Bombay High Court Diary
Introduction
[1]A single bench of the Hon’ble Bombay High Court of Justice Arif S. Doctor was hearing a Commercial Arbitration Petition filed under Section 9 of the Arbitration and Conciliation Act, 1996. The petition was filed by a Developer appointed by the Respondent No.1 (Society) for redevelopment of a building known as ‘Taruvel’ situate at Andheri, Mumbai. (for short, “said building”).
Facts of the case
The Respondent No.1 had in a Special General Body Meeting of the members of Respondent No.1 confirmed the appointment of the Petitioner for undertaking the redevelopment of their society property.
Thereafter, the adjoining society also passed a resolution in their Special General Body Meeting for appointing the Petitioner as a developer for redevelopment. The appointment of the Petitioner as a developer was confirmed by the Deputy Registrar, following which the adjoining society and Respondent No.1 society were merged.
The draft of the Development Agreement (for short, “ DA”) was circulated in the Special General Body Meeting of Respondent No 1. The draft of the DA was approved by a majority of the members of Respondent No 1, through passing of a resolution. Subsequently, the DA was executed with Respondent No.1. Later, a structural audit of the building was carried out by VJTI, who in its report classified the building as C – 1 category.
Upon the receipt of the Intimation of Disapproval (for short, “I.O.D”) from the Brihanmumbai Municipal Corporation (for short, “ B.M.C.”),the Petitioner in accordance with one of the clauses of theDA addressed a letter calling upon the society members to vacate and handover the possession of their old premises in the said building.
However, some of the Respondents did not co-operate with the Petitioner and refused to vacate their old premises, due to which the Petitioner was compelled to approach the Hon’ble Bombay High Court praying for reliefs against the dissenting members of the society.
Contentions canvassed by the Petitioner
The advocate for the Petitioner put forth that after the filing of the Petition, Respondent No. 5, 6 and 7 had vacated their respective old premises in the said building and handed over the possession, therefore the petition was being pursued only against Respondent Nos.2 to 4 and 8 to 11.
In pursuance of the same, it was submitted on behalf of the Petitioner that it was a settled law that the opposing members of a Co-operative Housing Society did not possess any independent right to obstruct redevelopment, once the same had been approved by a majority of the members of the society.
It was asserted that the said building was in an old and dilapidated condition and the draft DA was approved by a majority of the members of Respondent No.1 and accordingly executed with the Petitioner.
It was stated that a majority of the members of Respondent No. 1 were senior citizens who had vacated and handed over the possession of their old premises in the said building for redevelopment. He also pointed out that Respondent No.2 to 4 had filed a Suit in the City Civil Court challenging the DA and also certain acts of Respondent No.1 before the Deputy Registrar. However, there was no stay order granted in either of the proceedings filed.
He further submitted that it was pivotal for the redevelopment to proceed smoothly and expeditiously in the good interest of the majority of the members of Respondent No.1.
It was contended that grave prejudice was being caused to the Petitioner because some of the Respondents had refused to vacate and handover their respective old premises in the said building as per the terms stipulated in the DA and as the Petitioner had already commenced paying the transit compensation, hardship compensation, brokerage and shifting charges to all the members who had vacated their old premises.
Reliance was also placed upon some of the judgements passed by Hon’ble Bombay High Court, one of which clearly communicated that internal disputes in respect of title and/or entitlement to the flat which was undergoing redevelopment were not relevant factors to be decided and/or adjudicated in such proceedings along with mentioning that only the person who is in the possession of the flat which is vacated and handed over for redevelopment is eligible to receive the transit compensation and other benefits under the DA and accordingly has to be given the permanent alternate accommodation in the proposed new building post the completion of the redevelopment.
The advocate for the petitioner brought to notice and kind attention of the Hon’ble High Court the four facts as listed below with respect to the filed petition.
- It was an undisputed fact that the redevelopment was approved by a majority of the members of the Respondent No.1.
- The DA was executed following the due process of law after attaining approval from the majority of the members of Respondent No.1.
- There was no stay order/obstruction imposed by any court for effectuating the redevelopment.
