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Bombay High Court
Lokhandwala Infrastructure Pvt. … vs Dhobighat Compound Rahiwasi Seva … on 30 October, 2014
Bench: S.C. Gupte
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                                      IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                                                                                             
                                            ORDINARY ORIGINAL CIVIL JURISDICTION




                                                                                                         
                                            NOTICE OF MOTION NO. 1516 OF 2011
                                                            IN
                                                  SUIT NO. 1108 OF 2011

               Lokhandwala Infrastructure Pvt.Ltd.                                                                        ...Applicant / Plaintiff




                                                                                                        
                    vs.
               Dhobhighat Compound Rahiwasi Seva Sangh & Ors.                                                             ...Defendants


               Dr.Veerendra Tulzapurkar, Senior Advocate with Mr.Chirag Balsara, Mr.Farid




                                                                                 
               Karachiwala, Mr.Sneh Mehta & R. Nichani i/b. M/s. Wadia Ghandy & Co. for
               Plaintiff in Suit 1108/2011.        
               Mr.Pravin Samdani, Senior Advocate with Mr.Chirag Balsara, Farid Karachiwala,
               Mr.Sneh Mehta, R. Nichani and Mr.Amit Rao i/b. M/s.Wadia Ghandy & Co. for
               Plaintiff in Suit No.1163/2011.
                                                  
               Mr.S.U. Kamdar, Senior Advocate with Mr.Zubin Behram-Kamdin for Defendant
               No.2 in NMS 1516/2011, Suit 1108-2011 and for Defendant No.2 in NMS
               1551/2011 Suit 1163-2011.
                  


               Mr.J.G. Reddy for Defendant No.24 in Suit 1163/2011.
               



               Mr.Vivek Vashi with Mr.Alya Khan i/b. M/s.Bharucha & Partners for Defendant
               No.26 in Suit 1108/2011 and for Defendant No.23 in Suit 1163/2011.


                                                                                     CORAM : S.C. GUPTE, J.





                                                                       RESERVED ON : 09 JULY 2014

                                                                PRONOUNCED ON : 30 OCTOBER 2014

               ORDER :

This Notice of Motion is taken out by the Plaintiff for appointment of
Court receiver and interim injunction against the Defendants restraining them
from acting upon or giving effect to the development agreement entered into
between Defendant Nos. 1 and 2 and Defendant No. 26. The Plaintiff, who is a
developer and who claims to have entered into a development agreement with
Defendant Nos. 1 and 2 and Defendant Nos. 7 to 25 for development of the suit
property, has filed the present suit for specific performance of that development

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agreement. The Defendants objected to the jurisdiction of this Court to hear the

suit in view of the provisions of Section 42 of the Maharashtra Slum Areas
(Improvement, Clearance and Redevelopment) Act, 1971. Accordingly, a

preliminary issue of jurisdiction was framed by this Court. That issue is being
decided by this order. The short facts of the Plaintiff’s case, relevant for the
determination of the present controversy, may be noted as follows:

2 The suit property is a notified slum within the meaning of the
Maharashtra slum (Improvement, Clearance and Redevelopment) Act, 1971

(“Slum Act”). The slum dwellers were desirous of developing the suit property
under a slum rehabilitation scheme (“SRA Scheme”). On about 10 August 2003,

Defendant Nos. 1 and 2, who are respectively the association of eligible slum
dwellers and registered Society of slum dwellers/members, occupying the suit

property, entered into a development agreement, through their representatives
being Defendant Nos. 7 to 25, with the Plaintiff. Pursuant to the development
agreement, Defendant Nos. 7 to 25 also executed an irrevocable power of
attorney dated 10 August 2003 in favour of the Plaintiff authorizing the Plaintiff to

do all acts necessary for implementation of the SRA Scheme. The Plaintiff claims

to have received irrevocable written consents of 95% of the members of
Defendant No. 2 Society residing on the suit property.

