1

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

APPEAL NO. 338 of 2009

IN
ARBITRATION PETITION LODG NO. 493 OF 2009

Girish Mulchand Mehta,

Flat No. 1/257, Harini Co-operative
Housing Society Ltd.,
R.N.Narkar Marg, Ghatkopar (E),
Bombay-400 077.

2. Durga Jaishankar Mehta,

Flat No. 3/257, Harini Co-operative
Housing Society Ltd.,
R.N.Narkar Marg, Ghatkopar(E),
Bombay 400 077. ....Appellants
v/s.
Mahesh S. Mehta,
Sole Proprietor of M/s. Suryakirti
Enterprises
having office at 196/5400,
“Suramya”, Pant Nagar, Ghatkopar(e)
Mumbai 400075.

2. Harini Cooperative Housing Society

Ltd.,
10/257, R.N. Narkar Marg,
Ghatkopar (E), Bombay 400 077. ....Respondents

Ms. Rajni Iyer, Sr. Advocate, i/b. K.V.Tembe for the appellants.
Mr. D.D.Madon, Sr. Advocate i/b. K.J. Hakan for respondent no.1.
Mr. C.J. Sawant, Sr. Advocate i/b. Rahul K. Hakani for respondent no.2.
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CORAM:- SWATANTER KUMAR, C.J. AND

A.M.KHANWILKAR, J.

JUDGMENT RESERVED ON: November 07, 2009.

JUDGMENT PRONOUNCED ON: December 10, 2009.

JUDGMENT (PER KHANWILKAR, J):

This appeal takes exception to the Judgment dated 3rd July, 2009 in

Arbitration Petition (L) No. 493/2009. The said petition was filed by the

Respondent No. 1 under Section 9 of the Arbitration and Conciliation Act,

1996 (hereinafter referred to as ‘the Act’ for short). The reliefs claimed in

the said Petition read thus:

“a) That during pendency of arbitral proceeding

between the Petitioner and the Respondent No. 1, before
the Ld. Sole Arbitrator Shri L.H. Patil, this Hon’ble
Court may be pleased to appoint Court Receiver High
Court Bombay or any fit and proper person as Receiver
of the said property i.e. plot of land bearing city survey
No. 5728 final plot No. 257 of Ghatkopar T.P.S.III,
R.N.Narkar Marg, Ghatkopar (E) Mumbai-400 077 and
the building known as “Harini” standing thereon with
all powers under order 40 Rule 1 of the Code of Civil
Procedure including power to take physical possession
by physically removing the Respondent Nos. 2 and 3
and their family members occupying flat No. 1 and Flat
No. 3 or anybody else found occupying any part of the
Building known as “Harini” and/or any part of the said
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property and to hand over vacant and peaceful

possession of the said property i.e. plot of land bearing
city survey No. 5728 final plot No. 257 of Ghatkopar
T.P.S. III, R.N.Narkar Marg, Ghatkopar (E)
Mumbai-400 077 and the building known as “Harini”
standing thereon to the Petitioner for the purpose of
demolition and construction of new building as provided
in the said Development Agreement Exhibit “A” hereto.

b) that the ad-interim measures in term of prayer clause

(a) above.

c) that for such other and further reliefs as the nature

and circumstances of the case may require.”

2. The Respondent No. 1 asserted that the Respondent No. 2 Society

entered into a Development Agreement dated 7th May, 2008 authorising

him to redevelop the building standing on piece and parcel of land

admeasuring 644.60 sq. meters bearing City Survey No.5728, Final Plot

No. 257 of Ghatkopar T.P.S. III, R.N. Narkar Marg, Ghatkopar (E),

Mumbai 400 077. The building standing on the said plot consists of three

floors comprising of 12 residential flats. Since the building was

constructed in the year 1964, due to passage of time its condition had

deteriorated. As a result, the members of the Society after due deliberation

unanimously decided to redevelop the building. Further, to effectuate the

said decision the Society appointed Respondent No. 1 to develop the said

building. Pursuant to the decision of the Society, the Respondent No. 2

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Society entered into registered Development Agreement with Respondent

No. 1 dated 7th May, 2008 thereby granting development rights to develop

the property by demolishing the existing building “Harini” standing on the

said property on terms and conditions referred to in the said agreement.

The Respondent No. 1 paid the stamp duty of Rs. 1,75,030/- and also

registration fees of Rs. 31,440/-. The said agreement was executed by

the authorised person of the Society (Respondent No. 2) and also by ten

(10) members out of twelve (12) members as token of confirmation

thereof in favour of Respondent No. 1. The said 10 members have also

signed and executed individual undertaking-cum-affidavit thereby

confirming the Development Agreement and undertaking to perform the

Development Agreement. According to Respondent No. 1, consequent to

the execution of the agreement, he has already spent amount of Rs.

12,00,000/-. and also Rs. 2,30,000/- per month (approximately) towards

monthly compensation paid to the 10 members who have already vacated

their respective flats since February 2009. It is the case of the

Respondent No. 1 that he has already paid monthly compensation to the

tune of Rs. 16,10,000/- and would be obliged to pay the future monthly

compensation to the said 10 members. Further, the plans for

redevelopment of the building have been duly approved and accepted by

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the General Body of the Society and whereafter the Respondent No. 1 has

taken steps to seek approval of the Competent Authority. Pursuant to the

agreement, the Respondent No. 1 has purchased and loaded TDR 650 sq.

