Dismissed

M/S. Aftab Construction v. Shaikh Anis Ahmed and 16 Ors.

Bombay HC10 Jul 2014NMS/835/2014

Case brief

AI extract

What is this about?

The court appointed a High Court Receiver to take possession of sixteen flats in a dilapidated co-operative building to enable redevelopment under an agreement. Directing respondents to hand over possession within four weeks, the court noted the binding nature of the society's resolution and the absence of relief for respondents in parallel co-operative court proceedings.

What did the court decide?

Appointment of a Court Receiver to take possession of sixteen flats from respondents and hand them over to the applicant for redevelopment within four weeks.

M/S. Aftab Construction Vs Shaikh Anis Ahmed and 16 Ors. — Property and Title | Bombay HC (2014)

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dik

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

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NOTICE OF MOTION NO. 835 OF 2014 IN

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SUIT NO.526 OF 2014

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M/s Aftab Construction ...Applicant/Plaintiff

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Shaikh Anis Ahmed & 16 Ors. ...Defendants

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Mr Y.R.Mishra with N.R.Prajapati for the Plaintiff.

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Ms Lakshmi Murali with Ms Priyanka Ahire i/b Lakshmi Murali & Associates for Defendant Nos.1 to 16.

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Mr D.A.Dube for Defendant No.17.

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CORAM : S.C. GUPTE, J.

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JULY 10, 2014

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P.C. :

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This Notice of Motion is taken out by the Plaintiff for appointment of Court Receiver in respect of sixteen flats in a building owned by a Co-operative Society, which building is to be redeveloped under a development agreement between the Plaintiff and Defendant No.17 society. The suit seeks specific performance of the development agreement and an order for delivery of possession of their respective flats against Defendant Nos.1 to 16, who are members of Defendant No.17 society.

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2 The short facts of the case, as stated by the Plaintiff, are outlined

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below;

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i) Defendant No.17 is a Co-operative Society of flat owners and owns a building known as “Shagupta”. The building, containing 55 flats, was constructed in the year 1976-77;

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ii) In or around 1996-97, the building, which was surrounded by stone quarries had developed huge cracks due to the blasting work going around. Around the year 1996-97 these cracks were filled up. But between 1997 and 2006, no major repair works were carried out by Defendant No.17 to the building;

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iii) In or about 2007, Defendant No.17 society carried out a structural audit of the suit building. The report indicated that the condition of the RCC structure was critical and a decision on major repairs or redevelopment was imminent;

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iv) In a Special General Body meeting of Defendant No.17 society held on 6 April 2007, all members present and voting unanimously agreed for redevelopment of the suit property by demolition of the old building and construction of a new building in its place;

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v) In or about 2008, fifty flat owner members of Defendant No.17 society (out of fifty five) consented in writing for redevelopment of the suit building. No redevelopment, however, could take place till April 2009. In the meantime, Defendant Nos.1 and 5, who were respectively the Secretary and Chairman of Defendant No.17 society, resigned from their respective posts, by reason of the members of Defendant No.17 not having accepted the developer suggested by them for the redevelopment work;

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vi) In April 2009, a major portion of the slab of the suit building, namely, slab of flat No.52 on the sixth floor of the building, collapsed;

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vii) By a notice dated 16 April 2009, after the incident of collapse referred to above, twenty four members of Defendant No.17 society requisitioned a General Body Meeting for consideration of redevelopment of the suit building;

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viii) On 25 April 2009, a Special General Body meeting of Defendant No.17 was called, in pursuance of the requisition, to discuss the redevelopment process. Thirty two members of Defendant No.17 including Defendant Nos. 3,4,5,8,9 and 16 were present in this meeting. It was decided in this meeting to immediately take steps for redevelopment of the suit building. It was decided to issue advertisements in major newspapers calling for tenders for appointment of the developer for the redevelopment work;

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ix) Accordingly, on or about 30 April 2009, advertisements were issued in newspapers inviting tenders for appointment of the developer;

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x) On or about 9 May 2009, in a meeting of the Management Committee of Defendant No.17, sealed tenders were opened in the presence of a representative of the Deputy Registrar of Cooperative Societies. On the same day, Special General Body Meeting was called to discuss the various tenders submitted by builders and developers for redevelopment of the suit property. In the same meeting, Defendant No.17 also appointed Project Management Consultants (PMC) for the proposed redevelopment work;

