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TMI Blog2009 (12) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... P.S.III, R.N Narkar Marg, Ghatkopar (E) Mumbai-400 077 and the building known as "Harini" standing thereon with all powers under Order 40, Rule 1 of the Code of Civil Procedure including power to take physical possession by physically removing the respondent Nos. 2 and 3 and their family members occupying flat No. 1 and Flat No. 3 or anybody else found occupying any part of the Building known as "Harini" and/or any part of the said property and to hand over vacant and peaceful possession of the said property i.e plot of land bearing City Survey No. 5728 final plot No. 257 of Ghatkopar T.P.S III, R.N Narkar Marg, Ghatkopar (E) Mumbai-400 077 and the building known as "Harini" standing thereon to the petitioner for the purpose of demolition and construction of new building as provided in the said Development Agreement Exhibit "A" hereto. (b) that the ad-interim measures in term of prayer clause (a) above. (c) that for such other and further reliefs as the nature and circumstances of the case may require". 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of ₹ 72,76,464/- (excluding stamp duty of ₹ 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 and 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 ₹ 12 lakhs towards non-refundable security deposit in lieu of the corpus fund and approximately ₹ 2.05 lakhs towards brokerage and also paid ₹ 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 eventu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etting 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 and 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 Cooperative Court, Mumbai being Case No. AVN/CC-II/207 of 2009 praying for following reliefs:- "a) that it be declared that the convening and holding of the purported Specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m orders in terms of prayers (e) and (f) above. (h) for costs. (i) for such other and further reliefs as the nature and circumstances of the case may require". 4. To complete the chronology of events which is relevant for answering the controversy on hand, it may be apposite to advert to the fact that the General Body of the Society was ad-idem that the building of the Society needs to be redeveloped. That position can be discerned from the minutes of the meeting of the Managing Committee dated 10th August, 2002 wherein it was resolved to reinterview the developer for improvisation of his offer to take up the development work with clear understanding that there will be no going back on the proposal after the terms and conditions were finalized with the developer. Moreover, that would be binding on all the members. Notably, the appellants herein at the relevant time were members of the Managing Committee and were party to the said resolution. The deliberation regarding redevelopment of the property was taken forward thereafter as can be discerned from the minutes of the subsequent meetings of the General Body of the Society dated 22-1-2005, 2-10-2005, 3-11-2005, 25-11-2005, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The respondent No. 2 Society, however, did not resist the relief claimed in the said Petition. In fact, the respondent No. 2 Society took the stand that in spite of its willingness to perform its part of the obligation under the agreement, it was unable to do so because of the untenable obstruction caused by the appellants herein (who were its members till they came to be expelled by the General Body). The Petition, however, was mainly resisted by the appellants. The Principal grievance of the appellants (Original respondents 2 and 3) was that they could not be made party in the Petition under section 9, as they were not party to the Arbitration Agreement. The Court had no jurisdiction to pass any direction or order against the appellants since they were not party to the Arbitration Agreement. In any case, the Court cannot order their dispossession in exercise of power under section 9 of the Act. The appellants justified their obstruction mainly on the ground that they did not approve of the terms and conditions specified in the Development Agreement executed in favour of the respondent No. 1. It was their case that the offer given by the respondent No. 1 was prejudicial to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted the request of the respondent No. 1 to allow the Court Receiver to take possession of all the flats in the said building and hand over vacant possession of the entire building to the respondent No. 1 so as to enable the respondent No. 1 to complete the project in terms of Development Agreement and discharge his obligation of providing duly constructed accommodation/premises to all members including appellants herein (original respondents 2 and 3) within the prescribed time. The Learned Single Judge also noticed that the relief sought would only require the appellants herein to shift to another accommodation till the redevelopment of the property of the Society whereafter they would be once again accommodated in the newly constructed accommodation in lieu of their existing flats. Accordingly, the Petition was made absolute in terms of prayer clause (a). 6. It is this decision which is subject-matter of challenge before us. According to the appellants, the relief granted against them was without jurisdiction inasmuch as they are not party to the Arbitration Agreement. They could not have been impleaded as respondents in the Petition. Moreover, there was no justification for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence; (d) interim injunction or the appointment of a receiver; (e) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceeding before it". 9. The purport of section 9 has been expounded by the Apex Court in the case of Firm Ashok Traders v. Gurmukhdas Saluja, reported in (2004) 3 SCC 155 : AIR 2004 SC 1433. It considered the scheme of section 9 of the Act. It has held that application under section 9 is not a suit although such application results in initiation of civil proceedings. It went on to observe that the right conferred by section 9 is on a party to an Arbitration Agreement. That section-9 has relevance to the locus standi as an applicant. A person not party to an arbitration agreement cannot enter the Court for protection und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subject-matter of the Arbitration Agreement. In addition to appointment of a Receiver, it is open to the Court to provide such interim measures of protection as may appear to it, to be just and convenient. Besides, appointing the Court Receiver, it would be open to the Court to order removal of any person from the possession or custody of the property or commit the same to the possession, custody or management of the Receiver. It is also open to the Court to confer upon the Receiver all such powers for realization, management, protection, preservation and improvement of the property, collection of the rents and profits thereof or such other powers as the Court thinks fit. Such order, however, has to be passed on the satisfaction of the Court that it is just and convenient to do so. The language of sub-clause (e) reinforces the position that besides appointment of a Receiver, it is open to the Court to order such other interim measures of protection as may appear to the Court to be just and convenient. Section 9 makes it amply clear that the Court shall have the same power for making orders as it is for the purpose of, and in relation