Delhi High Court on Arbitration and Real Estate Disputes

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 17.08.2026

Delhi High Court on Arbitration and Real Estate Disputes

The Delhi High Court recently delivered a significant judgment addressing the interplay between arbitration proceedings and remedies under the Real Estate (Regulation and Development) Act, 2016 (RERA), in a series of appeals involving Neo Developers Pvt. Ltd. and several appellants, including Rahul Bhargava, Harmeet Singh Kapoor, and Jagmohan Enterprises LLP. This article provides a comprehensive overview of the case background, legal issues, court findings, and its broader implications for real estate and arbitration law in India.

Background of the Dispute

1. Commercial Transactions and Agreements
   • In 2015, the appellants entered into agreements with Neo Developers Pvt. Ltd. to purchase commercial units in the “Neo Square” project, Gurugram, Haryana.
   • Each transaction was formalized through a Builder Buyer Agreement (BBA) and a Memorandum of Understanding (MoU), with assured monthly returns promised to the buyers until the commencement of the first lease.
2. Emergence of Disputes
   • From July 2019, Neo Developers ceased paying the assured returns.
   • The developer issued vague demands and threatened cancellation of allotments, delayed construction, and failed to hand over possession as per the agreements.
   • Aggrieved buyers approached the Economic Offences Wing (Delhi Police) and filed complaints before HARERA (Haryana Real Estate Regulatory Authority).
3. HARERA Orders
   • HARERA granted relief to the appellants, directing Neo Developers to pay arrears of assured returns, hand over possession, and refrain from charging non-contractual amounts.
   • No appeal was filed by Neo Developers against these HARERA orders.
4. Further Legal Proceedings
   • Despite HARERA’s orders, Neo Developers raised further unexplained demands and claimed to have leased out the units to third parties.
   • The appellants initiated execution proceedings before HARERA and also filed petitions under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim protection.
   • The Commercial Courts dismissed these petitions, citing either lack of jurisdiction or the doctrine of election (i.e., that buyers could not pursue remedies under both RERA and arbitration for the same cause).

Key Legal Issues Examined

1. Maintainability of Section 9 Petitions After RERA Proceedings
   • Whether buyers who have obtained relief from HARERA can also seek interim protection under Section 9 of the Arbitration Act.
2. Doctrine of Election
   • Whether pursuing remedies under RERA precludes parties from seeking relief under the Arbitration Act for the same dispute.
3. Scope of Interim Relief Under Section 9
   • Whether the reliefs sought under Section 9 (interim injunctions to preserve property and prevent third-party rights) are distinct from those adjudicated by HARERA.
4. Territorial Jurisdiction
   • Whether technical distinctions between “Delhi” and “New Delhi” as the seat of arbitration can be grounds for dismissing petitions.

Court’s Analysis and Findings

Distinction Between RERA and Arbitration Remedies

• The Court held that the reliefs sought before HARERA (regulatory and determinative) and those under Section 9 (preventive and preservative) are distinct.
• Section 88 of the RERA Act clarifies that its provisions are in addition to, not in derogation of, other laws.
• The doctrine of election does not apply when the scope and nature of remedies are different.

Interim Protection is Essential

• Section 9 of the Arbitration Act empowers courts to grant interim measures to preserve the subject matter of arbitration, prevent irreparable harm, and maintain status quo.
• The Court emphasized that interim relief is crucial in real estate disputes to prevent alienation or encumbrance of property before arbitration is concluded.

Jurisdictional Technicalities

• The Court criticized the Commercial Court’s hyper-technical approach in dismissing petitions based on minor territorial distinctions.
• It clarified that such technicalities should not defeat substantive justice, especially when the seat of arbitration is broadly defined.

Sham Transactions and Status of Property

• The Court found that the alleged lease to a third party (M/s Vexto Commercials Pvt. Ltd.) appeared to be a sham, as the mall was incomplete and unfit for occupation.
• The Local Commissioner’s report confirmed ongoing construction and lack of genuine tenancy.

Final Directions and Reliefs Granted

1. Restraint on Third-Party Rights
   • Neo Developers and its agents are restrained from creating any third-party interests (including leasing out the property) until the commencement of arbitration proceedings.
2. Status Quo to be Maintained
   • The developer must maintain status quo regarding the units under the BBA or MoU until arbitration begins.
3. Modification by Arbitral Tribunal
   • Once the arbitral tribunal is constituted, either party may seek modification of these interim orders.
4. Appeals Allowed
   • All appeals by the buyers were allowed, and pending applications were disposed of.

Broader Implications

• Concurrent Remedies: The judgment affirms that buyers can pursue both RERA and arbitration remedies if the reliefs are not identical.
• Protection of Buyers: Courts will intervene to protect buyers’ interests and prevent developers from taking coercive or prejudicial actions during disputes.
• Clarity on Interim Relief: The scope of Section 9 is broad and can be invoked even after statutory remedies have been pursued, provided the reliefs are distinct.
• Discouragement of Technical Dismissals: Courts are urged to focus on substantive justice rather than technicalities that may defeat legitimate claims.

Conclusion

This judgment is a landmark in clarifying the relationship between RERA and arbitration remedies in real estate disputes. It reinforces the principle that interim protection is vital to preserve the subject matter of arbitration and ensures that buyers are not left remediless due to procedural technicalities or overlapping statutory frameworks.

Connected Matter

Delhi High Court Clarifies Concurrent Remedies for Real Estate Disputes

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Source: Delhi High Court

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