Beyond RERA: Delhi High Court Allows Section 9 Arbitration Petitions in Real Estate Stalemate

The High Court of Delhi has stepped into a protracted commercial dispute, clarifying the boundaries between regulatory relief and arbitration. In a significant order passed by the division bench of Justice Prathiba M. Singh and Justice Shail Jain , the court ruled that investors are not barred from exercising their rights under Section 9 of the Arbitration and Conciliation Act, 1996 , even if they have previously approached the Real Estate Regulatory Authority (RERA).

The Genesis of the Dispute

The conflict involves multiple investors who booked commercial spaces in "Neo Square Mall," Gurugram, developed by M/s Neo Developers Pvt. Ltd. The investors—including Harmeet Singh Kapoor, M/s Jagmohan Enterprises LLP, and Rahul Bhargava—allege a recurring cycle of broken promises: missed deadlines for construction, failure to hand over possession, and unpaid "assured returns."

While the Appellants had successfully secured a favorable order from HARERA on August 14, 2024, the developer failed to comply with the directives to provide possession or pay long-standing arrears. As the developer moved to lease these contested units to a third-party entity—later identified as Vexto Commercials Private Limited —the investors rushed to the Commercial Courts under Section 9 of the Arbitration Act to protect their interests from being eroded by third-party rights.

Striking the Legal Balance

The Commercial Courts had initially dismissed these petitions, arguing that the Appellants could not "forum shop" once they had begun proceedings under the Real Estate (Regulation and Development) Act, 2016 (RERA) .

The Delhi High Court disagreed. Drawing from the nuances of Ireo Grace Realtech Private Limited v. Abhishek Khanna and Ors. , the Court found that the bar on jurisdiction under Section 79 of the RERA Act does not automatically extinguish every other legal remedy.

"The continued non-adherence of any obligations by the Respondent, constitutes a continuing cause of action in favour of the Appellants. Thus, the Appellants are well within their rights to seek further relief from the appropriate forum for securing their interest," the bench observed.

Directive for Transparency and Custody

Raising suspicions of "sham" transactions, the Court directed the developer to bring financial transparency to the fore. The Bench ordered that the entire lease revenue generated from the units must be deposited with the Registrar General of the High Court .

Furthermore, to ascertain the ground reality of the occupation of the units, the Court appointed Mr. Syed Hussain Adil Taqvi as a Local Commissioner. He is mandated to inspect the third and fourth floors of Neo Square Mall to identify current occupants and report on the existence of any sub-tenants.

Key Observations

The judgment underscores the judiciary’s intent to prevent developers from exploiting procedural delays:

• On Multiplicity of Reliefs: "An allottee may elect or opt for one out of the remedies provided by law for redressal of its injury or grievance. An election of remedies arises when two concurrent remedies are available, and the aggrieved party chooses to exercise one, in which event he loses the right to simultaneously exercise the other for the same cause of action."
• On the Nature of Section 9: "The power of the Court under Section 9 of the Arbitration and Conciliation Act, 1996, is quite broad and would permit grant of relief in cases where prima facie case, balance of convenience and irreparable injury is made out."
• On the Plight of Homebuyers: "In all these appeals, the Appellants are running from pillar to post since the last several years... to secure their units which they have booked. They have made substantial payments to the Respondent and have not enjoyed any fruits of the said payment."

Implications for the Future

This decision provides a roadmap for homebuyers and commercial investors who find themselves caught in execution delays post-RERA orders. By distinguishing between actions taken prior to completion certificates and actions taken post certificate, the High Court has reaffirmed that Section 9 remains a potent tool for asset preservation during arbitral proceedings. The matter is currently listed for October 30, 2025, where the Court will review the Local Commissioner’s findings and the status of the developer’s compliance with the deposit order.