Meeti Developers Private Limited v. New Kamal Kunj Co-operative Housing Society Limited

6 It is in the context of these rival claims, two separate petitions are filed, seeking interim measures u/s.[9] of the Arbitration and Conciliation Act, 1996, pending the initiation of arbitration proceedings and it is the case of each of the petitioner, in the two petitions that it has performed its respective obligations under the Development Agreement, but it is the other party, which is in breach and the prevailing precarious situation, is attributed to the opposing party. Arguments Advanced

7 Mr.Rohaan Cama, represent the petitioner Society in ARBPL No. 12837/2023, whereas learned Senior Mr.Kapadia represent the respondent Society in petition filed by Meeti. As per Mr.Cama, Kamal Kunj comprise of 69 members (36 residential and 33 shops) and there were 16 garages along with southern boundary of the property, out of which one garage owner has vacated his garage, but the remaining 15 continue to occupy them. He would submit that though the Development Agreement was entered in the year 2006, the garage owners did not vacate and did not co-operate, as a result the development work could not be carried out and various meetings were held with the garage owners. In or around 2012, Meeti shared a new plan for redevelopment, which envisaged that the construction would start from North side rather than the South side and this would require vacating of all the units by the members at the same time, and not in a phase manner, as was postulated in the D.A. The SGM of the Society recorded that the garage owners have agreed to vacate and pursuant thereto, an IOD was obtained on 30/9/2016. Recording the revised terms and conditions of redevelopment, an addendum agreement was executed between the parties on 18/3/2017, recording that the property shall not be redeveloped in a phase wise manner, but as a whole, at a time. The Addendum Agreement specifically agreed for payment of rent/compensation; shifting charges and location of separate public parking area in the basement. As per Mr.Cama, the Addendum Agreement cast a duty upon Meeti, to obtain sanction plan and IOD within 12 months and it also took upon itself the responsibility to pay taxes, that the planning authority i.e. the MCGM may levy. As per the commitment, the Members of the Society in possession of the residential flats, in furtherance of the Addendum Agreement vacated their premises and all the shop owners, (except 8) who had been shifted to the periphery of the property also vacated the units in their possession.

8 As a next step, as per Mr.Cama, the Society addressed a letter to Meeti, recording that the possession of the property along with the building has been handed over for demolition and for proceeding and undertaking the construction activities. In furtherance, the commencement certificate was obtained and the building was demolished by Meeti, in the month of June 2018 and as per the promise, the payments started flowing to the members who had vacated. In order to tackle with the non-cooperative members, Meeti and Kamal Kunj joined hands and filed a Suit against the garage owners, who had refused to vacate, but immediately thereafter, Meeti alleged on the pretext that Society is not rendering its co-operation, it stopped paying the transit rent from March 2020.

9 As per Mr.Cama, the Society addressed various letters to Meeti, reminding it of its obligations, more particularly, that of payment of rent/compensation and Meeti even assured to make the payment commencing from 25/7/2020 but failed to keep its promise, as regards clearance of accrued rent and commencement of the work, in the timeline specified. Not only this, the cheques issued by Meeti towards rent/compensation were also dishonored and vide notices issued on 17/11/2020 and 30/11/2020, Meeti was called upon to comply with its obligations under the Agreements, but it did not budge. According to him, the situation prevailing on the site as on today, is nothing but existence of a pit, with stagnant water accumulated therein, which serve no purpose than of a mosquito breeding site and in fact, the MCGM had also called upon the developer, to pump out the accumulated water, but even this was taken casually. The photographs are placed on record at Exhibit- T of the petition of the Society, depicting the position on site and it is specifically submitted by Mr.Cama, that the position continues since last four years and though the Commencement Certificate (C.C) was obtained by Meeti, nothing was done and the last C.C was validated upto plinth level, but as on date, even that has lapsed.

