Homebuyers’ Right To RERA: When Homebuyer Rights Override an Arbitration Clause (And When You Need a Real Estate Lawyer)

If you are a homebuyer facing delayed possession, one of the first questions a real estate lawyer will help you answer is this: when your builder’s agreement to sale contains an arbitration clause, are you forced into private arbitration, or can you approach the RERA Tribunal instead? This single jurisdictional question decides how fast, how cheaply, and how effectively you recover your money. This blog explains, in practical terms, how RERA overrides arbitration clauses in real estate disputes, what the courts have held, and where a real estate lawyer adds decisive value.

One of the most significant contractual breaches made by the Developer under an agreement to sale is the default or delay in delivering possession of the Apartment/plot to the homebuyers. Such delays often give rise to Real Estate Disputes, leading homebuyers to question whether they should approach the RERA Tribunal established under the Real Estate (Regulation and Development) Act of 2016 for the adjudication of their claims or turn to the Arbitral Tribunal established under the Arbitration and Conciliation Act of 1996, especially when an arbitration clause is already present in the agreement to sale. Through this blog, the author aims to analyse various legal provisions, judicial precedents, and specific instances wherein the homebuyer may be entitled to approach the RERA Tribunal for seeking relief despite the existence of an arbitration clause in the agreement to sale. The blog further seeks to resolve the jurisdictional dilemma between the two authorities.

Provisions Under the Real Estate Regulatory Authority Act, 2016

The RERA Act, 2016 contains certain essential provisions that provide for the superseding of RERA Act over any other law at the time being in force – 

• Section 88: States that the provisions of RERA are in addition to and not in derogation of any other law currently in force. This means that RERA does not exclude the application of other laws unless explicitly stated. The section herein is produced in verbatim: –

“The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.

• Section 89: The Section states that the RERA Act shall have an overriding effect on any other law/laws that is active for the time being in force. Which clearly states that the RERA Act will take precedence over any other law that is inconsistent with its provision. The Section is herein produced in verbatim: – 

“The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force.”

• Section 79: The Section that no civil court shall have the jurisdiction to entertain any type of suit or proceedings which is pending adjudication before this Hon’ble Tribunal. The Section basically puts a bar upon the jurisdiction of any other court over the matter specifically handled by the RERA Tribunal. 

The above provisions clearly stipulates that the RERA Act has been established for providing a special remedy to the homebuyers in addition to any other remedy available. But the Courts at various instances have superseded the jurisdiction of the RERA Tribunal over the Arbitral Tribunal. 

What Disputes Are Not Arbitrable

The Hon’ble Supreme Court in the cases of Vidya Drolia & Ors. Vs. Durga Trading Corporation and Booz Allen and Hamilton INC vs. SBI Home Finance Limited & Ors. , has laid down certain disputes which are not arbitrable. Disputes such as involving public interest, land laws, or disputes of public nature are often not arbitrable. Basically, any dispute which has a “right in rem” i.e. rights getting effected of more than one individual, is not included under the head of arbitrable disputes. 

Retrospective Application of the RERA Act

Agreements to sale, that are executed prior to the enactment of the RERA Act mostly contain an Arbitration Clause for resolving all or any disputes that arise out of the said Agreement. Homebuyers, face difficulty in determining the jurisdiction in cases like these. The Hon’ble Supreme Court answered to this question in the case of “M/S. Newtech Promoters and Developers vs. State of Uttar Pradesh” and held that RERA applies retroactively to ongoing projects that do not have completion certificate. 

Judicial Pronouncements Solidifying the RERA Tribunal’s Jurisdiction over the Arbitral Tribunal

• Ganesh Lonkar v. D S Kulkarni Developers
  

  The Maharashtra RERA in the present case dismissed the plea of the respondent that the dispute falls under arbitration as per the agreement to sale. The Tribunal, held that Section 89 of the Rera Act, creates an overriding effect over the provisions of the Arbitration Act, and therefore the MahaRERA will have exclusive jurisdiction over the said case. 

• Rashmi Realty Builders Pvt. Ltd. V. Rahul RajendraKumar Pagariya and others
  

The Bombay High in the present case, while answering to the question of whether jurisdiction under Section 20 of the RERA Act, 2016 be ousted when an arbitration clause is already present in the agreement to sale, held that even though a dispute under RERA is filed by an individual allottee against the developer, but the subsequent decision may affect all the other allottees in the said project. Therefore, the matter affects a larger sect of public and does not fall within the ambit of “Rights in Personam”. The court concluded that the said dispute is non-arbitrable as they involve the interests of the public at large and not just one single individual.

