RERA Relief Does Not Bar Arbitration Protection: Delhi High Court Sets Aside Commercial Court's Order

The Delhi High Court has recently ruled that homebuyers and investors are not barred from seeking interim relief under Section 9 of the Arbitration and Conciliation Act of 1996, solely on the ground that they had already previously approached the Real Estate Regulatory Authority (RERA). A Division Bench of Justice Prathiba M. Singh and Justice Shail Jain on 24th December, 2025 noting that remedies under the RERA Act and the Arbitration Act are contemporaneous and not mutually exclusive, pronounced that “The mere fact that a party has availed a statutory remedy under a special enactment does not, by itself, denude the Court of jurisdiction to grant interim protection, particularly where the reliefs sought do not overlap in substance or effect”. The dispute arose out of commercial agreements in 2015 regarding the "Neo Square" project in Gurugram, which was developed by M/S Neo Developers Pvt Ltd. The homebuyers, including Rahul Bhargava, entered into Builder Buyer Agreements (BBA) and Memorandums of Understanding (MoU) for commercial units with developers promising "Assured Monthly Returns" till the commencement of the first lease. The premature halt of these payments, delayed constructions, unexplained fit-out charges and allotments cancellation threats by the developer aggravated the dispute. Consequently, the homebuyers approached the Haryana Real Estate Regulatory Authority (HARERA) which ordered the developer to pay the arrears and to deliver possession as well as restricted unreasonable demands. Despite this, the developer allegedly attempted to lease the flats to third parties and raised additional demands. In order to secure their allotments, the buyers sought temporary relief from the Commercial Courts under Section 9 of the Arbitration Act. On July 10th, 2025, this application filed by homebuyers was dismissed on ground of doctrine of election. Aggrieved, the homebuyers filed an appeal. The central issue was whether the Section 9 petitions could be maintained considering that the homebuyers had already received orders from HARERA. Advocate Mr. Tanmay Mehta, counsel for the Appellants/homebuyers, maintained that the cause of action for obtaining interim protection—specifically, against the possibility of third-party leasing and fraudulent fit-out charges—was separate from the HARERA proceedings. He further claimed that the lease signed by the developer with a connected entity was a "complete sham." Advocate Mr. Chaudhary, representing the respondent/developer, relying on the "Doctrine of Election," argued that after the homebuyers opted to approach RERA and thereby secured an order, they could not seek remedy under the Arbitration Act. Rejecting the developer's arguments, the Court determined that the Commercial Court failed to consider the nature of the reliefs sought before HARERA and under Section 9 of the Arbitration and Conciliation Act, 1996. The court stated that “HARERA, while exercising its statutory mandate, rendered determinations which are final in character. In contradistinction, Section 9 Petition was limited to seeking interim and protective measures, instituted in a materially different context”. It cited IREO Grace Realtech v. Abhishek Khanna to emphasize that the doctrine of election is only applicable when the remedies are identical and concurrent. The Court deciding on the scope of Section 9, held that its objective is to solely to protect rights, not to resolve the matter, ruling that courts intervene to prevent irreversible actions—particularly in property disputes to ensure that alienation do not render arbitration "futile or illusory". Consequently, the Division Bench of Justice Prathiba M. Singh and Justice Shail on 24th December, 2025 ruled that homebuyers who have already obtained relief under the Real Estate (Regulation and Development) Act, 2016 (RERA) are not barred from seeking interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, as long as the reliefs sought are distinct and protective in nature. The Bench noted that “In cases where one party is in a position of dominance, such as a developer exercising control over possession and allotment, Section 9 enables the Court to neutralise such an imbalance, ensuring procedural fairness and preserving the sanctity of the arbitral process”, highlighting the broad scope of the provision. Further, the bench criticised the builders for a "sham transaction, seemingly brought into existence with the sole object of defeating the purpose and intent of the Memorandum of Understanding." The Court determining that the homebuyers had presented a sufficient case for interference to preserve the subject matter of the forthcoming arbitration, allowed all appeals and set aside the commercial court's orders. The Court ordered the developer not to create any third-party interests or lease out the property until the arbitration procedures commenced. Additionally, the developer has also been instructed ...

RERA Relief Does Not Bar Arbitration Protection: Delhi High Court Sets Aside Commercial Court's Order

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RERA Relief Does Not Bar Arbitration Protection: Delhi High Court Sets Aside Commercial Court's Order

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