Availing RERA Remedies Does Not Bar Section 9 Arbitration Petitions for Interim Relief: Delhi High Court - 2025-09-18

Bridging the Gap: Delhi High Court Upholds Right to Interim Relief Despite RERA Proceedings

In a significant relief for real estate allottees, the Delhi High Court has clarified the intersection of remedies available under the Real Estate (Regulation and Development) Act, 2016 (RERA) and the Arbitration and Conciliation Act, 1996 . The Court ruled that filing complaints before the Real Estate Regulatory Authority (RERA) does not preclude a party from seeking interim protections under Section 9 of the Arbitration Act, especially when the cause of action is distinct or ongoing.

The Backdrop: A Struggle for Possession

The dispute originates from a series of commercial space bookings in the 'Neo Square Mall' in Gurugram. The appellants, including various investors, entered into Memoranda of Understanding (MoU) with the developer, M/s Neo Developers Pvt. Ltd. Years later, citing non-payment of assured returns, delayed construction, and the failure to hand over physical possession, the investors knocked on the doors of both the Economic Offences Wing and the Haryana RERA (HARERA).

While HARERA ruled in favor of the allottees in August 2024, mandating the payment of arrears and eventual handover of units, the developer allegedly pivoted by leasing the spaces to a third party, Vexto Commercials Private Limited—a entity the appellants claim is a front for the developer’s own promoters. With the developer failing to comply with the RERA orders and simultaneously creating third-party interests in the properties, the appellants filed for interim protection under Section 9 of the Arbitration Act.

The Legal Tug-of-War

The Commercial Courts had initially dismissed the petitions, citing the Supreme Court’s decision in Ireo Grace Realtech Private Limited v. Abhishek Khanna , which suggests that once a party elects a remedy under RERA, they cannot concurrently pursue a different forum for the same cause of action.

Representing the appellants, Counsel argued that the RERA petitions were filed before the issuance of completion certificates, whereas the Section 9 petitions were reactive measures filed to prevent the creation of illegal third-party leases after the project had advanced. They contended the lease to "Vexto" was a "sham" designed to strip the appellants of their rights.

Conversely, the developer maintained that the election of remedies doctrine bars these petitions and that the MoUs granted them the right to manage leasing arrangements for the commercial space.

The Court’s Reasoning

The Delhi High Court rejected the notion that RERA proceedings serve as an absolute bar. Justice noted that the Court’s jurisdiction under Section 9 is expansive, intended to preserve the subject matter of the dispute and prevent irreparable harm.

The Court reasoned that as long as the obligations remain unfulfilled and the respondent continues to generate rental income from units already booked by the allottees, the situation presents a continuing cause of action. "The power of the Court under Section 9... is quite broad and would permit grant of relief in cases where prima facie case, balance of convenience and irreparable injury is made out," the Court observed.

Key Observations

• On Sequential Remedies: "Prima facie, the legal issue... would not bar the filing of petitions under Section 9 of the Arbitration and Conciliation Act, 1996 as the proceedings before HARERA are not from the same cause of action."
• On the Need for Intervention: "In all these appeals, the Appellants are running from pillar to post since the last several years... they have made substantial payments to the Respondent and have not enjoyed any fruits."
• On Judicial Discretion: "Under Section 9 of the Arbitration and Conciliation Act, 1996 the Court can pass various interim measures of protection including... such other interim measures of protection as appear to the Court to be just and convenient."

A Decisive Move

In a move aimed at stopping the "bleeding" of the appellants' investments, the High Court directed the developer to deposit all lease rents earned from the disputed units with the Court’s Registrar General. Furthermore, the Court appointed a Local Commissioner to inspect the ground reality of the mall and verify the occupancy status, ensuring that the developer cannot continue to profit from units for which they have failed to provide possession.

This judgment serves as a vital precedent, emphasizing that legislative frameworks like RERA and the Arbitration Act are meant to be tools for justice, not technical shields for developers to evade accountability while holding onto investors' capital and property usage rights.