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2021 Supreme(Bom) 940

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
G.S. Patel, J.
Westin Sankalp Developers - Appellant
Versus
Ajay Sikandar Rana - Respondent
Comm Arbitration Petition (L) No. 221 of 2020; Comm Arbitration Application (L) No. 1914 of 2021; Interim Application (L) No. 3007 of 2021
Decided On : 19-03-2021

Advocates appeared:
Rajesh G Singh, Advocate, Nidhi B Singh, Advocate, R.S. Pachundkar, Advocate, Nilesh S Parte, Advocate

Headnote:

dissenting members - cooperative society - Commercial Courts Act, 2015 - Section 35 of the Code of Civil Procedure - The court discussed the dissenting members' opposition to re-development, the binding effect of resolutions on members, and the appointment of a receiver. The court referred to various decisions including Girish Mulchand Mehta & Ors v Mahesh S Mehta & Ors, Aditya Developers v Nirmal Anand Co-op. Hsg Soc Ltd & Ors, and Sarthak Developers v Bank of India Amrut-Tara Staff CHSL. The court held that the dissenting members are bound by the decision of the general body and the development agreement, and their opposition to re-development is impermissible.

Fact of the Case:

The case involved dissenting members of a cooperative society opposing re-development approved by the general body. The court analyzed the binding effect of resolutions on members, the appointment of a receiver, and the dissenting members' obligation to vacate the premises.

Finding of the Court:

The court found that the dissenting members are bound by the decision of the general body and the development agreement, and their opposition to re-development is impermissible. The court ordered the dissenting members to vacate the premises and appointed a receiver for enforcement.

Issues: The issues involved the binding effect of resolutions on members, the appointment of a receiver, and the dissenting members' obligation to vacate the premises.

Ratio Decidendi: The ratio decidendi established that dissenting members of a cooperative society are bound by the decision of the general body and the development agreement, and their opposition to re-development is impermissible.

Final Decision: The court ordered the dissenting members to vacate the premises and appointed a receiver for enforcement.

JUDGMENT

G S Patel, J. - This is the second case in as many weeks of dissenting members of a cooperative society holding up its re-development, though this re-development is approved by a vast majority of the general body. Mr Pachundkar urges the same point of law that has been raised and negatived repeatedly by this court. He claims that since his clients, Respondents Nos. 1 and 2, have not signed the development agreement, they are not bound by the arbitration clause and no relief in Section 9 can be made against them. The question is no longer res integra. It has not been res integra for many years. Every dissenting member of society after society constantly repeating the same jaded mantra again and again, totally unmindful of the law, is a practice that must now be deprecated in the strongest possible terms. This is now the very last time I will refrain from imposing severe costs. These are claims in the Commercial Division of this court and we are under the Commercial Courts Act, 2015. That Act amended the provision for costs in Section 35 of the Code of Civil Procedure, 1908. One of the factors to be borne in mind while awarding costs - which can be actual costs and even exemplary costs - is the frivolity of the defence and whether the party against whom costs are to be made has wasted the Court's time. Every such untenable and unsustainable objection by a dissenting member is a colossal waste of judicial time. The next such matter will receive, first, an order of immediate eviction of the dissenting member (i.e., vacating that very day, or at best the next), and, second, an appropriately severe order of costs. That order will be made keeping in mind the costs incurred by the Society, the loss to other society members, and the actual loss suffered by the developer on account of the delay occasioned by such members. Consequently, the order of costs is unlikely to be moderate or modest. This is, in my view, only fitting, for there is nothing moderate or modest about the opposition by these dissenting members. They behave as if they are not bound by orders of this Court or by the law. They are.

2. An identical question came before me only a few days ago in Chirag Infra Projects Pvt Ltd v Vijay Jwala Coop Hsg Soc Ltd & Anr., Arbitration Petition (L) No. 108 of 2021, decided on 12th March 2021. The entire case law on the subject has been considered there: in particular the decisions of a Division Bench of this Court in Girish Mulchand Mehta & Ors v Mahesh S Mehta & Ors.,2019 SCCOnLineBom 1986.; the decision of a learned Single Judge of this Court (the Hon'ble Mr Justice KK Tated) in Aditya Developers v Nirmal Anand Coop Hsg Soc Ltd & Ors., (2016) 3 MhLJ 761 : 2016 SCC OnLine Bom 100. and the decision in Sarthak Developers v Bank of India AmrutTara Staff CHSL, Appeal (L) No 310 of 2012.

3. I refuse to waste time by re-visiting the same law again and again. I will simply quote the relevant portions of my decision in Chirag Infra Projects Pvt Ltd to set the stage for a brief factual discussion.

17. It is entirely true and correct that the 2nd Respondent has not himself signed this agreement.

18. This is the point of law raised in opposition. The submission is that the development agreement and its arbitration clause cannot possibly bind a non-signatory, namely, Kondvilkar. Reliance is placed on the decision of the Supreme Court in Indowind Energy Ltd v Wescare (I) Ltd & Anr., (2010) 5 SCC 306 but this decision lends no support to the argument in question because this was not a case where one of the parties sought to be bound by the agreement was a member or affiliate of a signatory. The petitioner before the Supreme Court sought an order under Section 11 against two parties. One of them resisted the petition saying that the agreement did not contemplate any contractual relationship between the petitioner and itself and there was no arbitrable dispute. It was in that context that Wescare was decided. Then reliance is placed on the de

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