Maharashtra Real Estate Appellate Tribunal Upholds Homebuyers' Rights Against Arbitration Clauses

The Maharashtra Real Estate Appellate Tribunal (MREAT) has delivered a significant ruling that bolsters the rights of homebuyers. The appellate body set aside an earlier order from the Maharashtra Real Estate Regulatory Authority (MahaRERA) which had directed flat purchasers to pursue arbitration due to clauses in their sale agreements. The Tribunal has remanded the matter back to MahaRERA with instructions to decide the complaints afresh on their merits.

The ruling came in response to appeals filed by allottees, including Borivali resident Antony Ignatius and members of the Khadtare family from Bhayander, against CCI Projects Private Limited and Cable Corporation of India Limited. The appellants, represented by Advocate Anil D’Souza, were part of the “Rivali Park” project in Borivali, particularly the residential towers known as “Winter Green.” The allottees had booked flats and paid substantial amounts. However, the promoters failed to hand over possession within the agreed timelines, leading the homebuyers to approach MahaRERA for interest and compensation.

MahaRERA had initially dismissed the complaints, citing Clause 59 of the registered agreements for sale. This clause, executed before the enactment of the Real Estate (Regulation and Development) Act, 2016 (RERA), provided that disputes between the parties would be resolved through arbitration. Accepting this contention, MahaRERA dismissed the complaints without examining their merits and directed the parties to initiate arbitration proceedings.

Dissatisfied with this order, the allottees moved the Appellate Tribunal, arguing that the existence of an arbitration clause does not oust the jurisdiction of the regulatory authority under the RERA Act. The Tribunal, in allowing the appeals, relied on the binding precedent of the Bombay High Court in M/s Rashmi Realty Builders Pvt. Ltd. vs. Mr. Rahul Rajendrakumar Pagariya. This ruling states that the jurisdiction of the Authority under RERA cannot be defeated merely because the agreement contains an arbitration clause.

The Tribunal further cited the Supreme Court’s ruling in M/s Newtech Promoters and Developers Pvt. Ltd., which clarified that the RERA Act has retroactive application and covers ongoing projects that commenced prior to the Act coming into force. The Tribunal emphasized that disputes between allottees and promoters under the RERA Act are non-arbitrable in nature and fall squarely within the domain of the regulatory mechanism established under the statute.

The Tribunal rejected the promoters’ argument that arbitration was a mutually agreed contractual forum. It stressed that a statutory remedy provided under a welfare legislation such as RERA cannot be curtailed by private contractual terms. The availability of arbitration does not extinguish the right of homebuyers to seek redress under the special forum created by Parliament.

Concluding that the earlier order warranted interference, the Tribunal set aside MahaRERA’s decision and restored the complaints for fresh adjudication on their merits. This ruling is expected to have wider implications for pending disputes involving pre-RERA agreements containing arbitration clauses, reinforcing that homebuyers in Maharashtra can invoke the protections of the RERA Act irrespective of such contractual stipulations.