Mtrs. in favour of the Respondent No. 2 Society in lieu of the Bank

guarantee. The Respondent No. 1 has already paid sum of Rs.72,76,464/-

(excluding stamp duty of Rs. 2,18,300/-) being purchase price of the TDR

and also got the plan for construction of new building approved and

sanctioned from the Mumbai Municipal Corporation. The Mumbai

Municipal Corporation has also issued I.O.D. on 19/12/2008. After

issuance of I.O.D., Respondent No. 1 called upon the Respondent No. 2 to

hand over vacant possession of the building forthwith. However, the

Respondent No. 2 Society expressed its inability to do so as the Appellants

(original respondents 2 & 3) were opposed to executing any document or

to vacate their respective flats to facilitate demolition of the existing

building for reconstruction and redevelopment thereof. It is stated that

the Respondent No. 1 has already spent aggregate sum of Rs. 12 lakhs

towards non-refundable security deposit in lieu of the corpus fund and

approximately Rs. 2.05 lakhs towards brokerage and also paid Rs. 7500/-

towards transportation/shifting so as to provide temporary accommodation

to each of the ten members who vacated their respective flats as per the
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terms of the agreement. It is stated that due to resistance by the

Appellants, the Society eventually initiated expulsion proceedings against

the Appellant No.1 and after following necessary procedure the said

Appellant No. 1 has been expelled from the primary membership of the

Society by the General Body of the Society. The Respondent No. 2

Society offered vacant possession of only 10 flats to the Respondent No.

1. In so far as the two flats occupied by the Appellants, the Respondent

No. 1 was informed to recover possession thereof from the concerned

members who were not co-operating. The Respondent No. 1, however,

insisted that possession of the entire building should be handed over to

him by the Respondent No. 2 in terms of the Development Agreement

executed with the Society (Respondent No.2). Since the Respondent No.

2 failed to perform their part under the Development Agreement,

Respondent No. 1 issued notice raising dispute. Eventually, as per the

Arbitration Agreement in terms of clause-49 of the Development

Agreement, the Respondent No. 1 appointed sole Arbitrator and called

upon the Respondent No. 2 Society to concur with the appointment of the

said Arbitrator to avoid unnecessary cost. The Respondent No. 2

concurred with the appointment of the named sole Arbitrator and agreed

for referring dispute to the sole Arbitrator. The Respondent No. 1 filed
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Statement of Claim and Application under Section 17 of the Act before

the sole Arbitrator who in turn has heard the said application and passed

order on 25/5/2009. The sole Arbitrator directed the Society to hand over

vacant and peaceful possession of the property within ten days from the

date of the order failing which it would be open to the Respondent No. 1

to move this Court for appointment of the Court Receiver by invoking

provisions of Section 9 of the Act. After the said order of the Arbitrator,

the Respondent No. 2 Society through Advocate’s notice called upon the

Appellants to vacate their respective flats. It is also noticed that the

Resolution of expulsion of the Appellant No. 1 from the primary

membership of the Respondent No. 2 Society has been approved by the

Dy. Registrar of Co-operative Societies on 6/6/2009. Later on, even the

Appellant No. 2 has been expelled by the General Body of the Society in

its meeting held on 21st June, 2009 and steps have been taken to seek

approval of the Registrar, which decision is stated to be pending. Since

the Respondent No. 1 realised that it was getting difficult to get vacant

possession of the entire building and the development work was being

delayed resulting in recurring avoidable cost towards monthly

compensation being paid to the 10 members who have already vacated

their respective flats in February 2009 as also the amount spent by the
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Respondent No. 1 towards consideration under the Agreement and other

expenses, had no option but to take recourse to Petition under Section 9 of

the Act before this Court. Accordingly, the Respondent No. 1 filed the

said Petition in June 2009, praying for reliefs which are already

reproduced hitherto. In this Petition besides making the Respondent No.

2 Society party, the Respondent No. 1 also impleaded the Appellants as

Respondent Nos. 2 & 3 who were occupying two flats in the said building

and were causing obstruction to the development of the property.

3. As a counter blast to the abovesaid Petition filed by the Respondent

No. 1 under Section 9, the Appellants filed dispute dated 25th June, 2009

before the Co-operative Court, Mumbai being Case No. AVN/CC-II/207

of 2009 praying for following reliefs:-

“a) that it be declared that the convening and holding of

the purported Special General Meeting dated 27/4/2008
of the Opponent Society and all its proceedings,
including Resolutions passed therein, are illegal, bad in
law, null and void ab-initio and not binding upon the
Disputants.

b) it be declared that the purported Development

Agreement dated 7.5.2008 between the Opponent
Society and the Developer, being Ex-A hereto is illegal,
bad in law, null and void ab-initio and not binding upon
the Opponent Society nor any of its members, including
the Disputants.
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c) the Opponent Society, its office bearers, agents and

servants be permanently restrained by an order of
injunction of this Hon’ble Court from, in any manner,
implementing and/or acting upon any of the purported
Resolutions passed in the purported Special General
Meeting held on 27/4/2008 and the purported
Development agreement dated 7/5/2008 being Ex-A
hereto.

d) the Opponent Society, its office bearers, agents and

servants be permanently restrained by an order of
injunction of the Hon’ble Court from disconnecting
and/or causing the disconnection of (i) the water supply
and the common electric supply to the Society’s
building and (ii) the electric meter fro the common
lights, staircase lights, water pump etc. and the
electricity meters in respect of the suit flats No. 1 & 3 in
the building of the Opponent Society at 257, R.N.
Narkar Marg, Ghatkopar (E), Mumbai- 400 077.

