Arbitral Tribunal Not Barred Under Section 79 Of The RERA Act From Passing An Order Of Injunction: Bombay High Court

The Single Bench of Justice G.S. Kulkarni held that the bar of Section 79 of the RERA Act would not apply to an Arbitral Tribunal and thus, the Arbitral Tribunal is not barred from passing an order of injunction under Section 17 of the Arbitration and Conciliation Act, 1996 (A&C Act). The Court added that it can never be the intention of the legislature to elevate the status of the Arbitral Tribunal to that of a Civil Court or to construe the Arbitral Tribunal as an authority like a Civil Court.

In the course of the arbitral proceedings between the claimant/appellant- Ashok Palav Coop. Housing Society Ltd., and the respondent-Pankaj Bhagubhai Desai, the Arbitral Tribunal rejected the application of the appellant under Section 17 of the A&C Act for interim relief. The Arbitral Tribunal held that by virtue of Section 79 of the Real Estate (Regulation and Development) Act, 2016 (RERA Act), the Tribunal was barred from passing any order of injunction under Section 17 of the A&C Act. Against this, the appellant filed an appeal under Section 37 of the A&C Act before the Bombay High Court.

The appellant Ashok Palav Coop. Housing Society contended that the parties had entered into the relevant agreement, which contained an arbitration clause, much before the provisions of the RERA Act were brought into force. The appellant added that before the RERA Act was brought into force, the said agreement was terminated by the party. The appellant averred that the Supreme Court, by a consent order passed on Special Leave to Appeal, appointed a Sole Arbitrator to adjudicate the disputes between the parties.

Section 79 of the RERA Act provides that no civil court shall have the 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 the RERA 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 the RERA Act.

The High Court observed that the Sole Arbitrator, while rejecting the application under Section 17 of the A&C Act for interim relief, had held that since the Arbitral Tribunal is a forum for adjudication selected by the parties under an arbitration agreement, therefore, the bar against grant of injunction, as provided under Section 79 of the RERA Act, is applicable to a proceeding pending before an Arbitral Tribunal.

Noting that Section 79 primarily postulates a bar on the Civil Court to exercise any jurisdiction to entertain any suit or proceedings, and bars any injunction being granted by "any Court" or "any other authority", the High Court ruled that the Arbitral Tribunal certainly cannot be called a Civil Court falling under the Code of Civil Procedure, 1908.

The Bench observed that the Supreme Court in Food Corporation of India versus M/s. Evdomen Corporation (1999) had interpret 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.

Further, the High Court noted that the Supreme Court in Nahar Industrial Enterprises Ltd. versus Hong Kong and Shanghai Banking Corporation (2009) had ruled that though a "tribunal" which is authorized to take evidence of witnesses would ordinarily be held to be a "court" within the meaning of Section 3 of the Evidence Act, 1872, and that it would include Judges, Magistrates and other persons who are legally authorized to take evidence; however, the Arbitrators were excluded from the definition of "court".

Hence, the Court ruled that the Arbitral Tribunal is not a Civil Court within the meaning and purview of the Code of Civil Procedure and thus, the arbitral proceedings cannot be said to be barred under Section 79 of the RERA Act.

"Adverting to the above position of law, it can be observed that although the arbitral tribunal has some trappings of the Court, the arbitral tribunal is not a Civil Court within the meaning and purview of the Code of Civil Procedure, so that the bar to arbitral proceedings can be read under Section 79 of the RERA."

The Court rejected the finding of the Arbitral Tribunal that that the Arbitral Tribunal constituted "an authority" and hence, it fell within the purview of Section 79 of the RERA Act and thus, it was barred from passing an order of injunction in the application for interim relief filed by the appellant under Section 17 of the A&C Act.

"The expression "any Court or other authority" as used in Section 79 would be required to be construed to mean that the word "authority" is a species of the word "Court". This more particularly, as the word "Court" would be required to be read in conjunction with the word "authority" as it is well settled that when the words are separated by a conjunction "or", the intention of the legislature is of joining the alternatives. Thus, the word "or" being a conjunction, it is being used for joining two alternatives namely the word "Court" and the word "authority". Thus, the words "other authority" as used in the second part of Section 79 certainly derives its colour from the words in its company namely the "Court".", the Court said.

The Court added that it can never be the intention of the legislature to elevate the status of the Arbitral Tribunal to that of a Civil Court or to construe the Arbitral Tribunal as an authority like a Civil Court. Hence, the Bench ruled that the bar of jurisdiction from passing an order of injunction, as envisaged under Section 79 of the RERA Act, would certainly not apply to an Arbitral Tribunal.

Observing that the remedies under the RERA Act are in addition to and not in derogation of any other law for the time being in force, as provided under Section 88 of the RERA Act, the Bench ruled that the Arbitral Tribunal was not correct to hold that the nature of the dispute between the parties fell purely under the RERA Act, to which Section 79 of the RERA Act would strictly apply.

"Adverting to the above principles of law, it needs to be stated that in the facts of the present case the parties elected to resolve their disputes through arbitration. Therefore, the parties clearly wished to bind themselves by the ACA. It cannot be logically conceived that the parties would seek a remedy which bars any interim or final adjudication if the case of the respondent is to be accepted. In such event, the recourse to arbitration would amount to an empty formality.", the Court ruled.

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

Case Title: Ashok Palav Coop. Housing Society Ltd. versus Pankaj Bhagubhai Desai & Anr.

Dated: 10.06.2022 (Bombay High Court)

Counsel for the Appellant: Mr. H.V. Kode with Mr. Yogesh Yagnik and Ms. Janhavi Karnik

Click Here To Read/Download Judgment