10 As per the version of the Society, in its Special General Meeting, Mr.Saurabh Bhuta. the Director of Meeti, informed the members that if the project is to kick start, an amount of Rs.225 crores is necessary. According to Mr.Cama and Mr.Kapadia, there is also a whooping sum of Rs.6,12,62,584/- due and payable towards property taxes. The members of the Society in it’s Special General Body Meeting passed a resolution to terminate the Development Agreement with Meeti, by highlighting the suffering and injury caused to them on account of the violations and defaults committed, as it had failed and neglected to restart and complete the project of redevelopment. The resolution also specifically made a reference to the warrant issued by the Metropolitan Magistrate against one of the Director Mrs. Harsha Bhuta for dishonor of cheque of Rs.65 lakhs to the creditors and hence, it was decided to put an end to the agreement by revoking the Power of Attorney as well as cancelling the resolution giving consent to create charge by the developer over their rights, title and entitlement in the free sale area, approximately admeasuring 34,226 sq.ft and treating the same as null and void. As a subsequent development, Mr.Cama would point out that in the proceedings before the Magistrate, non bailable warrants were issued against the Director of Meeti and order of attachment was also issued. The Directors came to be arrested and remanded to judicial custody and the Magistrate ordered cancellation of the non-bailable warrant on payment of penalty and the compliance.

11 Mr.Cama is joined in his submission by learned senior counsel Mr.Chetan Kapadia representing the society in CARBP(L) 6410/2023. On behalf of the Society, it is his submission that the developer has utterly failed to deliver and despite the Society vacating the existing premises in or around June 2018 and the building having been demolished, till date, the members are out of their ‘homes’ and are facing tremendous hardship, as the developer has even failed to discharge it’s obligation to pay rent/compensation. Though, in or around June 2017, some payments were made to the members, who had vacated their premises, around March 2020, the developer stopped making payment of transit rent/compensation to the shop owner members and from June 2020, no payment was made to the resident members. As per the statement appended to the petition, in form of Annexure ‘H’, the rent receivable to the flat owner in terms of the addendum agreement payable from 1/6/2020 to 28/2/2023 i.e. 33 months is computed as Rs. 8,70,10,920.00 whereas, the rent payable for 36 months to the shop owners in the Society is approximated to Rs. 7,60,50,342/-, and thus, it is contended that the Society has lost faith in the developer who have let the arrears mount, and now a stage has reached where its disbursement appear to be an impossibility. The reason for loss of complete faith in the Developer are the promises made from time to time and in utter disregard to the same, continuing with the defaults. The Developer in its letter dated 11/6/2020 assured to make the payment of rent/compensation starting from 25/7/2020 with a further email addressed on 10/8/2020, admitting that it was unable to honor the 25/7/2020 deadline, but it would sort out all the issues and start making payments from the month of August 2020, but even when this deadline was not met, which caused detail discussions and once again, a promise was made to make the payment of rent/ compensation on or before 30/9/2020. Another commitment came on 16/9/2020, but just to be breached. The cheques given towards rent/compensation having been dishonored, created a trust deficit and it is the submission of Mr.Cama as well as Mr. Kapadia representing the Society and in turn, its members that the developer continued with its default spree and a time came, when despite notices issued by the Society, it did not even bother to respond and failed to abide by it’s obligations and commitment under the development contract. This has given rise to a feeling in the members of the Society that the Developer has abandoned the project and its members.

12 Reference is also made to the order passed by the NCLT, admitting the developer into CIRP for non-payment of its financial debts, though at a subsequent point of time, it is revealed to the Society that in view of the arrangement arrived between the developer and one entity Ajmera Realty, the Company Petition filed by, Edelweiss was withdrawn. Mr.Kapadia would vehemently submit that the respondent today is not financially capable of performing its obligations and the Society was kept in dark about ongoing CIRP proceedings before the NCLT Mumbai under the IBC. In order to raise the liability to pay rent/compensation to the members of the Society, the developer even erected temporary shops at the periphery of the property and the initial permission to use them was obtained by the developer from the MCGM, but even now the permssion has lapsed and there is no renewal. Apart from this, the property taxes due and payable to the MCGM are to the tune of Rs.2,84,09,049/- upto March 2021 and there is a demand as on date of Rs.6,12,62,584/- and this demand has exposed the petitioner’s property to risk of attachment and penal action at the risk of MCGM, for no fault of the Society.

