Punjab RERA: Arbitration Clause in Sale Agreement Does Not Deny Homebuyers From Approaching Authority

Punjab RERA: Arbitration Clause in Sale Agreement Does Not Deny Homebuyers From Approaching Authority

Relies on Sections 79, 88 and 89 of the Real Estate (Regulation and Development) Act, 2016 to make its point

The Punjab bench of the Real Estate Regulatory Authority (RERA) has held that homebuyers can approach it to adjudicate a matter, even though the Agreement for Sale stipulates an Arbitration Clause.

The bench of Justice Balbir Singh thus directed the builder to compensate the homebuyers for the delayed possession.

The complainants (homebuyers) purchased a flat in the builder’s project ATS Golf Meadows Lifestyle for Rs.5,176,000.

The parties entered an agreement for sale on 18 June 2014. According to Clause 14 of the agreement, the builder was obligated to deliver possession of the flat to the homebuyers within 36 months, with an additional grace period of six months from the date of the construction.

Subsequently, the homebuyers paid Rs.4,676,000 to the builder, obtaining a loan of Rs.3,852,098 from HDFC Bank (respondent No.2). Despite receiving timely payments, the builder failed to provide possession of the flats within the promised timeline.

This led the homebuyers to file a complaint with Punjab RERA to seek compensation for the delayed possession before resorting to the sole arbitrator for dispute resolution.

The builder contended that according to Clause 35 of the Sale Agreement, any dispute between the parties had to be first referred to a single arbitrator before seeking resolution through legal action in a court. He added that Para 37 of the Agreement stipulated that only the civil court of Noida, Uttar Pradesh had exclusive jurisdiction to entertain the matter.

However, RERA stated that despite the arbitration clause, the homebuyers had an option under the Real Estate (Regulation and Development) Act, 2016 to approach the authority for the issues’ redressal. It relied on Sections 79, 88 and 89 to make its point.

Section 79: Bar of jurisdiction states that no civil court shall have jurisdiction to entertain any suit or proceeding in any matter in which the authority, the adjudicating officer or the appellate tribunal was empowered under the Act. No injunction shall be granted by any court or authority on any action taken or in pursuance of any power conferred by or under the Act.

Section 88: Application of other laws not barred states that the provisions of the Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.

Section 89: Act to have overriding effect states that the provisions of the Act shall have effect, notwithstanding anything inconsistent contained in any other law for the time being in force.

Thus, the RERA stated it had the jurisdiction to entertain the matter.

It added that despite the builder’s argument of exclusive jurisdiction of the civil court at Noida (Para 37 of the homebuyers’ agreement), it was observed that the project was in Dera Bassi, Punjab. Since the agreement was executed in Punjab and the project was registered with Punjab RERA, the bench had jurisdiction to intervene and decide on the dispute between the parties.