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xi) Subsequent to this General Body Meeting, between December 2009 and March 2010 the Managing Committee of Defendant No.17 verified and analyzed the tenders and ascertained financial and technical viability of the developers bidding for the work;

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xii) On or about 31 March 2010, a Special General Body meeting was convened for appointment of the developer in response to the bids received. In the presence of an authorized representative of the Deputy Registrar of Co-operative Societies, a resolution was

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passed by the members present and voting, appointing the Plaintiff as the developer of the suit property. Forty one out of forty six members present in the meeting voted in favour of this resolution. Forty three members out of total fifty five members of Defendant No.17 society also signed consent letters for appointment of the Plaintiff as the developer of the suit property. Defendant Nos.9, 11, 12 and 15 were also signatories to this common consent;

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xiii) By a letter dated 17 April 2010, the Deputy Registrar of Cooperative Societies confirmed the appointment of the Plaintiff as the developer for the redevelopment work;

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xiv) On or about 5 June 2010, a registered development agreement was executed by Defendant No.17 society in favour of the Plaintiff. Under the development agreement, the Plaintiff agreed to provide new flats on ownership basis, free of cost, to the members of Defendant No.17 with 20 % extra carpet area together with an additional area consisting of balconies. The Plaintiff also agreed to provide corpus fund of Rs.1.85 lacs and Rs.1.60 lacs per member for one bedroom, hall and kitchen, and one room kitchen flats respectively, as also corpus fund of Rs.25 lacs to Defendant No.17. The Plaintiff also agreed to provide monthly rent @ Rs.17,000/and Rs.14,000/- for the respective flats per member towards temporary alternative accommodation during the period of redevelopment;

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xv) In pursuance of the development agreement, the Plaintiff prepared and furnished plans for the new building. Before the plans were finalized, the Development Control Rules for Greater Mumbai were amended by including the concept of fungible FSI. As a result, the extra carpet area to be allotted in the new flats in lieu of the flats held by the members in the old building was increased from 20 % to 35 %. The Plaintiff also agreed to increase the rent amount for

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alternative transit accommodation by 10 %. These building plans prepared accordingly were approved by Defendant No.17;

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xvi) The Plaintiff thereafter proceeded to obtain IOD with approval of plans from the Municipal Corporation of Greater Mumbai for redevelopment of the suit property. The Plaintiff also proceeded to enter into individual agreements with thirty nine member occupants of Defendant No.17;

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xvii) During 2012-2013, thirty nine out of fifty five members of Defendant No.17 vacated their respective flats and handed over the possession of the same to the Plaintiff. The Plaintiff proceeded to pay corpus amounts to these members as well as their respective rents for alternative transit accommodation;

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xviii) Defendant Nos.1 to 16 refused to vacate their respective flats and as a result the reconstruction work could not be commenced;

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xix) In the meantime, the Municipal Corporation of Greater Mumbai had issued notices under Section 354 of the Bombay Municipal Corporation Act, 1881 on the ground that the building was in a dilapidated condition and required to be urgently vacated. There was no response of Defendant Nos.1 to 16 to the said notice. In the premises, Municipal Corporation and Reliance Energy Ltd. (the electricity supplier) proceeded to disconnect the water and electricity supply to the respective flats of Defendant Nos.1 to 16. The action of the Municipal Corporation and Reliance Energy Ltd. in disconnecting the water and electricity supply was challenged by Defendant Nos.1 to 16 before this Court in a Writ Petition. This Court, however, refused to grant any interim relief to Defendant Nos.1 to 16;

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xx) As many as ten of the sixteen remaining occupants of the suit

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building have already vacated their respective flats but have not handed over possession thereof to the Plaintiff. About six occupants continue to stay in their respective flats in the suit building. There is no water or electricity available in the suit building. These occupants also tried to approach the City Civil Court at Dindoshi for interim relief in respect of water and electricity supply to their respective flats. The City Civil Court, Dindoshi has refused to grant any ad-interim relief to the occupants.