• Anil Kumar Arya v. SVS Buildcon Private Limited

The Madhya Pradesh RERA in a landmark ruling pertaining to the jurisdictional issues between the arbitral tribunal and the RERA tribunal answered the same in favour of the RERA tribunal. The Tribunal held that the RERA Act is a special statute as opposed to the Arbitration Act which is a general statute. Therefore, in cases of conflict the RERA tribunal must be preferred as the requisite forum for seeking relief. 

The Current Position (2025–2026): Statutory Rights Cannot Be Ousted by a Private Arbitration Clause

The judicial trend since this position was first articulated has moved decisively in the homebuyer’s favour. In a widely reported 2025 ruling in the Rashmi Realty Builders matter, the Bombay High Court reaffirmed that statutory rights under RERA cannot be ousted by a private arbitration clause, describing RERA as a sui generis welfare legislation designed to protect vulnerable homebuyers. Invoking the doctrine of generalia specialibus non derogant, a general law does not derogate from a special law, the Court held that the RERA framework prevails over the general provisions of the Arbitration and Conciliation Act, 1996. For any homebuyer weighing forums today, the practical takeaway a real estate lawyer will confirm is that a builder cannot force you into arbitration to defeat your RERA remedy.

The Doctrine of Election and Judicial Divergence

The position is not entirely one-directional, and this is precisely where sound advice from a real estate lawyer becomes critical. A parallel line of reasoning, drawing on the Supreme Court’s observations in Vidya Drolia and in M. Hemalatha Devi v. B. Udayasri, recognises the Doctrine of Election, where more than one remedy is available for the same cause of action, the aggrieved party may choose its preferred forum, provided there is no inconsistency with mandatory statutory provisions. Some tribunals have accordingly treated RERA and arbitration as operating in “harmonious spheres” rather than in strict conflict. The result is a degree of judicial divergence across states and benches. Whether arbitration is genuinely available, or whether your dispute is squarely non-arbitrable, is a fact-specific determination and choosing the wrong forum can cost a homebuyer months of delay and a fresh round of litigation.

What This Means for Homebuyers: Your Remedies Under Section 18

Understanding jurisdiction is only half the battle. Real estate lawyers explain that knowing what you can actually claim is the whole new revelation. Under Section 18 of the RERA Act, 2016, where the promoter fails to hand over possession by the date promised in the agreereal estate lawyerment to sale, the allottee has two clear options, often described as two “doors”:

• Withdraw from the project and claim a full refund of every amount paid, along with interest and compensation for loss; or
• Continue with the project and claim interest for every single month of delay until possession is actually handed over.

The Supreme Court in M/s. Newtech Promoters and Developers Pvt. Ltd. v. State of Uttar Pradesh held these rights to be “absolute and unconditional,” meaning they cannot be diluted by contractual terms. In most states, the prescribed interest rate for delayed possession is the State Bank of India’s highest Marginal Cost of Lending Rate (MCLR) plus 2%. Homebuyers exploring their options in RERA refund and possession cases should preserve their registered agreement for sale, all payment receipts, and the project’s RERA dashboard records before initiating a claim.

Conclusion

After analysing the above discussion, it can be inferred that homebuyers can pursue one of the two effective remedies available under the Arbitration and Conciliation Act of 1996 or the Real Estate (Regulation and Development) Act of 2016. However, the RERA Act is better placed because it is a piece of legislation established specifically to protect homebuyers’ interests and regulate the real estate industry. In ordinary circumstances, a special law prevails over a general law, further supporting RERA’s dominance in resolving real estate disputes even when an arbitration clause is present.

That said, the jurisdictional interplay between RERA and arbitration remains fact-sensitive, and the difference between the right forum and the wrong one can determine whether you recover your money in months or years. An experienced real estate lawyer can assess your agreement to sale, identify the strongest forum for your claim, and pursue the appropriate remedy whether a refund with interest or possession with delay compensation. If you are facing delayed possession or a builder dispute, our real estate dispute resolution team can review your agreement and advise on the fastest route to relief. 

Author –  Namanveer Singh Sodhi, Associate

Co- Author – Prarabdh Tiwari, Assessment Intern