Developers across India have spent the better part of a decade trying to route RERA disputes with homebuyers back into arbitration clauses tucked into their agreements for sale, with mixed success before different benches. Justice Amit Borkar of the Bombay High Court has now declined to settle that question on his own authority, and has instead sent it to a larger bench for a considered answer.
The reference arose in a petition by Rensar Infra Private Limited under Section 11 of the Arbitration and Conciliation Act, seeking appointment of a sole arbitrator against two flat buyers under an agreement for sale dated 31 December 2020. The buyers had not waited for arbitration. They had already approached MahaRERA under Section 18 of the Real Estate (Regulation and Development) Act, and MahaRERA allowed their complaint on 14 August 2024. Rensar's review of that order failed, and the developer then sought to pull the dispute into arbitration even as the buyers' appeal against the MahaRERA order proceeded before the Appellate Tribunal on a separate track.
Justice Borkar's task at the Section 11 stage was a narrow one in form, since the Supreme Court's own jurisprudence, running from Vidya Drolia onward, confines a referral court's enquiry at that stage to a limited, prima facie scrutiny rather than a full merits determination of arbitrability. What made this petition different was that the limited scrutiny still required the Judge to decide whether RERA disputes between a promoter and an individual allottee belong to a category of disputes the law treats as inherently unsuited to arbitration, in the way that insolvency, matrimonial and certain other disputes have been held non-arbitrable regardless of what the parties' contract says.
The existing Bombay High Court authority on this point, in Rashmi Realty Builders v. Rahul Pagariya, had read RERA's overriding effect broadly, holding that a promoter-allottee dispute under a RERA-governed agreement could not be sent to arbitration even where the agreement itself contained an arbitration clause. Justice Borkar's order treats that holding as requiring fresh scrutiny rather than automatic application, framing the question the larger bench must answer as whether non-arbitrability should attach to the entire class of promoter-allottee disputes, or whether it should instead turn on the subject matter of the particular dispute, the nature of the relief actually sought, and whether that relief falls within what a RERA authority is statutorily empowered to grant.
That distinction is not academic for developers and buyers litigating today. A dispute over delayed possession compensation, which RERA authorities routinely adjudicate and award, sits differently from a dispute over, say, a purely contractual damages claim unrelated to any RERA-specific relief, where an arbitration clause might sensibly operate without displacing the homebuyer protections RERA was enacted to provide. Treating the entire category as non-arbitrable forecloses that distinction before it can even be examined; treating arbitrability as relief-dependent preserves it, at the cost of a more fact-intensive enquiry in every case where a developer invokes an arbitration clause against a RERA complainant.
Until the larger bench rules, the reference leaves Bombay High Court practice in a holding pattern on this specific point, with Rashmi Realty's broader rule remaining the operative precedent for now even as its reasoning stands referred for reconsideration. Developers drafting fresh agreements for sale, and litigants presently fighting Section 11 petitions elsewhere in Maharashtra, will want to watch how the larger bench frames the test, since a relief-dependent standard would reopen arbitration as a live option in categories of RERA disputes that Rashmi Realty's broader reading had appeared to foreclose entirely.
The order also keeps in view the Supreme Court's general caution, reiterated across several recent rulings on arbitrability, against referral courts conducting anything beyond a prima facie assessment at the Section 11 stage. By referring the question rather than deciding it himself on a petition that nominally called only for appointment of an arbitrator, Justice Borkar has avoided pre-empting a wider bench's considered view on a point that affects every RERA-regulated transaction with an arbitration clause, not merely the two flat buyers before him.