3 After execution of the development agreement, by a letter dated 20

September 2003, the Plaintiff submitted the SRA Scheme to the authorities under
the Slum Act. It is the Plaintiff’s case that despite following up the matter with
Defendant Nos.27 and 28, the issuance of Annexure – II on the SRA Scheme
submitted by the Plaintiff was delayed. It is also the Plaintiff’s case that the

Plaintiff has duly complied with its part of the obligations under the development
agreement and has also been ready and willing to comply with all its remaining
obligations under the agreement.

4 By its letter dated 11 August 2009, Defendant No. 2 terminated the
development agreement executed with the Plaintiff. On 20 September 2009,
Defendant No. 2 called a general body meeting for appointment of a new

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developer in substitution of the Plaintiff.

5 The Plaintiff, in the premises, filed an arbitration petition, being

Arbitration Petition No. 759 of 2009, seeking an injunction against holding of this
meeting. This Court by its order dated 18 September 2009 did not grant any
interim relief but observed that the decision, if any, taken in this meeting would be

subject to the order that may be passed in the petition.

6 Defendant Nos. 1 and 2 proceeded to hold the meeting and
appointed Defendant No. 26 as the developer for development of the suit

property under any SRA Scheme. Defendant No. 26 claimed to have obtained
consent of more than 70% of eligible slum dwellers for its SRA Project. A general

body meeting of the members of Defendant No. 2 was convened thereupon by
the Registrar of Co-operative Societies for the purpose of ascertaining whether

the Plaintiff or Defendant No. 26 enjoyed the support of not less than 70% of the
slum dwellers.

7 The Plaintiff challenged the decision of the Registrar calling such

meeting by filing a petition, being Writ Petition No. 679 of 2010. This Court

dismissed the Writ Petition. Around the same time, the Defendants moved an
application before the high-powered committee seeking removal of the Plaintiff as
a developer and appointment of Defendant No. 26 as the new developer. The

application was dismissed by the high-powered committee as being premature.

8 Defendant No. 27 thereafter accepted the Defendant’s case that the
Defendant No. 26 enjoyed the support of more than 70% of the members of

Defendant No.2 and directed its engineering department to process issuance of a
letter of intent in favour of Defendant No. 26.

9 Once again this decision was challenged by the Plaintiff by filing
another writ petition, being Writ Petition No. 95 of 2011. The order of Defendant
No. 27 was set aside by a Division Bench of this Court. This Court, however,
directed that Defendant No. 27, after giving an opportunity of being heard both to
the Plaintiff and Defendant No. 26, shall arrive at a decision as to whether or not

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the Plaintiff continues to have the support of 70% of slum dwellers. The Plaintiff

challenged this part of the order by filing a review petition. The review petition,
however, was dismissed by this Court. An SLP was preferred by the Plaintiff

against the dismissal of the review petition. The Supreme Court refused to set
aside the order passed by this Court on the review petition and simply directed
postponement of the meeting fixed for the purpose by 15 days with liberty to the

parties to make appropriate applications in the pending arbitration petitions.

10 The Plaintiff subsequently withdrew the arbitration petitions and filed
the present suit. In this suit, the Plaintiff claims a declaration that the development

agreement between Defendant Nos. 2 and 26 is illegal, null and void. The Plaintiff

also claims specific performance of the development agreement entered into
between the Plaintiff and Defendant No. 2.

11 The jurisdiction of this Court is objected to by Defendant No. 2 on
the ground of the bar of jurisdiction of Civil Courts under Section 42 of the Slum
Act. Relying on the various provisions of the Slum Act read with DCR 33(10) of

the Development Control Regulations for Greater Mumbai, and the evidence of
the Plaintiff’s witness, it is submitted by Mr. Kamdar, learned Senior Counsel for

Defendant No. 2, that the present suit involves matters which the authorities
under the Slum Act are alone empowered to determine and therefore, the
jurisdiction of this Court is barred under the provisions of Section 42 of the Slum

Act. Learned Counsel relies upon the decisions in the cases of Naresh
Lachmandas Aswani Vs. Haridas alias Haridas Lachmandas 1, Qari
Mohammed Zakir Hussain & Ors. Vs. Municipal Corporation of Greater
Mumbai2, Slum Rehabilitation Authority Vs. Kohinoor (SRA) Co-op. Hsg.

