Arbitrability of RERA disputes: statutory exclusivity, party autonomy and judicial divergence
The Real Estate (Regulation and Development) Act, 2016 (“RERA”) was enacted to correct the deep structural imbalances in the Indian real estate sector marked by information asymmetry, unequal bargaining power and delays in project delivery. For decades homebuyers found themselves trapped in one-sided contracts facing indefinite delays and protracted litigation with little recourse. While real estate contracts routinely incorporate arbitration clauses, the interface between RERA and the Arbitration and Conciliation, 1996 (“Arbitration Act”) raises a fundamental doctrinal question: Whether disputes governed by a specialised consumer protection statute can be contractually diverted to arbitral forums?
Although, it is undisputed that Indian arbitration jurisprudence strongly favours party autonomy, disputes arising under RERA present a distinct category where statutory design, public interest considerations and regulatory objectives constrain arbitrability. The emerging judicial trend reflects a conundrum with regards to the arbitrability of disputes arising in the real estate sector in light of conflicting High Court judgments.
Statutory Architecture of RERA and Forum Exclusivity
The architecture of RERA is underpinned by a clear legislative intent to vest exclusive adjudicatory competence within specialized statutory bodies. Under Section 20 of RERA, the establishment of the Real Estate Regulatory Authority (“Authority”) is not merely administrative but central to a mandate of systemic oversight. This is reinforced by Section 31 of RERA, which provides an expansive remedial gateway for an aggrieved person. Crucially, the statutory definition of “person” extends to associations of allottees, signalling that the rights protected by RERA often transcend individual contractual grievances, ascending into the realm of collective or public interest (rights in rem).
The legislative limitation which establishes an explicit jurisdictional bar of civil courts is found in Section 79 of RERA. By ousting the traditional judicial forums, the legislature has effectively indicated the establishment of a self-contained, impervious dispute resolution ecosystem intended to prevent the fragmentation of remedies by eliminating traditional judicial forums.
Conversely, the Arbitration Act is founded on the principle of party autonomy, Sections 8 and 11 of the Arbitration Act statutorily mandate judicial authorities to give effect to the parties’ expressed intention to arbitrate by referring disputes to arbitration when a valid arbitration agreement exists. However, this party autonomy is tied to the Doctrine of Arbitrability. Statutes which create a new right and provide for a unique and specific machinery for its enforcement usually are held to be exclusive. Consequently, Section 79 of RERA along with the public interest character of RERA suggest towards the argument for statutory pre-emption. This legal conundrum has arisen due to the interface of a general procedural law i.e. Arbitration with a welfare-oriented statute that is RERA.
The Jurisprudential Bedrock: Conceptual Foundations of Arbitrability
Arbitrability refers to the legal acceptability of a dispute being resolved by arbitration rather than by judicial courts or statutory tribunals. In the Indian arbitration context this is not a question which can be determined on contractual will but rather which needs to be decided in accordance with the statutory limitations and the nature of rights involved. While the Arbitration Act accords significant weight to party autonomy, Section 2(3) of the Arbitration Act preserves the applicability of other laws by recognising certain disputes that may not be submitted to arbitration.
A crucial facet of this debate of arbitrability lies in the nature of the rights, while Rights in Personam refer to interests protected against a specific individual or individuals, they are confined within the four corners of a contract and have no effect on the public at large. In contrast, the rights which are exercisable against the public at large are referred to as Rights in Rem. As these rights involve issues such as collective welfare, statutory protections, or erga omnes obligations (obligations towards all) they require a central, authoritative determination by state appointed forums to ensure consistence and public order.
The Indian judiciary has progressively developed a structured framework to determine the categories of disputes that are non‑arbitrable. In Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd.1Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532, the Supreme Court affirmed that disputes involving rights in rem fall outside the scope of arbitration, as their adjudication necessitates determination by public fora rather than private tribunals. This position was further refined in Vidya Drolia v. Durga Trading Corporation2Vidya Drolia v. Durga Trading Corp., (2021) 2 SCC 1, wherein the Supreme Court articulated a four‑fold test for assessing non‑arbitrability. The test considers: (i) the nature of the rights involved, (ii) the potential impact on third‑party rights, (iii) the presence of specialised statutory fora designated to adjudicate such disputes and (iv) any express or implied statutory exclusion of arbitration. Collectively, these precedents underscore that arbitrability is dictated by the character of the rights and the governing statutory framework, rather than by the contractual intentions of the parties.
The Judicial Conundrum around Arbitrability of RERA Disputes
The absence of clear Supreme Court ruling on the arbitrability of disputes emerging under RERA has resulted in a fragmented jurisprudential landscape, creating legal uncertainty for real estate stakeholders. The Bombay High Court in M/s Rashmi Realty Builders Pvt. Ltd. v. Rahul Rajendrakumar Pagariya & Ors.3Rashmi Realty Builders (P) Ltd. v. Rahul Rajendrakumar Pagariya, 2024 SCC OnLine Bom 3871 held that the dispute resolution mechanism under RERA takes precedence over arbitration clauses. The case centred around the crucial question, whether an arbitration clause in a memorandum of understanding between a promoter and allottees could override RERA jurisdiction?
