16 April 2025 Arbitration Law >> Business & Commercial Law   |   Property Law >> Personal Law  

In a move to break the deadlock hindering the redevelopment of Spectrum Co-operative Housing Society in Khar West, Mumbai, the High Court has issued a decisive order under Section 9 of the Arbitration and Conciliation Act, 1996. The order addresses the objections raised by two dissenting members and the internal disputes plaguing their families, paving the way for the project to move forward.

The redevelopment project, based on a Development Agreement dated July 31, 2024, between Elite Housing LLP (Elite) and Spectrum, has garnered the consent of 18 out of 20 society members. However, the refusal of two members, Chandra Bhagwansingh Lulla (holder of Flat No. 6) and Ritesh Haldar (co-holder of Flat No. 12), to hand over vacant possession had stalled the entire process.

Lulla, along with his siblings (Respondents No. 3 to 6 involved in an inheritance dispute), raised concerns about the terms of the Development Agreement, including the security for Elite's performance, development potential sharing, terrace treatment, and the absence of force majeure clauses. The court, however, noted that these objections were not shared by the majority of Spectrum's members and were matters best addressed before relevant regulatory and quasi-judicial authorities governing co-operative housing societies. Lulla also insisted on the execution of Permanent Alternate Accommodation Agreements (PAAAs), receipt of a Revised Intimation of Disapproval (Revised IOD), and a subsequent notice to vacate before relinquishing possession.

Haldar, while willing to hand over possession through his brother (Respondent No. 8), faced complications due to his sister-in-law, Leena Rohitesh Haldar (Respondent No. 9), who currently occupies Flat No. 12 with her children and demanded transit compensation be paid to her. Haldar claimed to have purchased the flat himself, adding his deceased mother's name for convenience, and stated that he had revoked the gratuitous license granted to his brother and Leena, with an eviction suit pending. His brother (Leena's husband) claimed a one-third share in the flat and sought the entire redevelopment benefits. Leena, on the other hand, presented her children's passports showing Flat No. 12 as their residential address, indicating her occupancy.

Faced with this impasse, the court, after reviewing the records and hearing the arguments, issued a comprehensive order aimed at balancing the competing interests and facilitating the redevelopment without prejudice to the ongoing inter-se disputes within the Lulla and Haldar families.

Key Directives of the Court Order:

• Court Receiver to Execute Agreements: Elite is permitted to approach the Court Receiver to execute the tripartite agreements for Flat No. 6 and Flat No. 12, ensuring the terms mirror those offered to other members, with adjustments only for flat identification, area, and related features. This execution will bind the respective families.
• Notice to Vacate Post Revised IOD: Upon obtaining the Revised IOD, Elite must issue a four-week notice to all Spectrum members, including the dissenting ones, with a copy to the Court Receiver, specifying the deadline for vacating their flats.
• Deposit of Dues: Concurrently with providing the Revised IOD to the Court Receiver, Elite must deposit all amounts due for Flat No. 6 and Flat No. 12 in the court registry, along with a detailed calculation.
• Forceful Possession if Necessary: Should the two flats not be vacated within the stipulated four-week period, the Court Receiver is authorized to take physical possession, if needed with police assistance, and hand it over to Elite for redevelopment. The local police are directed to provide necessary support.
• Release of Funds to Occupants: The hardship compensation, transit accommodation rent, brokerage, and displacement compensation for Flat No. 6 will be released by the Court Receiver to Lulla upon vacant possession. Similarly, the corresponding amounts for Flat No. 12 will be released to Leena after she hands over possession. This direction is solely for cash flow management to facilitate alternative accommodation and does not determine the legal entitlements within the respective families.
• Possession of Redeveloped Flats: Upon completion, the redeveloped Flat No. 1101 and Flat No. 801 will be handed over by Elite to Lulla and Leena respectively, subject to any future orders from other legal forums concerning the inter-se family disputes.
• Liberty to Seek Inter-se Adjustments: The court granted liberty to the members of the Lulla and Haldar families to approach the forums where their inter-family litigations are ongoing to seek adjustments in light of this order, ensuring the redevelopment proceeds without being hampered by these internal disputes.

With these directions, the court finally disposed of the petition, granting liberty to apply in case of non-compliance. The order emphasizes that Elite and Spectrum can proceed with the redevelopment insulated from the internal disputes of the dissenting members' families. All actions mandated by the order will be effective upon the uploading of the order on the court's website.

Section 9, Arbitration and Conciliation Act - 1996  

Arbitration and Conciliation Act, 1996