Society3, Om Shree Sai Developers Vs. State of Maharashtra 4, Lokhandwala
Infrastructure Pvt. Ltd. Vs. State of Maharashtra 5 and Pramila Suman Singh
Vs. State of Maharashtra6.

1

          2    2002(2) Bom.C.R. 98
          3    2014(1) Bom.C.R. 449
          4    2010(6) Bom.C.R.194
          5    2011(3) Bom.C.R. 240
          6    2009(2) Bom.C.R. 138

                                                                                                                                                 

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          12                  In reply, Dr. Tulzapurkar, learned Senior Counsel appearing for the




                                                                                                                                           

Plaintiff, refers to the various provisions of the Slum Act and the averments in the
plaint and documents annexed thereto and submits that the suit as framed does

not involve determination of matters referred to in Section 42 of the Slum Act.

13 The Slum Act makes various provisions for improvement, clearance

and redevelopment of slums. It enacts provisions for Slum Rehabilitation
Schemes. It creates authorities for implementing these schemes. It provides for
ouster of jurisdiction of Civil Courts in respect of matters which such authorities
are empowered to determine under the Slum Act. The relevant provisions in this

behalf may be noted at the outset. (Since the State Government has appointed a

Slum Rehabilitation Authority and published a Slum Rehabilitation Scheme for the
areas which include the suit property herein, respectively, under Section 3A and
3B of the Slum Act, the provisions of the Slum Act which apply to the facts of this

case, and which are noted below, are the modified provisions of the Slum Act
according to Section 3D of the Slum Act.) Section 3A of the Slum Act provides for
constitution of a Slum Rehabilitation Authority (“Authority”) for implementing the

Slum Rehabilitation Scheme framed and published under Section 3B. Under Sub-

Section (3) of Section 3A, the powers, duties and functions of the Authority are as
follows :

“(3) The powers, duties and functions of the Slum

Rehabilitation Authority shall be, –

(a) to survey and review existing position regarding
slum areas;

(b) to formulate schemes for rehabilitation of slum

areas;

                                (c) to get                       the         Slum            Rehabilitation                   Scheme
                                implemented;

                                (d) to do all such other acts and things as may be

necessary for achieving the objects of rehabilitation of
slums.”

Section 3B provides for preparation and publication of a general Slum
Rehabilitation Scheme for the areas specified under sub-section (1) of Section

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3A. Under sub-section (4) of Section 3B, the Authority lays down the parameters

for declaration of any area as a slum rehabilitation area and indicates the manner
in which rehabilitation of such area shall be carried out. Section 3C empowers the

Chief Executive Officer of the Authority to declare any area as a slum
rehabilitation area under the Slum Rehabilitation Scheme. Such declaration,
which is referred to as “the slum rehabilitation order”, can be challenged by any

aggrieved person under sub-section (2) of Section 3C before a Special Tribunal
appointed under the Slum Act. Section 3D provides for application of the other
chapters of the Slum Act to Slum Rehabilitation Area with modifications. Sections

3Z-1 and 3Z-2 provide for powers of the Competent Authority to demolish
unauthorized or illegal dwelling structures and penal liabilities. Section 12

empowers the Chief Executive Officer of the Authority to make a clearance order
in relation to any slum area, which is declared as a slum rehabilitation area,

ordering demolition of each of the buildings specified therein. Any aggrieved
person can prefer an appeal from the clearance order to the Special Tribunal,
under sub-section (4) of Section 14. Section 13 of the Slum Act is in the following
terms :

“13. Power of Slum Rehabilitation Authority to develop
Slum Rehabilitation Area.

(1) Notwithstanding anything contained in sub-section
(10) of section 12, the slum Rehabilitation Authority may,

after any area is declared as the Slum Rehabilitation
Area, if the landholders or occupants of such area do not
come forward within a reasonable time, with a scheme for
re-development of such land, by order, determine to re-
develop such land by entrusting it to any agency for the
purpose.

