MUMBAI: The Bombay High Court has ruled that a dispute between an individual allottee and a promoter covered by RERA is non-arbitrable.
The jurisdiction of the Real Estate Regulatory Authority, established under the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA), is not ousted, even if the agreement between the promoter and the allottee contains an arbitration clause, Justice Madhav Jamdar of the HC ruled.
The judgment, lawyers say, is a landmark as it ensures that arbitration—a private alternate dispute redressal mechanism—won’t be the go-to solution for buyer-builder disputes that RERA tribunals must hear.
The RERA appellate tribunal in Maharashtra directed a builder to refund Rs 12 lakh with interest to a buyer where the sale agreement was yet to be registered. The builder, Rashmi Realty Builders Pvt Ltd, said there was a memorandum of understanding which contained an arbitration clause for disputes. However, the HC, after analysing the law, said special rights are created under RERA and to enforce them, special fora are also established with special provisions to implement orders of MahaRERA and the Appellate Authority. “Thus, the disputes covered under RERA are non-arbitrable,” said Justice Jamdar in an Oct 25 judgment made available last week.The builder appealed against a March 2023 RERA appellate tribunal order that reversed a Jan 2020 order of the Chairperson of Maharashtra Real Estate Regulatory Authority (MahaRERA). The Chairperson observed that since the parties were yet to enter into a registered agreement for sale, Section 18 of the RERA Act would not be attracted. The section allows a buyer who wishes to withdraw from a project to receive a refund with interest over delay in possession.
The legal question framed by the HC was whether the jurisdiction of the Real Estate Regulatory Authority established under RERA is ousted if the agreement between the promoter and the individual allottee or an association of allottees contains an arbitration clause. The HC held it was not ousted.
Senior counsel Atul Damle, as amicus curiae, underlined that the legislators intended RERA to protect homebuyers. A R Upadhyay, the builder’s advocate, said the MoU executed in 2013, provided for arbitration in Mira Road and argued that since no agreement was registered with flat numbers, buyers were not classified as ‘allottees’ under RERA. The HC held that the MoU clearly showed them as allottees since the flat numbers were to be allotted at a function to be hosted by the builder, as argued by Advocate Altaf Khan for Rahul Pagariya and other buyers, who booked flats in a project called Rashmi’s Star City Phase IV.
Justice Jamdar said it was a well-settled that selecting arbitration as the mechanism is available only if the law accepts the existence of arbitration as an alternative remedy that is available to be chosen. If arbitration is repugnant or inconsistent with the law, such an option to adopt arbitration as the dispute resolution mode is denied, the HC said.
Source Homevior.in
