The majority decision of a cooperative housing society to appoint a developer is binding on all members, and obstruction to redevelopment without valid reasons can lead to court intervention and appointment of a sole arbitrator.

COMMERCIAL ARBITRATION PETITION NO. 393 OF 2017

1. This petition is filed under Section 9 of the Arbitration and Conciliation Act, 1996 (The said Act) by petitioner and though prayers appear to be in the nature of the mandatory final order, in the facts and circumstances of the case, I do not find it wrong for petitioner to ask for and for court to grant such a relief. Extraordinary situations require extraordinary orders.

2. Petitioner carries on business of real estate developers. Respondent no.1 is Co-operative Housing Society registered under the provisions of Maharashtra Co-operative Societies Act, 1960 situated at Mulund Mrug Archana CHS Ltd., Govind Nagar, Sarojini Naidu Road, Mulund (West), Mumbai 400 080 (The said property). It must be noted that counsel for respondent no.1-society stated that respondent no.1-society fully supports petitioner in this petition. Respondent Nos. 2 to 4 are the members of respondent no.1-society. Respondent Nos. 2 to 4 are dissenting members for proposed redevelopment against the majority of 34 members of respondent no.1-society. Respondent nos. 2 to 4 have right, title and interest in respect of their respective flats being Flat Nos. A-15 (3rd Floor), A-11 (2nd Floor) and B-32 (3rd Floor) in the buildings of the society.

3. Respondent no.1-society situated on the said property is consisting of two Wings, namely, 'A' Wing comprising of ground plus four upper floors and 'B' Wing comprising of ground plus four upper floors totally consisting of 37 flats.

It is the case of petitioner, who is supported by respondent no.1 that the said building “Mulund Mrug Archana” in general and the R.C.C. framework in particular are in a weak and dilapidated condition and, over the years, have been showing increasing signs of stress. With each passing year, the condition of RCC framework has deteriorated further, cracks have developed at several places, the steel reinforcements have corroded extensively, and there is a discontinuity in the reinforcements. Besides the aforesaid, there are leakages in several of the Members' existing flats in the building and the water, which is constantly seeping into slabs/RCC structure, is further compounding the problem. While the society has carried out major works of repairs as well as maintenance works to the buildings from time to time, the same have only provided temporary relief and in view of the opinion of the Architects, Structural Auditors and Consultants such repairs are only a temporary solution to the problem, and hence respondent no.1-society unanimously decided to redevelop the said building instead of carrying out any further repairs.

4. Petitioner further states that at the Special General Body meeting of respondent no.1 society (wherein respondent Nos.2 to 4 were also present and signed the Register maintained by respondent no.1-society) the issues of the condition of the building of the society were discussed at length and the members were of the opinion that they should demolish the existing buildings and construct a new building thereon. However, since neither the society nor the members had the finance nor the expertise to carry out such work, it was decided that the task of carrying out such demolition and reconstructing flats for the members should be entrusted to professional developers who could carry out the development work free of cost to the members of the society and construct for the members new flats free of cost. In return for the same, the Developers could be granted the right to bring in and utilize TDR/FSI and sell the remaining premises not earmarked for the members and appropriate the sale proceeds into themselves. The members took a unanimous decision and formed a special committee comprising of a few chosen members for the purpose of inviting proposals from various developers for development of the property of the society. The Managing Committee has been empowered and was invested with the powers of considering the various pro