Are All Promoter-Allottee RERA Disputes Non-Arbitrable? Bombay HC Refers Question To Larger Bench

The Bombay High Court has referred to a larger Bench the question of whether every dispute between a real estate promoter and an individual flat buyer under an agreement for sale governed by RERA is non-arbitrable as a class.

The court will consider whether arbitrability must instead be examined by looking at the subject matter, nature of relief and the matters RERA authorities are empowered to determine.

Justice Amit Borkar observed, “The issue is whether the existence of a statutory forum under RERA and its public nature takes the entire promoter-allottee class outside private arbitration, or whether the Court has to examine the exact relief, subject matter and nature of dispute in every case.”

The court, therefore, referred the question to a larger bench.

"Whether, having regard to Sections 79, 88 and 89 and the other relevant provisions of the Real Estate (Regulation and Development) Act, 2016, a dispute arising between an individual promoter and allottee under an Agreement for Sale containing an arbitration clause is, merely because the relationship and transaction are governed by RERA, nonarbitrable as a class, or whether the arbitrability must be examined by reference to the subject matter, nature of relief and the matters which the statutory authorities under RERA are empowered to determine; and, consequently, whether the conclusion in paragraph 63(i) of Rashmi Realty Builders Pvt. Ltd. v. Rahul Rajendrakumar Pagariya, 2024 SCC OnLine Bom 3871, is to be understood as a general rule of non-arbitrability of all such disputes, notwithstanding the reasoning in Abhay Damodar Kanhere v. Morya Infraconstruct Pvt. Ltd, Arbitration Petition No.148 of 2024, and the principles governing limited scrutiny under Section 11 as held by the Supreme Court in Arif Azim Co. Ltd. v. Aptech Ltd,(2024) 5 SCC 313, Vidya Drolia v. Durga Trading Corporation ,(2021) 2 SCC 1 and NTPC Ltd. v. SPML Infra Ltd,(2023) 9 SCC 385?”

The reference arose from a petition by Rensar Infra Private Limited asking the Bombay High Court to appoint an arbitrator to resolve its dispute with two flat buyers over Flat No. 1901. The agreement for sale, signed on December 31, 2020, had an arbitration clause.

The flat buyers had earlier approached the Maharashtra Real Estate Regulatory Authority (MahaRERA) under Section 18 of the RERA Act. MahaRERA allowed their complaint on August 14, 2024. Rensar's review petition was rejected on April 17, 2025, after which it filed an appeal before the Maharashtra Real Estate Appellate Tribunal.

Rensar later issued a demand notice to the flat buyers on May 20, 2025. It invoked the arbitration clause on July 25, 2025, after receiving their reply. The parties could not agree on the constitution of the arbitral tribunal.

The claims included ₹92.45 lakh towards additional area and ₹41.59 lakh towards balance sale consideration. The court observed that these could not be treated as sham claims merely because the flat buyers disputed them.

The court also considered a compensation claim raised by Rensar. The flat buyers argued that the claim was an afterthought. Rensar relied on earlier complaints to the MCGM, issues concerning the Occupation Certificate and fire approval, and related criminal proceedings.

The court declined to reject the compensation claim at the Section 11 stage. He observed that whether the allegations could be proved, whether they caused loss, whether the loss was recoverable and whether the agreement permitted such recovery could not be decided at that stage.

The larger issue was whether the arbitration clause was enough to make these disputes referable to arbitration despite the RERA framework.

It noted that Section 11 proceedings cannot become a full trial. Questions such as limitation of individual claims, accord and satisfaction and other matters requiring detailed evidence ordinarily should not be decided at this stage.

At the same time, the existence of an arbitration agreement does not bring the court's enquiry to an automatic end. Non-arbitrability can be examined on a limited, prima facie basis.

In Rashmi Realty Builders Pvt. Ltd. v. Rahul Rajendrakumar Pagariya, the Bombay High Court had held that disputes between an individual allottee and promoter covered by RERA are non-arbitral. In Abhay Damodar Kanhere v. Morya Infraconstruct Pvt. Ltd., another bench understood the question decided in Rashmi Realty more narrowly.

The later decision in Laxman Mura Vaid v. Shree Siddhivinayak Infrastructure and Realty considered Rashmi Realty and followed it. Justice Amit Borkar noted that a later coordinate-Bench judgment does not become a decision of a larger Bench merely because it was delivered later.

The court also noted that the disputes before it were not identical to the reliefs originally sought by the flat buyers before MahaRERA. Rensar's claims concerned balance sale consideration and payment allegedly due for additional area. Both sets of proceedings nevertheless arose from the same agreement for sale.

If all promoter-allottee disputes governed by RERA are treated as non-arbitrable, such Section 11 applications would fail at the outset. If arbitrability depends on the particular dispute, an arbitral tribunal may have jurisdiction over some contractual disputes even where RERA remedies are available or were earlier used.

Justice Amit Borkar also cautioned against treating Section 16 of the Arbitration Act as an answer to the entire problem.

“Section 16 is an important principle of arbitral autonomy, but it cannot create jurisdiction where the law does not permit it,” he observed. The court also ruled that it would not be correct to reject every Section 11 application merely because the dispute has some relation with RERA.

The court noted that the difficulty was determining what amounts to a prima facie bar to arbitration in promoter-allottee disputes under RERA. It therefore concluded that an authoritative decision was required.

The court observed that the objection to non-arbitrability raised a substantial question of law requiring authoritative consideration by a larger Bench.

The papers were directed to be placed before the Chief Justice on the administrative side for constitution of an appropriate larger Bench. The larger Bench may consider the questions framed by Justice Borkar or such other or modified questions as it considers appropriate.

The Section 11 proceedings will remain deferred for consideration in accordance with the larger Bench's decision.  

For Petitioner (Rensar Infra Private Limited): Advocate Zaid Ansari.

For Respondent (Rais Kasam Shaikh & Anr.): Advocates Rohan Sawant, Aagam Mehta, Pratik K. Shah. Rensar Infra