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2014 DIGILAW 2232 (BOM)

Amar Nagar (SRA) Sah. Gruhanirman Sanstha (proposed) v. Vikas Narayan Raikar

2014-11-05

R.D.DHANUKA

body2014
Judgment : 1. By this petition filed under Section 37 of the Arbitration and Conciliation Act, 1996, the Petitioners have impugned the order dated 10th February, 2014 passed by the learned Arbitrator under Section 17 of the said Act directing the petitioner no.1 not to proceed with the SRA project with the heirs of the original owners or M/s. Gupta Housing Pvt. Ltd. or persons claiming through them as developers on the portion of land belonging to the original owner late Mrs. Rajrani Harbanslal Gupta admeasuring 2500 sq. mtrs. Some of the relevant facts for the purpose of deciding this petition which is in the nature of an appeal under Section 37 of the Act are as under:- 2. By a notification dated 18th March, 1976, the Maharashtra Slum Improvement Board of Mumbai declared the area bearing Survey No.58, Amar Nagar, Borla Village Chembur, Mumbai as a slum area. Members of the petitioner no.1-Society are residing in the said slum area. Area admeasuring 5651 sq. yards equivalent to 4724.80 sq. mtrs. was held by Mrs. Rajrani Harbanslal Gupta. 3. On 16th December, 2004, Mrs. Rajrani H. Gupta entered into a Memorandum of Understanding (MOU) with the respondent no.1 and permitted the respondent no.1 to develop a portion admeasuring 2989 sq. yards equivalent to 2500 sq. mtrs. out of the portion of the property admeasuring 5651 sq. yards equivalent to 5730 sq. mtrs. which was covered by about 120 hutments out of the total 400 hutments covering on the larger plot. On 10th October, 2007, Mr. Rajrani H. Gupta expired. A portion of larger plot admeasuring 5161 sq. yards devolved upon Mr. Sudhir H. Gupta and Ashwin H. Gupta upon demise of Mrs. Rajrani H. Gupta. 4. The hutment dwellers, totally 400 in number, formed themselves into Amar Nagar Hutment Dwellers Society (proposed). Petitioner no.1 was formerly known as Amar Nagar Hutment Dwellers Society. The said society undertook a scheme for redevelopment of their plot under Regulation 33(10) of the Development Control Regulations. On 27th December, 2004, the petitioner no.1 entered into a Development Agreement with respondent no.1 appointing the respondent no.1 as developer in respect of portion admeasuring 2500 sq. mtrs. 5. It is the case of the petitioners that the respondent no.1 through its Architect under the covering letter dated 25th April, 2005 submitted a proposal for implementing Slum Rehabilitation Scheme on portion admeasuring 2500 sq. mtrs. mtrs. 5. It is the case of the petitioners that the respondent no.1 through its Architect under the covering letter dated 25th April, 2005 submitted a proposal for implementing Slum Rehabilitation Scheme on portion admeasuring 2500 sq. mtrs. which was subject matter of the said development agreement. It is the case of the petitioners that the respondent no.1 represented that the respondent no.1 proposed to execute similar MOU with Mrs. Rajrani H. Gupta for developing the remaining portion admeasuring 2662 sq. yards as also with Krishnakumar Gupta and others for the other portion admeasuring 5651 sq. yards and if the owners did not agree, the respondent no.1 shall put up a proposal under Section 14 (i) of the Slum Act for acquisition of the remaining portion of the larger property. The respondent no.1 submitted a proposal under Section 14(i) of the Slum Act for acquisition of the remaining portion of the larger plot. It is the case of the petitioners that the respondent no.1 did not comply with the obligation under the MOU dated 16th December, 2004 entered into between the original owner and the respondent no.1. The original owner through her advocate's letter dated 20th October, 2006 gave notice of termination to the respondent no.1 and called upon the respondent no.1 to collect the refund of the amount which was paid by the respondent no.1 to the original owner. The respondent no.1 subsequently accepted the refund and confirmed the acceptance of the amount of Rs.4,51,000/-through his advocate's letter dated 4th October, 2007. 6. The legal heirs of the original owner thereafter through their advocate's letters dated 26th April, 2007, 29th April, 2008 and 4th June, 2007 informed the authorities under the Slum Act about termination of the MOU dated 16th December, 2004 and requested various authorities to reject the redevelopment proposal submitted by the respondent no.1. 7. The legal heirs of the original owner through their advocate's letter dated 23rd April, 2008 informed the petitioner no.1 about the termination of the MOU dated 16th December, 2004 executed between the owner and the first respondent and also revocation of the permission granted to the first respondent to redevelop the portion of the land. By the said letter, the petitioner no.1 was informed that the owners were desirous of undertaking the redevelopment of property owned by Mrs. By the said letter, the petitioner no.1 was informed that the owners were desirous of undertaking the redevelopment of property owned by Mrs. Rajrani Gupta by themselves and advised the petitioner no.1 and its members to revoke their consent given to the respondent no.1 for developing the property admeasuring 2500 sq. mts. By their advocate's letter dated 5th June, 2008 addressed to the Additional Collector, the owners once again recorded that they proposed to develop by themselves the property owned by them and therefore the proposal for redevelopment as well as proposal for acquisition of land owned by them cannot be considered and deserves to be rejected. 