(2) Where on declaration of any area as a Slum
Rehabilitation Area the Slum Rehabilitation Authority, is
satisfied that the land in the Slum Rehabilitation Area has
been or is being developed by the owner in contravention
of the plans duly approved, or any restriction or conditions
imposed under sub-section (10) of section 12, or has not
been developed within the time, if any, specified under
such conditions it may, by order, determine to develop the
land by entrusting it to any agency for the purpose :

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Provided that, before passing such order, the

owner shall be given a reasonable opportunity of showing
cause why such order should not be passed.”

Section 22 provides for a prohibition from taking proceedings for eviction of
occupiers or execution of eviction decrees or for issue of distress warrants
without the previous permission of the Authority. Section 23 provides for an

appeal from such order. Section 24 provides for allotment of tenements to
occupants who have vacated, or have been evicted from, the premises in their
occupation in a slum rehabilitation area, after completion of the development of
the area and reconstruction of the building/s therein under the Scheme. Section

27 to 40 provide for various miscellaneous matters such as entry and inspection

powers of the Authority, allotment of tenements to slum dwellers not willing to join
the scheme, removal of offensive or dangerous trades from slum areas,
demolition of buildings in certain cases, jurisdiction of courts, etc. Sections 41 and

42, which bar suits and prosecutions, and jurisdiction of civil courts, are in the
following terms :

“41. Protection of action taken in good faith.

No suit, prosecution, or other legal proceedings
shall lie against the Competent Authority, Slum
Rehabilitation Authority or against any person acting
under its authority for anything which is in good faith done
or intended to be done under this Act or the rules made

thereunder.

42. Bar of jurisdiction

Save as otherwise expressly provided in this Act,
no civil court shall have jurisdiction in respect of any

matter which the Slum Rehabilitation Authority, the
Appellate Authority, Competent Authority, Grievance
Redressal Committee or Special Tribunal is empowered
by or under this Act, to determine; and no injunction shall
be granted by any court or other authority in respect of
any action taken or to be taken in pursuance of any
power conferred by or under this Act.”

14 As the provisions of the Slum Act quoted above indicate, the

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matters which the Administrator, Authority and Tribunal are empowered to decide

are the specific matters noted above. These matters are out of bounds for the
civil court to exercise jurisdiction over, under Section 42 of the Slum Act. So also

no injunction can be granted by any court or authority in respect of any action
taken or to be taken in pursuance of any power conferred by or under the Slum
Act. (The powers are noted above.)

15 The Plaintiff has sought the following reliefs in the suit:

(a) Declaration of nullity in respect of the termination of the suit

development agreement by Defendant No.2 and the corresponding
declaration of subsistence and validity of the suit development

agreement and power of attorney executed by Defendant No. 2 in
favour of the Plaintiff;

(b) Specific performance of the suit development agreement by
Defendant Nos. 1 to 25 and members of Defendant No.1 /
Defendant No.2 and consequential reliefs;

(c) Cancellation of the rival development agreement between
Defendant Nos. 1 to 25 on the one hand and Defendant No. 26 on
the other and consequential reliefs; and

(d) Damages against Defendant Nos. 1 to 25 in the alternative.

In other words, the suit is basically for specific performance of a
development agreement (which is coupled with an agreement to sell immovable

property) or damages in lieu thereof. The cause of action is : (i) execution of a
development agreement between the Plaintiff and Defendant Nos. 1 to 25, and

(ii) non performance of that development agreement by Defendant Nos. 1 to 25
inter alia by executing a development agreement with a rival developer,
Defendant No. 26. Now the question is, does this cause of action and reliefs
claimed in connection therewith involve matters which the administrator or the
Authority or the Tribunal is empowered by or under the Slum Act to determine.

