Case Note & Summary
The suit was filed by a partnership firm of developers, Maya Developers, against the Azad Co-operative Housing Society Ltd. and its members, seeking specific performance of a development agreement for re-development of a property known as Azad Bhavan. The society, consisting of 36 members, had initiated the re-development process in 2009 and, after a general body meeting on 26th February 2012 where 31 out of 32 members voted in favour, entered into a development agreement with the plaintiff. Plans were approved and flats allocated. About two and a half years later, some members, who had previously voted in favour, raised objections and moved the Cooperative Court and the City Civil Court, but failed to obtain relief. The society terminated the agreement and engaged another developer, alleging delay and breach by the plaintiff. The plaintiff then filed the suit and took out a notice of motion seeking interim injunction to restrain the society from creating third-party rights or acting on the termination. Defendant No.10 (one of the objecting members) filed a separate notice of motion raising a jurisdictional plea under Section 9A of the Code of Civil Procedure, 1908, contending that the dispute fell within the exclusive jurisdiction of the Co-operative Court under Section 91 of the Maharashtra Co-operative Societies Act, 1960, and also sought other reliefs. The court first considered the preliminary issue of jurisdiction and held that Section 91 did not bar the suit because the plaintiff, as a developer, was not a member or a person claiming through a member under clause (b), and the transaction was not one subject to restrictions under Sections 43, 44, or 45 as required under clause (c). The mere fact that the dispute ‘touches the business of the society’ was insufficient to oust the jurisdiction of the civil court. The court then addressed the plaintiff’s interim application and applied the principles of prima facie case, balance of convenience, and irreparable injury. It found that the development agreement had been terminated, an alternative developer had been appointed and construction likely advanced, the plaintiff had delayed in seeking relief, and an adequate remedy in damages existed. Consequently, the balance of convenience favoured allowing the re-development to proceed, and no irreparable injury would be caused to the plaintiff. The court dismissed the plaintiff’s notice of motion and vacated the ad-interim order granted earlier. The remaining prayers in Defendant No.10’s notice of motion were disposed of as they did not survive in view of the dismissal of the plaintiff’s motion.
Headnote
A) Co-operative Law – Dispute Resolution – Jurisdiction of Co-operative Court – Section 91, Maharashtra Co-operative Societies Act, 1960 – Dispute between a developer and a co-operative housing society arising out of a development agreement for re-development of the society’s property does not fall within the ambit of Section 91(1) as the developer is not a member or a person claiming through a member under clause (b), and the transaction is not one in respect of which restrictions or regulations under Sections 43, 44 or 45 have been imposed, made or prescribed under clause (c); mere existence of a dispute “touching the business of the society” does not by itself oust the jurisdiction of the civil court; Held, suit is not barred. (Paras 8-15) B) Civil Procedure – Preliminary Jurisdictional Issue – Section 9A, Code of Civil Procedure, 1908 – The plea that the suit is barred under Section 91 MCSA is a jurisdictional issue that must be decided first under Section 9A CPC; the Court finds that the dispute is not covered and thus the suit is maintainable. (Paras 4-5, 8) C) Injunction – Interim Relief in Specific Performance of Development Agreement – Re-development Project – Principles of Balance of Convenience and Irreparable Injury – Development agreement terminated, alternative developer engaged, project in advanced stage, plaintiff delayed in seeking relief, remedy in damages available; Held, no interim injunction granted; ad-interim order vacated. (Paras 16-30)
Issue of Consideration
Whether the suit filed by a developer against a co-operative society for specific performance of a development agreement is barred under Section 91 of the Maharashtra Co-operative Societies Act, 1960? Whether the developer is entitled to interim injunction restraining the society from proceeding with re-development through another developer?
Final Decision
The preliminary issue of jurisdiction is answered in the negative: the suit is not barred under Section 91 of the MCS Act and the High Court has jurisdiction. The plaintiff’s Notice of Motion for interim relief is dismissed. The ad-interim order dated 2nd April 2015 stands vacated. The 10th Defendant’s Notice of Motion, except the jurisdictional plea, is disposed of as it does not survive in view of the dismissal of the plaintiffs’ motion.
Law Points
- Interpretation of Section 91 Maharashtra Co-operative Societies Act
- 1960 defines exclusive jurisdiction of Co-operative Court
- suits by non-members against society not barred if transaction not under statutory restrictions
- interim injunction in development agreement disputes requires strong prima facie case and balance of convenience
- delay defeats interim relief
