Remedy Under A&C Act Is In Addition To Remedies Under Special Statutes, But Once Elected Other Remedies Are Barred For Same Dispute: Calcutta HC

Brief Facts:

The Defendant is a subsidiary of Bengal Ambuja Housing Development Limited, a joint venture company of West Bengal Housing Board and Ambuja Neotia Group. On 24.04.2016, the Plaintiffs jointly applied for allotment of an Apartment in the project of the Defendant. The total sale consideration of the said apartment was Rs. 2.73 crores. The Respondents paid an aggregate amount of Rs. 94 lakh towards this sale consideration from time to time. Plaintiff no. 1 approached the defendant for cancellation of the provisional allotment of the apartment due to financial difficulties in paying the installments.

The plaintiffs requested the defendant to arrange for the refund of the part consideration paid by the plaintiffs to the defendant. The defendant by email informed the plaintiffs that they shall be entitled to a refund of a sum of Rs. 31 lakh only out of the total amount of Rs. 94 lakh after the resale or re-allotment of the said apartment. A sum of Rs. 31 lakh would be deducted towards cancellation charges of GST.

The plaintiffs lodged a complaint to the West Bengal Housing Industrial Regulation Authority under Section 31 of the West Bengal Housing Industry Regulation Act, 2017. No date was fixed for hearing. The defendant sent a cheque of Rs. 31 lakh after deducting the alleged applicable charges stating that the plaintiffs had no right, title or interest against the apartment. The plaintiffs accepted the amount without prejudice to their rights to recover the entire consideration with interest. The Plaintiffs filed a suit against the defendant for recovery of Rs. 62.99 lakhs along with interest.

The Defendant filed the application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the parties to the suit to arbitration in terms of the General Terms and Conditions entered between the parties.

Contentions of the Parties:

Mr. Siddhartha Banerjee, Counsel for the Defendant contended that the existence and enforceability of the Contract had never been disputed by the plaintiffs. He submitted that the disputes were covered under the arbitration clause of the General Terms and Conditions of the Contract and the disputes sought to be raised in the suit are arbitrable. The Arbitration Clause was duly signed by the plaintiffs voluntarily and with the knowledge of the Arbitration Clause and thus at this stage, the plaintiffs cannot say that the General Terms and Conditions of the Contract is illegal.

Reliance was placed upon Priyanka Taksh Sood v. Sunworld Residency Pvt. Ltd. (2022), where the Delhi High Court ruled:

"Once a RERA proceeding is initiated, an application under Section 8 of the Arbitration and Conciliation Act would not lie. However, in this case, since no RERA proceeding was initiated, the election of remedy for arbitration is not barred."

Reliance was also placed upon Pallab Ghosh v. Simplex Infrastructures Ltd. (2024), where the Guwahati High Court held that "The arbitration clause agreed upon by the parties can be used to resolve disputes instead of taking recourse to the RERA Act”.

Mr. Suman Kumar Dutt, Senior Counsel for the plaintiffs contended that Section 13 of the Act casts an obligation on the promoter not to take deposit or advance without first entering into Agreement for Sale. He submitted that Rule 9 of the West Bengal Real Estate (Regulation and Development) Rules, 2021 provides that the Agreement for sale shall be in the form as per Annexure 'A'. The agreement was not in consonance with the statutory form of agreement provided under Rule 9 of the 2021 Rules. He further submitted that the defendant had entered into an agreement and incorporated the Arbitration Clause, which derogates the provisions of the Act of 2016.

Further, it was submitted that the defendant has no right or authority in law to withhold the money paid towards part consideration of the flat. Under Section 18 of the 2016 Act, if a promoter fails to complete or deliver possession as per the agreement, they must return the received amount with interest upon the allottee's demand.

Reliance was placed upon Army Welfare Housing Organization v. Col. R. Ganesan (2021) to submit that when the issues governed by the special Statute including criminal matters, the same is non arbitrable.

Observations:

The court observed that Section 79 of the Act of 2016 specifically excludes the jurisdiction of every civil court to entertain any suit or proceeding in respect of any matter, which the authority or the adjudicating officer or the Appellate Tribunal constituted under the Act of 2016 is empowered to determine. It referred to Imperia Structures Ltd. Vs. Anil Patni and Another, which held that on plain reading of Section 79 of the RERA Act, an allottee would stand barred from invoking the jurisdiction of a civil court. In that case, it was observed:

"Section 79 of the RERA Act bars jurisdiction of a civil court to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered under the RERA Act to determine..."

The court relied upon Gujarat State Civil Supplies Corporation Limited Vs. Mahakali Foods Private Limited (Unit 2) and Another, where the Supreme Court held that the Facilitation Council shall have the jurisdiction to proceed with reference made by the party in respect of the dispute covered under Section 17 of the MSMED Act, 2006 despite the existence of an independent arbitration agreement between the parties.

Notably, the court observed:

“...the remedy available under the Arbitration and Conciliation Act, 1996 is in addition to the remedies available under other special statutes and the availability of alternative remedies is not a bar to the entertaining of a petition under the Arbitration and Conciliation Act, 1996. But once elected, then the other remedy will not lie in respect of the same dispute.”

The court noted that the plaintiffs initially made complaint before the West Bengal Housing Industrial Regulation Authority under Section 31 of the Act and the said complaint was still pending. It held that since plaintiffs elected remedy under Section 31, they cannot file the suit for recovery of money and the parties cannot be referred to arbitration.

With these observations, the court dismissed the application filed by the defendant.

Case Title: Smt. Rita Banerjee & Anr. Versus S.E. Builders & Realtors Limited

Case Number: IA No. GA 3 of 2022 in CS No. 57 of 2022

For the Plaintiffs: Mr. Suman Kumar Dutt, Sr. Adv. Mr. Rajarshi Dutta, Mr. A.P. Agarwalla

For the Defendant: Mr. Siddhartha Banerjee, Mr. Subir Banerjee, Mr. Abhishek Baran Das, Mrs. Srijoni Chongdar

Date of Judgment: 05.12.2024

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