RERA – Regulation rules over arbitration?

The Real Estate (Regulation and Development) Act, 2016 (RERA), was enacted with the objective of ensuring transparency and efficiency in real estate transactions and to establish a mechanism for speedy adjudication of disputes. The Real Estate Regulatory Authority (Authority) was created by RERA in each state not only for the protection of the consumers but also for the regulation and promotion of the real estate sector, an industry that had long been unregulated. From requiring mandatory registration of real estate projects to prescribing penal consequences for violation of builder-buyer agreements, RERA establishes an effective and well-regulated framework for transactions in the real estate sector.

Question of jurisdiction: In a recent decision on Ganesh Lonkar v DS Kulkarni Developers Ltd, the Maharashtra Real Estate Authority (MahaRERA) 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. The reasoning in the decision has two foundations. Firstly, the legislature is presumed to be aware of all laws enacted by it; as RERA was enacted after the Arbitration and Conciliation Act, 1996 (ACA), RERA would prevail over ACA. Secondly, the legislature has specifically provided a non obstante clause in section 89 of RERA. This states that RERA shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force. Thus, the provisions of RERA override section 8 of ACA, which mandates a judicial authority to refer to arbitration disputes that are subject to an arbitration agreement.

Anjala Parveen and Neha Joshi are associates at Vidhii Partners.