RERA disputes can't be settled by Arbitration, says Bombay HC

A disagreement between a promoter covered by RERA and an individual allottee is not subject to arbitration, according to the Bombay High Court.

Judge Madhav Jamdar of the High Court held that even in cases where an arbitration clause is included in the agreement between the promoter and the allottee. The Real Estate Regulatory Authority, which was established in accordance with the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA), retains its jurisdiction.

Lawyers claim that the ruling is historic because it guarantees that buyer-builder disputes that RERA tribunals must consider will not be resolved through arbitration, a private alternative dispute resolution process.

In a case where the sale agreement had not yet been registered, the RERA appellate tribunal in Maharashtra ordered a builder to reimburse a buyer for Rs. 12 lakh plus interest. There was an arbitration clause in the memorandum of understanding, according to the Builder, Rashmi Realty Builders Pvt Ltd.

After analyzing the legislation, the HC concluded that special rights are established under RERA and that, in order to uphold these rights, special forums have been established with unique provisions to carry out MahaRERA orders and the Appellate Authority's directives.

Therefore, in a ruling from October 25 that was made public last week, Justice Jamdar declared, "The disputes covered under RERA are non-arbitrable."

A March 2023 RERA appellate tribunal order that overturned a January 2020 order from the Chairperson of the Maharashtra Real Estate Regulatory Authority (MahaRERA) was appealed by the builder. The Chairperson noted that Section 18 of the RERA Act would not apply because the parties had not yet signed a registered agreement for sale.