REDRESSAL MECHANISM UNDER THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT 2016: OUSTER OF THE ARBITRATION TRIBUNAL?
The Parliament enacted the Real Estate (Regulation and Development) Act, 2016 to regulate the real estate sector, protect innocent buyers and provide speedy redressal mechanism.
The recently passed Real Estate (Regulation
The Government of India,
Real estate agreements,
In this backdrop,
PROTECTING THE BUYERS
The REA comes as a
In order to
At the time of registration, the REA, in addition
The REA also sets up various compliance and reporting requirements.
Apart from the
Under the REA, the
Thus, the REA casts several legal obligations on the
One of the key objectives
To remedy this practice, the REA establishes a dedicated body for real estate disputes,
The independence and separation of the proceedings before the two forums is evident from a plain reading of
If the buyer does not file a complaint before the RERA, the
Another key aspect of the redressal mechanism under the REA is that it does not oust the jurisdiction of
The creation of multiple forums for the adjudication of the same claim does not further the intention of speedy redressal.
ARBITRABILITY OF DISPUTES
Whether the disputes are capable of adjudication and settlement by arbitration? That is, whether the disputes, having regard to their nature, could be resolved by a private forum chosen by the parties (the arbitral tribunal) or whether they would exclusively fall within the domain of public fora (courts)?
Whether the disputes are covered by the arbitration agreement? That is, whether the disputes are enumerated or described in the arbitration agreement as matters to be decided by arbitration or whether the disputes fall under the 'excepted matters' excluded from the purview of the arbitration agreement.
Whether the parties have referred the disputes to arbitration? That is, whether the disputes fall under the scope of the submission to the arbitral tribunal, or whether they do not arise out of the statement of claim and the counter claim filed before the arbitral tribunal.”61
The Test of Nature of Rights
The Court took the view that certain categories of proceedings are reserved by the legislature exclusively for public forums
The seventh category
The Test of Relief Sought
Taking an alternative approach, the Bombay High Court in
However, applying the
The Test of Social Objective
and Public Policy
The most important decision on arbitrability of disputes is
Towing a similar line, the
Applying the Tests to Disputes under the REA
If the interpretation of the Bombay High Court
Thus, the test
THE EFFECT OF THE ARBITRATION & CONCILIATION (AMENDMENT) ACT, 2015
It is pertinent to note that the aforesaid decisions on arbitrability were passed before the amendment to the Arbitration Act,93
OUSTER OF THE ARBITRATION TRIBUNAL
First, the REA is a
Second, it has been held time and again that in case of
Third, taking a purposive interpretation, the costs associated with arbitration are relatively high and the process of arbitration is not understood by most buyers.104
Fourth, the REA provides for strict timelines, such as the refund of money within
The REA is much needed,
The requirement of registration of builders, and especially of real estate agents,
However, since the REA also applies to projects which are yet to receive an occupancy certificate,
“ "real estate project" means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartment, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto.”).
“ "occupancy certificate" means the occupancy certificate, or such other certificate by whatever name called, issued by the competent authority permitting occupation of any building, as provided under local laws, which has the provision for civic infrastructure such as water, sanitation and electricity.”).
Any aggrieved person may file a complaint with the Authority or the adjudicating officer, as the case may be, for any violation or contravention of the provisions of this Act or the rules and regulations made thereunder against any promoter allottee or real estate agent, as the case may be.”).
“While adjudging the quantum of compensation or interest, as the case may be, under section 71, the adjudicating officer shall have due regard to the following factors, namely:— (a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; (b) the amount of loss caused as a result of the default; (c) the repetitive nature of the default; (d) such other factors which the adjudicating officer considers necessary to the case in furtherance of justice.”).
“The allottee shall be entitled to claim the possession of apartment, plot or building, as the case may be, and the association of allottees shall be entitled to claim the possession of the common areas, as per the declaration given by the promoter under sub-clause (C) of clause (I) of sub-section (2) of section 4.”).
“If any promoter contravenes any other provisions of this Act, other than that provided under section 3 or section 4, or the rules or regulations made thereunder, he shall be liable to a penalty which may extend up to five per cent of the estimated cost of the real estate project as determined by the Authority.”).
“Provided that any person whose complaint in respect of matters covered under sections 12, 14, 18 and section 19 is pending before the Consumer Disputes Redressal Forum or the Consumer Disputes Redressal Commission or the National Consumer Redressal Commission, established under section 9 of the Consumer Protection Act, 1986, on or before the commencement of this Act, he may, with the permission of such Forum or Commission, as the case may be, withdraw the complaint pending before it and file an application before the adjudicating officer under this Act.”).
"My right to the peaceable occupation of my farm is in rem, for all the world is a under a duty towards me not to interfere with it. But if I grant a lease of the farm to a tenant, my right to receive the rent from him is in personam.”).
“A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that