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3 Having regard to the facts and circumstances narrated above, which are supported by documents on record, it is clear that the suit building is in a dilapidated condition. In 2009, after a slab of the sixth floor of the suit building collapsed, members of Defendant No.17 society duly requisitioned a meeting for consideration of redevelopment. On the requisition of these members, in 2009, a Special General Body Meeting of Defendant No.17 was called and it was resolved to redevelop the suit building and call for sealed tenders for the same. In pursuance of public advertisements issued in this behalf, tenders were received from different developers. After appointment of Project Management Consultants, these tenders were scrutinized and in a duly convened Special General Body Meeting of Defendant No.17, the proposal of the Plaintiff was accepted by a substantial majority. Defendant No.17 duly passed a resolution appointing the Plaintiff as developer of the suit property. The appointment has also been confirmed by the office of the Registrar of Co-operative Societies. Finally, a development agreement was duly entered into by Defendant No.17 society with the Plaintiff. This agreement has been substantially acted upon both by the Plaintiff and Defendant No.17 together with its thirty nine members.

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4 The learned Counsel for Defendant Nos.1 to 16 raised objections to the validity of the General Body resolution passed by Defendant No.17. It was submitted by the learned Counsel that the resolution is in breach of directives issued by the Government of Maharashtra under Section 79A of the Maharashtra Co-operative Societies Act, 1960 concerning redevelopment of buildings owned by Co-operative Housing Societies. The learned Counsel submitted that the

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requisition for convening the Special General Body meeting was not supported by the requisite number of members of the society. The directives require not less than ¼ members of the society to submit a requisition for conveying Special General Body meeting to finalize the policy of redevelopment. In the present case, the particular requirement is clearly satisfied, since twenty four out of fifty five members of Defendant No.17 requisitioned the Special General Body meeting. The learned Counsel for Defendant Nos. 1 to 16 further submitted that the resolution is vitiated on account of many infirmities in conveying and conducting this meeting. It is submitted that whereas the General Body meeting to be conveyed for the purpose requires a minimum 14 days notice, the notice given in the present case was merely of 8 days. It is submitted that written suggestions were not called for from the members of the society for the work of redevelopment. It is submitted that the Project Management Consultants were appointed after shortlisting the developers. There is nothing on record to show that Defendant Nos.1 to 16 objected to conveying of the meeting or conduct thereof on the grounds alleged. Having regard to the facts narrated above, it clearly appears that there was a substantial compliance with the directives issued by the State Government under Section 79A of the Act. In any event, the matter concerning validity of the General Body resolution inter alia on account of failure to comply with the directives has already been carried by Defendant Nos.1 to 16 before the Co-operative Court. Defendant Nos.1 to 16 have been unable to obtain any interim relief from the Co-operative Court in this behalf.

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5 In the premises, it is clear at least at this prima facie stage that the General Body of the society, which has supreme authority in the matter, has taken a conscious decision to redevelop the suit building. The General Body has appointed the Plaintiff as the developer for the project. A development agreement has been duly entered into by Defendant No.17 society in favour of the Plaintiff. The challenge to the General Body resolution, on the basis of which the Plaintiff was appointed as the developer, has prima facie not found any favour with the Co-operative Court. The General Body resolution of Defendant No.17 society and the development agreement entered into with the Plaintiff in pursuance thereof, are prima facie binding on all members of Defendant No.17,

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until the resolution is overturned by a forum of competent jurisdiction. A few members of the society, including Defendant Nos.1 to 16 herein, cannot take a stand alone position contrary to the General Body resolution and resist the process of redevelopment. This Court in the case of Girish Mulchand Mehta & Anr Vs Mahesh S. Mehta¹ held as follows;

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“By now it is well established position that once a person becomes a member of the Cooperative Society, he looses his individuality with the Society and he has no indepen debt rights except those given to him by the statute and Bye-laws. The member has to speak through the Society or rather the Society alone can act and speaks for him qua the rights and duties of the Society as a body see (Daman Singh & ors. Vs State of Punjab), reported in 1985 DGLS (Soft.) 110 : A.I.R. 1985 S.C. 973. This view has been followed in the subsequent decision of the Apex Court in the case of ( State of U.P. Vs Chheoki Employees Co-operative Society Ltd.) reported in 1997 DGLS (Soft.) 69: A.I.R. 1997 S.C. 1413. In this decision the Apex Court further observed that the member of Society has no independent right qua the Society and it is the Society that is entitled to represent as the corporate aggregate. The Court also observed that the stream cannot rise higher than the source. Suffice it to observe that so long as the Resolutions passed by the General Body of the respondent No.2 Society are in force and not overturned by a forum of competent jurisdiction, the said decisions would bind the appellants. They cannot take a stand alone position but are bound by the majority decision of the General Body.”