to, any proceedings before it. In other words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on the basis of Court sale could be interfered with, injuncted or subjected to proceedings under section 9 of the Act. Instead, it held that section 9 of the Act contemplates issuance of interim measures by the Court only at the instance of party to Arbitration Agreement with regard to the subject-matter of the Arbitration Agreement. The Court has, however, noted that such order can be only against the party to an Arbitration Agreement or at best against any person claiming under him. The Principle expounded in this decision is that if a third party has independent right in the subject-matter of the Arbitration Agreement, section 9 cannot be invoked to affect his rights. At the same time, the Kerala High Court has plainly opined that it is possible to pass orders under section 9 against a third party if such person is claiming under the party to the Arbitration Agreement. Thus understood, section 9 can be invoked even against a third party who is not party to an arbitration agreement or arbitration proceedings, if he were to be person claiming under the party to the arbitration agreement and likely to be affected by the interim measures. The appellants herein will have to substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IR 1975 SC 1470 to contend that the flats in question occupied by them have been allotted to them by the Housing Society which allotment is coupled with the right to transfer their shares of the Society and interest in the said flat which is the property of the Society. In the said decision, the Apex Court has observed that the right so enjoyed by the member is the species of the property namely the right to occupy a flat of this type, which assumes significant importance and acquires under the law a stamp of transferability in furtherance of interest of commerce, It went on to observe that there is no fetter in any of the legal provisions against such a conclusion and for which reason the attachment and sale of the property of the member in execution of the decree are valid under the law. The legal position expounded by the Apex Court in the said decision will be of no avail to the case on hand. The crucial question is whether the members can be heard to say that their rights in the flats occupied by them were de hors the rights of the Society therein and that they were not claiming under the Society at all. In our considered opinion such stand of the members (appellants herein) c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the Resolutions passed by the General Body of the Society to redevelop the property and more so, to appoint the respondent No. 1 as the Developer to give him all the redevelopment rights. The proprietary rights of the appellants herein in the portion (in respective flats) of the property of the Society cannot defeat the rights accrued to the Developer and/or absolve the Society of its obligations in relation to the subject-matter of the Arbitration Agreement. The fact that the relief prayed by the respondent No. 1 in section-9 Petition and as granted by the Learned Single Judge would affect the proprietary rights of the appellants does not take the matter any further. For, the proprietary rights of the appellants in the flats in their possession would be subservient to the authority of the General Body of the Society. Moreso, such rights cannot be invoked against the Developer (respondent No. 1) and in any case, cannot extricate the Society of its obligations under the Development Agreement. Since the relief prayed by the respondent No. 1 would affect the appellants, they were impleaded as party to the proceedings under section 9 of the Act, which was also necessitated by virtue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the appellants were members of the Society and were allotted flats in question in that capacity at the relevant time are bound by the decision of the General Body of the Society, as long as the decision of the General Body is in force. As observed earlier, the appellants have not challenged the decisions of the General Body of the Society which is supreme, insofar as redevelopment of the property in question or of appointment of the respondent No. 1 conferring on him the development rights. The appellants have merely challenged the Resolution which at best would raise issues regarding the stipulations in the Development Agreement. The General Body of the Society has taken a conscious decision which in this case was after due deliberation of almost over 5 years from August, 2002 till the respondent No. 1 came to be finally appointed as Developer in terms of Resolution dated 2nd March, 2008. Moreover, the General Body of the Society by overwhelming majority not only approved the appointment of respondent No. 1 as developer but also by subsequent Resolution dated 27th April, 2008 approved the draft Development Agreement. Those terms and conditions have been finally incorporated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Agreement as well as have executed separate undertaking-cum-agreement with the respondent No. 1 Developer. They have already vacated flats in their occupation to facilitate demolition of the existing building and have shifted to alternative transit accommodation as back as in February, 2009. The project has been stalled because of the obstruction created by the appellants herein who are in minuscule minority. The said ten members of the Society who have already shifted their premises, they and their family members are suffering untold hardship. At the same time, the respondent No. 1 who has already spent huge amount towards consideration of the Development Agreement and incurred other incidental expenses to effectuate the Development Agreement in addition will have to incur the recurring cost of paying monthly rent to the ten members who have already shifted to transit accommodation. The learned Single Judge has noted that the appellants are not in a position to secure the amount invested and incurred including the future expenses and costs of the respondent No. 1 herein in case the project was to be stalled in this manner. Even before this Court the appellants have not come for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not challenged the relevant decisions of the Society to redevelop the suit property and to appoint the respondent No. 1 as the Developer. At best, the appellants have challenged the Resolution dated 27th April, 2008 which in turn relates to the approval of the Development Agreement, which has already been executed between the respondent No. 1 Developer and the respondent No. 2 Society. Indeed, in those cases the relief was not on an Application under section 9 of the Act, but for the reasons recorded hitherto the relief to be granted in this petition would nevertheless be the same. 20. It was also argued that the property was in good condition and there was no need to redevelop the existing building. In the first place, as noted earlier, the decision of the General Body of the Society to redevelop the suit property has not been challenged at all. Besides, no provision in the Co-operative Societies Act or the rules or any other legal provision has been brought to our notice which would curtail the right of the Society to redevelop the property when the General Body of the Society intends to do so. Essentially, that is the commercial wisdom of the General Body of the Society. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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