e) that pending the hearing and final disposal of this

dispute, the Opponent Society, its office bearers, agents
and servants be restrained by an order of injunction of
this Hon’ble Court from, in any manner, implementing
and/or acting upon (i) any of the purported Resolutions
passed in the purported Special General Meeting held on
27/4/2008 and (ii) the purported Development
agreement dated 7/5/2008 being EX-A hereto.

f) That pending the hearing and final disposal of this

dispute, the Opponent Society, its office bearers, agents
and servants be restrained by an order of injunction of
this Hon’ble Court from disconnecting and/or causing
the disconnection of (i) the water supply and the electric
supply to the building and (ii) the electric meter in
respect of common lights, staircase lights, water-pump
and the electricity meters of the suit flats No. 1 & 3 in
the building of the Opponent Society at 257, R.N.
Narkar Marg, Ghatkopar (E), Mumbai-400 077.
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g) for urgent Ad-Interim orders in terms of prayers (e) &

(f) above.

h) for costs.

i) for such other and further reliefs as the nature and

circumstances of the case may require.”

4. To complete the chronology of events which is relevant for

answering the controversy on hand, it may be apposite to advert to the fact

that the General Body of the Society was ad-idem that the building of the

Society needs to be redeveloped. That position can be discerned from the

minutes of the meeting of the Managing Committee dated 10th August,

2002 wherein it was resolved to reinterview the developer for

improvisation of his offer to take up the development work with clear

understanding that there will be no going back on the proposal after the

terms and conditions were finalized with the developer. Moreover, that

would be binding on all the members. Notably, the Appellants herein at

the relevant time were members of the Managing Committee and were

party to the said resolution. The deliberation regarding redevelopment of

the property was taken forward thereafter as can be discerned from the

minutes of the subsequent meetings of the General Body of the Society

dated 22/1/2005, 2/10/2005, 3/11/2005, 25/11/2005, and 17/9/2007. The

minutes of the General Body dated 17/9/2007 records that the purpose of
 11

the meeting was to discuss and seek clarification regarding draft

Development Agreement with the Respondent No. 1 Developer. The

final decision to appoint Respondent No. 1 as the developer was taken by

the General Body of the Society in its Special General Body Meeting held

on 2nd March, 2008. It is recorded in the said minutes that “M/s.

Suryakirti Enterprises be our final selection as developer for demolition

and reconstruction of Harini Building”. This Resolution was supported

by 9 members out of total 12 members of the Society. In the said

meeting, the General Body also resolved to enter into Development

Agreement with the Respondent No. 1 for demolition and reconstruction

of Harini Building, which was to be approved by the Society.

Significantly, none of the abovesaid Resolutions have been challenged by

the Appellants before any Court much less the Co-operative Court. The

challenge, however, is only to the Resolution passed in the Special

General Meeting dated 27/4/2004 and the consequences flowing

therefrom. In the said meeting the draft Development Agreement

executed between the Society (Respondent No.2) and the Developer

(Respondent No. 1) came to be unanimously approved by the seven

members present and voted. The minutes of the meeting makes note of

the fact that in addition three absent members have also consented to the
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resolution. As aforesaid, the challenge of the Appellants before the Co-

operative Court is only to the terms and conditions referred to in the said

Development Agreement as has been executed by the authorised officer

of the Respondent No. 2 Society in favour of Respondent No. 1 and

registered on 7/5/2008.

5. Be that as it may, the Respondent No. 1 instituted Petition under

Section 9 essentially against the Respondent No. 2 Society with whom the

Respondent No. 1 had entered into Development Agreement on the

assertion that the Society has failed to perform its part of the obligation

under the said Agreement and it was just and convenient to grant the relief

as prayed in Section 9 Petition. Since the grant of the proposed relief

was to incidentally affect the Appellants herein, they were also impleaded

as Respondents 2 & 3. The said Respondents were required to be

impleaded also because of Rule 803E of the Bombay High Court

(Original Side) Rules. The Respondent No. 2 Society, however, did not

resist the relief claimed in the said Petition. In fact, the Respondent No.

2 Society took the stand that inspite of its willingness to perform its part of

the obligation under the agreement, it was unable to do so because of the

untenable obstruction caused by the Appellants herein (who were its

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members till they came to be expelled by the General Body). The

Petition, however, was mainly resisted by the Appellants. The Principal

grievance of the Appellants (Original Respondents 2 & 3) was that they

could not be made party in the Petition under Section 9, as they were not

party to the Arbitration Agreement. The Court had no jurisdiction to pass

any direction or order against the Appellants since they were not party to

the Arbitration Agreement. In any case, the Court cannot order their dis-

possession in exercise of power under Section 9 of the Act. The

Appellants justified their obstruction mainly on the ground that they did

not approve of the terms and conditions specified in the Development

Agreement executed in favour of the Respondent No. 1. It was their case

that the offer given by the Respondent No.1 was prejudicial to the interest

of the members of the Society. In that, the Developer was not only

obliged to provide bigger alternative reconstructed flats but also obliged

to provide additional corpus to the Society. In the first place, the Learned

Single Judge found that there was an Arbitration Agreement in the shape

of clause 49 of the Development Agreement executed between the

Respondent No. 1 and Respondent No. 2. Thus, it was open to the

Respondent No. 1 to invoke Section 9 of the Act being party to the

Arbitration Agreement. Further, Section 9 can be invoked in aid to the

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main relief/claim pending before the Arbitral Tribunal. The Learned