8. The Additional Collector (Encroachment) vide its letter dated 31st March, 2010 informed the respondent no.1 that as per the SRA Rules if the proposal was submitted for acquisition of land and for approval of plans, both the proposals could not be considered simultaneously. The respondent no.1 through its Architect's letter dated 2nd April, 2010 requested the Additional Collector to keep the proposal for redevelopment of the portion admeasuring 2500 sq. mtrs. Pending and to process Application for acquisition under Section 14 (i) of the Slum Act for the acquisition of larger property. 9. The owners of the said property preferred a Writ Petition (1352 of 2010) in this Court, inter alia challenging the notice under Section 14 (i) of the said Act and submitted that the owners of the property would present a better and more viable housing scheme for slum dwellers. By an order dated 19th July, 2010, this Court disposed of the said writ petition and held that without expressing any opinion on the controversy and since no final decision was taken by the Collector, the Additional Collector shall take into consideration the objections submitted in writing by the Society and after hearing all concerned shall take a final decision as expeditiously as possible. 10. The Additional Collector issued a public notice dated 19th November, 2010 and called upon all persons having interest in the said larger property to show cause as to why the proposal of acquiring the larger property should not be sent to the Government for approval. By letter dated 4th January, 2011 the petitioner no.1 informed the Additional Collector that the petitioner no.1 was not interested in proposal for acquisition under Section 14 (i) of the Slum Act. 11. By letter dated 4th January, 2011 the petitioner no.1 informed the Additional Collector that the petitioner no.1 was not interested in proposal for acquisition under Section 14 (i) of the Slum Act. 11. By an order dated 10th February, 2011 the Additional Collector closed the proposal under Section 14(i) of the Slum Act for acquisition of the said larger property. 12. On 7th August, 2011 the petitioner no.1 thereafter convened a Special General Body Meeting to decide as to whether the respondent no.1 shall continue to be the developer or to appoint the owners as the developers. The said meeting, besides the committee members, was also attended by 304 members. Voting was conducted and 289 members voted in favour of the owners and against the respondent no.1. Only 4 members voted in favour of continuing the respondent no.1 as developer and other 2 votes were disqualified. 13. In the Special General Body Meeting held on 26th August, 2011 the petitioner no.1 resolved that the redevelopment of the property be entrusted to Gupta family as developers and authorised the managing committee to execute the necessary document. 14. By letter dated 24th February, 2012 the petitioner no.1 informed the respondent no.1 about the meeting held on 23rd October, 2011 in which all the members decided to terminate the agreement with the respondent no.1 and to appoint the owners as developers and the promoters therefore had no alternative but to carry out the decision of the members. The development agreement entered into between the petitioner no.1 and respondent no.1 was terminated. 15. The petitioner no.1 thereafter executed two separate Development Agreements i.e one dated 19th December, 2012 between M/s.Pancha Tatva Realty and Amar Nagar (A) SRA Sahkari Grihanirman Sanstha (proposed) and second agreement dated 22nd December, 2012 between Gupta Housing Private Limited and Amar Nagar (B) SRA Sahkari Grihanirman Sanstha (proposed). 16. The Slum Rehabilitation Authority addressed a letter dated 19th July, 2013 to the petitioner no.1 society stating that the proposal for redevelopment submitted by respondent no.1 was accepted by the SRA on 2nd June, 2006. Since the respondent no.1 had not shown any interest in implementing the scheme, the authority kept a hearing in the matter. 17. By order dated 14th January, 2013 passed by the learned designate of Chief Justice, learned arbitrator came to be appointed as the sole arbitrator. The respondent no. Since the respondent no.1 had not shown any interest in implementing the scheme, the authority kept a hearing in the matter. 17. By order dated 14th January, 2013 passed by the learned designate of Chief Justice, learned arbitrator came to be appointed as the sole arbitrator. The respondent no. 1 filed a statement of claim before the learned arbitrator and also filed application for interim measures. The petitioner no.1 opposed the said application. 18. By an order dated 10th January, 2014, the learned arbitrator directed the petitioner no.1 not to proceed with the SRA project with the heirs of Mrs.Rajrani H. Gupta or M/s.Gupta Housing Pvt. Ltd. or persons claiming through them as developers on the portion of land belonging to late Mrs.Rajrani Gupta, admeasuring 2500 sq. mtrs. This order of the learned arbitrator is impugned in this petition filed under Section 37 of the Act. 19. Mr. Balsara, learned counsel for the petitioner submits that the owners have already terminated the MOU between the owners and the respondent no.1. The respondent no.1 has already accepted the refund of the amount paid by the original owner to the respondent no.1 and did not challenge the termination of MOU effected by the owner in any proceedings. The said termination is thus valid, subsisting and binding on the respondent no.1. In view of the termination of MOU between the owner and respondent