Availing RERA Remedy Is No Bar To Seek Interim Protection U/S 9 Arbitration Act: Delhi High Court

The Court emphasized that Section 9 serves as a "supportive mechanism" to preserve the subject matter of a dispute, ensuring that subsequent arbitration does not become a futile exercise.

​The Division Bench of Justice Pratibha M Singh and Justice Shail Jain observed, “In addition, it is established that the jurisdiction under Section 9 of the Arbitration and Conciliation Act, 1996, is not an adjudicatory substitute for the final determination of rights, but a supportive mechanism to facilitate effective dispute resolution through arbitration. The mere fact that a party has availed a statutory remedy under a special enactment does not, by itself, denude the Court of jurisdiction to grant interim protection, particularly where the reliefs sought do not overlap in substance or effect. In the opinion of this Court, there can be no doubt that persons like the Appellants are forced to avail of remedies at different stages before different Authorities.”

Advocate Tanmay Mehta appeared on behalf of the Appellants, whereas Advocate Jitender Chaudhary appeared for the Respondent.

Facts of the case

Connected appeals were filed by six Appellants under Section 13 (1A) of the Commercial Courts Act, 2015, read with Section 37(1)(b) of the Arbitration and Conciliation Act of 1996, inter-alia,, challenging the Final Orders passed by the District Judge by which the Petitions filed under Section 9 of the Act of 1996, were dismissed by the concerned Commercial Courts.

In 2015, the Appellants entered into a commercial transaction with Neo Developers Pvt. Ltd. for the purchase of units in the "Neo Square" project in Gurugram. The parties executed a Builder Buyer Agreement (BBA) and a Memorandum of Understanding (MoU). Disputes arose in 2019 when the Respondent unilaterally stopped paying the assured returns and issued cancellation notices based on unexplained dues. The Appellants also alleged significant construction delays. In response, the Appellants initiated criminal proceedings via an F.I.R. and filed complaints before the Haryana Real Estate Regulatory Authority (HARERA). In 2024 and 2025, HARERA ruled in favour of the Appellants. Despite these orders, the Respondent issued new demand letters for "fit-out charges" and threatened to cancel allotments again, claiming the units were being leased to third parties.

The Appellants subsequently filed Petitions under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim injunctions to protect their property rights. However, the Commercial Courts dismissed these petitions. The Appellants preferred these consolidated appeals to challenge those dismissals.

Contentions of the parties

The Appellants argued that the Respondent’s recent actions were a facade designed to circumvent the HARERA order. They contended that a lease deed executed in June 2025 was a sham transaction involving a shell company linked to the Respondent’s promoters and incorporated only weeks prior. They further alleged that the Respondent had illegally altered the structural character of the units by splitting double-height spaces with unauthorized beams.

In response, the Respondent argued that the Appellants were precluded from seeking relief under Section 9 of the Arbitration Act after already obtaining a final order from HARERA. They characterized the Appellants as investors entitled only to "assured returns" and symbolic possession rather than specific physical units. They further noted that the Appellants represented only a small fraction of the total floor area and claimed that, in several cases, the assured returns already paid out exceeded the original investment amounts. Consequently, they argued that the Section 9 petitions were merely an attempt to execute a RERA order through the wrong judicial forum.

Observations of the Court

While dealing with the scope of Section 9 of the 1996 Act, the Court held, “In the present matter, the interim measures sought before the Commercial Courts were confined to preservation of the allotted commercial units, restraint on coercive actions such as cancellation of allotment or creation of third-party rights, and protection against enforcement of disputed and unexplained demands raised subsequent to HARERA’s Orders. These reliefs are ancillary in nature and are designed to ensure that the arbitral proceedings, once initiated, are not rendered in vain or illusory.”

The Court added that the power of the Court under Section 9 of the Act of 1996, is quite broad and would permit the grant of relief in cases where, prima facie, a balance of convenience and irreparable injury is made out in favour of the Petitioner.

“In disputes involving immovable property, particularly in the real estate sector, the need for interim protection assumes heightened significance. Property, once alienated, encumbered or subjected to third-party rights, may become impossible to restore to its original position. The law, therefore, recognises that preservation of the same is central to ensuring that the final adjudication, whether by an arbitral tribunal or a statutory authority, remains effective and enforceable…On the same lines, in all these Appeals, the Appellants have been running from pillar to post for the last several years, as is evident from the proceedings before the HARERA and the Petitions under Section 9 of the Arbitration and Conciliation Act, 1996, in order to secure their units, which they have booked. They have made substantial payments to the Respondent and have not enjoyed any fruits of the said payment.”, the Court held.

It was also observed that in cases where one party is in a position of dominance, such as a developer exercising control over possession, allotment, or documentation, the absence of interim restraint may permit actions that effectively foreclose the other party’s remedies. Section 9 enables the Court to neutralise such an imbalance, ensuring procedural fairness and preserving the sanctity of the arbitral process, the Court added.

The Court also remarked that the reliefs before HARERA were regulatory and determinative, whereas the reliefs under Section 9 were preventive and preservative. The failure of the Commercial Court to appreciate this vital distinction has resulted in a conflation of jurisdictions and an erroneous conclusion on maintainability, it said.

Conclusion

The Court directed, “a. The Respondent and their agents, servants, attorneys, heirs, contractors, labourers, representatives, etc., are restrained from creating any third-party interest/right(s), including, but not limited to, that of leasing out the property till the commencement of Arbitration proceedings; b. The Respondent is further directed to maintain status quo in relation to the respective Units under the BBA or MOU till the commencement of the Arbitration proceedings;c. Once the Arbitral tribunal is constituted, either of the parties may seek modification of this order from the Arbitral Tribunal.”

Accordingly, the Court allowed the appeal.

Cause Title: Rahul Bhargava & Anr. v. M/s Neo Developers Pvt Ltd. [Neutral Citation: 2025:DHC:11842-DB]

Appearances:

Appellants: Advocates Tanmay Mehta, Rajinder Singh & Arjun Sharma

Respondent: Advocates Jitender Chaudhary, Shilpa Chohan, Ritika Harplani, Aditi Tripathi, Vaishali Rathi, Mohit Matani, Vaishnavi Gaur, Waseem, Shozeb Ali and Syed Hussain Adil Taqvi

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