Arbitral Tribunal Not Barred Under Section 79 Of The RERA Act From Passing An Order Of Injunction: Bombay High Court

The Bombay High Court has ruled that the Arbitral Tribunal is not a Civil Court within the meaning and purview of the Code of Civil Procedure, 1908 and thus, the arbitral proceedings cannot be said to be barred under Section 79 of the Real Estate (Regulation and Development) Act, 2016 (RERA Act). The Single Bench of Justice G.S. Kulkarni held that the bar of Section 79 of the RERA Act would not apply to an Arbitral Tribunal and thus, the Arbitral Tribunal is not barred from passing an order of injunction under Section 17 of the Arbitration and Conciliation Act, 1996 (A&C Act). The Court added that it can never be the intention of the legislature to elevate the status of the Arbitral Tribunal to that of a Civil Court or to construe the Arbitral Tribunal as an authority like a Civil Court. In the course of the arbitral proceedings between the claimant/appellant- Ashok Palav Coop. Housing Society Ltd., and the respondent-Pankaj Bhagubhai Desai, the Arbitral Tribunal rejected the application of the appellant under Section 17 of the A&C Act for interim relief. The Arbitral Tribunal held that by virtue of Section 79 of the Real Estate (Regulation and Development) Act, 2016 (RERA Act), the Tribunal was barred from passing any order of injunction under Section 17 of the A&C Act. Against this, the appellant filed an appeal under Section 37 of the A&C Act before the Bombay High Court. The appellant Ashok Palav Coop. Housing Society contended that the parties had entered into the relevant agreement, which contained an arbitration clause, much before the provisions of the RERA Act were brought into force. The appellant added that before the RERA Act was brought into force, the said agreement was terminated by the party. The appellant averred that the Supreme Court, by a consent order passed on Special Leave to Appeal, appointed a Sole Arbitrator to adjudicate the disputes between the parties. Section 79 of the RERA Act provides that no civil court shall have the jurisdiction to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered by or under the RERA 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 the RERA Act. The High Court observed that the Sole Arbitrator, while rejecting the application under Section 17 of the A&C Act for interim relief, had held that since the Arbitral Tribunal is a forum for adjudication selected by the parties under an arbitration agreement, therefore, the bar against grant of injunction, as provided under Section 79 of the RERA Act, is applicable to a proceeding pending before an Arbitral Tribunal. Noting that Section 79 primarily postulates a bar on the Civil Court to exercise any jurisdiction to entertain any suit or proceedings, and bars any injunction being granted by "any Court" or "any other authority", the High Court ruled that the Arbitral Tribunal certainly cannot be called a Civil Court falling under the Code of Civil Procedure, 1908. The Bench observed that the Supreme Court in Food Corporation of India versus M/s. Evdomen Corporation (1999) had interpret the phrase "Civil Court having jurisdiction to decide", as contained in Section 2(c) of the Arbitration Act, 1940, as a Court having jurisdiction under Section 20 of the Code of Civil Procedure. Further, the High Court noted that the Supreme Court in Nahar Industrial Enterprises Ltd. versus Hong Kong and Shanghai Banking Corporation (2009) had ruled that though a "tribunal" which is authorized to take evidence of witnesses would ordinarily be held to be a "court" within the meaning of Section 3 of the Evidence Act, 1872, and that it would include Judges, Magistrates and other persons who are legally authorized to take evidence; however, the Arbitrators were excluded from the definition of "court". Hence, the Court ruled that the Arbitral Tribunal is not a Civil Court within the meaning and purview of the Code of Civil Procedure and thus, the arbitral proceedings cannot be said to be barred under Section 79 of the RERA Act. "Adverting to the above position of law, it can be observed that although the arbitral tribunal has some trappings of the Court, the arbitral tribunal is not a Civil Court within the meaning and purview of the Code of Civil Procedure, so that the bar to arbitral proceedings can be read under Section 79 of the RERA." The Court rejected the finding of the Arbitral Tribunal that that the Arbitral Tribunal constituted "an authority" and hence, it fell within the purview of Section 79 of the RERA Act and thus, it was barred from passing an order of injunction in the application for interim relief filed by the appellant under Section 17 of the A&C Act. "The expression "any Court or other authority" as...

Arbitral Tribunal Not Barred Under Section 79 Of The RERA Act From Passing An Order Of Injunction: Bombay High Court

Parina Katyal

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