The dispute arose with regard to a refund claim for delayed construction. The allottees, dissatisfied with the delay filed a complaint before the Maharashtra Real Estate Regulatory Authority (“MahaRERA”). The complaint was lodged under Section 31(1) of RERA, which permits any aggrieved person to approach the Authority alleging a contravention of its provision, along with Section 18 of RERA which entitles an allottee to withdraw from a delayed project and claim a refund with interest.
MahaRERA held that since no apartments had been allotted and no agreement for sale had been executed the provisions of the Arbitration Act were inapplicable and accordingly dismissed the complaint. Aggrieved by this decision, the allottees filed an appeal before the Maharashtra Real Estate Appellate Tribunal (“Appellate Tribunal”). The Appellate Tribunal overturned MahaRERA’s order and ruled in favour of the allottees, directing the promoter to refund the consideration amount along with applicable interest. The promoter, dissatisfied with the Appellate Tribunal’s decision approached the Bombay High Court seeking a determination on whether the dispute resolution clause in the agreement could override the statutory remedies and adjudicatory framework provided under RERA.
The Bombay High Court rejected this contention and held that RERA as a special welfare statute prevails over the Arbitration Act. Applying the doctrine of generalia specialibus non derogant (General laws do not derogate from special laws), the Bombay High Court held that contractual arrangements cannot override the statutory jurisdiction vested under RERA. Further, the disputes governed by RERA possess an erga omnes (obligations towards all) character as they affect the collective interests of allottees and their associations, thereby transcending mere rights in personam. Moreover, where statutory remedies are mandatory the doctrine of election has no application. Emphasising consumer protection and public interest, the ruling affirmed RERA as a sui generis (of its own kind) and exclusive adjudicatory forum for real estate disputes.4Amaresh Singh, Sourav Sharma, Ashutosh Jadhav, Varsha Aggarwal, Rights Under RERA Cannot Be Ousted by Private Arbitration Clause, Bombay HC Holds (Mondaq, 13 February 2025) https://www.mondaq.com/india/arbitration-dispute-resolution/1584404/rights-under-rera-cannot-be-ousted-by- private-arbitration-clause-bombay-hc-holds
However, this restrictive view contrasts with the more liberal view taken by the Gauhati High Court in the case of Pallab Ghosh v. Simplex Infrastructures Limited (2024)5Pallab Ghosh v. Simplex Infras. Ltd., 2024 SCC OnLine Gau 751. In this case Gauhati High Court held that the invocation of arbitration is not prohibited merely because RERA has provided remedy under the statute. The Court did not find any repugnancy between RERA and the Arbitration Act and held that both statues function in different but harmonious spheres. Based on the four-fold test established in the case of Vidya Drolia v. Durga Trading Corporation6Supra 2, the Gauhati High Court held that disputes between individual allottees and promoters in RERA are of a contractual nature and do not involve rights in rem or affect third-party rights adversely. Applying the doctrine of election the Gauhati High Court held that a party can choose arbitration over RERA proceedings, where both provide relief for the same cause of action but through different procedural avenues.
With regard to doctrine of election, in the case of Rahul Bhargava & Anr. v. M/s Neo Developers Pvt Ltd7Rahul Bhargava v. Neo Developers (P) Ltd., 2025 SCC OnLine Del 9567. pronounced by the Delhi High Court, the Court examined whether homebuyers who have more than one contractual remedy particularly under RERA and arbitration agreements are bound to a single forum or can choose either. The judgement clarified that RERA’s statutory framework is aimed at consumer protection along with project regulation and operates alongside contractual arbitration.
This position aligns with the Delhi High Court’s ruling in Priyanka Taksh Sood v. Sunworld Residency Pvt. Ltd.8Priyanka Taksh Sood v. Sunworld Residency Pvt. Ltd. (2022 SCC OnLine Del 4717), wherein the Court ruled that there is no express bar under Sections 79, 88 and 89 of RERA on recourse to arbitration under the Arbitration Act. The Delhi High Court held that while concurrent remedies are available under the different frameworks, the aggrieved party is entitled to elect only one remedy over the other and will lose the alternative remedy as soon as one is elected over the other. This ruling serves as a watershed judgement for real estate arbitration, as it recalibrates the interplay of RERA and arbitration.
Nonetheless, this balanced approach raises practical concerns, particularly the risk of forum shopping and the procedural challenges that come with managing parallel or sequential proceedings across multiple adjudicatory forums.
Legislative Intent and Public Policy Considerations
RERA was introduced not merely as a legislative addition to the statute books, but as a well thought out, remedial intervention designed to address the existing complications in the real estate industry. Prior to the enactment of RERA, homebuyers were often exposed to multiple risks such as delivery delay, unclear contractual terms and inadequate relief. All these issues sprouted due to the asymmetrical bargaining power between the developers and home buyers. The main aim of RERA was to cure these defects by ensuring standardized contractual terms and setting up a dedicated regulatory and adjudicative machinery to provide effective relief. Therefore, the legislative intent of RERA is manifestly clear. It is intended to give primacy to consumer protection and set up sectoral accountability.
