Court Rules in Favor of Appellants, Emphasizing Separate Legal Grounds for Section 9 Arbitration Reliefs and RERA Adjudications
In a significant ruling, the Delhi High Court, comprising Justices Prathiba M. Singh and Shail Jain, has allowed appeals filed by Rahul Bhargava and others against the orders of the Commercial Court, which dismissed their Section 9 petitions under the Arbitration and Conciliation Act, 1996. The case revolved around disputes with M/S Neo Developers Pvt Ltd concerning commercial units in a real estate project.
The High Court's decision underscores the distinct nature of reliefs available under the Arbitration and Conciliation Act and the Real Estate (Regulation and Development) Act, 2016 (RERA). The appeals were necessitated after the Commercial Court dismissed the Section 9 petitions on the grounds that the appellants had already sought remedies under RERA, thereby allegedly precluding them from seeking similar reliefs under the Arbitration Act.
The background of the dispute involves a series of agreements between the appellants and Neo Developers for purchasing commercial units in the "Neo Square" project in Gurugram. When the developer ceased assured monthly payments and failed to deliver possession, the appellants pursued remedies through RERA. However, they also sought interim measures under Section 9 of the Arbitration Act to prevent the creation of third-party rights and maintain the status quo until arbitration commenced.
The Delhi High Court noted that the reliefs sought under Section 9 were interim and protective in nature, intended to preserve the subject matter of arbitration and ensure justice. These were separate from the substantive adjudications made by RERA, which focused on statutory and contractual violations. The court emphasized that the doctrine of election does not apply when the scope and ambit of remedies under different laws are distinct.
Furthermore, the court criticized the Commercial Court for dismissing the petitions on territorial jurisdiction grounds, noting that a technical distinction between "Delhi" and "New Delhi" as venues for arbitration was unwarranted. The High Court also highlighted the necessity of interim protection to prevent irreversible harm, especially in real estate disputes where property rights could be compromised.
In light of these findings, the High Court granted interim reliefs to the appellants, restraining Neo Developers from creating third-party interests and maintaining the status quo until arbitration proceedings commence. The ruling reinforces the complementary roles of arbitration and statutory remedies, allowing parties to pursue both without forfeiting their rights.
Bottom Line:
Arbitration and Conciliation Act, 1996 - Section 9 - Reliefs under Section 9 of the Arbitration Act are preventive and preservative in nature, distinct from regulatory and determinative reliefs under the Real Estate (Regulation and Development) Act, 2016 (RERA). The doctrine of election is inapplicable when remedies under RERA and Arbitration Act are distinct and not concurrent.
Statutory provisions:
- Arbitration and Conciliation Act, 1996 - Section 9
- Real Estate (Regulation and Development) Act, 2016 - Section 88
- Code of Civil Procedure, 1908 - Order 7, Rule 10
Rahul Bhargava v. M/S Neo Developers Pvt Ltd, (Delhi)(DB) : Law Finder Doc id # 2826722
