Commercial Unit Buyers Not Barred From Seeking Arbitration Relief After Availing Remedies Under RERA: Delhi High Court

The Delhi High Court bench of Justice Pratibha M. Singh and Justice Shail Jain has held that Buyers of commercial units are not prohibited from seeking arbitration relief subsequent to availing remedies under RERA, provided that the arbitration petitions were filed after a change in circumstances. Background The Appellants had entered into a Memorandum of Understanding (MoU) with Neo Developers for booking commercial units in New Square Mall, Gurugram. Disputes arose between the parties regarding assured returns, delay in construction and failure to hand over possession. The buyers approached the Economic Offence Wing and filed a complaint before Haryana RERA. The RERA allowed the prayers and directed the Respondent to pay arrears of assured returns till possession is given, offer possession within two months after obtaining the occupation certificate and execute conveyance deeds within 3 months thereafter. However, instead of following the directions, the Developer leased the units to an entity connected to its promoters. Aggrieved, the Appellants filed a petition under section 9 of the Arbitration Act seeking interim reliefs. But the applicant was dismissed by the Commercial Court, stating that since the RERA remedies had already been sought, parallel arbitration proceedings were barred. The Appellants submitted that the RERA had conferred rights of possession on the buyers, but the developer continued to frustrate their rights of possession. Vexto Commercials was merely a front company established to protect the rights of the buyers. The reliefs sought under section 9 were different from those sought before the RERA, as the arbitration petitions were filed after the issuance of the completion certificate, which constituted a fresh cause of action. The Respondent relied on the Supreme Court's judgment in Ireo Grace Realtech, where it was held that once the RERA route is adopted by buyers, they are estopped from invoking arbitration reliefs. The developer was authorised under the MoU to select lessees, and the Appellants were obligated to pay fit-out charges. Analysis The court at the outset observed that although the Supreme Court's judgment in Ireo Grace Realtech bars simultaneous remedies for the same cause of action but does not prohibit the party from seeking arbitration relief once the circumstances have changed. The RERA remedies were invoked before the issuance of the completion certificate, whereas the arbitration petitions were filed after the completion certificate was issued. It was further observed that the buyers ran from pillar to post since 2015, despite making substantial payments. The court held that the respondent not only withheld possession of the units but also earned rentals by leasing the said units, going against the RERA's directions. It said that this continuing breach constituted adequate reasons for protection under section 9 of the Arbitration Act, given the broad scope of interim protection encompassed under the Arbitration Act. Accordingly, the respondent was directed to deposit the entire lease rentals so far with the Registrar General and continue monthly deposits thereafter. Case Title: HARMEET SINGH KAPOOR & ANR. versus M/S NEO DEVELOPERS PVT LTD and Ors.Citation: 2025 LiveLaw (Del) 1159 Case Number: FAO (COMM) 237/2025, CM APPL. 53580/2025 & CM APPL. 53581/2025 Order Date: 18/09/2025 For Appellants: Mr. Tanmay Mehta, Mr. Rajinder Singh and Mr. Arjun Sharma, Advs. For Respondent: Mr. Jitender Chaudhary, Ms. Shilpa Chouhan, Mr. Mohit Matani, Ms. Ritika Harplani & Ms. Anshita Shrivastava, Advs. Click Here To Read/Download The Order

Commercial Unit Buyers Not Barred From Seeking Arbitration Relief After Availing Remedies Under RERA: Delhi High Court

Mohd Malik Chauhan

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