At the outset, what might seem as a welcome move by the High Courts in providing flexibility with regards to choice of forum, this issue can have multi-faceted aspects. Arbitration as an efficient dispute resolution mechanism in commercial disputes is a private, consent-based process that mainly gives effect to the contractual rights of the parties. RERA disputes may involve statutory rights granted to the promoters, common interests of the allottees, and the overall real estate project. Arbitration being a confidential, expensive and a party-autonomy-based process may affect the uniformity and accessibility of the remedies provided under RERA. Additionally, arbitration may have a disproportionately adverse effect on homebuyers, who generally do not have equality in negotiating arbitration agreements and are likely to incur high procedural and financial costs in arbitration proceedings.
The doctrine of generalia specialibus non derogant, which states that in the case of a conflict, a special law will prevail over a general law, further accentuates the conflict between arbitration and the statutory provisions of RERA. Since, RERA is a special law that aims to control the real estate industry and safeguard the interests of homebuyers, statutorily it is required to override the general provisions of arbitration, as provided in the Arbitration Act. The judicial interpretation of this doctrine clearly states that the arbitration clauses cannot be used to undermine the statutory rights, remedies and forums specifically provided under RERA.9Ajar Rab, Redressal Mechanism Under the Real Estate (Regulation and Development) Act 2016: Ouster of the Arbitration Tribunal? (2017) 10 NUJS Law Review 1 https://nujslawreview.org/wp- content/uploads/2017/03/2017-10-1-Ajar-Rab-Redressal-Mechanism-Under-The-Real-Estate-Regulation-and- Development-Act-2016.pdf
Civil Court Exclusion and Implied Bar on Arbitration
The provisions under Section 79 of RERA are specifically intended to bar the jurisdiction of civil courts in respect of all matters that are required to be decided by the Real Estate Regulatory Authority, the Adjudicating Officer, or the Appellate Tribunal under RERA. This provision also indicates the intention of the Parliament to create a self-sufficient adjudicatory system that has the power to deal with real estate related disputes. Therefore, the legislature aimed to ensure that all real estate disputes are resolved within the self-contained adjudicatory system, uniquely equipped to navigate the complexities of the real estate sector.
Although arbitration is not expressly referred to, the scope and object of Section 79 of RERA suggest an implied bar on adjudication through arbitral procedures in matters specifically falling within RERA’s jurisdiction. Arbitration is distinct from civil court proceedings as it operates as an alternative dispute resolution mechanism primarily in the realm of contractual obligations. While permitting reference to arbitration may carry certain advantages it risks undermining the intent of Section 79 of RERA by subordinating RERA’s specialised adjudicatory machinery to the will of the parties, wherein the promoters/builders typically possess greater bargaining power and resources than the general consumer/allottees.
The promoters/builders may choose to avail themselves of the arbitration provisions in order to delay litigation, split causes of action or derive procedural benefits if arbitration is allowed to run concurrently with RERA proceedings. Apart from causing unnecessary litigation to the allottees this may also put the arbitral tribunals and RERA authorities at risk of being faced with inconsistent and conflicting decisions.
Need for Doctrinal Clarity and Judicial Consistency
The divergent judicial stances taken by different High Courts on the arbitrability of disputes under RERA highlight the pressing need for doctrinal consistency and clarity. While some High Courts have taken a lenient or intermediate stance based on the doctrine of election, other High Courts like the Bombay High Court have placed reliance on the exclusivity of RERA forums and the non-arbitrable nature of disputes arising out of RERA. Apart from creating uncertainty in the realm of dispute resolution and creating a lack of clarity, the divergent judicial stands may also have the effect of diluting the consumer-friendly intent of RERA.
Conclusion
The analysis demonstrates that considerable judicial uncertainty continues to surround the arbitrability of disputes in the real estate sector. A purposive reading of Section 79 of RERA suggests that matters falling within its statutory framework were intended to be resolved exclusively by the Authority established under RERA, implying a bar on recourse to arbitral proceedings where statutory rights and remedies are involved. At the same time, judicial approaches have remained divided with some courts treating RERA rights as having a broader public character akin to rights in rem, while others have allowed arbitration through the application of the doctrine of election. This lack of uniformity carries significant consequences for real estate transactions in India, particularly in relation to the enforceability of arbitration clauses. Promoters must therefore ensure that contractual arrangements remain consistent with RERA’s statutory safeguards and do not undermine its remedial framework. Ultimately, authoritative guidance from the Supreme Court is necessary to settle this divergence and bring coherence to the law. A harmonised and purposive interpretation that gives due weight to consumer protection would be essential to achieving certainty and stability in the law of arbitrability while preserving the consumer‑centric objectives of RERA.
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