RERA/Arbitration relationship needs definition | India

Until the relationship between the RERA and arbitration is clarified by the Supreme Court, real estate conflicts between builders and buyers will continue to exacerbate, writes Rishabh Gandhi

It begins quietly, as many real estate disputes do. A homebuyer walks into the real estate regulator’s office, the RERA, carrying a thick file containing agreements, brochures, WhatsApp promises and a photograph of a swimming pool that never materialised.

Across the table sits the builder’s lawyer, immaculate and composed, relying on one sentence placed deep within the agreement for sale: “All disputes shall be referred to arbitration under the Arbitration and Conciliation Act, 1996.” The adjudicating officer looks up, half-tired and half-amused. The buyer asks for justice. The developer invokes autonomy. The law stands in the middle and tries to reconcile promises made by two very different systems.

This small exchange reflects the larger question that defines real estate litigation in India. When contractual arbitration and a statutory consumer protection regime operate together, which one takes priority?

The Real Estate (Regulation and Development) Act, 2016 (RERA Act), offers transparency, deterrence and administrative supervision. Arbitration promises party autonomy, privacy and finality. Each system, viewed independently, is efficient and modern. Together, they often generate uncertainty because both appear mandatory, both appear attractive, and neither sits comfortably alongside the other.

The promise, the paradox

The RERA, enacted in 2016, was the parliament’s response to an industry that had drifted too far from fairness. Buyers had little bargaining power. Delays were routine. Project disclosures were unreliable. The RERA introduced mandatory registration, strict promoter obligations, financial discipline and quick adjudication under sections 18 and 31. Section 79 of the RERA created a jurisdictional bar on civil courts, which signalled that the RERA was intended to be the primary route for redress.

Arbitration, by contrast, comes from a contract. It favours procedural flexibility and the idea that parties are best placed to resolve private disputes. It is built for commercial certainty rather than regulatory oversight. The modern builder-buyer agreement merges these worlds, often without clarity on how they coexist.

Courts as referees

Indian courts have long tried to map this coexistence. Booz Allen and Hamilton Inc v SBI Home Finance Ltd (2011) drew the distinction between rights in rem (against a thing) and rights in personam (against a person) and held that only the latter are arbitrable.

A Ayyasamy v A Paramasivam (2016) clarified that the mere presence of public interest does not automatically exclude arbitration. Vidya Drolia v Durga Trading Corporation (2021) refined the arbitrability doctrine with a structured four-fold test and held that disputes involving exclusive statutory jurisdiction or rights enforceable erga omnes (towards everyone) must remain outside arbitration.

However, Vidya Drolia does not conclusively determine whether RERA disputes fall into the non-arbitrable category. The judgment leaves room for interpretation. Whether a section 18 claim is a purely personal contractual dispute or an extension of a statutory regulatory structure remains a matter on which courts disagree.

Peace between two laws

Earlier Supreme Court rulings on consumer protection provide some guidance but not a definitive answer. Imperia Structures Ltd v Anil Patni (2020) held that remedies under the RERA and the Consumer Protection Act are concurrent and additional. Emaar MGF Land Ltd v Aftab Singh (2019) affirmed that statutory consumer rights cannot be waived through arbitration clauses. These rulings strengthen homebuyer remedies but do not invalidate arbitration clauses in builder-buyer agreements.

Instead, they confirm that statutory remedies survive alongside contractual ones. Recent high court decisions have widened the divide. In 2024, the Gauhati High Court, in Pallab Ghosh v Simplex Infrastructures Ltd (2024), held that arbitration is not barred by the RERA because arbitral tribunals are not civil courts under section 79(6). Delhi High Court, in Priyanka Taksh Sood v Sunworld Developers (2022), held that arbitration is permissible if invoked before the buyer approaches the RERA, applying the doctrine of election.

Patna and Punjab have taken similar positions. Under this concurrent remedy model, a buyer may choose between the RERA and arbitration, and the choice can bind both parties.

Maharashtra has taken the opposite view. The Bombay High Court, in Rashmi Realty Builders v Rahul Pagariya (2024), held that disputes between allottees and promoters, particularly under sections 12 and 18, are non-arbitrable. The court reasoned that the RERA’s purpose is to protect homebuyers through a supervisory framework that cannot be diluted through private dispute resolution.

The Maharashtra Real Estate Appellate Tribunal followed this reasoning in 2025. The result is a clear jurisdictional split. In some states, arbitration is an available path. In Maharashtra, it is generally excluded for core promoter-allottee disputes.

The practical consequences are predictable. A buyer files a complaint under the RERA for delayed compensation. The developer files a section 8 application seeking referral to arbitration. Courts spend months deciding which forum should hear the dispute.

The RERA can award a refund, interest or penalty. Arbitration usually awards contractual damages. The RERA’s orders can be executed through the collector. Arbitral awards must survive a section 34 challenge. One dispute becomes two disputes. Time and cost multiply. The promise of fast-track resolution is offset by jurisdictional contest.

From intervention to restraint

Some clarity emerges from the doctrine of election. Courts increasingly hold that whichever forum the buyer approaches first determines the path forward. Forum shopping is discouraged. However, the doctrine itself is applied differently across jurisdictions, which adds to the uncertainty.