no.1, the petitioner no.1 also terminated the Development Agreement with the respondent no.1. It is submitted by the learned counsel that any slum existing on the private land can be developed under Slum Rehabilitation Scheme only with the consent of the land owners. In this case, the land owner has not only terminated the MOU with the respondent no.1 but also strongly opposed the application for acquisition of the plot made by the respondent no.1 under Section 14(i) of the Slum Act. The authorities have already closed the application of the respondent no.1 for acquisition of the plot in question. The respondent no.1 did not challenge the closure of the application for acquisition filed by the respondent no.1 by the authorities. The authorities have already closed the application of the respondent no.1 for acquisition of the plot in question. The respondent no.1 did not challenge the closure of the application for acquisition filed by the respondent no.1 by the authorities. It is submitted by the learned counsel that since the owner has terminated the agreement with the respondent no.1 and the application of acquisition for acquisition of the land in question under Section 14(i) of the Act having stood closed by the authorities, the claim for specific performance filed by the respondents before the learned Arbitrator itself is not maintainable. It is submitted that the owner was admittedly not a party to the arbitration proceedings. 20. It is submitted by the learned counsel that the respondent no.1 having accepted termination of MOU and having accepted the refund of the amount paid from the owner even could not have made and/or pursue the application for acquisition under Section 14(i) of the Slum Act and could not even pursue the application for development under Regulation 33 (10) of the Development Control Regulations. 21. Mr. Balsara, learned counsel submits that the scheme submitted by the respondent no.1 is not at all in compliance with the conditions mentioned in Annexure-I. It is submitted by the learned counsel that even otherwise, a claim for specific performance cannot be granted in the facts of this case since specific performance of the development agreement entered into between the respondent no.1 and petitioner no.1, would run into such minute or numerous details and the performance of which would involve the performance of a continuous duty which the Court cannot supervise. Reliance is placed on Sections 14 (1) (b) and 14 (1) (d) of the Specific Performance Act, 1963. In support of this submission, the learned counsel also invited my attention to the clauses of the development agreement entered into between the respondent no.1 and the petitioner no.1. 22. It is submitted by the learned counsel that by the impugned order, the learned Arbitrator has granted injunction against the petitioner no.1 from proceeding with the SRA project with the heirs of the owner or persons claiming through them as developers on the portion of the land which was subject matter of the Development Agreement. It is submitted that indirectly the learned Arbitrator has granted injunction under Section 41(e) of the said Act which cannot be granted under the said provisions. It is submitted that indirectly the learned Arbitrator has granted injunction under Section 41(e) of the said Act which cannot be granted under the said provisions. The owner was admittedly not a party to the arbitration proceedings. 23. Mr. Vaidya, learned counsel appearing for the respondent no.1, on the other hand, submits that the respondent no.1 had taken all steps under the MOU entered into with the original owner and also under the Development Agreement entered into with the petitioner no. 1. The respondent no.1 has spent huge amounts on the project. It was the case of the respondent no.1 that the Development Agreement was not terminated. Learned counsel submits that the balance of convenience was in favour of the respondent no.1 and thus the learned Arbitrator, after considering the matter in right perspective has granted the interim measures so as to protect the subject matter of the proceedings before the learned Arbitrator. This court thus shall not interfere with the interim measures granted by the learned arbitrator. The learned counsel placed reliance on various observations and prima facie finding rendered by the learned arbitrator. 24. Learned counsel also invited my attention to the order passed by this court in the writ petition filed by the owner to which the petitioner no. 1 society was also a party. It is submitted that the learned collector however, dropped the acquisition proceedings without any basis. 25. In rejoinder Mr. Balsara learned counsel for the petitioner submits that the plot in question even today continues to be a slum. Because of the injunction granted by the learned arbitrator, the petitioner no. 1 is prevented from proceeding with SRA Project with the owner or persons claiming through them. It is submitted that the owner as well as petitioner no. 1 have already entered into development agreement with other parties after termination of the MOU and the development agreement. Even those parties are not parties to the arbitration proceedings. 26. A perusal of the record indicates that it is not in dispute that the plot in question was declared as as slum under the provisions of Slum Act. Mrs. Rajrani Gupta was owner of the plot which was declared as a slum. The said Mrs. Rajrani Gupta died on 10th October, 2007. 