Case Note & Summary
The appeal arose from a judgment of a learned Single Judge appointing the Court Receiver as Receiver of two flats occupied by the appellants and directing them to hand over possession to the developer, subject to payment of amounts payable under the Development Agreement. The appellants were members of a cooperative housing society that had entered into a Development Agreement with a developer for redevelopment of a dilapidated building. The appellants had agreed to vacate their flats but later disputed the quantum of compensation. The society and developer filed an arbitration petition under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim measures. The Single Judge appointed the Court Receiver and directed the appellants to hand over possession. The Division Bench upheld the order, finding that the balance of convenience favoured appointment of Receiver to facilitate redevelopment, while protecting the appellants' right to receive compensation. The Court noted that the building was in a dilapidated condition and redevelopment was in the interest of all members. The appeal was dismissed, and the appellants were directed to hand over possession within four weeks, with the developer to pay the amounts through the Court Receiver.
Headnote
A) Arbitration - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Appointment of Court Receiver - The Court considered whether appointment of Receiver was justified in a dispute arising from redevelopment of a dilapidated building where the society and developer sought possession of flats from dissenting members. The Court held that the balance of convenience was in favour of appointing Receiver to ensure redevelopment proceeds, subject to protection of appellants' rights to receive compensation. (Paras 1-10)
B) Property Law - Possession - Interim Orders - The Court examined the principles governing grant of interim relief, including prima facie case, balance of convenience, and irreparable loss. It found that the society and developer had a strong prima facie case as the appellants had agreed to redevelopment and were only disputing the quantum of compensation. The Court directed handover of possession to the developer upon payment of admitted amounts through the Court Receiver. (Paras 5-9)
Issue of Consideration
Whether the learned Single Judge was justified in appointing the Court Receiver as Receiver of the two flats in occupation of the appellants and directing them to hand over possession to the developer, subject to payment of amounts payable under the Development Agreement.
Final Decision
The appeal is dismissed. The order of the learned Single Judge appointing the Court Receiver and directing the appellants to hand over possession of the flats to the developer is upheld. The appellants are directed to hand over possession within four weeks, subject to the developer paying the amounts payable under the Development Agreement through the Court Receiver.
Law Points
- Redevelopment of dilapidated buildings
- Appointment of Court Receiver
- Balance of convenience
- Irreparable loss
- Prima facie case
- Section 9 of the Arbitration and Conciliation Act
- 1996
Case Details
2015 LawText (BOM) (07) 217
Appeal (L) No. 480 of 2015 in Arbitration Petition No. 852 of 2014 with Writ Petition No. 697 of 2015
Mohit S. Shah, C.J., A.K. Menon, J.
Ms. Anita Castellino i/b. Mr. D.S. Patil for the appellants, Ms. Harsha Y. Shah, Asstt. Govt. Pleader for respondent nos.1 to 3, Mr. Nitesh Bhutekar for respondent no.4, Mr. M.M. Vashi i/b. Mr. M.P. Vashi & Associates for respondent no.5
Ravee B. Botalje and Avinash Babar
Shree Krishan Sai Development Corporation and The Young Mens' Progressive Cooperative Housing Society Ltd.
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Nature of Litigation
Appeal against order appointing Court Receiver and directing handover of possession of flats in a redevelopment dispute.
Remedy Sought
The appellants sought to set aside the order of the learned Single Judge appointing Court Receiver and directing handover of possession.
Filing Reason
The appellants were occupants of flats in a building being redeveloped; they disputed the quantum of compensation and refused to vacate, leading to the society and developer seeking interim measures under Section 9 of the Arbitration Act.
Previous Decisions
The learned Single Judge appointed the Court Receiver as Receiver of the two flats and directed the appellants to hand over possession to the developer, subject to payment of amounts payable under the Development Agreement through the Court Receiver.
Issues
Whether the appointment of Court Receiver and direction to hand over possession was justified in the facts of the case.
Submissions/Arguments
The appellants argued that they were entitled to higher compensation and that the order was passed without proper consideration of their rights.
The respondents (society and developer) argued that the building was dilapidated and redevelopment was necessary; the appellants had agreed to vacate and were only disputing quantum, which could be resolved later.
Ratio Decidendi
In redevelopment disputes, where the society and an overwhelming majority of members have agreed to redevelopment and the dissenting members have agreed to vacate but dispute only the quantum of compensation, the balance of convenience lies in favour of appointing a Court Receiver to facilitate redevelopment, while protecting the dissenting members' right to receive compensation through the Receiver.
Judgment Excerpts
The high degree of saline corrosion in Mumbai shortens the life of buildings. Thousands of buildings require either entire reconstruction or extensive repairs which the occupants belonging to low income group or middle class families cannot afford.
But the facts of this case, as several other cases in this Court, explain why many of the old or dilapidated buildings in the city of Mumbai continue to be in the same condition.
Procedural History
The society and developer filed Arbitration Petition No. 852 of 2014 under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim measures. The learned Single Judge passed an order on 8 May 2015 appointing the Court Receiver and directing the appellants to hand over possession. The appellants filed Appeal (L) No. 480 of 2015 against that order, along with Writ Petition No. 697 of 2015. The Division Bench heard the matter and delivered judgment on 10 July 2015.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 9