13 The counsel representing the Society categorically state that the substantial and major portion of the work remains woefully incomplete and if at all it has to resume, it definitely would involve investment of substantial funds and the Developer, no matter how much he try, can match the same, if at all the Society decide to give it one chance. In absence of the disclosure of the source of its funding or even the manner in which it shall secure the fund for the project, the Society is not ready, to once again trust such a Developer. The property being clearly abandoned by the developer and leaving it in a condition creating health hazards, had prompted the society to take a decision to terminate the development agreement as well as the Addendum Development Agreement and the reliefs enumerated above are prayed for. The counsel for the Society have also furnished details of the legal proceedings instituted against the developer to justify its decision to terminate the agreement since in the present scenario, despite of any assurances, the Developer is incapable of completing the project and adhere to the timelines for its completion. Mr.Cama would place reliance to the decision delivered in the very case of the respondent Meeti initiated by PNB Workers Co-operative Housing Society Limited, by Justice G.S. Patel on 11/2/2021 and also upon the Division Bench decision in Arbitration Appeal (L) No.4739/2021, upholding the same. The learned counsel would also assert on the well settled legal proposition of law when the developer lacked fund and his projects are similarly stuck, nothing positive can be expected from such a developer, which would justify the action of termination and some steps to be taken for the sake of the members, who are at present not only Homeless but also Hopeless.

14 Countering the aforesaid submission, Mr. Karl Tamboly representing Meeti, a Developer appointed by the Society in respect of ‘property’ would assertively submit that it is absolutely incorrect for the Society to put the entire blame on the developer for the delay, and he would submit that under the Development Agreement dated 27/11/2006, the redevelopment work was agreed to be carried out in two phases, the rehab building was to be constructed without shifting the residential members from their own old premises and thereafter upon rehabilitating the residential members, the old building was to be demolished and a new commercial building was to be constructed, wherein the garage owners were entitled for accommodation and even though the garages occupied by them were constructed without consuming the FSI. It is the case of the developer that pursuant to the Development Agreement, active steps were taken by it and this involved investment of substantial sums and execution of PAAA with more than half of the members of the society and even IOD was obtained on 4/8/2009. According to Mr.Tamboly in the year 2012, DCR 1991 was amended and compensatory fungible FSI and fungible FSI was made permissible and the property was eligible for being redeveloped under DC (Regulations) 33 (24) and 35(4) and in the wake of the change in policy, parties negotiated the terms of redevelopment and a fresh IOD was obtained on 30.9.2015. The addendum was executed on 18/3/2017 reflecting the final renegotiated terms and the compensation payable to the members of the Society was enhanced and the members including the garage owners agreed to hand over vacant possession of the respective premises for demolition.

15 The case of the developer is very specific, that it obtained fresh IOD on 30/9/2015 and under its covering letter dtd 21/4/2017 forwarded cheques towards compensation/rent payable and on 21/4/2017, Society handed over the possession of the residential building i.e. old building standing on the plot but only 10-15 shops out of 33 were handed over and the developer started paying rent to the members who vacated their units. The difficulty projected on behalf of Meeti, is highlighted by Mr.Tamboly by submitting that the IOD obtained contemplated the entire building to be vacated and it is absence, the CC could not be granted and since the building was not vacated in its entirety, the CC could not have been obtained. This compelled the Developer to obtain permission to construct periphery shops for expeditious implementation of the Scheme and to ensure that their business is not hampered and the Society was informed about the permission. This resulted into a commencement certificate issued on 14/6/2018 by the MCGM for carrying construction upto top of the basement, the work of excavation, shore piling, and cast foundation, by restricting it to the portion of the plot, which was made available, as the Society had failed to hand over complete vacant site.

16 According to Mr.Tamboly, the work was delayed on account of the obstructing shop and garage occupants and reference is made to the complaint filed by the Society to Khar police station as well as its intimation to the MCGM about the development work suffering due to obstructive acts of certain members. The Developer claim that till date, an amount of Rs.15 crores is paid towards rent and Rs. 6.[5] crores are expended towards corpus obligations, for the residential members till March 2020 and the shop occupiers till June 2020 and this was done despite, the Society having failed in its obligation of handing over possession of the entire property for redevelopment. This problem is alleged to be further aggravated on account of the covid pandemic as the lock down imposed and since the default occurred at its end in repayment of the obligations to Edelweiss, it filed proceedings before the NCLT and a moratorium was imposed, when the petition was admitted on 5/3/2021 which continued till 8/8/2022 when the matter was settled and the moratorium order was vacated.

