This is an important issue especially when the same tribunal namely MahaRERA has passed two controversial Orders on this issue.

Let us see what is the provision of the Arbitration Act and what is an Arbitration proceeding.

Arbitration Act :

  1. Power to refer parties to arbitration where there is an arbitration agreement.—

(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to the arbitration.

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.

Jurisdiction of RERA

Now let us see provisions of The Real Estate (Regulation and Development) Act, 2016.( RERA)

  1. Application of other laws not barred.—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.
  2. Act to have overriding effect.—The provisions of this Act shall have an effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force.

Judicial pronouncements:

Booz-Allen & Hamilton Inc vs Sbi Home Finance Ltd. & Ors on 15 April 2011  Arbitral tribunals are private fora chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public fora constituted under the laws of the country. Every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of arbitral tribunals is excluded either expressly or by necessary implication. Adjudication of certain categories of proceedings is reserved by the Legislature exclusively for public fora as a matter of public policy. Certain other categories of cases, though not expressly reserved for adjudication by public fora (courts and Tribunals), may by necessary implication stand excluded from the purview of private fora. Consequently, where the cause/dispute is arbitrable, the court where a suit is pending will refuse to refer the parties to arbitration, under section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes. The well-recognized examples of non-arbitrable disputes are (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offenses; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes.

It may be noticed that the cases referred to above relate to actions in rem. A right in rem is a right exercisable against the world at large, as contrasted from a right in personam which is an interest protected solely against specific individuals. Actions in personam refer to actions determining the rights and interests of the parties themselves in the subject matter of the case, whereas actions in rem refer to actions determining the title to the property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property.

BEFORE THE MAHARASHTRA REAL ESTATE REGULATORY AUTHORITY MUMBAI Mr. Ganesh Lonkar  Versus D.S. Kulkarni Developers Ltd

Coram: Shri B.D. Kapadnis, Hon’ble Member & Adjudicating Officer.

There is a presumption that Parliament knows all the laws enacted by it. The Arbitration and Conciliation Act is of 1996 whereas the Real Estate (Regulation and Development) Act, 2016 is the later enactment. While enacting the Real Estate Act, the parliament has specifically provided in its section 89 that the provisions of the Real Estate Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. So the provisions of RERA have overriding effect over the provisions of section 8 of Arbitration and Conciliation Act, 1996. In view of this legal positiory I have come to the conclusion that despite the Arbitration Agreement of parties MahaRERA gets the jurisdiction to adjudicate upon the disputes which relate to the subject of an Arbitration Agreement.

BEFORE THE MAHARASHTRA REAL ESTATE REGULATORY AUTHORITY, MUMBAI Virtual Hearing held through video conference as Per MahaRERA Circular No.: 27 /2020 

Ayyaz Khan and Saba Khan Vs Era Realtors Pvt Ltd and Ors

Order dated 14th January 2022

The Parties will have to now abide by the terms of the Agreement for Sale dated 20.11,2o14. The Parties cannot now take recourse to RERA for a disputed issue for which the available recourse was defined in the agreement then itself.

The object and purpose of both the statutes are distinct and different, and there is nothing inconsistent or derogation therein. The Arbitration Act was enacted to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and for matters connected therewith or incidental thereto. Whereas the RERA Act was enacted to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating

Patna High Court REQ. CASE No.28 of 2020 dt.07-07-2021 officer and for matters connected therewith or incidental thereto.

M/S Bihar Home Developers  vs Shri Narendra Prasad Gupta on 7 July, 2021 Section 88 thereof provides the provisions of this Act explicitly to be in addition to and not in derogation of the provisions of any other law, with the only limitation contained in Section 89 making it prevail over in any other consistent law. Reading of both the statutes do not make the Arbitration Act to be inconsistent with the provisions of the RERA Act, more so when respondent no.1 himself disputes its applicability for want of the jurisdictional issue.

Real Estate Regulation and Development Authority Madhya Pradesh (at Bhopal) Complaint no:- M-BPL-17-0036 Date of filing:- 11/05/2017

 Shri. Anil Kumar Arya Vs. SVS Buildcon Pvt Ltd

Held that S.88 of the RERA Act states that the Act is in addition to, and not in derogation of, the provisions of any other law for the time being in force. Exactly this point of law has been dealt with by the Hon’ble Supreme Court in National Seeds Corporation vs. M. Madhusudhan Reddy &Anr. (2012)2 SCC 506. After taking into consideration Section 8 of the Arbitration Act and the provisions of the Consumer Protection Act the Court held that since the remedy available under the Consumer Protection Act was in addition to, and not in derogation of, the provisions of any other law for the time being in force, the complaint filed in the Consumer Forum would be maintainable despite there being an arbitration clause in the agreement to refer the dispute to an arbitrator.

This same authoritative pronouncement of the Supreme Court was reiterated by a three members bench of the National Consumer Disputes Redressal Commission in DLF Ltd. Vs. Mridul Estate Pvt. Ltd., R.P. No.412 of 2011 decided on 13.5.2013 and again by the National Consumer Disputes Redressal Commission in Sunil Kumar Sengar & Anr. Vs. M/s Unitech Ltd. Case No.427 of 2014 was decided on 8.6.2015.

Again S.89 of the Act clearly mentions that the RERA Act has overriding effect over any other law for time being in force in matters related to disputes between real estate promoters and allottees. On the basis of above-mentioned case law and legal maxims, we conclude that in the present matter of dispute the RERA Act will apply rather than the Arbitration Act and that the Authority has proper jurisdiction and the complaint is maintainable whereas Arbitration and Conciliation Act, 1996 is not applicable to the present dispute

M/s Imperia Structures Ltd v Anil Patni & Another (Civil Appeal No. 3581-3590 of 2020), the Supreme Court held that the redressal mechanism/provisions under the Real Estate (Regulation and Development) Act 2016 (RERA) do not act as a bar to complaints under the Consumer Protection Act 1986 (CP Act).

IBC and RERA

Pioneer Urban Land  vs Union of India on 9 August 2019

The RERA is to be read harmoniously with the Code, as amended by the Amendment Act. It is only in the event of a conflict that the Code will prevail over the RERA. Remedies that are given to allottees of flats/apartments are therefore concurrent remedies, such allottees of flats/apartments being in a position to avail of remedies under the Consumer Protection Act, 1986, RERA as well as the triggering of the Code.

CONCLUSION:

There is no specific ruling of the Supreme Court on issue specific on conflict between RERA and Arbitration but considering the precedents, we can draw an inference that arbitration is a private forum preferred by the parties to resolve the disputes between them as per agreement and mutually decided but RERA is a code by itself having regulatory powers and jurisdiction in matters of real estate.

 

19th January,2022

Shruti Desai