Allowed

Dhanshree Developers Pvt. Ltd. v. Majaswadi Inqulab Nagar Punarujjivan Chs Ltd.

Bombay HC6 Aug 2012ARBAP/110/2012

Case brief

AI extract

What is this about?

A sole arbitrator was appointed under Section 11 of the Arbitration and Conciliation Act, 1996, to adjudicate disputes arising from a Development Agreement. The court acted ex parte as the respondent failed to oppose the appointment or submit any reply.

What did the court decide?

Appointment of Dr. Birendra Saraf as sole arbitrator; venue fixed at Mumbai; award period six months.

Dhanshree Developers Pvt. Ltd. Vs Majaswadi Inqulab Nagar… — Arbitration | Bombay HC (2012)

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ARBAP 110 of 2012

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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ARBITRATION APPLICATION NO.110 OF 2012

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Dhanshree Developers Pvt. Ltd. … Applicant Versus Majaswadi-Inqulab Nagar Punarujivan CHS Ltd. ...Respondent

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Mr. Rohan Cama a/w Mr.Amal Mishra and Ms.Urmi Shah i/by SRM Law and Associates, for Petitioner. None for Respondent.

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CORAM: S.J.KATHAWALLA, J.

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DATE: 6 th AUGUST 2012

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P.C.

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The above application is filed under Section 11 of the Arbitration and Conciliation Act, 1996 ( the Act) for appointment of a sole arbitrator to arbitrate upon dispute/difference that has arisen between the Applicant and the Respondent with regard to the terms and conditions of the Development Agreement dated 07-11-2007 (Exhibit C to the Application).

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The relevant facts of the matter are set out hereunder :

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The Applicant is a Private Limited Company interalia carrying out work of land and building development and construction activities in the city of Mumbai and also in the State of Maharashtra. The

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Respondent is a tenant co-operative housing society consisting of 43 individual members registered under the provisions of the Maharashtra Co-Operative Societies Act, 1960 and Rules of 1961 framed thereunder. The Respondent is a lessee of Maharashtra Housing and Development Authority (MHADA), a statutory corporation constituted under the Maharashtra Area and Development Act, 1976 (Mah XXVIII of 1977), in respect of piece and parcel of land admeasuring about 1240.12 sq.mtrs bearing Survey No.46 (part) of plot no.8 situated at Village Majas, Taluka Andheri, in the Registration Sub-District of Mumbai Suburban District, Mumbai (the said property).

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By virtue of a Registered Lease Deed dated 26-10-1989 under Registration No.P/10684/89 dated 03-11-1989, the Respondent Society became the lessee in respect of the said property and subsequently in and around 1991, constructed 43 tenements for its members. According to the Applicant, owing to the old and dilapidated condition of the said structure, the Respondent convened a General Body Meeting on 12-04-2007 and decided to opt for redevelopment of the existing building

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under relevant provisions of Development Control Regulations, 1991 (DCR) by appointing private developer.

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According to the Applicant, upon invitation from the

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Respondent, the Applicant submitted its offer dated 04-08-2007 to the Respondent Society. The Respondent Society after evaluating various offers and several negotiations with the Applicant, unanimously resolved to accept the same in its General Body Meeting held on 12-09-2007. The Respondent on the same day, issued a letter of appointment and authorized the Applicant to commence with the redevelopment process. According to the Applicant, in pursuance of the said appointment and after further discussion between the parties, the Respondent executed the Development Agreement and the Irrevocable General Power of Attorney, both dated 07-11-2007 in favour of the Applicant. Clauses 48 and 50 of the said Development Agreement stipulate that any dispute and difference between the parties shall be referred to the Arbitrator as per the Arbitration and Conciliation Act, 1996. The said arbitration clauses are reproduced hereunder for ready reference :

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“Clause 48 – The parties hereto agree that in the event of any difference of opinion arises with regard to the interpretation, implementation and enforcement of terms and conditions of the agreement and/or compliance of the terms and conditions herein, then in that event the parties hereto shall refer such dispute to the mutually agreed Sole Arbitrator under the provisions of Arbitration and Conciliation Act, 1996, whose decision shall be final and binding on the parties hereto.

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Clause 50 – All disputes and differences between

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the parties hereto pertaining to this Agreement for Development and/or subsequent Agreement for Development including interpretation of any terms and conditions hereof either during the subsistence of this Memorandum of Understanding, Agreement for Development or subsequent thereto shall be referred to Arbitration and the same shall be governed by the provisions of the Arbitration and Conciliation Act, 1996, or its statutory modification for the time being in force. The Arbitrators shall have summary powers. The Arbitration shall always be held in Mumbai and the Courts of Mumabi shall have jurisdiction in the matter. The award declared and published thereunder shall be final and binding upon the parties hereto.”

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The Applicant in good faith and in order to honour its obligations under the said Development Agreement and with intent to commence and complete the redevelopment work in the stipulated time, also undertook certain activities on behalf of the Respondent which are not at all concerned or connected with the redevelopment of the Respondent's society. To give an illustration, the Respondent Society vide Indenture dated 20-03-1991 had mortgaged the said property to the Maharashtra Corporation Co-operative Housing Finance Limited. The Applicant paid the mortgage dues thereby getting the property discharged from mortgage and further proceeded with the redevelopment process. According to the

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Applicant, the Applicant in coordination with the appointed Architect Mr.Ketan Belsar of M/s. Ellora Project Consultants submitted a revised

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proposal dated 06-10-2010, along with relevant documents for obtaining offer letter from MHADA in view of the amended policy of the State Government for MHADA colonies. Moreover, the Applicant through the appointed Architect, vide letter dated 11-10-2010 also applied to MHADA for a demarcation plan showing “the conveyance boundary tit-bit land or any land in possession of the society”. In response thereto, MHADA vide letter dated 13-01-2011 has issued a demarcation plan to the Applicant.

