Civil Court to Adjudicate Allegations of Fraud and Misrepresentation in Redevelopment Project, Overruling RERA Act Jurisdiction Bar
In a significant decision, the Bombay High Court has reinstated the jurisdiction of the Civil Court over a case involving allegations of fraud and misrepresentation in a redevelopment project, setting aside an earlier order that directed the matter to be heard by authorities under the Real Estate (Regulation and Development) Act, 2016 (RERA). The case, titled Ibrahim Babubhai Chokiya v. M/s. Westinrely Developers Pvt. Ltd., revolves around claims by the plaintiffs, who are members of a society undergoing redevelopment, that the allotment of commercial premises was done fraudulently and without proper consent.
The appeal was heard by Justice Sharmila U. Deshmukh, who ruled that the civil court retains jurisdiction in matters involving allegations of fraud and misrepresentation, which fall outside the ambit of the RERA Act. The court emphasized that Section 79 of the RERA Act bars civil court jurisdiction only when the subject matter is capable of being adjudicated by RERA authorities. The plaintiffs argued that their case involves fraudulent allotment and suppression of sanctioned plans, which are issues that cannot be adequately addressed by RERA.
The dispute arose when the plaintiffs, original members of the society, filed a suit seeking a declaration that the allotment of shops was done fraudulently and was void. They claimed that their consent was not obtained for the redevelopment under the new development control regulations. The trial court initially returned the plaint, citing the jurisdiction bar under Section 79 of the RERA Act, which led to the appeal.
In her judgment, Justice Deshmukh highlighted that the plaintiffs do not fall under the definition of "allottee" as per the RERA Act, since there is no promoter-allottee relationship in a redevelopment scenario. The court noted that the grievances were related to the development agreement and involved contractual disputes rather than statutory violations under RERA. Consequently, the civil court is the appropriate forum to adjudicate these issues.
The High Court's decision underscores the importance of civil remedies in cases where allegations of fraud and misrepresentation are made, even in contexts where the RERA Act is applicable. It reaffirms the principle that civil courts retain jurisdiction over disputes that fall outside the purview of statutory authorities, thus ensuring that parties have access to appropriate legal forums for their grievances.
The case has been restored to the City Civil Court, with directions for the parties to appear before the trial court on July 8, 2026. The interim order restraining the creation of third-party rights in the disputed commercial premises will continue for a limited period, allowing the trial court to extend it if deemed necessary.
Bottom line:-
Jurisdiction of Civil Court under Section 79 of RERA Act - Civil Court retains jurisdiction over disputes involving misrepresentation, fraud, and entitlement arising out of the development agreement between parties, which fall outside the ambit of the RERA Act.
Statutory provision(s): Real Estate (Regulation and Development) Act, 2016, Sections 2(d), 14, 31, 79, 88; Civil Procedure Code, 1908, Order VII Rule 10, Rule 11
