Aastha Thakur
Published on: 04 August 2022 at 18:41 IST
The Delhi High Court held that in any disagreement 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 case was heard by Single Bench of Justice Sanjeev Narula and he observed that the remedies given under the RERA Act are in addition not in suppression of, the remedies available under the Arbitration and Conciliation Act, 1996. (A&C Act)
The Court applied the ‘Doctrine of Election’, while ruling that as the party has not avail the remedial provisions under the RERA Act, therefore, it was not barred from electing to avail the remedy of arbitration.
The disputed case fact are as follows – The respondent- Sun world 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’.
However, after sometime the petitioner wanted to cancel the allotted flat agreement and recover the amount given to the respondent. The respondent failed to refund the said amount, thereby petititoner invoked the Arbitration Clause given in the Flat Buyer Agreement and filed the application in Delhi HC under the Section 11(6) of the A&C Act seeking the appointment of a Sole Arbitrator.
In submission, the respondent submits that the construction company is registered under the RERA Act, UP and therefore the jurisdiction for the disputes arising out of the Flat Buyer Agreement, as per statutory provision of Section 88 of the Act, falls before the Uttar Pradesh Real Estate Regulatory Authority (UP RERA). Further, it contends that the RERA Act comes under special legislation enacted to resolve the issues of buyers & builders in the Real Estate Agreements. Hence, the arbitration clause invoked here holds no water as the jurisdiction of petitioner disputes lies under RERA Act.
Respondent placed reliance on the 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.
The Court examined the statutory provision provided under Part I of the A&C Act which provides that 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.
Observing that the application of Petitioner does not fall under the category of cases which have been recognized as non-arbitral. 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.
Regarding the bar of Section 79 of the RERA Act, 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 relied on the case of Imperia Structures versus Anil Patni (2020) where the apex court 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 RERA Act. Hence, the High Court held that the application of concurrent remedies under the A&C Act is not barred under the RERA Act, and thus, there is no clash between the provisions of the RERA Act and the A&C Act, since the remedies available under the RERA Act are in addition to, and not in supersession of, the remedies available under the A&C Act.
The Court while adjudging jurisdictional issue applied the ‘Doctrine of Election’ – where two remedies are available for the same relief, the party to whom the said remedies are available has the option to elect either of them; however, the doctrine would not apply to cases where the ambit and scope of the two remedies is essentially different.
The Court further noted that the invoking of arbitration clause is not invalid as long as Court held that if the petitioner under the statue does not imply the arbitration dispute. The Apex Court had added that the judicial authority can refuse to refer the parties to arbitration only when the party has opted for the specific/special remedies which are provided for under the statute.
Observing that the parties had not initiated any proceedings under the RERA Act, the Court held that the petitioner was not barred from electing to avail the remedy of arbitration.
The Court held that, “From the foregoing, it is thus clear that the remedy available under the A&C Act is in addition to the remedies available under other special statutes and the availability of alternative remedies is not a bar to the entertaining of a petition filed under the A&C Act. But once elected, then the other remedy will not lie in respect of the same dispute. Hence, once a RERA proceeding is initiated, an application under Section 8 of the Act would not lie. However, in the instant case, Respondent has not initiated any proceeding under RERA, hence election of remedy of arbitration is not barred.”
Further the Court noted that there is no provision of RERA Act for the authority to refer a matter to arbitration, it was ruled that the provisions of the RERA Act are in addition to, and not in derogation of, any other law, and that the RERA Act is not inconsistent with the provisions of the A&C Act. The Court added that the object and purpose of both the statutes is distinct.
Therefore, the Bench ruled that the disputes raised by the petitioner were clearly arbitrable, and were not barred by the existence of a concurrent remedy under the RERA Act.
Thus, the Court allowed the petition, appointed a Sole Arbitrator and referred the parties to arbitration.
