Punjab RERA - Arbitration Clause In Agreement For Sale Does Not Restrict Homebuyers From Approaching RERA

Background Fact

The complainants (Homebuyers) purchased a flat in the builder's project named ATS Golf Meadows Lifestyle for a total price of Rs. 5,176,000. Both parties entered into an agreement for sale on June 18, 2014. As per Clause 14 of the agreement, the builder was obligated to deliver possession of the flat to the homebuyers within 36 months, with an additional grace period of 6 months from the date of the construction of the tower.

Furthermore, the homebuyers paid Rs. 4,676,000 to the builder, and in doing so, they also obtained a loan of Rs. 3,852,098 from HDFC Bank (Respondent no. 2). Despite making the payment on time, the builder failed to provide possession of the flat within the promised timeline.

Consequently, the homebuyers filed a complaint with Punjab RERA to seek compensation for the delayed possession before resorting to the sole arbitrator for dispute resolution.

Contention of Builder

The builder contended that according to Clause 35 of the Sale Agreement, any disputes between the parties must first be referred to a single arbitrator before seeking resolution through legal action in a court of law. The builder further contended that Para 37 of the Sale Agreement stipulates that only the civil court of Noida, Uttar Pradesh would have the exclusive jurisdiction to entertain the matter in relation to the Project.

RERA Verdict

The Authority held that despite the presence of an arbitration clause, homebuyers have a remedy available under The Real Estate (Regulation and Development) Act, 2016 to approach the authority for the redressal of issues.

To reach a conclusion, The Authority relied on Section 79, Section 88, and Section 89 of RERA, 2016, which read as follows:

Section 79: Bar of jurisdiction.

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

Section 88: Application of other laws not barred.

The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.

Section 89: Act to have overriding effect.

The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force.

The authority further held that they have the jurisdiction to entertain the matter because, despite the argument put forward by the builder regarding the exclusive jurisdiction of the Civil Court at Noida stated in Paragraph 37 of the flat buyer's agreement, it was found that the project in question is located in Derra Bassi (Punjab), the agreement was executed in the State of Punjab, and the project is registered with RERA Punjab, as an ongoing project. Therefore, the authority concluded that the bench has jurisdiction to entertain and decide the dispute between the parties in the present case.

In Conclusion, that Homebuyers can approach RERA, even though the Sale Agreement stipulates an Arbitration Clause.

Case: Saurabh Sehgal & another vs M/s ATS Estate Private Limited and Mr. Aditya Jit Singh Pahwa

Citation: Complaint No. RERA/AdC No.0278/2021

Counsel for Complainant: Mr. Vijay Goyal

Counsel for Respondent: Mr. J.P. Rana

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