Parallel to this debate is the broader evolution of judicial intervention in arbitration. Indian arbitration law has moved decisively from intervention towards restraint. ONGC v Saw Pipes Ltd (2003) expanded the meaning of public policy dramatically. Associate Builders v DDA (2015) narrowed it. Ssangyong Engineering and Construction Co Ltd v NHAI (2019) confined it to fraud, corruption and procedural violations. Delhi Airport Metro Express Pvt Ltd v DMRC (2022) clarified that enforcement courts cannot replace the arbitrator’s interpretation simply because another interpretation is possible.

These rulings promote finality and make arbitration attractive when it is legally permissible. A recent chapter in this evolution is the Supreme Court’s decision, in Gayatri Balasamy v ISG Novasoft Technologies Ltd (2025), which examined whether courts may modify arbitral awards while exercising jurisdiction under sections 34 and 37.

The court recognised a narrow window for modification in exceptional cases where the error is patent and severable. Although the dispute did not arise under the RERA, the decision illustrates the continuing tension between arbitral autonomy and judicial oversight. It shows that complete non-intervention remains a goal rather than a present reality.

This pattern extends to foreign awards. In Government of India v Vedanta Ltd (2020), the Supreme Court emphasised enforcement with minimal interference. In NTPC Ltd v Voith Hydro (2023), the court reaffirmed that challenges must meet strict statutory thresholds.

Indian courts now start with a presumption that foreign awards should be enforced. For complex commercial disputes, arbitration can be more efficient than litigation or RERA proceedings. Yet arbitrability remains the gateway issue. Efficiency does not override statutory purpose. If the statute intends a regulatory forum, private autonomy cannot displace it.

Answers needed

Looking ahead, the divergence between jurisdictions that favour arbitration and those that give primacy to the RERA cannot remain an open question indefinitely. The uncertainty creates real consequences. Builders continue to draft broad arbitration clauses. Buyers oscillate between the RERA, arbitration and consumer fora depending on tactical advantage.

Lawyers engage in elaborate forum-selection strategies before a dispute even begins. A definitive clarification from the Supreme Court is essential not merely for doctrinal purity, but to stabilise behaviour in a sector where predictability is often as important as possession itself.

A legislative response may also be timely. Parliament could revisit section 79 of the RERA and provide clearer language on whether arbitral tribunals may adjudicate promoter obligations from sections 11, 12 and 18. If parliament intends the RERA to retain dominance over statutory remedies, this intention can be recorded expressly. Conversely, if the goal is coexistence between statutory supervision and private adjudication, a structured division could be created: the RERA for regulatory compliance, arbitration for post-possession disputes or quantification issues. Even a short explanation appended to section 79 could eliminate a decade of litigation on arbitral referrals.

Contractual drafting, too, needs evolution. Promoters must recognise that arbitration clauses cannot be designed as a universal shield against statutory obligations. Clauses that expressly carve out RERA-specific remedies and restrict arbitration to purely contractual issues would reduce the volume of section 8 applications filed only to be defeated in preliminary hearings. Clarity at the drafting stage would prevent much of the procedural sparring that now consumes time at both RERA and arbitral forums.

Institutional co-operation may offer an additional solution. A protocol in which RERA authorities determine compliance while arbitral tribunals decide limited contractual questions could balance both systems. This would prevent duplication, allow expertise to be applied where it is most relevant, and reduce the current situation in which each forum treats the other as an intruder rather than a collaborator.

Enforcement mechanisms could also be harmonised by permitting the RERA’s administrative machinery to enforce arbitral awards in registered projects, combining statutory oversight with arbitral finality.

Capacity building will be crucial. At present, adjudicating officers and arbitrators operate in functional silos. Each speaks a language the other rarely studies. Greater familiarity with the boundaries of each other’s jurisdiction would reduce contradictory outcomes and repeated challenges. Regular cross-training sessions and model procedural guidelines could significantly improve consistency and coherence.

The growth of institutional arbitration, the emergence of specialised commercial courts, and the maturing of the RERA’s regulatory apparatus make the present moment an inflection point. The legal system now has the opportunity to align two important mechanisms rather than let them collide by default.

Coexistence does not require homogenisation. It requires clarity, co-ordination, and a shared understanding of purpose. Once that alignment is achieved, the real estate sector will function with greater stability and fewer jurisdictional detours.

Conclusion

Law and architecture both require clear boundaries. The RERA and arbitration were built to improve efficiency and fairness. When two systems attempt to regulate the same space, their walls do not always align.

The RERA must remain the guardian of transparency and statutory compliance. Arbitration should decide disputes where parties genuinely bargain on equal terms. Each system performs best when it respects the other’s domain.

Until the Supreme Court clarifies the relationship between the two, homebuyers will continue navigating two promises that move at different speeds. One is a statute built for speed that sometimes slows down.

The other is a mechanism built for autonomy that occasionally waits for statutory blessing. Somewhere between these paths lies the road home.

Rishabh Gandhi is an advocate, arbitrator, and a former judge.