Single Judge then considered the grievance of the Appellants and found

that the Resolutions passed by the overwhelming majority of members of

the Society were not challenged till the filing of the Petition under Section

9. Besides, the majority decision of the General Body of the Society

would not only bind the Society but also the Appellants. It is further held

that essentially the relief claimed under Section 9 by the Respondent No. 1

Petition was against the Respondent No. 2 Society who was obliged to

comply with the obligation under the Development Agreement without

which the Respondent No. 1 would not be able to get Commencement

Certificate thereby stalling the redevelopment of the building. The

Learned Single Judge also noticed that it is only the two members-

Appellants herein, who were causing obstruction which was resulting in

delay. Moreover, it was causing serious prejudice not only to the

Respondent No. 1 (Petitioner) in terms of recurring cost as the Respondent

No. 1 has already acted upon the agreement and incurred substantial

amount towards consideration of the agreement and other expenses, but

even the remaining 10 members of the Society have already acted upon

the agreement by vacating their respective flats and have shifted to transit

accommodation for which they have been duly compensated by the

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Respondent No.1 as per the terms of the Agreement. The Learned Single

Judge also noted that the Appellants herein were not in a position to secure

the amount invested and incurred including the future expenses and cost

of the Respondent No. 1 in case the project was stalled at their instance.

Taking over all view of the matter, the Learned Single Judge not only

thought it just and convenient to appoint Court Receiver but also accepted

the request of the Respondent No. 1 to allow the Court Receiver to take

possession of all the flats in the said building and hand over vacant

possession of the entire building to the Respondent No. 1 so as to enable

the Respondent No. 1 to complete the project in terms of Development

Agreement and discharge his obligation of providing duly constructed

accommodation/premises to all members including Appellants herein

(original Respondents 2 & 3) within the prescribed time. The Learned

Single Judge also noticed that the relief sought would only require the

Appellants herein to shift to another accommodation till the

redevelopment of the property of the Society whereafter they would be

once again accommodated in the newly constructed accommodation in

lieu of their existing flats. Accordingly, the Petition was made absolute in

terms of prayer clause (a).

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6. It is this decision which is subject matter of challenge before us.

According to the Appellants, the relief granted against them was without

jurisdiction in as much as they are not party to the Arbitration Agreement.

They could not have been impleaded as Respondents in the Petition.

Moreover, there was no justification for passing the drastic order of

dispossessing the Appellants from their respective flats and handing over

those flats to the Respondent No. 1 with further liberty to demolish the

existing building and to construct new building on the suit plot.

7. The Respondents on the other hand have supported the decision of

the Learned Single Judge and pray that the Appeal be dismissed being

devoid of merits and more so because the attitude of the Appellants is

only to protract the issue on untenable grounds.

8. In the first place, the Respondent No. 1 had moved the sole

Arbitrator for interim measures by invoking Section 17 of the Act. The

Arbitrator opined that the sweep of Section 17 is only to pass order against

a party to the Arbitration Agreement to take any interim measures of

protection in respect of the subject matter of the dispute. Accordingly,

 17

while passing directions against the Society (Respondent No.2 herein), he

gave liberty to the Respondent No.1 to move the Court for appropriate

order. It is not necessary for us to delve upon the issue as to whether the

sole Arbitrator himself could have considered the relief claimed by the

Respondent No. 1 claimant. Indeed, the view taken by the sole Arbitrator

has not been assailed and has been allowed to become final. In deference

to the opinion recorded by the sole Arbitrator, the Respondent No. 1 has

now invoked Section-9 of the Act and has prayed for reliefs which are

reproduced hitherto. The first question which arises for consideration is

the sweep of Section 9 proceedings. Section-9 of the Act reads thus:

“9. Interim measures, etc., by Court- A party

may,before or during arbitral proceedings or at
any time after the making of the arbitral award
but before it is enforced in accordance with
section 36, apply to a Court:-

(i) for the appointment of a guardian for a minor

or a person of unsound mind for the purposes of
arbitral proceedings; or

(ii) for an interim measure of protection in respect

of any of the following matters, namely:-

(a) the preservation, interim custody or sale of

any goods which are the subject-matter of
arbitration agreement;

(b) securing the amount in dispute in the

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arbitration;

(c) the detention, preservation or inspection of

any property or thing which is the subject-matter
of the dispute in arbitration, or as to which any
question may arise therein and authorising for any
of the aforesaid purposes any person to enter
upon any land or building in the possession of any
party, or authorising any samples to be taken or
any observation to the made, or experiment to be
tried, which may be necessary or expedient for
the purpose of obtaining full information or
evidence;

(d) interim injunction or the appointment of a

receiver;

(e) such other interim measure of protection as

may appear to the Court to be just and
convenient,
and the Court shall have the same power for
making orders as it has for the purpose of, and in
relation to, any proceeding before it.”

