One of the most significant contractual breaches made by the Developer under an agreement to sale is the default or delay in delivering possession of the Apartment/plot to the homebuyers. Such delays often give rise to Real Estate Disputes, leading homebuyers to question whether they should approach the RERA Tribunal established under the Real Estate (Regulation and Development) Act of 2016 for the adjudication of their claims or turn to the Arbitral Tribunal established under the Arbitration and Conciliation Act of 1996, especially when an arbitration clause is already present in the agreement to sale. Through this blog, the author aims to analyse various legal provisions, judicial precedents, and specific instances wherein the homebuyer may be entitled to approach the RERA Tribunal for seeking relief despite the existence of an arbitration clause in the agreement to sale. The blog further seeks to resolve the jurisdictional dilemma between the two authorities.
Provisions Under the Real Estate Regulatory Authority Act, 2016
The RERA Act, 2016 contains certain essential provisions that provide for the superseding of RERA Act over any other law at the time being in force –
- Section 88: States that the provisions of RERA are in addition to and not in derogation of any other law currently in force. This means that RERA does not exclude the application of other laws unless explicitly stated. The section herein is produced in verbatim: –
“The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.
- Section 89: The Section states that the RERA Act shall have an overriding effect on any other law/laws that is active for the time being in force. Which clearly states that the RERA Act will take precedence over any other law that is inconsistent with its provision. The Section is herein produced in verbatim: –
“The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force.”
- Section 79: The Section that no civil court shall have the jurisdiction to entertain any type of suit or proceedings which is pending adjudication before this Hon’ble Tribunal. The Section basically puts a bar upon the jurisdiction of any other court over the matter specifically handled by the RERA Tribunal.
The above provisions clearly stipulates that the RERA Act has been established for providing a special remedy to the homebuyers in addition to any other remedy available. But the Courts at various instances have superseded the jurisdiction of the RERA Tribunal over the Arbitral Tribunal.
What Disputes Are Not Arbitrable
The Hon’ble Supreme Court in the cases of Vidya Drolia & Ors. Vs. Durga Trading Corporation and Booz Allen and Hamilton INC vs. SBI Home Finance Limited & Ors. , has laid down certain disputes which are not arbitrable. Disputes such as involving public interest, land laws, or disputes of public nature are often not arbitrable. Basically, any dispute which has a “right in rem” i.e. rights getting effected of more than one individual, is not included under the head of arbitrable disputes.
Retrospective Application of the RERA Act
Agreements to sale, that are executed prior to the enactment of the RERA Act mostly contain an Arbitration Clause for resolving all or any disputes that arise out of the said Agreement. Homebuyers, face difficulty in determining the jurisdiction in cases like these. The Hon’ble Supreme Court answered to this question in the case of “M/S. Newtech Promoters and Developers vs. State of Uttar Pradesh” [3] and held that RERA applies retroactively to ongoing projects that do not have completion certificate.
Judicial Pronouncements Solidifying the RERA Tribunal’s Jurisdiction over the Arbitral Tribunal
Ganesh Lonkar v. D S Kulkarni Developers
The Maharashtra RERA in the present case dismissed the plea of the respondent that the dispute falls under arbitration as per the agreement to sale. The Tribunal, held that Section 89 of the Rera Act, creates an overriding effect over the provisions of the Arbitration Act, and therefore the MahaRERA will have exclusive jurisdiction over the said case.
Rashmi Realty Builders Pvt. Ltd. V. Rahul RajendraKumar Pagariya and others
The Bombay High in the present case, while answering to the question of whether jurisdiction under Section 20 of the RERA Act, 2016 be ousted when an arbitration clause is already present in the agreement to sale, held that even though a dispute under RERA is filed by an individual allottee against the developer, but the subsequent decision may affect all the other allottees in the said project. Therefore, the matter affects a larger sect of public and does not fall within the ambit of “Rights in Personam”. The court concluded that the said dispute is non-arbitrable as they involve the interests of the public at large and not just one single individual.
Anil Kumar Arya v. SVS Buildcon Private Limited
The Madhya Pradesh RERA in a landmark ruling pertaining to the jurisdictional issues between the arbitral tribunal and the RERA tribunal answered the same in favour of the RERA tribunal. The Tribunal held that the RERA Act is a special statute as opposed to the Arbitration Act which is a general statute. Therefore, in cases of conflict the RERA tribunal must be preferred as the requisite forum for seeking relief.
Conclusion
After analysing the above discussion, it can be inferred that homebuyers can pursue one of the two effective remedies available under the Arbitration and Conciliation Act of 1996 or the Real Estate (Regulation and Development) Act of 2016. However, the RERA Act is better placed because it is a piece of legislation established specifically to protect homebuyers’ interests and regulate the real estate industry. In ordinary circumstances, a special law prevails over a general law, further supporting RERA’s dominance in resolving real estate disputes even when an arbitration clause is present.