17 Mr.Tamboly would make reference to various meetings held between the developer and the Society and reference is also made to introduction of a reputed Brand Name, which would assist it in completion of a project by stepping in as a ‘development manager’ and it is the claim of the developer that this entity had unimpeachable credentials and financial resources and experience of construction. The developer blame the Society for acting in collusion with Ajmera Realty and Infra India Limited (ARIIL) and the circumstance is explained by submitting that since the developer was undergoing CIRP initiated by Edelweiss, an arrangement was worked with ARIIL who agreed to invest in the project and this resulted in execution of MOU between the Society and ARIIL, but since it refused to honor the arrangement agreed with the developer, it led to disputes between the two and the Society is accused of over throwing the developer in an deliberate attempt and frustrate its rights when ARIIL and the Society engaged in discussions, negotiations to its exclusion and the apprehension expressed is, after terminating the agreement with Meeti, the Society would collude with ARIIL and continue with its project of redevelopment. The specific accusation is levelled against the Society by alleging that despite Meeti introducing a reputed real estate entity, as a development manager to complete the project and furnishing proposals for settling the rents due and accruing the Society intend to remove it as its Developer and instead appoint ARIIL to negotiate a better offer at its expense.

18 Mr.Tamboly would emphasize upon the investment made by it, which according to him, run into more than 75 crores and it claim to be in possession of the entire property excluding the portions that have not been handed over. It is also a claim of Meeti that considerable work has been carried out on the property and it is entitled to be in physical and legal possession thereof. Consideration of rival submissions 19 “Home is a place you grow up wanting to leave and grow old wanting to get back to” The above quote depict the mindset of all the residential members of the Society as well as the owners of 36 shops, who expected a day to come when they would step their foot into their new house/shop and this they dreamed of, since the Development Agreement was entered with Meeti, the developer chose to give wings to their dream. It is as early as on 5/3/2006, in the Special General Meeting of the Society, the developer was chosen and on 9/8/2006, a Power of Attorney was executed in its favour. A development Agreement was entered in 27/12/2006 which was registered on 24/4/2007. Despite of this long timeline, 69 Members of the Society, which comprise of 36 residential unit holders and 33 shop holders, await their rehabilitation in the newly constructed building.

20 Despite the Development Agreement executed in the year 2006, since the Shop owners did not vacate the garages and in turn, caused obstruction in the redevelopment work, on several occasions, meetings were arranged and it is after a period of almost six years, with great persuasion the garage owners expressed their consent to vacate the premises. Once again, a Power of Attorney was executed in favour of Meeti and in the year 2016, it obtained fresh IOD. In order to match with the new DCR, Addendum Agreement is entered on 18/3/2017 recording the revised terms and conditions of the redevelopment. The rework arrangement was coupled with promise of payment of rent and compensation to the members along with the shifting charges and Meeti agreed to obtain sanction plan and IOD within 12 months of the Addendum Agreement. Despite the long time lapse when the Development Agreement was entered in the year 2006, it was only on 5/6/2017, the residential flat owners vacated their premises and in the month of June 2018, the building is demolished.

21 Upon the members of the Society having shifted to transit accommodation/alternative premises, the developer was duty bound to make payment of their rents as they had shifted to alternative premises and could not have been told to bear the expenses of their alternative accommodation. It is from this point of time, they faced inconvenience, as Meeti started defaulting and from the month of March 2020, it stopped paying the transit rent and thereafter, the Society literally chased the developer persuading it to make payment of rent as well as on the other issues. The communications placed on record at Exhibit-J reflect the desperation of the members on account of non-payment of rent and the corpus with the lingering status of the project for last three years, leaving the members of Society gasping at straws and the Society complained about the silence of the developer, giving rise to an inference that it do not possess the necessary funds to proceed with the project or to pay the rent and corpus. Meeti responded to the said letter and promised to make payment of rent from 25/7/2020 and a difficulty was expressed by the Director on behalf of the Meeti group, about a personal loss and an assurance to make the monthly rentals payable and this explanation was accepted as a ray of hope by the Society in the moment of despair. Meeti assured, though it proved to be a hollow promise, that it would recommence the construction in full swing. It really misled the Society by promising that it is pulling things together and finalizing all the arrangements, with the following assertion:- “To summarize, we are just about getting the things together and financing all the arrangements mentioned herein above and shall be submitting a more detail plan of action, revised completion time-line and any other missing information by 2nd / 3rd week of July 2020. We hope members see this letter in a positive light. We are nearing the end of the uncertainties and sloughing ahead. This letter comes with as much as candidness as possible and not as a legal remedy or recourse. After so many years of togetherness, we do not expect to go down that route with each other”