9. The purport of Section-9 has been expounded by the Apex Court in

the case of Firm Ashok Traders & anr. vs. Gurmukhdas Saluja & ors.

reported in AIR 2004 SC 1433. It considered the scheme of Section 9

of the Act. It has held that application under Section 9 is not a suit

although such application results in initiation of civil proceedings. It

went on to observe that the right conferred by Section 9 is on a party to an

Arbitration Agreement. That Section-9 has relevance to the locus standi

as an applicant. A person not party to an arbitration agreement cannot

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enter the Court for protection under Section 9 of the Act. In other words,

the party to an Arbitration Agreement can invoke this jurisdiction for

securing relief which the Court has power to grant before, during or after

arbitral proceedings by virtue of Section 9. The Apex Court further held

that Section 9 has nothing to do with the relief which is sought for from

the Court or the right which is sought to be canvassed in support of the

relief. The Court is competent to grant reliefs to a party under Clauses (i)

and (ii) of Section 9 which flow from the power vesting in Court

exercisable by reference to “contemplated”, “pending” or “completed”

arbitral proceedings. The Court is conferred with the same power for

making the specified orders as it has for the purpose before it though the

venue of the proceedings in relation to which the power under Section 9 is

sought to be exercised is the Arbitral Tribunal. It is thus clear that the

relief sought in such application is neither in a suit nor a right arising from

a contract. The Court under Section 9 only formulates interim measures

so as to protect the right under adjudication before the Arbitral Tribunal

from being frustrated. Suffice it to observe that this decision is of no avail

to answer the controversy on hand as to whether remedy under Section 9

can be pursued against a person who is not party to an arbitration

agreement or arbitration proceedings.

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10. On plain language of Section 9, it would appear that a party to

an Arbitration Agreement can invoke jurisdiction of the Court under this

provision for interim measures as specified therein at any stage of Arbitral

proceedings but before the Arbitral Award is enforced in accordance with

Section 36. The power of the Court under Section 9 of the Act is very

wide and is not controlled by the provisions of the Code of Civil

Procedure. Indeed, the Court has to be guided by the equitable

considerations keeping in mind that the award to be passed by the Arbitral

Tribunal is capable of enforcement.

11. In the present case, the relief which is sought by the Respondent

No.1 and as granted by the Learned Single Judge is ascribable to the

situations specified in sub-clauses (d) and (e) of Section 9(ii). Sub-clause

(d) envisages interim injunction or the appointment of Receiver.

Obviously, the interim measures can be for management, protection,

preservation and improvement of the property which is the subject matter

of the Arbitration Agreement. In addition to appointment of a Receiver,

it is open to the Court to provide such interim measures of protection as

may appear to it, to be just and convenient. Besides, appointing the Court
 21

Receiver, it would be open to the Court to order removal of any person

from the possession or custody of the property or commit the same to the

possession, custody or management of the Receiver. It is also open to the

Court to confer upon the Receiver all such powers for realization,

management, protection, preservation and improvement of the property,

collection of the rents and profits thereof or such other powers as the

Court thinks fit. Such order, however, has to be passed on the

satisfaction of the Court that it is just and convenient to do so. The

language of sub-clause (e) reinforces the position that besides appointment

of a Receiver, it is open to the Court to order such other interim measures

of protection as may appear to the Court to be just and convenient.

Section 9 makes it amply clear that the Court shall have the same power

for making orders as it is for the purpose of, and in relation to, any

proceedings before it. In other words, the Court while considering the

request for formulating interim measures should be guided by equitable

consideration on case to case basis with a view to ensure that the award

passed by the Arbitral Tribunal is capable of enforcement.

12. The next question is whether order of formulating the interim

measures can be passed by the Court in exercise of powers under Section

 22

9 of the Act only against a party to an Arbitration Agreement or

Arbitration Proceedings. As is noticed earlier, the jurisdiction under

Section 9 can be invoked only by a party to the Arbitration Agreement.

Section 9, however, does not limit the jurisdiction of the Court to pass

order of interim measures only against party to an Arbitration Agreement

or Arbitration Proceedings; whereas the Court is free to exercise same

power for making appropriate order against the party to the Petition under

Section 9 of the Act as any proceedings before it. The fact that the order

would affect the person who is not party to the Arbitration Agreement or

Arbitration Proceedings does not affect the jurisdiction of the Court under

Section 9 of the Act which is intended to pass interim measures of

protection or preservation of the subject matter of the Arbitration

Agreement.

