Once Plaintiff Elected Remedy U/S.31 RERA, They Can’t File Suit for Recovery of Money & Parties Can’t Be Referred to Arbitration: Calcutta HC

The Calcutta High Court held that when the plaintiffs elected remedy under Section 31 of the Real Estate (Regulation and Development) Act, 2016, the plaintiffs cannot file the suit for recovery of money and the parties cannot be referred to arbitration.
The defendants, in this case, had filed the application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the parties to the instant suit to arbitration in terms of Clause 26 of the General Terms and Conditions entered between the parties.
The Single-Judge Bench of Justice Krishna Rao asserted, “Section 79 of the Act of 2016 specifically excludes the jurisdiction of every civil court to entertain any suit or proceeding in respect of any matter, which the authority or the adjudicating officer or the Appellate Tribunal constituted under the Act of 2016 is empowered to determine.”
Senior Advocate Suman Kumar Dutt represented the plaintiffs while Advocate Siddhartha Banerjee represented the defendants.
The plaintiffs filed the suit against the defendant for recovery of a sum of Rs 62,99,393 along with interest. The defendant, a subsidiary of the Bengal Ambuja Housing Development Limited, is a joint venture company of the West Bengal Housing Board and Ambuja Neotia Group. After going through the advertisements made by the defendant, the plaintiffs jointly applied for allotment of the Apartment in the project of the defendant.
The defendant provided an application to the plaintiffs and the applicants duly signed the said application and also made payment of Rs 10,00,000 by way of cheque. Time to time as per the demand of the defendant, the plaintiffs paid an aggregate amount of Rs 94,15,028 being the part sale consideration of the apartment. The plaintiff no. 1 approached the defendant with a request for cancellation of the provisional allotment of the apartment due to the demand for installment amount at regular-intervals by the defendant which was contrary to the representations made by the defendant prior to application for allotment causing financial difficulties to the plaintiffs. The plaintiffs requested the defendant to arrange for the refund of the part consideration paid by the plaintiffs to the defendant. The defendant informed them that the plaintiffs would be entitled to refund of a sum of Rs 31,15,635 only out of the total amount of Rs 94,15,028 after the resale or re-allotment of the said apartment.
As the deduction of Rs 62,99,393 was illegal and contrary to law, the plaintiffs lodged a complaint to the West Bengal Housing Industrial Regulation Authority. After several correspondences between the parties, the plaintiffs have accepted the amount of Rs 31,15,635 without prejudice to the rights of the plaintiffs to recover the entire consideration along with interest. After receiving no notice of any proceeding from the Authority, the plaintiffs have filed the present suit.
It was the case of the defendant that the dispute in the instant case revolved around the contract entered between the parties pertaining to the residential unit in the form of a provisional letter of allotment and the General Terms and Conditions signed by both the parties. It was submitted that the the disputes raised in the instant suit are covered under the arbitration clause of the General Terms and Conditions of the Contract and the disputes sought to be raised in the suit were arbitrable in nature.
The plaintiffs submitted that the defendant had entered into an agreement and incorporated Clauses of Arbitration, which was contrary to and in derogation of the provisions of the Real Estate (Regulation and Development) Act, 2016. It was submitted that the provisions of the Act of 2016 contained in Chapter VIII thereof provides for various punishment/ penalties, if a party contravenes any of the provisions of the Act of 2016.
The Bench noted that the defendant already sold or took steps for sale of the said property and realized or about to realize the entire consideration thereof.“The defendant cannot make wrongful gain at the cost of the plaintiffs. The Clause in the General Terms and Conditions permitting the defendant to withhold payment on the garb of applicable charges is contrary to law and cannot be given effect to”, the Bench said.
It was further observed that Section 18 stipulates that if the promoter itself fails to complete or is unable to give possession of an apartment, plot or building in accordance with the terms of the agreement for sale, the promoter would be liable, on demand from the allottees, to return the amount received by him in respect of that apartment, plot or building, with interest at such rate, as may be prescribed. In the instant case, the plaintiffs wanted to walk out of the agreement on the ground that the defendant had violated the agreement. Section 79 specifically excludes the jurisdiction of every civil court to entertain any suit or proceeding in respect of any matter, which the authority or the adjudicating officer or the Appellate Tribunal constituted under the Act of 2016 is empowered to determine.
The Bench observed that the plaintiffs filed the suit for a decree for a sum of Rs 62,99,393 with interest but had not prayed for any punishment and penalty, thus the contention of the plaintiffs did not stand.“Considering the above, it is clear that the remedy available under the Arbitration and Conciliation Act, 1996 is in addition to the remedies available under other special statutes and the availability of alternative remedies is not a bar to the entertaining of a petition under the Arbitration and Conciliation Act, 1996. But once elected, then the other remedy will not lie in respect of the same dispute”, the Bench said.
The Bench also considered the fact that the plaintiffs initially made a complaint before the West Bengal Housing Industrial Regulation Authority under Section 31 of the Act and the said complaint was still pending before the concerned authority. “Thus the plaintiffs elected remedy under Section 31 of the Act of 2016, the plaintiffs cannot file the suit for recovery of money and the parties cannot be referred to arbitration”, the Bench said while dismissing the suit filed by the plaintiffs and the application filed by the defendant.
The Bench concluded the matter by observing, “The dismissal of the suit will not create any hindrance to the plaintiffs to take appropriate steps before the concern authority to proceed with the complaint filed by the plaintiffs on 7th October, 2020.”
Cause Title: Smt. Rita Banerjee & Anr. Versus S.E. Builders & Realtors Limited (Case No. IA No. GA 3 of 2022 )
Appearance:
Plaintiffs: Senior Advocate Suman Kumar Dutt, Advocates Rajarshi Dutta, A.P. Agarwalla
Defendants: Advocates Siddhartha Banerjee, Subir Banerjee, Abhishek Baran Das, Srijoni Chongdar