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The Bombay High Court on 10th June ruled that the Arbitral Tribunal is not a Civil Court within the sense and scope of the Code of Civil Procedure, 1908, and hence the arbitral proceedings are not prohibited by Section 79 of the Real Estate (Regulation and Development) Act, 2016 (RERA Act), through the single bench of Justice G. S. Kulkarni in the case of Ashok Palav Coop. Housing Society Ltd. vs Pankaj Bhagubhai Desai and Anr. (Commercial Arbitration Petition (L) No. 1206 of 2019).

 

FACTS OF THE CASE:

During the arbitral proceedings between the claimant/appellant, Ashok Palav Coop. Housing Society Ltd. and the respondent, Pankaj Bhagubhai Desai, the Arbitral Tribunal dismissed the appellant’s plea for interim relief under Section 17 of the A&C Act. The Arbitral Tribunal ruled that the Tribunal was prevented from issuing an injunction under Section 17 of the A&C Act due to Section 79 of the Real Estate (Regulation and Development) Act, 2016 (RERA Act). In response, the appellant filed an appeal with the Bombay High Court under Section 37 of the A&C Act.

The appellant, Ashok Palav Coop. Housing Society, argued that the parties entered into the agreement, which included an arbitration clause, long before the RERA Act went into effect. The appellant further stated that the party terminated the agreement prior to the implementation of the RERA Act. The appellant claimed that the Supreme Court appointed a Sole Arbitrator to hear the parties’ issues through a consent order issued on Special Leave to Appeal.

According to Section 79 of the RERA Act, no civil court shall have jurisdiction to entertain any suit or proceeding relating to any matter which the Authority, the adjudicating officer, or the Appellate Tribunal is empowered by or under the RERA Act to determine; and no injunction shall be granted by any court or other authority relating to any action taken or to be taken in pursuance of any power conferred by or under the RERA Act.

JUDGEMENT:

The bench noted that the Sole Arbitrator, in rejecting the application for interim relief under Section 17 of the A&C Act, stated that because the Arbitral Tribunal is a forum for adjudication chosen by the parties under an arbitration agreement, the bar against grant of injunction, as provided under Section 79 of the RERA Act, applies to a proceeding pending before an Arbitral Tribunal.

The Bench observed that the Supreme Court had interpreted the phrase “Civil Court having jurisdiction to decide” as contained in Section 2(c) of the Arbitration Act, 1940, as a Court having jurisdiction under Section 20 of the Code of Civil Procedure in Food Corporation of India vs. M/s. Evdomen Corporation (1999).

Furthermore, the High Court noted that the Supreme Court in Nahar Industrial Enterprises Ltd. vs Hong Kong and Shanghai Banking Corporation (2009) held that while a “tribunal” authorised to take witness evidence would ordinarily be held to be a “court” within the meaning of Section 3 of the Evidence Act, 1872, and would include Judges, Magistrates, and other persons legally authorised to take evidence; however, the Arbitrators were exempt.

The Court went on to say that the legislature could never intend to elevate the Arbitral Tribunal’s status to that of a Civil Court or to interpret the Arbitral Tribunal as an authority like a Civil Court. As a result, the Bench concluded that the jurisdictional restriction to issuing an injunction, as intended in Section 79 of the RERA Act, would not apply to an Arbitral Tribunal.

Observing that the Arbitral Tribunal did not consider the appellant’s case on merits, the Court set aside the Arbitral Tribunal’s order and instructed the Tribunal to reconsider the appellant’s application filed under Section 17 of the A&C Act on merits.

Accordingly, the impugned order was set aside and the interim application was accepted.

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JUDGEMENT REVIEWED BY NIDHI KUMAR