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The ratio of the Judgment in Girish Mulchand Mehta (supra) is clearly applicable to the facts of the present case. The development agreement in the present case is entered into after following the due process of law. The same is prima facie valid and subsisting. The Plaintiff has duly performed its obligations thereunder and is prima facie entitled to specific performance of the development agreement.

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6 Even the balance of convenience clearly weighs in favour of the Plaintiff and Defendant No.17 society who support the Plaintiff. The suit building

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1 2010(1) Bom. C.R. 31

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is in an extremely dilapidated condition. In fact as far back as in 2007, the structural condition of the building was described as critical by a Structural Auditor appointed by Defendant No.1 and 5 themselves (who were then respectively the Secretary and Chairman of Defendant No.17 society ). In 2009, a part of the slab of the suit building had collapsed. There are notices issued under Section 354 of the Bombay Municipal Corporation Act by the Municipal Corporation of Greater Mumbai. Electricity and water supply to the suit building have been disconnected in response to these notices. The Defendants' challenge to this action was unsuccessful before this Court as well as the City Civil Court. The challenges to the disconnection of electricity and water supply have not yielded any interim order in favour of the occupant members. In fact, when the Municipal team came for demolition of the suit building, the Plaintiffs before the City Civil Court sought eight weeks' time on humanitarian grounds. Their applications before City Civil Court made thereafter, as noted above, have not secured any interim orders. Thirty nine out of fifty five members of Defendant No.17 society have already vacated their respective flats and are staying in temporary transit accommodations awaiting the reconstruction of the suit building. The Plaintiff has already incurred huge expenses towards preparation and approval of plans, obtaining IOD, corpus fund to the society as well as to the members and rents for temporary alternative accommodations pending reconstruction of the suit building. The Plaintiff claims to have spent a sum of over Rs.3.50 crores towards these. On the other hand, ten out of sixteen Defendants have already vacated their respective flats presumably on the ground that the suit building is in a dangerous condition, but omitted to handover the possession of their respective flats for the reconstruction work. In these circumstances, considerations of balance of convenience require that the redevelopment project is undertaken expeditiously.

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7 For the reasons discussed above, the Plaintiff has clearly made out a prima facie case for grant of interim relief in the Notice of Motion. Accordingly, the following order is passed:

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i) Court Receiver, High Court, Bombay is appointed as a Receiver of

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16 flats in the building described in para 1.3 of the plaint and owned and occupied by Defendant Nos.1 to 16, with all powers under Order 40 Rule 1 including the power to take possession of the said flats from Defendant Nos.1 to 16 and handover the same to the Plaintiff for demolition / redevelopment of the building;

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ii) Defendant Nos.1 to 16 are directed to handover the possession of their respective flats to the Court Receiver within a period of four weeks from today;

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iii) In the event of Defendant Nos.1 to 16 or any of them failing to handover the possession to the Court Receiver within the period mentioned above, the Court Receiver to take physical possession of the flats, if necessary, with the assistance of Police;

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iv) The Plaintiff shall pay the corpus amount as well as advance rent to Defendant Nos.1 to 16 against delivery of possession of their respective flats, as paid to the other members of Defendant No.17 society;

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v) It is clarified that the observations made in this order are prima facie and will not in any way prejudice to the proceedings pending before the Co-operative Court;

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vi) There shall be no order as to costs;

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vii) All parties to act on the authenticated copy of this order;

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( S.C.GUPTE J. )

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M/S. Aftab Construction v. Shaikh Anis Ahmed and 16 Ors.

Case brief

What is this about?

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M/S. Aftab Construction v. Shaikh Anis Ahmed and 16 Ors.

Case brief

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