Court highlights conflicting precedents on whether disputes under Real Estate Regulatory Act between promoters and allottees are inherently non-arbitrable or depend on case specifics.
In a significant decision on October 7, 2026, the Bombay High Court, presided over by Justice Amit Borkar, dealt with a contentious issue concerning the arbitrability of disputes arising between real estate promoters and allottees under the Real Estate (Regulation and Development) Act, 2016 (RERA). The court was seized with Arbitration Application No. 205 of 2026 filed by Rensar Infra Private Limited seeking appointment of a sole arbitrator to resolve disputes with allottees Rais Kasam Shaikh and others related to an Agreement for Sale.
The core dispute involved claims for recovery of balance sale consideration, additional charges for extra constructed area, and compensation purportedly arising out of a flat sale agreement which contained an arbitration clause. The allottees contended that such promoter-allottee disputes fall exclusively within the jurisdiction of RERA forums and are non-arbitrable as a class, citing prior Bombay High Court decisions including Rashmi Realty Builders Pvt. Ltd. v. Rahul Rajendrakumar Pagariya.
On the other hand, the applicant promoter argued that the existence of an arbitration agreement mandates appointment of an arbitrator at the Section 11 stage of the Arbitration and Conciliation Act, 1996, and that questions on limitation, admissibility, and arbitrability should be left for the arbitral tribunal to decide. The applicant also highlighted conflicting judgments including Abhay Damodar Kanhere v. Morya Infraconstruct Pvt. Ltd. which took a more permissive view on arbitration in such disputes.
Justice Borkar acknowledged the validity of both views and recognized that the issue presented a substantial question of law regarding whether promoter-allottee disputes under RERA are categorically non-arbitrable or whether the arbitrability depends on the nature of the subject matter and statutory powers of RERA authorities.
The Court emphasized that the Section 11 stage allows only a limited prima facie scrutiny and is not a mini-trial to delve into merits, limitation or estoppel issues. However, the fundamental jurisdictional question of arbitrability, which is jurisdictional in nature, can be examined at this stage.
Due to the apparent conflict between precedents such as Rashmi Realty and Abhay Kanhere, and subsequent rulings like Laxman Mura Vaid v. Shree Siddhivinayak Infrastructure and Realty, the Court referred the matter to a larger Bench for authoritative determination.
The Court also clarified that failure to invoke arbitration at the proper stage before RERA does not automatically bar independent arbitration claims under Section 11, but cautioned against splitting causes of action to pursue parallel proceedings, referencing the Supreme Court's judgment in Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya.
In conclusion, the Bombay High Court deferred the appointment of an arbitrator pending the larger Bench's ruling on the key question framed as: whether disputes between promoters and individual allottees under RERA agreements containing arbitration clauses are non-arbitrable as a class or whether arbitrability must be decided on a case-by-case basis considering the subject matter and statutory powers of RERA authorities.
This judgment highlights the evolving jurisprudence on the intersection of arbitration law and sector-specific regulatory regimes like RERA, underscoring the need for clarity on jurisdictional boundaries to avoid conflicting parallel forums.
Bottom Line:
Arbitration and Conciliation Act, 1996 Section 11 RERA disputes - In promoter-allottee dispute arising from agreement for sale containing arbitration clause, Court held existence of arbitration agreement and genuineness of claims were not in dispute, limitation and Section 8 objections did not conclusively bar application, but substantial question remained whether disputes governed by RERA are non-arbitrable as a class or arbitrability depends on nature of subject-matter and relief - In view of apparent conflict in Bombay High Court decisions, matter referred to larger Bench.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 8, 11, 16; Real Estate (Regulation and Development) Act, 2016 Sections 18, 19, 20, 43, 79, 88, 89; Limitation Act, 1963 Section 19
Rensar Infra Private Limited v. Rais Kasam Shaikh, (Bombay) : Law Finder Doc Id # 2992183