22 Unfortunately, the above promise means nothing. After two months, when nothing was moved and the deadline of 25th July was not met, followed another regret letter from Meeti to the Society, expressing sincere regret and apologies for the inconvenience with a promising statement that the hope is still alive and kicking and indicating that all issues shall be sorted out including the rental payments. The assurance, however, was with a caveat, as Meeti informed the Society, “Depending on the arrangements of finances, we may stagger the pay outs for a few days. Kindly bear with us.”

23 With no progress, once again another round of discussion ensued and the issues of rent, corpus, construction activities were discussed and on one more occasion, the Members of the Society were taken for a ride. Pursuant to the meeting held on 12.9/2020, on 16/9/2020, Meeti laid out time line for payment of rent to the residence owners and the shop owners separately. The construction work on the site was assured to commence between 15 and 30th October 2020 and at the end of the communication, the members were thanked for their support and positive consideration. The Members of the Society, by this time, realized the hollowness of the promises and some shop owners addressed notices to Meeti and its Directors through their Advocate as it was pointed out that the cheques which were given towards monthly rent/compensation were dishonored.

24 Expressing the anguish, the Society once again addressed a communication to Meeti and Mr.Saurabh Bhuta, its Director and expressed it’s regret in addressing the communication inviting its attention to various breaches and defaults under the agreement. Meeti was clearly informed that except giving false assurances and promises in the SGM of the Society, nothing had moved ahead and as a result of non-payment of monthly compensation, the members were in a precarious position, unable to bear the expenses of the transit alternate premises and on this count, they were likely to lose shelter on their head. The communication therefore, called upon Meeti:-

(i) to make payment of arrears of monthly compensation/rent within a period of 7 days, (ii) To deposit/pay TDS and regularise the defaults and furnish the challans in respect of the unit holders within 7 days. Meeti was also asked to commence construction activity within 7 days or else it was threatened to face civil as well criminal proceedings. Despite the clear demand being set out, there was no change in the approach of Meeti, which resulted in a notice addressed by the Society on one more occasion, inviting its attention to the continued defaults under the Development/ Addendum Agreement on the following counts: (a) delay in constructed activity beyond period of contract (b) failure in payment of arrears of rent/monthly compensation

(c) failure to execute PAAA.

(d) failure to regularize TDS.

25 Despite one more opportunity being afforded calling upon Meeti to commence construction of the property within 10 days and to pay arrears of rent and cure the defaults indicated in the notice within a period of 10 days, this time, a clear adversarial action was contemplated on failure to take note of the lapses and cure the same. The project, still suffered a logjam did not progress except that the mosquitoes continued to breed in the excavated pits, which constrained the Ward Officer of Municipal Corporation to warn the Director of Meeti to take appropriate steps as the breeding ground of mosquitoes was detrimental to public health. The photographs of the site placed on record speak of themselves. The site is in shambles and the pictures reflect no hope.

26 The Society ultimately called a Special General Body Meeting apprise its members of the prevailing scenario, on 23/2/2023 where it resolved as under:- “RESOLVED THAT the Development Agreement dated 27th December 2006 and Addendum Development Agreement dated 18th March 2017 between the Society and Meeti Developers Pvt. Ltd in respect of redevelopment of Society’s property situate at Plot No.417-A, Corner of 15th and 33rd Road, T.P.S III Bandra (West), Mumbai 400050, be and is hereby terminated, revoked and cancelled.

