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2021 Supreme(Bom) 898

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
G.S. Patel, J.
Chirag Infra Projects Pvt. Ltd. - Appellant
Versus
Vijay Jwala Coop Hsg Soc Ltd & Anr. - Respondents
Arbitration Petition (L) No. 108 of 2021
Decided On : 12-03-2021

Advocates appeared:
Amogh A Singh, Advocate, Bhavin R Bhatia, Advocate, Rohit Yadav, Advocate, Moksha M Doshi, Advocate, Amol Joshi, Advocate, Vinod Rane, Advocate, Rane & Co, Advocate, Divya B Parmar, Advocate

The main legal point established in the judgment is that dissenting members of a cooperative society are bound by the decisions of the general body, and the court has the authority to order mandatory measures, including the appointment of a receiver, in redevelopment disputes.

Headnote:

Obstruction - Redevelopment of Society Building - Maharashtra Cooperative Societies Act, 1960, Maharashtra Regional & Town Planning Act, 1966, Mumbai Municipal Corporation Act, 1888, Arbitration and Conciliation Act 1996 - Section 95A of the MHADA Act - Summary of Acts and Sections referenced: Maharashtra Cooperative Societies Act, 1960, Maharashtra Regional & Town Planning Act, 1966, Mumbai Municipal Corporation Act, 1888, Arbitration and Conciliation Act 1996, Section 95A of the MHADA Act - The court discussed the authority of the general body of the society, the binding effect of resolutions, and the obligations of members under the Cooperative Societies Act. The court also highlighted the power of summary eviction under Section 95A of the MHADA Act and the legal principles governing the appointment of a receiver in redevelopment disputes.

Fact of the Case:

The 2nd Respondent obstructed the redevelopment of a dilapidated society building, despite the building being declared unsafe and unfit for human habitation. The 1st Respondent society had resolved to redevelop the building, and a Development Agreement was signed. The 2nd Respondent opposed the reconstruction, claiming the entire proposal was illegal due to lack of permission from the Social Welfare Department.

Finding of the Court:

The court found the 2nd Respondent's obstruction to be without legal basis and highlighted the binding effect of the society's resolutions and the obligations of members under the Cooperative Societies Act. The court also emphasized the power of summary eviction under Section 95A of the MHADA Act and the legal principles governing the appointment of a receiver in redevelopment disputes.

Issues: The issues involved the legality of the redevelopment proposal, the authority of the general body of the society, the binding effect of resolutions, and the obligations of members under the Cooperative Societies Act.

Ratio Decidendi: The court held that a member of a cooperative society cannot assert rights independent of the society's decisions, and dissenting members are bound by the decisions of the general body. The court also emphasized the applicability of Section 95A of the MHADA Act and the legal principles governing the appointment of a receiver in redevelopment disputes.

Final Decision: The court ordered the 2nd Respondent to vacate the premises by a specified date, failing which the Court Receiver would forcibly take possession. The court also granted the 2nd Respondent the benefits and incidents available to all other members of the society, including transit rent and possession of the allotted premises after reconstruction.

JUDGMENT

G S Patel, J. - This is the usual story of a solitary member of a society obstructing the redevelopment of the society building. It does not matter to this member that the building is in a dilapidated condition unfit for human habitation. It does not matter to him that the building has been declared as such by the Planning Authority and categorized as a 'C1' building. It does not matter to that dissenting member that the building now poses a risk to all occupants - including the dissenting himself - and, in addition, others in the vicinity. It also does not seem to matter to this member that his actions come at the very real cost of other member of the society, all 19 of whom have vacated their premises as far back as in November 2018.

2. As we shall presently see, the facts behind the 2nd Respondent's persistent obstruction for the last six years are beyond shocking. The 2nd Respondent imagines that it is only he who can tell right from wrong, that it is only he who knows what is good for all, and that he is entitled without any assumption of liability to continually obstruct this redevelopment, put his fellow members at risk and continue in this fashion. The 2nd Respondent also imagines that he can continually obstruct implementation of the redevelopment project although court after court after court has refused to grant him relief. It matters not a whit to his reasoning - or the conspicuous lack thereof - that he has never once assailed the Society's resolution regarding re-development or the redevelopment agreement itself. To a question whether he has obtained any order at all either staying the general body resolution, or declaring the redevelopment agreement in question null and void, the only answer I received is 'not yet'. Presumably, this means that not only the Court but the developer and more importantly the fellow members of the society - the 2nd Respondent's neighbours - must wait for an eternity until the 2nd Respondent has his own way.

3. The 2nd Respondent is wrong on every single aspect of the matter. The 2nd Respondent is entirely in error in believing that no action can be taken and that he is protected or insulated from the operation of law. The 2nd Respondent is equally wrong in believing that he can continually evade liability or that he can avoid his responsibilities as a member of the 1st Respondent society.

4. The facts are not many. This is how they unfold. The 1st Respondent society owns a building at Building No. 8, Survey No. 1061 (part), CTS 217 in the revenue village of Shastri Nagar, Pahadi Goregaon. On this land there stood a building known as Vijay Jwala. It has 20 tenements. The only tenement still in occupation is the one in which this 2nd Respondent, Kondvilkar, resides with his wife. The Society (the 1st Respondent) resolved on 7th September 2014 to redevelop Vijay Jwala. A Development Agreement followed on 16th December 2015. A copy of this agreement is annexed at Exhibit 'H'. It is duly stamped and registered. It contains a provision for arbitration reproduced at page 73 in clause 39, which says that any disputes are to be referred to arbitration under the Arbitration and Conciliation Act 1996. For a correct understanding, I will have occasion to return to this development agreement a little later in this order.

5. To complete the factual narrative, this property being on MHADA land, it required a no objection certificate from MHADA. This came on 2nd August 2019, but it was just a year after a structural audit by the Municipal Corporation of Greater Mumbai on 16th June 2018 declaring the building in the 'C1' category, i.e., as unsafe and unfit for human habitation.

6. The 2nd Respondent has from the beginning opposed the reconstruction. As I understand it, he says that the entire proposal is for some reason 'illegal'. The point that is being urged is that the building was meant for persons from the lower income group and, therefore, permission of or from the Social Welfare Department

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