- Majority of the members had already vacated and handed over the quiet, vacant and peaceful possession of their respective old premises.
Contentions canvassed by the Respondent
The advocate for the Respondent put forth that the Petitioner was not entitled to obtain any reliefs as the Petitioner was not willing to discharge his obligations as recorded in the DA by seeking an exemption from executing the Permanent Alternate Accommodation Agreement (for short, “PAAA”) with the opposing members.
The said contention was refuted by the advocate for the Petitioner stating that the Petitioner had already executed PAAA’s with all those members of the Respondent No.1 who had vacated and handed over the possession of their respective old premises. He also added that Respondent No.2 to 4 had totally misinterpreted prayer clause (d) and its context.
It was stated that the said prayer had been sought only as a precautionary measure for preventing the relevant permissions/sanctions/approvals not being granted from the concerned authorities due to some of the dissenting members denial to execute the PAAA’s.
It was clarified on behalf of the Petitioner that he would execute the PAAA’s with the Respondents in the same manner as had been done with the other members of the Respondent Society who had vacated their respective old premises and also treat them at par with the other members of the Respondent No.1.
Another contention put forth on behalf of the Respondent was that the Petitioner was required to approach the City Civil Court for making modification in the order passed in the Suit filed. To counter the same, the Petitioner submitted that there was in fact, no transfer of any immovable property at all and on the completion of the redevelopment, Respondent Nos. 2 to 4 would be placed at the exact same position in respect of their respective flats as they presently were. In addition to the same, he also stated that the issues pending adjudication before the City Civil Court would not be affected by any order passed in the proceedings before the Hon’ble Bombay High Court.
Order of the Hon’ble Bombay High Court
The single bench of the Hon’ble Bombay High Court laid strong emphasis and took into consideration a plethora of judgements pertaining to the issue of a few non –cooperating members objecting redevelopment.
The bench remarked that a minuscule minority of the members of Respondent No.1 did not have any right to object to the redevelopment of the said building. There was no legal hindrance which would prevent the Petitioner and Respondent No.1 from taking any steps in furtherance of the DA.
The court in its order dated 1st July, 2024 allowed the petition in respect of the respondents who had not vacated their respective old premises. The court gave the following directions in its order.
- If the Respondent Nos. 2 to 4 and 8 to 11 or any of them vacate and handover the possession of their respective old premises within a period of 2 (two) weeks from the date of the order, no costs will have to be borne and paid by those Respondents who handover the possession.
- However, if all or any of the Respondents mentioned hereinabove do not handover the possession within the timeline mentioned, then in such an event costs shall have to be paid by those Respondents.
Analysis of the order
The occupancy of buildings which are declared as C-1 category have to be pulled down for being unsafe and dangerous to the persons occupying, resorting to or passing by the same in order to prevent all cause of risk and danger arising therefrom.
Many a times, even after forming and concluding the entire course of action the developers are restrained from accelerating the process of redevelopment because of only a handful of non -cooperating members opposing and obstructing the redevelopment. The implications of such situations have to be faced by both the developer and the other members of the society who have already vacated their old premises.
The developer already having incurred a huge amount towards the DA to materialize the development, coupled with which he will also have to bear the costs of paying the monthly transit compensation to the members shifted to transit accommodation. Whereas, the members of the society who have vacated their old premises and shifted to transit accommodation are left to suffer mental agony without any certainty of being rehoused. Such circumstances defeat the whole purpose and object of redevelopment by bringing it to a screeching halt.
The order passed by the Hon’ble High Court in the present case coherently conveys that the minority members of the society have no right to obstruct/hinder/hamper the redevelopment and such non co-operating and dissenting members shall be directed to vacate their old premises, if a majority of the members are in favour of redevelopment. It shall help to catalyze growth in the real estate sector by facilitating the demolition of old and dilapidated buildings and construction of new buildings thereon.
Nirali Yash Desai authors the article, she is a real estate lawyer working with Damji Shamji Shah Group, Mumbai (in house legal department).
[1] M/s Dem Homes LLP Vs. Taruvel C.H.S.L. & Ors – Commercial Arbitration Petition (L) No. 13474 of 2024