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According to the Applicant, the Applicant pursued the said matter to the best of his capacity and ability and carried out considerable work, as envisaged by the Development Agreement. Sufficient time elapsed in completing various basic essential formalities on behalf of the Respondent Society which are indispensable in order to commence with the actual construction of the said property, which is further affected by uncertain and changing housing policies of the State Government pertaining to MHADA colonies. According to the Applicant, pending the process being followed by the Applicant, the redevelopment of the Respondent Society was also effected by M/s.Aishwarya Light Construction Company, the developer developing the adjoining plot.

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According to the Applicant, during the pendency of the

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process of obtaining various sanctions from MHADA and follow ups in connection therewith, to the utter shock and surprise of the Applicant, the Applicant discovered that one Mr.Sandeep R. Kangutkar, the Architect on behalf of M/s.Nisar Properties Pvt. Ltd., vide letter dated 08-10-2011 had submitted a fresh proposal to MHADA pertaining to the Respondent's property, without the knowledge of the Applicant, and despite there being a subsisting, valid and pending Development Agreement between the Applicant and the Respondent Society. The Applicant promptly upon coming to know of the same, vide letter dated dated 04-11-2011 took strong objection against the said unauthorized and unscrupulous act. According to the Applicant, the said Nisar Properties Pvt. Ltd., vide its Advocate's letter dated 23-12-2011 replied to the Applicant's letter dated 04-11-2011, thereby for the first time disclosing that in or around October, 2010, the Respondent Society had appointed one M/s.Vardhaman Infrastructures as its developers. However, due to failure on part of M/s.Vardhaman Infrastructures, the Respondent Society terminated its appointment and appointed M/s.Nisar Properties Pvt. Ltd. as its new developer. The Applicant vide letter dated 02-01-2012 refuted the authority of M/s.Nisar Properties Pvt. Ltd. in respect to the proposed redevelopment of the Respondent's society. M/s. Nisar Properties Pvt. Ltd.

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vide its Advocate's letter dated 09-01-2012 responded to the said letter of the Applicant dated 02-01-2012.

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According to the Applicant, to their further shock and surprise, the Respondent Society vide termination notice dated 20-12-2011, received by the Applicant only on 13-01-2012, terminated the development rights of the Applicant on the alleged ground that the decision for such termination was taken by the Society in its General Body Meeting held on 13-07-2011. According to the Applicant, aggrieved by the unauthorized and unscrupulous conduct of the Respondent Society and the termination notice, the Applicant vide notice dated 01-02-2012 finally invoked the arbitration as per clauses 48 and 50, suggesting the name of Mr.L.C.Joshi, Senior Advocate, Bombay High Court, as the Sole Arbitrator to resolve the said dispute. The Respondent Society failed and neglected to respond to the said notice dated 01-02-2012 despite receipt of the same. The Applicant has therefore, on 07-03-2012 filed the present petition under Section 11 of the Act, seeking the aforestated reliefs. It is submitted by the Applicant that if the Sole Arbitrator is not appointed as per the arbitration agreement between the parties, the Applicant will be put to great hardship and will suffer grave irreparable loss and harm, which cannot be compensated at all in terms of money.

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From the aforestated facts, it is clear that the parties have under Clauses 48 and 50 of the Development Agreement dated 07-11-

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2007 agreed to refer their dispute arising out of the said agreement to the Sole Arbitrator under the provisions of the Act, which decision as agreed, shall be final and binding on the parties. The parties have also agreed that the arbitration shall be held in Mumbai and Courts of Mumbai shall have jurisdiction in the matter. It is also established from the aforestated facts that the dispute has arisen between the Applicant and the Respondent Society as regards the said Development Agreement dated 0711-2011. Though, the Applicant has invoked the aforestated arbitration clauses 48 and 50 of the Development Agreement and has also suggested the name of an Advocate as the proposed Sole Arbitrator, the Respondent Society has not responded to the same. Though the Respondent has been served with the copy of the above Application, the Respondent has not filed any Reply to the above Application and has also not appeared before this Court at the time of hearing of this Application. In view thereof, the following order is passed :

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(a) Dr. Birendra Saraf, Advocate, is appointed as a Sole Arbitrator to arbitrate upon the disputes/differences that have arisen between the Applicant and Respondent Society with regard to the Development

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Agreement dated 07-11-2007.

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(b) The venue of the arbitration shall be at Mumbai.

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(d) The cost of the arbitration shall initially be borne by the parties.

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(e) All contentions of the parties are kept open.

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The above Arbitration Application is accordingly disposed of.

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( S.J.KATHAWALLA, J.)

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Dhanshree Developers Pvt. Ltd. v. Majaswadi Inqulab Nagar Punarujjivan Chs Ltd.

Case brief

What is this about?

What did the court decide?

Dhanshree Developers Pvt. Ltd. v. Majaswadi Inqulab Nagar Punarujjivan Chs Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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