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Arbitration remains an alternative for real estate disputes even under RERA Act: Gauhati High Court

BACKGROUND

The Court was dealing with a petition filed by two persons (petitioners) who had entered into an agreement to buy an apartment with a real estate company and the Guwahati Metropolitan Development Authority (respondents). The apartment was supposed to be delivered to the petitioners by December 20, 2020. However, although the petitioners paid the advance amount, the respondents did not hand over the possession of the apartment. In the ensuing dispute, the petitioners sought the payment of interest for the delay in handing over the apartment – an entitlement under Section 18 of the RERA Act where there is a delay in handing over the apartment. To resolve this dispute, the petitioners invoked an arbitration clause which provided for the settlement of disputes by a three-member arbitration tribunal. The petitioners also appointed an arbitrator. However, the respondents did not take any steps to appoint an arbitrator from their end, thus delaying the resolution of the dispute by arbitration. This led the petitioners to approach the High Court for relief. In response, the respondents asserted that the dispute should be decided on by the authority under the RERA Act and not by arbitration. To support this stance, the respondents referred to the Vidya Drolia ruling, in which it had been observed that disputes handled by the Debt Recovery Tribunal (DRT) are not subject to arbitration since the DRT Act is a complete code in itself for debt recovery. The respondents contended that the same analogy would be applicable to the RERA Act. The Court, however, rejected this argument and held that the DRT Act and the RERA Act are not comparable. “The recovery of money is automatic as soon as the order of the Tribunal or the Appellate Tribunal is made under the DRT Act. However, the same is not the case with respect the RERA Act,” the Court pointed out. The Court proceeded to appoint former Gauhati High Court judge, Justice (Retired) HN Sarma as the sole arbitrator to settle the dispute between petitioners and the respondents, before disposing of the petition before it.

 

 

VERDICT

The Gauhati High Court ruled that arbitration can be invoked to settle a real estate dispute, even though an alternative legal remedy exists under the Real Estate (Regulation and Development) Act (RERA Act) [Pallab Ghosh and Kakali Roy V. Simplex Infrastructures Limited and Anr. Justice Michael Zothankhuma found that there is no conflict between the RERA Act and the Arbitration Act of 1996 and that either remedy can be opted for by a party in real estate-related disputes. “The Arbitration Act is not inconsistent or in derogation of the RERA Act. Thus, arbitration can be invoked by a party, in spite of the availability of the alternative remedy provided under the provisions of the RERA Act,” the Court observed.

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Written by- Shreyasi Ghatak