-. The said agreement was executed by the authorised person of the Society (Respondent No. 2) and also by ten (10) members out of twelve (12) members as token of confirmation thereof in favour of Respondent No. 1. The said 10 members have also signed and executed individual undertaking-cum-affidavit thereby confirming the Development Agreement and undertaking to perform the Development Agreement. According to Respondent No. 1, consequent to the execution of the agreement, he has already spent amount of Rs. 12,00,000/-. and also Rs. 2,30,000/- per month (approximately) towards monthly compensation paid to the 10 members who have already vacated their respective flats since February 2009. It is the case of the Respondent No. 1 that he has already paid monthly compensation to the tune of Rs. 16,10,000/- and would be obliged to pay the future monthly compensation to the said 10 members. Further, the plans for redevelopment of the building have been duly approved and accepted by the General Body of the Society and whereafter the Respondent No. 1 has taken steps to seek approval of the Competent Authority. Pursuant to the agreement, the Respondent No. 1 has purchased and loaded TDR 650 sq. Mtrs. in favour of the Respondent No. 2 Society in lieu of the Bank guarantee. The Respondent No. 1 has already paid sum of Rs.72,76,464/- (excluding stamp duty of Rs. 2,18,300/-) being purchase price of the TDR and also got the plan for construction of new building approved and sanctioned from the Mumbai Municipal Corporation. The Mumbai Municipal Corporation has also issued I.O.D. on 19/12/2008. After issuance of I.O.D., Respondent No. 1 called upon the Respondent No. 2 to hand over vacant possession of the building forthwith. However, the Respondent No. 2 Society expressed its inability to do so as the Appellants (original respondents 2 & 3) were opposed to executing any document or to vacate their respective flats to facilitate demolition of the existing building for reconstruction and redevelopment thereof. It is stated that the Respondent No. 1 has already spent aggregate sum of Rs. 12 lakhs towards non-refundable security deposit in lieu of the corpus fund and approximately Rs. 2.05 lakhs towards brokerage and also paid Rs. 7500/- towards transportation/shifting so as to provide temporary accommodation to each of the ten members who vacated their respective flats as per the terms of the agreement. It is stated that due to resistance by the Appellants, the Society eventually initiated expulsion proceedings against the Appellant No.1 and after following necessary procedure the said Appellant No. 1 has been expelled from the primary membership of the Society by the General Body of the Society. The Respondent No. 2 Society offered vacant possession of only 10 flats to the Respondent No. 1. In so far as the two flats occupied by the Appellants, the Respondent No. 1 was informed to recover possession thereof from the concerned members who were not co-operating. The Respondent No. 1, however, insisted that possession of the entire building should be handed over to him by the Respondent No. 2 in terms of the Development Agreement executed with the Society (Respondent No.2). Since the Respondent No. 2 failed to perform their part under the Development Agreement, Respondent No. 1 issued notice raising dispute. Eventually, as per the Arbitration Agreement in terms of clause-49 of the Development Agreement, the Respondent No. 1 appointed sole Arbitrator and called upon the Respondent No. 2 Society to concur with the appointment of the said Arbitrator to avoid unnecessary cost. The Respondent No. 2 concurred with the appointment of the named sole Arbitrator and agreed for referring dispute to the sole Arbitrator. The Respondent No. 1 filed Statement of Claim and Application under Section 17 of the Act before the sole Arbitrator who in turn has heard the said application and passed order on 25/5/2009. The sole Arbitrator directed the Society to hand over vacant and peaceful possession of the property within ten days from the date of the order failing which it would be open to the Respondent No. 1 to move this Court for appointment of the Court Receiver by invoking provisions of Section 9 of the Act. After the said order of the Arbitrator, the Respondent No. 2 Society through Advocate's notice called upon the Appellants to vacate their respective flats. It is also noticed that the Resolution of expulsion of the Appellant No. 1 from the primary membership of the Respondent No. 2 Society has been approved by the Dy. Registrar of Co-operative Societies on 6/6/2009. Later on, even the Appellant No. 2 has been expelled by the General Body of the Society in its meeting held on 21st June, 2009 and steps have been taken to seek approval of the Registrar, which decision is stated to be pending. Since the Respondent No. 1 realised that it was getting difficult to get vacant possession of the entire building and the development work was being delayed resulting in recurring avoidable cost towards monthly compensation being paid to the 10 members who have already vacated their respective flats in February 2009 as also the amount spent by the Respondent No. 1 towards consideration under the Agreement and other expenses, had no option but to take recourse to Petition under Section 9 of the Act before this Court. Accordingly, the Respondent No. 1 filed the said Petition in June 2009, praying for reliefs which are already reproduced hitherto. In this Petition besides making the Respondent No. 2 Society party, the Respondent No. 1 also impleaded the Appellants as Respondent Nos. 2 & 3 who were occupying two flats in the said building and were causing obstruction to the development of the property.

(3.) As a counter blast to the abovesaid Petition filed by the Respondent No. 1 under Section 9, the Appellants filed dispute dated 25th June, 2009 before the Co-operative Court, Mumbai being Case No. AVN/CC-II/207 of 2009 praying for following reliefs:-