Delhi High Court: Commercial Unit Buyers May Pursue Arbitration Relief After RERA Proceedings Where Circumstances Change
Safiya Malik
The High Court of Delhi Division Bench of Justice Prathiba M. Singh and Justice Shail Jain held that purchasers of commercial units are not barred from pursuing arbitration remedies after approaching the Real Estate Regulatory Authority, where petitions are filed following changed circumstances such as issuance of completion certificates. In a dispute over delayed possession, assured returns, and alleged unauthorized leasing of units in Neo Square Mall, Gurugram, the Bench directed M/s Neo Developers Pvt. Ltd. to deposit lease rentals with the Registrar General and appointed a Local Commissioner to inspect the premises under Section 9 of the Arbitration and Conciliation Act, 1996
The appeals concerned commercial units booked by Harmeet Singh Kapoor, Rahul Bhargava, and M/s Jagmohan Enterprises LLP in Neo Square Mall, Sector-109, Gurugram, developed by M/s Neo Developers Pvt. Ltd. The appellants had entered into Memoranda of Understanding with the respondent and were assured fixed returns. Disputes arose when the respondent allegedly failed to pay assured returns, delayed construction, and did not hand over possession. The appellants approached the Economic Offences Wing and filed complaints before the Haryana Real Estate Regulatory Authority (HARERA).
On 14 August 2024, HARERA issued directions under Section 37 of the Real Estate (Regulation and Development) Act, 2016. The authority set aside a cancellation notice, directed payment of arrears of assured returns from January 2015 until leasing, mandated possession within two months of obtaining the occupation certificate, execution of conveyance deeds within three months thereafter, and prohibited charges beyond the agreement of sale. HARERA also imposed an obligation to pay arrears with 9% annual interest if unpaid within ninety days.
Following HARERA’s order, the respondent raised fresh demands on 27 February 2025 concerning fit-out charges. The appellants filed execution proceedings before HARERA and simultaneously sought interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 before the Commercial Court at Tis Hazari. The Commercial Court dismissed these petitions, reasoning that remedies under RERA and the Arbitration Act could not be pursued simultaneously for the same reliefs. The appellants challenged these dismissals before the High Court.
The respondent filed an affidavit stating that the units had been leased to Vexto Commercials Private Limited under a nine-year lease deed dated 30 June 2025, at a monthly rent of INR 143.50. The respondent contended that appellants had defaulted in payments and had not taken possession. It further raised a demand of INR 92,41,672 towards fit-out charges for priority numbers 21 to 26.
The appellants argued that Vexto Commercials was a front entity linked to the promoters of Neo Developers, incorporated only in May 2025 to frustrate their rights. They submitted that payments had been made in 2015 without benefit, and that the lease arrangement was fraudulent.
The Court considered whether Section 9 petitions were prima facie maintainable. It examined the decision of the Supreme Court in Ireo Grace Realtech Pvt. Ltd. v. Abhishek Khanna, (2021) 3 SCC 241. Quoting the Supreme Court, the Bench recorded: “An allottee may elect or opt for one out of the remedies provided by law for redressal of its injury or grievance. An election of remedies arises when two concurrent remedies are available, and the aggrieved party chooses to exercise one, in which event he loses the right to simultaneously exercise the other for the same cause of action.” The Court clarified that simultaneous pursuit of remedies was barred.
The Court contrasted the reliefs sought before HARERA and under Section 9 petitions. It noted: “A perusal of the complaint filed before HARERA would show that the relief sought was in respect of payment of assured returns, execution of sale deed and for restraining the Respondent from entering into any lease deed with the third party till the completion of the project and handing over of possession.” By comparison, the Section 9 petitions sought injunctions against leasing after issuance of occupation certificate and against cancellation of units pending arbitration.
The Bench recorded HARERA’s directions requiring arrears of assured returns, offer of possession post-occupation certificate, and execution of conveyance deeds. The Court observed: “Prima facie, the legal issue which has been raised in respect of the decision in Ireo Grace Realtech Private Limited (Supra), would not bar the filing of petitions under Section 9 of the Arbitration and Conciliation Act, 1996 as the proceedings before HARERA are not from the same cause of action.”
It further held: “The section 9 petitions have been filed after completion certificates have been issued. