Parallel Remedies: Delhi High Court Upholds Right to Interim Relief Despite RERA Proceedings

In a significant procedural ruling affecting real estate litigants, the Delhi High Court has clarified the boundaries between statutory remedies under the Real Estate (Regulation and Development) Act (RERA) and interim protection under the Arbitration and Conciliation Act, 1996. The court affirmed that property buyers are not categorically barred from seeking Section 9 relief simply because they have previously approached the Real Estate Regulatory Authority (RERA).

A Decade of Stalled Possession

The dispute hinges on commercial spaces booked by the appellants in "Neo Square Mall," Gurugram, back in 2015. Despite substantial payments, the appellants alleged a lack of possession, delivery delays, and non-payment of "assured returns." While the Haryana Real Estate Regulatory Authority (HARERA) had previously passed orders in favour of the appellants—directing the payment of arrears and eventual handover of units—execution remained stalled.

The appellants subsequently filed petitions under Section 9 of the Arbitration and Conciliation Act, 1996, seeking injunctions to prevent the developer, M/s Neo Developers Pvt. Ltd., from leasing out their units to third parties. Commercial courts had initially rejected these petitions, citing the principle of "election of remedies" and stating that the appellants could not agitate the same grievance in multiple fora.

The Conflict of Remedies

The central legal question before the Division Bench, comprised of Justice Prathiba M. Singh and Justice Shail Jain, was whether an allottee’s decision to approach RERA precludes them from seeking interim protection under the Arbitration Act.

The developer argued that, per the Supreme Court’s ruling in Ireo Grace Realtech Private Limited v. Abhishek Khanna , a party must elect its remedy. Once a forum is chosen, the party is estopped from pursuing concurrent, parallel proceedings for the same cause of action.

Counsel for the appellants retorted that their Section 9 petitions were not redundant; rather, they addressed a "continuing cause of action" that had evolved since the RERA orders were passed—specifically, the developer’s attempt to lease out units through alleged "front companies" after the issuance of completion certificates.

Judicial Analysis: Distinguishing the Causes

The High Court rejected the notion that the RERA proceedings created a complete bar to Section 9 petitions. The Court distinguished the stages of the project, noting that while HARERA addressed initial grievances regarding assured returns and construction delays, the current need for an injunction arose from the developer’s subsequent, potentially deceptive, leasing practices.

> "Prima facie, the legal issue which has been raised in respect of the decision in Ireo Grace Realtech Private Limited... 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."

The Court did not stop at declaring the maintainability of the petitions. Observing that the appellants have been "running from pillar to post since the last several years," the Bench issued a stern interim order to preserve the status quo.

Key Observations

The judgment underscores the breadth of judicial power under Section 9, which includes the preservation of the subject matter of an agreement. The Court highlighted:

• On the breadth 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 continuing obligations: "The continued non-adherence of any obligations by the Respondent, constitutes a continuing cause of action in favour of the Appellants."

The Road Ahead: Transparency and Accountability

To ensure the developer does not unjustifiably profit from the disputed units while the litigation proceeds, the High Court ordered the developer to deposit all rental income earned from the subject units with the Registrar General of the Court.

Furthermore, the Court appointed a Local Commissioner to conduct an immediate, on-site inspection of the Neo Square Mall to identify current occupants and obtain copies of any existing lease deeds. This proactive measure aims to pierce the veil of the alleged "front" entities and provide the Court with an accurate picture of the property’s status.

With the matter listed for further hearing on October 30, 2025, this judgment serves as a vital precedent for home and commercial buyers, affirming that statutory bodies and arbitration courts can, under distinct circumstances, function as complementary layers of protection in the face of developer non-compliance.