Last updated: 04.02.2020
Article by: Jasleen Kaur
The Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as RERD Act) precisely provides for a non obstante clause under Section 89 which states that the Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force. It means that to the extent of all inconsistencies occurring between RERD Act and any other Act for the time being in force, RERD Act shall prevail over such other Act, without any doubt. Thus, the provisions of RERA override Section 8 of the Arbitration and Conciliation act, 1996 which mandates a judicial authority to refer disputes to arbitration, that are subject to an arbitration agreement. Hence, all Applications filed by the parties seeking to refer a complaint under the RERD Act are liable to be dismissed.
In the decision of Ganesh Lonkar v. DS Kulkarni Developers Ltd, the Maharashtra Real Estate Authority (Maha RERA) has taken the view that despite the existence of an arbitration agreement between the parties, it has the jurisdiction to adjudicate disputes that are the subject of the arbitration agreement.
In a landmark judgment of A. Ayyasamy v/s. A Paramasivam, the Supreme Court held that there are classes of disputes that fall within the exclusive domain of special bodies created under legislation that confer jurisdiction to the exclusion of ordinary civil courts. Such disputes would not then be capable of resolution by arbitration. Hence, based on the settled position of law as prevailing in India, the present Application is liable to be dismissed.
In a subsequent matter before the Karnataka Real Estate Authority in a complaint against M/s. Hamilton Homes LLP, the Adjudicating Officer has taken a view that a Section 8 Application filed by parties to refer the complaint to Arbitration by virtue of the Arbitration Clause in the Sale or Construction Agreement, is liable to be dismissed, in view of the provisions of Section 89 of RERD Act and the rulings stated above.
The Real Estate Regulatory Authority is a special forum created by a special enactment known as The Real Estate (Regulation and Development) Act, 2016 for the purpose of enforcement of special types of claims arising in favour of Allottees or Promoters in a real estate project. It is fair to say that if the claims are allowed to be decided outside the purview of the special authority constituted under the Act, it will dilute the object of the Act being, to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for the speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, direction or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto.
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