26. A perusal of the record indicates that it is not in dispute that the plot in question was declared as as slum under the provisions of Slum Act. Mrs. Rajrani Gupta was owner of the plot which was declared as a slum. The said Mrs. Rajrani Gupta died on 10th October, 2007. During her life time, by her advocates letter dated 20th October, 2006, she had already terminated the MOU dated 16th December, 2004 between her and the respondent no.1. There is no dispute that the respondent no. 1 has accepted the refund of the amount which was paid by the respondent no.1 to the owner under MOU and also did not challenge the termination of the MOU between him and the owner. 27. A perusal of the record indicates that the petitioner no. 1 has also terminated the development agreement between petitioner no. 1 and respondent no. 1. The development agreement entered into between the petitioner and respondent no.1 provide that the respondent no.1 and petitioner no. 1 had decided to acquire the land from the original owner to develop the same under slum rehabilitation scheme. The owner had raised strong objection before the authority not to proceed with the application for acquisition or for granting sanction for redevelopment of the plot by pointing out that the MOU between the owner and respondent no. 1 was already terminated. It is not in dispute that the authority has already dropped the acquisition proceedings. 28. Under the provisions of the Development control regulations read with provisions under the Slum Act, any slum existing on the private land can be developed only with the consent of the land owner. The land owner has already terminated the agreement which is neither challenged by the respondent no. 1 nor has been set aside by any court of law. In my view, the respondent no.1 could apply for permission to redevelop in these circumstances only if the said plot was acquired by the authority under section 14(1) of the Slum Act. In my prima facie view, the MOU between the owner and respondent no. 1 being not subsisting, the development agreement entered into between the petitioner no.1 and respondent no. 1 cannot be enforced independently without consent of the owner. The owner has admittedly withdrawn consent granted in favour of the respondent no. 1. 29. In my view, the petitioner no. In my prima facie view, the MOU between the owner and respondent no. 1 being not subsisting, the development agreement entered into between the petitioner no.1 and respondent no. 1 cannot be enforced independently without consent of the owner. The owner has admittedly withdrawn consent granted in favour of the respondent no. 1. 29. In my view, the petitioner no. 1 however, cannot be prevented from entering into any development agreement with the owner or with a third party with consent of the owner. In my prima facie view, the original MOU having been terminated and the respondent no. 1 having accepted such termination and having accepted the refund of the amount paid by the owner to the respondent no. 1, respondent no. 1 cannot pursue the development agreement entered into with the petitioner no. 1 society. 30. The petitioner no. 1 and the original owner have already entered into development agreements with third parties after terminating the development agreement. By granting injunction against the petitioner no. 1, from proceeding with any agreement with the original owner or with any third party, the learned arbitrator in my view has prevented the petitioner no.1 from complying with their obligations under the agreement arrived at with owner and third party. The learned arbitrator in my view has committed patent illegality on the face of the order passed by him. 31. Interim measure is in aid of final relief. In my prima facie view since the claim for specific performance of the development agreement between the petitioner no. 1 and the respondent no. 1 itself cannot be granted for the aforesaid reasons, the learned arbitrator could not have granted interim measures of this nature. 32. Under Section 14(1) (b) read with 14(1)(d), a contract can not be specifically enforced if it runs into a minute or numerous details or otherwise from its nature is such that court cannot enforce specific performance of its material terms or if the performance of which involves the performance of a continuous duty which court cannot supervise. A perusal of the development agreement entered into between the petitioner no. 1 and respondent no. 1 clearly indicates that various obligations agreed to be performed under the said agreement, performance of which would involve the performance of a continuous duty, which in my view the arbitrator or court cannot supervise. A perusal of the development agreement entered into between the petitioner no. 1 and respondent no. 1 clearly indicates that various obligations agreed to be performed under the said agreement, performance of which would involve the performance of a continuous duty, which in my view the arbitrator or court cannot supervise. In my prima facie view such development agreement cannot be enforced on this ground also. The interim measure granted by the learned arbitrator is also contrary to section 41(e) of the Specific Relief Act, 1963. The impugned order thus deserves to be set aside on this ground also. 33. I therefore, pass the following order: The impugned order dated 10th February, 2014 passed by the learned arbitrator under section 17 of the Arbitration & Conciliation Act, 1996 Exhibit A to the petition, is set aside. Application under section 17 of the Arbitration & Conciliation Act filed by the respondent no.1 before the learned arbitrator is dismissed. Arbitration Petition is allowed in aforesaid terms. There shall be no order as to costs.