RESOLVED FURTHER THAT notwithstanding termination of the Development Agreement and the Addendum Agreement, the Society and its Members do hereby reserve and retain their respective rights to claim diverse amounts due and payable by the said Developers – Meeti Developers Pvt. Ltd, to the Society and its respective Members” It was also revoked the POA given to Meeti and also cancelled resolution offering consent to create charge on the free saleable area. On 24/2/2023, Meeti was ultimately informed about the termination. 27 ‘Meeti’ is the same developer which suffered an order from Justice Patel, Single Judge of this Court in respect of another Society i.e. Punjab National Worker’s Co-operative Bank Limited, where it was appointed as a developer to redevelop a building belonging, to the Society of ground plus one storey comprising of 16 flats at Borivali (West) on Gorai Road. The Development Agreement was entered on 15/12/2004 but since there was failure to make payment of rent to the members of the Society, Section 9 petition was filed to secure the arrears of rent to the tune of Rs.64,37,200/- for 16 flats members and a direction was sought to hand over the quiet and peaceful physical possession of the property to the Society or in the alternative, seeking appointment of Court Receiver, High Court with all powers under Order 40 Rule 1 of CPC to take physical possession of the suit property site from Meeti and hand it over to the Society. On a similar scenarios arising, Meeti also filed a cross petition u/s.[9] restraining the Society, from terminating the development rights and seeking injunction order, in displacing it from the project site. When I persued the order passed by the learned Single Judge (Justice G.S. Patel) on 11/2/2021, I can find stark similarity in the situation, with the members of the Society awaiting their dream homes and Meeti not in a position to offer any solace, though the flat owners had vacated their units in 2008 and were out of possession ever since then and though the shop keepers never vacated. It is in this background the pertinent observations made by Justice Patel are relevant, as he has eloquently offered flesh and blood to his reasoning, in the following words:- “21 This is sadly the stark reality of redevelopment project in this city. Society members are entitled to better their living conditions. The property is theirs. They are the owners of it. It may be that in the course of redevelopment they are required to confer certain rights on a developer. After all, they are not able to afford the costs of reconstruction themselves. Allowing a developer the right to sell free sale units is compensation for the developers putting up the rehabilitation units to reaccommodate members. This does not confer by itself in every case rights in the land in favour of a developer. There are equitable considerations to be kept in mind. A developer is in search of only thing: the profits that it will make from the project. The interest of society members are entirely different. What they are looking at is better homes, ones long promised to them, but ones that remained an unfulfilled dream forever receding in time.

22. The contest is therefore between what is a essentially human displacement problem and the purely profit-oriented objective. If there is to be an equitable balance, then there can be no doubt which side a Court of equity will lean. The developers may have a claim to be made in damages. It is free to pursue that claim. That cannot give it rights in specie over the property itself nor can it subject the full ownership rights of the society to its demands. Not only is the developer entirely profit-oriented, and that necessarily matters that a developer can be compensated in money terms, immediately putting them out of the reach of any interim relief, but they have also cannot said to have acquired any direct interest in the land itself. Indeed, the only situation in which a developer may be able to get some relief is if it can demonstrate that it has played it ‘by the book’, as it were, and there is no default on its part.\

23 An attempt, however, on the other hand to choke up a development to leverage changes in development policy and available FSI to maximise profit is a strategy that comes at a real cost to society members, and is a stratagem that no Court of equity can, will or should ever countenance for a minute.

24 The strategy is plain and, like the Emperor’s clothes, it bares all. The idea is to keep the society and its members hanging by a thread, stuck in an endless cycle of delayed payments and part payments, all the while ostensibly keeping the contract ‘alive’, claiming rights in it, and waiting to squeeze every last drop of available buildability out of the project only to maximize profits.”

28 With the above strongly worded order, the Society’s petition was allowed in terms of prayer clauses (c) to (j) and as regards the authorities involved i.e. MHADA and MCGM, direction was issued that by virtue of the order passed by the Court, they should not insist on NOC from Meeti Developers, its Architects, Engineer, Surveyor or Consultant as a condition precedent, or a pre-requisite for processing any application for development, permission or NOC that the Society may make itself or through any other developer/s that it chooses to appoint. Meeti was directed to off-site in all respects with immediate effect.

29 The order passed was carried in Appeal (CARBP No.4739/2021 and Division Bench headed by Justice Kathawala (as his Lordship was then) endorsed the view of the learned Single Judge, with the pertinent observation to the following effect:- “13 It is trite that a party must be held to the terms of its bargain. Having failed to fulfill its part of the bargain, the Developer cannot now seek to restrain the Society from enforcing the provisions of the Addendum which entitle it to terminate the Agreements and proceed with the redevelopment through a different builder.