13. The Appellants, however, place reliance on the decision of the

Kerala High Court in the case of Shoney Sanil v/s. M/s. Coastal

Foundations (P) Ltd. & Ors. reported in AIR 2006 Kerala (206). In

that case the question considered was whether the writ-petitioner,

admittedly, a third party to an alleged Arbitral Agreement between the

Respondents inter se, and who had in his favour a confirmed Court sale
 23

and certificate of such sale and delivery of possession, following and

arising under an independent decree, could be dispossessed, injuncted or

subjected to other Court proceedings under Section 9 of the Act? The

Kerala High Court held that orders under Section 9 (ii)(c) can be passed

only in relation to subject matter of dispute in arbitration which may be in

possession of any party since it is not the intention of the Act or any

arbitration proceedings as conceived by the law of Arbitration to interfere

with or interpolate third party rights. It concluded that on a plain reading

of Section 9 of the Act and going by the Scheme of the said Act, there is

no room to hold that by an interim measure under Section 9, the rights of

third party holding possession on the basis of Court sale could be

interfered with, injuncted or subjected to proceedings under Section 9 of

the Act. Instead, it held that Section 9 of the Act contemplates issuance

of interim measures by the Court only at the instance of party to

Arbitration Agreement with regard to the subject matter of the Arbitration

Agreement. The Court has, however, noted that such order can be only

against the party to an Arbitration Agreement or at best against any person

claiming under him. The Principle expounded in this decision is that if a

third party has independent right in the subject matter of the Arbitration

Agreement, Section 9 cannot be invoked to affect his rights. At the same

 24

time, the Kerala High Court has plainly opined that it is possible to pass

orders under Section 9 against a third party if such person is claiming

under the party to the Arbitration Agreement. Thus understood, Section 9

can be invoked even against a third party who is not party to an arbitration

agreement or arbitration proceedings, if he were to be person claiming

under the party to the arbitration agreement and likely to be affected by

the interim measures. The Appellants herein will have to substantiate that

they were claiming independent right in respect of any portion of the

subject matter of the Arbitration Agreement on their own and not claiming

under the Respondent No. 2 Society who is party to the Arbitration

Agreement. In absence thereof, the Court would certainly have jurisdiction

to pass appropriate order by way of interim measures even against the

Appellants herein, irrespective of the fact that they are not party to the

Arbitration Agreement or the Arbitration Proceedings.

14. Reliance was placed on another decision of the Delhi High Court

in the case of Impex Trading GMBH v/s. Anunay Fab. Ltd. & ors.

reported in 2008 (1) Arb. LR 50 Delhi. In this case relief was sought

against the bankers of the Respondent No. 1 and Petitioner respectively.

The Court found as of fact that the Bankers (Respondents 2 to 4) were

 25

regulated in their working by various articles of the UCP500. The

liability of the Bank under the document was independent of any dispute

as to breach of contract between the seller and the buyer. On this finding,

the Court went on to hold that Petition under Section 9 of the Act against

the Bankers who are not even party to the Consignment Agreement and

the Arbitration Clause is not maintainable and deserves dismissal qua

them. Once again that was not a case of person claiming under the party

to the Arbitration Agreement, unlike in the present case where the

Appellants were members of the Respondent No.2 Society and would be

therefore bound by the Award against the Society. The fact that the

Appellants have proprietary rights in the flats occupied by them does not

mean that they were claiming such right dehors the rights of the Society in

the said flats. For, the Society is the owner of the land and structure

standing thereon. The flats occupied by the Appellants are part thereof

and in fact, allotted to the Appellants in the capacity of members of the

Society. In that sense, the Appellants are persons claiming rights in the

flats situated in the property which is the subject matter of the Arbitration

Agreement, under the Respondent No.2 Society who is party to the said

Arbitration Agreement. Accordingly, even this decision will be of no

avail to the Appellants.

 26

15. The Appellants would then rely on the decision of the Apex Court

in Ramesh Himmatlal Shah v/s. Harsukh Jadhavji Joshi reported in

AIR 1975 SC 1470 to contend that the flats in question occupied by them

have been allotted to them by the Housing Society which allotment is

coupled with the right to transfer their shares of the Society and interest in

the said flat which is the property of the Society. In the said decision, the

Apex Court has observed that the right so enjoyed by the member is the

species of the property namely the right to occupy a flat of this type,

which assumes significant importance and acquires under the law a stamp

of transferability in furtherance of interest of commerce. It went on to

observe that there is no fetter in any of the legal provisions against such a

conclusion and for which reason the attachment and sale of the property

of the member in execution of the decree are valid under the law. The

legal position expounded by the Apex Court in the said decision will be of

no avail to the case on hand. The crucial question is whether the members

can be heard to say that their rights in the flats occupied by them were

dehors the rights of the Society therein and that they were not claiming

under the Society at all. In our considered opinion such stand of the

members(Appellants herein) cannot be countenanced.

 27

16. In the present case, it is not in dispute that the General Body of the

Society which is supreme, has taken a conscious decision to redevelop the

suit building. The General Body of the Society has also resolved to

appoint the Respondent No.1 as the Developer. Those decisions have not

been challenged at all. The Appellants who were members of the Society

at the relevant time, are bound by the said decisions. The Appellants in

the dispute filed before the Cooperative Court have only challenged the

Resolution dated 27/4/2008, which challenge would merely revolve

around the terms and conditions of the Development Agreement. As a

matter of fact, the General Body of the Society has approved the terms

and conditions of the Development Agreement by overwhelming majority.

Merely because the terms and conditions of the Development Agreement

are not acceptable to the Appellants, who are in minuscule minority

(only two out of twelve members), cannot be the basis not to abide by the

decision of the overwhelming majority of the General Body of the Society.

By now it is well established position that once a person becomes a

member of the Cooperative Society, he looses his individuality with the

Society and he has no independent rights except those given to him by the

statute and Bye-laws. The member has to speak through the Society or
 28

rather the Society alone can act and speaks for him qua the rights and

duties of the Society as a body (see Daman Singh & ors. v/s. State of

Punjab reported in AIR 1985 SC 973). This view has been followed in

the subsequent decision of the Apex Court in the case of State of U.P. v/s.

Chheoki Employees Cooperative Society Ltd. reported in AIR 1997

SC 1413. In this decision the Apex Court further observed that the

member of Society has no independent right qua the Society and it is the

Society that is entitled to represent as the corporate aggregate. The Court

also observed that the stream cannot rise higher than the source. Suffice

it to observe that so long as the Resolutions passed by the General Body of

the Respondent No. 2 Society are in force and not overturned by a forum

of competent jurisdiction, the said decisions would bind the Appellants.

