Chose RERA First? Supreme Court Says Buyers Cannot Then Run to Arbitration for the Same Relief

Case at a glance: The Supreme Court has set aside a High Court order that had restrained a Gurugram developer from leasing out a commercial project pending arbitration. Because the buyers had already elected to approach the Haryana RERA and obtained final orders on substantially the same prayers, the Court held that their Section 9 application under the Arbitration and Conciliation Act, 1996 was “misplaced” and relegated the parties to HRERA.

The appellant developed “Neo Square” at Sector 109, Dwarka Expressway, Gurugram, and sold undivided, un-demarcated commercial space to the respondents under a Builder Buyer Agreement and an MoU that promised an assured return. After the assured return was stopped and the project was delayed, the buyers went to the Haryana Real Estate Regulatory Authority. Its order, which among other things set aside a 2021 cancellation and directed payment of arrears of assured return at Rs 22,500 a month, attained finality; execution proceedings are pending.

When the developer announced in February and March 2025 that the property was proposed to be leased, and demanded development and fit-out charges, the buyers filed a Section 9 application. The Commercial Court held that having chosen HRERA they could not invoke the arbitration clause. In a Section 37 appeal, the High Court restrained the developer from creating third-party interests, including by leasing, until arbitration commenced.

The Key Question Before the Court

Can allottees who have already obtained final orders from RERA turn to the arbitration clause for interim protection on substantially the same claims?

Election of Remedy and the Nature of the Investment

The Court said it was “unable to concur” with the High Court's distinction between statutory RERA relief and interim protection under Section 9. The buyers had elected HRERA despite the arbitration clause, and the prayers in both forums were substantially the same, so there was no reason to now invoke arbitration.

Reading the agreement, the Court noted that the buyers held an undivided interest with an assured return, not separate possession, and that rental income from leasing could be more or less than that return. Restraining leasing would also stall a planned food court. HRERA, which has powers under Section 63 of the RERA Act, 2016 read with Rule 27 of the 2017 Rules, was the proper forum for the remaining disputes.

What the Court Actually Held

• The High Court's order was set aside and the Commercial Court's order restored.
• The arbitration route was held misplaced because the buyers had elected HRERA on substantially the same prayers.
• Buyers may approach HRERA on conveyance of the undivided area and on development and fit-out charges.
• The developer's contentions on the balance due under the BBA and MoU are left open before HRERA.

Why This Judgment Matters

• It discourages parallel proceedings before RERA and in arbitration on the same grievance.
• It treats assured-return commercial units as investments governed by the agreement's terms.
• It points parties to RERA's own enforcement powers instead of fresh arbitral litigation.

What Should Advocates Take Away From the Judgment?

For Allottees

• Choose the forum carefully; after electing RERA, an arbitration clause may not be available for the same relief.
• Use RERA's execution and penalty powers to enforce its orders.

For Developers

• Rely on prior RERA proceedings to resist parallel Section 9 applications.
• Raise balance-due claims before RERA, where the Court left them open.

Key Takeaways

Frequently Asked Questions

No. It held that on these facts, having elected HRERA on substantially the same prayers, the buyers could not invoke arbitration.

The restraint on leasing was lifted when the High Court's order was set aside.

To HRERA, on conveyance and on development and fit-out charges.

Conclusion