14 Even otherwise, on the factual matrix before us, we cannot allow the developer continuing to hold the project to ransom despite having miserably failed to comply with the timelines which were solemnly agreed to by the Developer. It is also important to note that the Society terminated the Development Agreement on 12th November 2020 and for over two months, the Developer made no attempt to approach the Court or seek a stay of the termination. In the meantime, the Society has taken steps to appoint a new developer and has obtained the IOD through its new architect. This delay also militates against grant of any interim relief to the Developer pending the arbitration”

30 Meeti has suffered the above order, in case of its one project and it has to answer the same accusations once again at the instance of New Kamal Kunj Co-operative Housing Society Limited, who has regretfully chosen Meeti as its developer. Time and again, this Court has propounded upon the situations similar to the one which is faced by the members of New Kamal Kunj Co-operative Housing Society. It has been well settled that a party must be held to the terms of its bargain and having failed to fulfilled its part, the developer cannot seek to restrain the Society from enforcing the provisions of the development Agreement/Addendum which entitled it to terminate the agreements and proceed with the redevelopment through a public developer.

31 A somehow similar view is expressed in Rajawadi Arunodaya Co-operative Housing Society Ltd vs. Value Projects Pvt. Ltd, 2021 SCC Online Bom 9572, SSD Estatics Pvt. Ltd Vs. Goregaon Pearl Co-op Housing Society Ltd, (ARBPL 1027/2018), New Aarti Co-operative Housing Society Ltd Vs. Kabra Estate & Investment Consultants 2015 SCC Online Bom 5929 and Solaris Developers Pvt. Ltd Vs. Eversmile Co-operative Housing Society Ltd, (ARBPL No. 593/2019), and I need not once again replicate on ‘balance of convenience test’, as when applied, there appear to be no single factor favouring the Developer except, the argument that it has pumped money into the project. No doubt, it may have done so as a business activity, but as a business, it was also expected to deliver. The developer by weighing the potential profit and interest, entered into the Development Agreement with the Society and assured returns, in form of a New Homes/Shop for business venture for the members of the Society and when it entered a deal, it definitely must have weighed the pros and cons as the development Agreement made the developer entitle for the free sale area approximately admeasuring 74,226 sq.ft to be constructed in the new building as a saleable component and to earn profit out of the same. The developer continued to buy time despite, the Development Agreement entered in 2006 and once the building was demolished in June 2018, it was expected to take prompt steps in paying the rent/ compensation and corpus to the members, who had shifted themselves to give way to the redevelopment project, but the developer continued to default and put the members of the Society in a fix, which left them with no option than to terminate the agreement with the Developer. Meeti in the past, has also failed members of another Society and with the identical methodology, it has again failed the members of New Kamal Kunj Co-op Housing Society. The Society is the owner of the property and the unit holders, being in possession of their residential/commercial units in the building, are now staring at the sky with hope, that they get roof of their own at the earliest, but this again appear to be a distance possibility, as Mr. Cama and Mr.Kapadia by computing the liabilities which Meeti will have to bear, are of the firm view that it will not be in a position to bear the financial burden of paying the arrears of rent as well as the corpus which has now reached to a whopping sum. As on date, the Society is cast with liability of property tax amounting to Rs.632,11,038/- (including penalty as applicable) and it has already received a notice on 16/6/2023 for payment of the same or to face an appropriate action. As per Mr. Cama, approximately, an amount of Rs.18 crore of rental arrears is payable and he would refer to the offer by Mr.Tamboly on behalf of the developer to clear the arrears of Rs.5.[5] crores, which is merely an eyewash.

32 No amount of assurance offered by Mr.Tamboly on behalf of Meeti could convince Mr.Cama and Mr.Kapadia in affording one more chance to the Developer. They are perfectly justified in insisting upon an important aspect of the matter, being that the unit holders are out of their premises since 2018 and have not received rent since March/May 2020 and the members have been left to fend for themselves with no hope of the redevelopment process being completed expeditiously. The respective counsel for the Society have clear instructions to make a statement that Meeti is not in a position to clear the rental arrears or even pay the corpus and the property tax and further raise the construction which would require pumping of additional money of about 225 crore when it is out of pocket, as on date. Across the Board, and in one voice, the Members of the Society are clear, that they do not wish Meeti to continue in the project and they have passed a resolution on 23/2/2023 by a majority of 57 members out of 69 deciding to put an end to the arrangement with Meeti.