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          16               Having regard to the powers, duties and functions of the Authority, it




                                                                                                                                        

is clear that the Authority is not empowered to determine the private rights or
liabilities as between the Slum dwellers and the developer vis-a-vis any

development agreement entered into between them for redevelopment of any
slum. Whether or not such development agreement is binding on the parties
thereto, whether or not either of the parties has breached such development

agreement, and whether or not the party complaining of a breach is entitled to
specific performance of the development agreement, all of which are matters
arising for the determination of this Court in the present suit, are not matters

which the Authority is empowered to decide under the Slum Act. (None of these
matters fall for the determination of any of the other entities including the Special

Tribunal named in Section 42.)

17 But Defendant No.2 contends that a party cannot seek to do
indirectly what he cannot do directly. It is submitted that granting of reliefs in the
present suit would involve impugning the exercise of the Authority of its powers
under Section 3A read with Section 13(2) of the Slum Act to appoint Defendant

No.26 as the developer / builder for the Slum Rehabilitation Scheme in question.

It is submitted that the bar under Section 42 of the Slum Act does not
countenance this.

18 Section 13(2) empowers the Authority to determine to develop the
land by any agency recognized by it for the purpose, on being satisfied that the
land has been or is being developed by the owner “in contravention of the plans
duly approved, or any restriction or conditions imposed under Sub-section (10) of

Section 12, or has not been developed within the time, if any, specified under
such conditions.” It is not anyone’s case that this power has been exercised by
the Authority or that Defendant No.26 is entrusted with the development of the
suit property through the exercise of this power. The termination of the suit
development agreement and execution of the rival development agreement with
Defendant No.26 by Defendant No.2, are matters involving their private inter se
disputes and do not in any way concern the Authority or exercise of any power by
it under the Slum Act.

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          19               As for the particular relief, namely, the permanent or temporary

injunction restraining Defendant No.26 from carrying on any development or

directly or indirectly preventing it from acting as a developer of the particular Slum
Rehabilitation Scheme, which the Authority has authorized it to do, whether or not
such relief can be granted would be considered on merits at the hearing of the

suit or the Notice of Motion, as the case may be. Such a consideration does not
reflect on the jurisdiction of this Court to entertain the suit as a whole. The Court
may entertain the suit and yet not grant the particular relief, if it considers the

same to be barred under Section 42 of the Slum Act.

20

Learned Counsel for Defendant No.2 relied on the judgment of this
Court in Lokhandwala Infrastructure (supra) to submit that the dispute between

a society of slum dwellers and the developer does not lie purely in the realm of a
private contractual dispute in the context of the role of the Authority with respect
to the scrutiny and approval of a slum rehabilitation scheme. It is submitted that
such a dispute has an important bearing on the proper implementation of the

slum rehabilitation scheme and goes beyond the interests of the society and the

developer. In Lokhandwala Infrastructure (supra), the petitioner developer had
challenged an order of the CEO of the Authority directing processing of a letter of
intent in favour of another developer (who was one of the respondents in the

petition) on the ground that 70% members of the co-operative society had
supported the respondent developer at a general body meeting. The petitioner
developer was seeking a writ of mandamus directing the Authority to process his
proposal for redevelopment and consider issuance of a letter of intent in his

favour. One of the submissions before the Court was that a dispute between the
co-operative society and its developer is a private dispute and a recourse to
private law remedies was the only form of redress. Whilst considering this
argument, this Court held that the execution of Slum Rehabilitation Scheme was
impressed with a public character; that lands on which such scheme was sought
to be sanctioned and implemented might be lands belonging to the Municipal
Corporation or the State or its instrumentabilities such as MHADA, etc.; that the
co-operative societies of slum dwellers and developers through whom the

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scheme was sought to be implemented facilitated the implementation of the

scheme; but that the State as the owner had a vital public interest in ensuring that
the object for which the land was utilized subserved the purpose of rehabilitation

of the slum dwellers. This Court, therefore, held that though a dispute between
the co-operative society and its developer had a private element, a recourse to
private law remedies was not the only available form of redress; that the Authority

and the owners of the land such as the Municipal Corporation or the State were
vital components of the rehabilitation scheme; and that their statutory powers
were not trammelled by private contractual arrangements.

