Homebuyers Seeking Remedy Under RERA Cannot Simultaneously Pursue Arbitration: SC

Homebuyers who elect to approach the Real Estate Regulatory Authority to enforce their rights cannot subsequently initiate parallel proceedings under the Arbitration and Conciliation Act, 1996 for the same underlying cause of action. The Supreme Court established that choosing statutory remedies under the real estate framework operates as a bar against seeking interim measures from commercial courts for arbitration.

A bench of Justice J. B. Pardiwala and Justice K. Vinod Chandran set aside a High Court order that had restrained a real estate developer from creating third-party interests or leasing out commercial space during pending arbitration proceedings.

Key Takeaways

Election of Forum is Final

Once allottees choose to invoke remedies before RERA and initiate execution proceedings, they cannot initiate parallel proceedings under the Arbitration and Conciliation Act, 1996 for substantially similar reliefs.

Commercial Leasing Preserved

Restraining developers from leasing out commercial spaces under assured return schemes impedes project operations, especially where allottees own un-demarcated undivided space rather than physical possession.

Scope of Section 9 Narrowed

Commercial Courts cannot entertain Section 9 interim protection applications that effectively seek to re-agitate matters already adjudicated or pending execution before RERA.

The Supreme Court observed that the remedies sought under RERA and the Arbitration and Conciliation Act, 1996 were substantially identical, rendering parallel arbitration proceedings misplaced. The Court, in its reasoning, observed: "We are not convinced that parallel proceedings of arbitration and execution of HRERA orders can be carried out and the former cannot be resorted to, for reason of the respondents having elected first, to go before the HRERA. The prayers made before both the authorities are substantially the same and the respondents having elected first to approach the HRERA, merely based on a communication issued, proposing leasing out of the properties and demanding development and fit out charges, there cannot be a fresh cause of action plea, to be agitated in arbitration. The application for arbitration in the facts of this case is misplaced."

The Court noted that the Haryana Real Estate Regulatory Authority had issued specific directions in the matter. The Court has following directions:

"i) The cancellation dated 07.06.2021 is hereby set aside and the respondent is directed to pay the arrears of amount of assured return at the rate i.e. Rs.22,500/- per month from the date i.e. 31.01.2015 till the commencement of the first lease on the said unit as per the memorandum of understanding, after deducting the amount already paid by the respondent on account of assured return to the complainants.
ii) The respondent is directed to pay arrears of accrued assured return as per MOU dated 31.01.2015 till date at the agreed rate within 90 days from the date of this order after adjustment of outstanding dues, if any, from the complainants and failing which that amount would be payable with interest @9% p.a. till the date of actual realization.
iii) The respondent is directed to offer possession of the unit within 2 months from the date of obtaining occupation certificate from the concerned authorities.
iv) The respondent is directed to execute conveyance deed in favour of the complainants within 3 months after obtaining the occupation certificate.
v) The respondent shall not charge anything from the complainant which is not the part of the agreement of sale."

Although the respondents relied upon In Re: Interplay between Arbitration agreements under Arbitration and Conciliation Act, 1996 and Stamps Act, 1899 to contend that judicial interference is extremely limited when an arbitration clause exists, the Apex Court clarified that the election of forum made by the homebuyers bound them to the statutory machinery.

Ratio

When litigants elect to invoke their statutory remedies under the Real Estate (Regulation and Development) Act, 2016 and initiate execution of RERA orders, they are precluded from pursuing parallel arbitration proceedings under the Arbitration and Conciliation Act, 1996 for substantially the same reliefs and underlying cause of action.

Background

The dispute originated from commercial agreements for the sale of undivided commercial space in a project named 'Neo Square' in Gurugram. The Builder Buyer Agreement and Memorandum of Understanding provided for an assured monthly return to the allottees. Following defaults in payment and delay in project completion, the respondents approached the Haryana Real Estate Regulatory Authority (HRERA) and obtained favorable directions. Execution proceedings were subsequently initiated in April 2025.

Thereafter, upon receiving communications regarding the proposed leasing of the property and demands for fit-out charges, the respondents approached the Commercial Court under Section 9 of the Arbitration and Conciliation Act, 1996 to restrain alienation and leasing. While the Commercial Court held the application maintainable, an appeal under Section 37 led to a High Court order restraining the developer from creating third-party rights or leasing the property. Reversing the High Court, the Supreme Court restored the order of the Commercial Court, modifying direction (iii) of the HRERA order in line with the commercial agreement, and relegated the parties back to HRERA under Section 63 of the Real Estate (Regulation and Development) Act, 2016 read with Rule 27 of the Real Estate (Regulation and Development) Rules, 2017.

Case Details:
Case No.: Civil Appeal Nos.10899-10904 of 2026
Neutral Citation: 2026 INSC 875
Case Title: Neo Developers Private Limited v. Rahul Bhargava and Anr. Etc.
Appearances:
For the Petitioner(s): Sri Amit Sibal, Senior Counsel
For the Respondent(s): Sri Rajinder Singh, AoR

Source: 2026 CaseBase(SC) 848