33 Though Mr.Tamboly attempted to put up a brave stand on behalf of Meeti, in submitting that it had complied with all it’s obligations and obtained necessary development/premises and pay transit rent to all the members, the argument do not hold any substratum and fail to impress me. Even an attempt on part of Meeti to introduce the Society to a reputed brand on the pretext that it would assist in completion of the project by coming, in as a Development Manager, is also not an offer acceptable to the Society. There is no denial that at one point of time, this entity was indulged into by the Society, but today, the decision of the members is, they may take their own decision whether to independently proceed with the project of redevelopment or seek assistance of the entity, but this they want without any intervention of Meeti, the developer, whom they do not trust any more. Though Mr.Tamboly would assertively submit that till date, his client has expended huge sum amounting to more than Rs.75 crore, merely on this ground, equity will not tilt in its favour. He has insisted on taking on record the approximate timelines for completion of the project commencing from August 2013 and procurement of Occupation Certificate (O.C) and handing over of the accomplished project to the Society by November 2026, this proposed timeline is outrightly rejected by the counsel representing the Society. Apart from this, the proposed resolution plan submitted by Mr.Tamboly about being regular in payment of rent commencing from August 2023 and clearing of past rent of 12 months (Rs.5.[5] crore approximately) with the balance outstanding (Rs.13 crore) approximately to be paid on possession with O.C to the members, also do not offer any respite, when once the Society had tested the flavour of false and hollow promises. It is too late in day to say that if there is a default, Meeti will take such consequences as the Court may impose. In any case, I do not think that I can force a developer upon the Society who is unwilling to move ahead along with it and rather intend to charter its own course of action, for redeveloping its own property.

34 In the Arbitration Petition filed by Meeti Developers being CARBP 6410/2023, IA(L) No. 20464/2023 filed by Edelweiss Asset Reconstruction Co. Ltd, which seek intervention and I have heard Mr.Ankit Lohia for Edelweiss. It is the claim of the intervenor – applicant that it is a Company registered as Securitization Company and acting in its capacity as trustee of the EARC Trust SC – 381, it has been assigned the debt of the petitioner along with underlying securities and all the right, title and interest therein from ECL Finance Ltd, the original lender by a registered agreement dated 21/5/2019. According to Mr.Lohia, the petitioner Meeti had availed a facility of Rs.55 crores towards project development expenses on 14/10/2016. The petitioner agreed to issue Non Convertible Debenture (NCB) aggregating to Rs.55 crores payable at coupon rate of 17% P.A and accordingly, it had executed Debenture Trust Deed. The NCB issued by the petitioner were secured by first mortgage and charge over the project and free sale building and area accruing to it under Development Agreement, executed with Kamal Co-operative Housing Society together with the structures constructed/to be constructed thereon, present and in future. Since Meeti committed default in respect of its payment obligations under the Debenture Trust Deed (DTD), the account was classified as NPA in the books of the original lender in terms of guidelines and the original lender assigned its right, title, interest and benefits under the facility/NCDs in favour of Edelweiss and hence, Mr.Lohiya seek intervention in the proceedings filed by Meeti claiming interim measures u/s.[9] of the Arbitration and Conciliation Act, 1996.

35 Since I am not inclined to grant any relief in favour of Meeti, leaving the rights and contentions of Edelweiss open, IA

(L) No. 20464/2022 is disposed off by leaving option to prosecute its remedies against Meeti.

ARBPL No. 12837/2023 filed by New Kamal Kunj Co-operative Housing Society Ltd is made absolute in terms of prayer clauses (a), (e), (f), (h) (i), (j) and (k). As a relief in favour of the Society, it is directed that MCGM shall not insist on NOC from the respondent developer, their subordinates, consultants, or Architects as a pre-condition, pre-requisite for processing any application for development, permission or NOC which the petitioner Society may seek with regard to the development process and construction on the society property, either on their own or through any other independent contractor or developers. Arbitration Petition (L) No. 7273/2023 being not connected to the issue between Society and Meeti, it is directed to be segregated and listed accordingly. ( SMT.

BHARATI DANGRE, J.)