21 This entire discussion as to whether or not public law remedies can

be availed of in cases of rehabilitation schemes where there may be private
disputes between the society and the developer, but equally the actions of the

Authority based on such disputes are under scrutiny, is quite besides the point in
our case. Here, a developer has come before the Court essentially with a private
dispute and has not challenged any action of the Authority or sought
determination of any matter, which exclusively rests with the Administrator,

Authority or Tribunal. What we are considering here is whether the jurisdiction of

the civil court is barred and not whether the recourse to that jurisdiction is the only
form of redress. The ratio of Lokhandwala Infrastructure (supra) has no
application to the facts of our case.

22 The other cases relied upon by Defendant No.2 also lend no
assistance to its case. In Naresh Lachmandas Aswani (supra), the plaintiff
claimed as successor-in-interest of the lessee of the suit property, a slum which

was being developed under a letter of intent issued by the Authority. Prayers (d)
and (i) of that suit sought an order and decree to hand over possession of the suit
property to the plaintiff. Such possession was sought from the third defendant,
who was the owner / developer of the suit property and in whose favour a letter of
intent was granted by the Authority. This Court held that in view of the admitted
fact that the scheme was being implemented under a letter of intent granted by
the Authority, the prayer for possession cannot be granted by a civil court in the
face of the bar under Section 42. The Court at the same time considered prayers

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(a) to (c) and (e) to (h) in that suit, which were seeking a declaration and

corresponding reliefs concerning the plaintiff’s entitlement to a share in the suit
property and challenge to the deeds executed by the first defendant in favour of

other defendants, to be within its jurisdiction. The ratio of this decision has no
bearing on the maintenability of the present suit which challenges the society’s
action in terminating the suit development agreement and entering into a rival

development agreement with another developer. In Qari Mohammed’s case
(supra), a section of hutment dwellers had challenged the action of the Authority
in allotting the suit land, which was owned by the Municipal Corporation, to the

respondent developers. The action was impugned as a collusive and mala fide
action. This Court in fact held that if the act is mala fide or fraudulent or collusive,

the civil court retained its jurisdiction to even question an act of the Authority. It is
difficult to see how this judgment may even remotely help Defendant No.2. In

Kohinoor (SRA) Co-operative Society’s case (supra), the developer plaintiff
had sought a direction against the Authority to accept the plaintiff’s proposed
rehabilitation scheme. This Court held that the civil court had no jurisdiction in the
matter in view of the bar under Section 42. The relief sought there was in the

teeth of the bar. As explained above, such is not the case in the present suit. In

Om Shree Sai Developer’s case (supra), the same principle, as in Kohinoor
(SRA) Co-operative Society, is affirmed. In Pramila Suman Singh (supra), the
Court was not concerned with the bar under Section 42 or any of the issues

relevant in the context of our case.

23 Mr.Kamdar referred to the various orders passed by the Authority in
the present case and the orders passed in the various challenges to the same

before this Court and the Supreme Court. He submitted that having regard to
these orders, it is clear that the Plaintiff no longer enjoys the support of the
statutory number of eligible slum dwellers and it has been confirmed that
Defendant No.26 enjoys such support. These facts, any way, reflect on the
Plaintiff’s entitlement to get the relief in the suit, namely, specific performance of
his development agreement or the interim relief in the Notice of Motion, namely,
the interim injunction sought. But it is difficult to see how they non-suit the Plaintiff
on a ground of want of jurisdiction. If the Court accepts the Defendant’s plea of

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the various orders disentitling the Plaintiff to specific performance of its contract,

the Court can very well consider granting the Plaintiff damages in lieu of specific
performance, which, in any case, is an alternative prayer of the Plaintiff.

24 In that view of the matter, there is no substance in the plea of bar of
jurisdiction under Section 42 of the Slum Act. The preliminary issue is decided in

favour of the Plaintiff and against the Defendants. This Court has jurisdiction to
entertain and try the present suit. The Notice of Motion may now be taken up for
hearing. S.O. to 27 November 2014.

                                               ig                                                       (S.C. Gupte, J.)
                                             
            
         






                                                                                                                                              

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