Remedy Under RERA Act Is Not A Bar For Initiation Of Arbitration: Delhi High Court

The Delhi High Court has ruled that the dispute involving refund of payment under the 'Flat Buyer Agreement' from a real estate developer is arbitrable and is not barred by the existence of a concurrent remedy under the Real Estate (Regulation and Development) Act, 2016 (RERA Act). The Single Bench of Justice Sanjeev Narula held that the remedies available under the RERA Act are in addition to, and not in supersession of, the remedies available under the Arbitration and Conciliation Act, 1996 (A&C Act), and that the application of concurrent remedies under the A&C Act is not barred under the RERA Act. Applying the 'Doctrine of Election', the Court ruled that since the party had not initiated any proceedings under the RERA Act, therefore, it was not barred from electing to avail the remedy of arbitration. The respondent- Sunworld Residency Pvt. Ltd. is a real estate developer, who undertook construction of a Group Housing Society in which the petitioner Priyanka Taksh Sood and her late husband were jointly allotted a flat. The parties entered into a 'Flat Buyer Agreement' and a 'Supplementary Agreement'. Thereafter, the petitioners opted to cancel the allotment of the flat and requested the respondent to refund an amount, which the respondent allegedly failed to refund. The petitioner invoked the Arbitration Clause contained in the Flat Buyer Agreement and filed a petition under Section 11(6) of the A&C Act before the Delhi High Court seeking appointment of a Sole Arbitrator. The respondent Sunworld Residency submitted before the High Court that it is registered with the Real Estate Regulatory Authority (RERA), Uttar Pradesh and therefore, in terms of Sections 88 and 89 of Real Estate (Regulation and Development) Act, 2016 (RERA Act) the jurisdiction for the disputes would lie before the Uttar Pradesh Real Estate Regulatory Authority (UP RERA). The respondent added that the RERA Act is a special legislation which is enacted for social welfare, wherein the homebuyers are given a specific remedy. Thus, the respondent contended that RERA's jurisdiction cannot be excluded and the dispute cannot be referred to arbitration. Relying on the provisions of Section 79 of the RERA Act, the respondent averred that the civil court's jurisdiction to entertain a suit or proceeding would be barred in respect of any matter which the RERA is empowered to determine under the RERA Act. Section 2(3) of the A&C Act provides that Part I of the A&C Act shall not affect any other law for the time being in force by virtue of which certain disputes may not be referred to arbitration. Section 5 of the A&C Act provides that notwithstanding anything contained in any other law for the time being in force, in matters governed by Part I of the A&C Act, no judicial authority shall intervene except where so provided in Part I of the A&C Act. Ruling that the dispute raised by the petitioner does not fall in the category of cases which have been recognized as non-arbitrable, the Court held that the claim for refund of money, which arises from cancellation of allotment under the Flat Buyer Agreement, relates to rights in personam, which are amenable to arbitration. The Court noted that the Supreme Court in Vidya Drolia and Others versus Durga Trading Corporation (2020) has clarified that disputes relating to subordinate rights in personam that arise from rights in rem are arbitrable. The Court observed that Section 79 of the RERA Act, which bars the jurisdiction of the Civil Court, is pari materia to Section 41 of the Prevention of Money Laundering Act, 2002; Section 61 of the Information Technology Act, 2000; Section 61 of the Competition Act, 2002; and Section 15Y of the Securities and Exchange Board of India Act, 1992. The Bench held that if any law provides, either expressly or by necessary implication, that disputes specified therein cannot be submitted to arbitration, then, despite the non obstante provision of Section 5 of the A&C Act, Section 2(3) shall apply and will restrict the overriding effect of the A&C Act. The Court further noted that the Supreme Court in Imperia Structures versus Anil Patni (2020) had observed that the remedies available under the Consumer Protection Act, 1986 are concurrent and that the bar specified under Section 79 of the RERA Act would not apply to proceedings initiated under the provisions of the Consumer Protection Act, 1986. The Supreme Court had ruled that Section 79 of the RERA Act does not bar the initiation of proceedings before a fora which cannot be called a Civil Court. Noting that Section 18 of the RERA Act itself specifies that the remedy under the said Section is "without prejudice to any other remedy available", the Apex Court had hence ruled that the other remedies which are available to the allottees is acknowledged and saved by the RERA Act, subject to the applicability of Section 79 of the...

Remedy Under RERA Act Is Not A Bar For Initiation Of Arbitration: Delhi High Court

Parina Katyal

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Remedy Under RERA Act Is Not A Bar For Initiation Of Arbitration: Delhi High Court

Parina Katyal

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