They cannot take a stand alone position but are bound by the majority

decision of the General Body. Notably, the Appellants have not challenged

the Resolutions passed by the General Body of the Society to redevelop

the property and more so, to appoint the Respondent No.1 as the

Developer to give him all the redevelopment rights. The propriety rights

of the Appellants herein in the portion (in respective flats) of the property

of the Society cannot defeat the rights accrued to the Developer and/or

absolve the Society of its obligations in relation to the subject matter of

 29

the Arbitration Agreement. The fact that the relief prayed by the

Respondent No. 1 in Section-9 Petition and as granted by the Learned

Single Judge would affect the propriety rights of the Appellants does not

take the matter any further. For, the propriety rights of the Appellants in

the flats in their possession would be subservient to the authority of the

General Body of the Society. Moreso, such rights cannot be invoked

against the Developer (Respondent No.1) and in any case, cannot extricate

the Society of its obligations under the Development Agreement. Since the

relief prayed by the Respondent No.1 would affect the Appellants, they

were impleaded as party to the proceedings under Section 9 of the Act,

which was also necessitated by virtue of Rule 803E of the Bombay High

Court (Original Side) Rules. The said Rule reads thus:-

“R803E. Notice of Filling Application to persons likely to be

affected.--
Upon any application by petition under the Act, the Judge in
chambers shall, if he accepts the petition, direct notice
thereof to be given to all persons mentioned in the petition
and to such other persons as may seem to him to be likely to
be affected by the proceedings, requiring all or any of such
persons to show cause, within the time specified in the
notice, why the relief sought in the petition should not be
granted.”

17. The Respondents have also placed reliance on the decision of the
 30

Delhi High Court in the case of Value Advisory Services v/s. ZTE

Corporation & ors. in OMP. No. 65/2009 decided on 15th July, 2009.

One of the issue considered in this decision is whether in exercise of

powers under Section 9 of the Act, the Court can make an order against or

with respect to any party other than a party to the arbitration agreement.

The Court observed that no general principle of

maintainability/applicability or non-maintainability/non-applicability can

be laid down. It will have to be determined by the Court in the facts of

each case whether for the purpose of interim measure of protection,

preservation, sale of any goods, securing the amount in dispute and order

affecting the third party can be made or not. Similar view can be

discerned from another decision of the Delhi High Court in the case of

Arun Kapur v/s. Vikram Kapur 2002-DLT-95-42. The Court was

considering the distinction between the scope of application under

Section 9 and Section 17 of the Act. It observed that it is settled that

Section 9 is attracted only if the nature of dispute is subject matter of

Arbitration proceedings or agreement. It does not contemplate any such

relief which does not stem from the Arbitration Proceedings or the

disputes referred to in arbitration for adjudication. It observed that

Section 9 is distinct from Section 17 in as much as Petition under Section

 31

17 is moved before the Arbitrator for an order against a party to the

proceedings, whereas Section 9 vests remedy to a party to arbitration

proceedings to seek interim measure of protection against a person who

need not be either party to the arbitration agreement or to the arbitration

proceedings.

18. We have no hesitation in taking the view that since the Appellants

were members of the Society and were allotted flats in question in that

capacity at the relevant time are bound by the decision of the General

Body of the Society, as long as the decision of the General Body is in

force. As observed earlier, the Appellants have not challenged the

decisions of the General Body of the Society which is supreme, in so far

as redevelopment of the property in question or of appointment of the

Respondent No.1 conferring on him the development rights. The

Appellants have merely challenged the Resolution which at best would

raise issues regarding the stipulations in the Development Agreement.

The General Body of the Society has taken a conscious decision which in

this case was after due deliberation of almost over 5 years from August

2002 till the Respondent No. 1 came to be finally appointed as Developer

in terms of Resolution dated 2nd March, 2008. Moreover, the General

 32

Body of the Society by overwhelming majority not only approved the

appointment of Respondent No. 1 as developer but also by subsequent

Resolution dated 27th April, 2008 approved the draft Development

Agreement. Those terms and conditions have been finally incorporated in

the registered Development Agreement executed by the Society in favour

of Respondent No.1. That decision and act of the Society would bind the

Appellants unless the said Resolutions were to be quashed and set aside

by a forum of competent jurisdiction. In other words, in view of the

binding effect of the Resolutions on the Appellants, it would necessarily

follow that the Appellants were claiming under the Society, assuming that

the Appellants have subsisting proprietary rights in relation to the flats in

their possession. It is noticed that as of today the Appellants have been

expelled from the basic membership of the Society. Their right to occupy

the flat is associated with their continuance as member of the Society. It

is a different matter that the decision of expelling the Appellants from the

basic membership of the Society will be subject to the outcome of the

decision of the superior authority where the appeals are stated to be

pending. If the decision of the Society to expel the Appellants is to be

maintained, in that case, the Appellants would have no surviving cause to

pursue their remedy even before the Co-operative Court much less to
 33

obstruct the redevelopment proposal. As a matter of fact those

proceedings will have to be taken to its logical end expeditiously. Even if

the Appellants were to continue as members, they would be bound by the

decision of the General Body whether they approve of the same or

otherwise. In any case, keeping in mind that the Development Agreement

does not absolutely take away the rights of the Appellants in the flats in

question, as after demolition of the existing building, the Appellants would

be accommodated in the newly constructed flats to be allotted to them in

lieu of the existing flats, on the same terms as in the case of other

members, provided the Appellants continue to remain members of the

Society. Under the Development Agreement, the Respondent No. 1 is

obliged to complete the project within 18 months from the date of receipt

of full Commencement Certificate from the Corporation. The full

Commencement Certificate would be issued only upon the vacant

possession of the entire building is delivered to the Respondent No.1 who

in turn would demolish the same with a view to reconstruct a new building

in its place. Significantly, out of twelve (12) members, ten (10)

members have already acted upon the Development Agreement as well as

have executed separate undertaking-cum-agreement with the Respondent

No. 1 Developer. They have already vacated flats in their occupation to

 34

facilitate demolition of the existing building and have shifted to alternative

transit accommodation as back as in February 2009. The project has

been stalled because of the obstruction created by the Appellants herein

who are in minuscule minority. The said ten members of the Society

who have already shifted their premises, they and their family members

are suffering untold hardship. At the same time, the Respondent No. 1

who has already spent huge amount towards consideration of the

Development Agreement and incurred other incidental expenses to

effectuate the Development Agreement in addition will have to incur the

recurring cost of paying monthly rent to the ten members who have

already shifted to transit accommodation. The learned Single Judge has

noted that the Appellants are not in a position to secure the amount

invested and incurred including the future expenses and costs of the

Respondent No.1 herein in case the project was to be stalled in this

manner. Even before this Court the Appellants have not come forward to

compensate the Respondent No.1 herein and the other ten members of the

Society for the loss and damage caused to them due to avoidable delay

resulting from the recalcitrant attitude of the Appellants. Considering the

impact of obstruction caused by the Appellants to the redevelopment

proposal, not only to the Respondent No. 1 Developer but also to the
 35

overwhelming majority of members (10 out of 12) of the Society, the

learned Single Judge of this Court opined that it is just and convenient to

not only appoint the Court Receiver but to pass further orders for

preservation as well as protection and improvement of the property which

is subject matter of Arbitration Agreement. We have already noticed that

the Court’s discretion while exercising power under Section 9 of the Act is

very wide. The question is whether in the fact situation of the present

case it is just and convenient to appoint Court Receiver coupled with

power conferred on him to take over possession of the entire building and

hand over vacant and peaceful possession thereof to the Respondent No. 1

who in turn shall redevelop the property so as to provide flats to each of

the members of the Society in lieu of the existing flats vacated by them as

per the terms and conditions of the Development Agreement, as ordered

by the learned Single Judge. For the reasons noted by the Learned Single

Judge which we have reiterated in the earlier part of this decision, we find

that it would be just and convenient to not only appoint Court Receiver

to take over possession of the property but also pass further order of

empowering the Court Receiver to hand over vacant possession of the suit

building to the Respondent No. 1 to enable him to complete the

redevelopment work according to the terms and conditions of the

 36

Development Agreement.

19. Our attention was invited to the decisions of our High Court in the

case of Raja Construction Co. v/s. Sahara Cooperative Housing

Society Ltd. & ors. in Notice of Motion No. 2753/2007 decided on

August 31, 2007 and another decision of the Division Bench in the case of

Whiz Enterprise Private Ltd. v/s. State of Maharashtra & ors. in WP

(L) No. 28/2009 decided on 30/7/2009. We are conscious of the fact that

in both these decisions the member who was in minority did not bother to

challenge the decision of the General Body of the Society. Even in the

present case, the Appellants have not challenged the relevant decisions of

the Society to redevelop the suit property and to appoint the Respondent

No.1 as the Developer. At best, the Appellants have challenged the

Resolution dated 27th April, 2008 which in turn relates to the approval of

the Development Agreement, which has already been executed between

the Respondent No. 1 Developer and the Respondent No. 2 Society.

Indeed, in those cases the relief was not on an Application under Section

9 of the Act, but for the reasons recorded hitherto the relief to be granted

in this petition would nevertheless be the same.

 37

20. It was also argued that the property was in good condition and there

was no need to redevelop the existing building. In the first place, as noted

earlier, the decision of the General Body of the Society to redevelop the

suit property has not been challenged at all. Besides, no provision in the

Cooperative Societies Act or the rules or any other legal provision has

been brought to our notice which would curtail the right of the Society to

redevelop the property when the General Body of the Society intends to do

so. Essentially, that is the commercial wisdom of the General Body of the

Society. It is not open to the Court to sit over the said wisdom of the

General Body as an Appellate Authority. Merely because some members

in minority disapprove of the decision, that cannot be the basis to negate

the decision of the General Body, unless it is shown that the decision was

the product of fraud or misrepresentation or was opposed to some

statutory prohibition. That is not the grievance made before us. In the

present case, the General Body took a conscious decision after due

deliberations for over five years to redevelop its property. Even with

regard to the appointment of the Respondent No.1 as the Developer, the

record shows that it was decided by the General Body of the Society after

examining the relative merits of the proposals received from the

developers and interviewing them. Even the proposed development

 38

agreement to be entered with the Developer(Respondent No.1) was

approved by the General Body. The Appellants raised untenable pleas to

cause obstruction and have belatedly filed proceedings in the Cooperative

Court as a counter blast only to protract the redevelopment work to be

carried out by the Respondent No.1 herein.

21. Accordingly, we find no infirmity in the conclusion reached by the

Learned Single Judge in making the Petition absolute in terms of prayer

clause (a) in the fact situation of the present case.

22. In our opinion, this Appeal is devoid of merits. The same deserves

to be dismissed. At the same time, we would clarify that any observation

in this decision shall not be treated as an expression of opinion one way or

the other in the pending proceedings. The same will have to be proceeded

on its own merits in accordance with law.

23. Hence, this Appeal is dismissed with costs.

CHIEF JUSTICE

A.M.KHANWILKAR, J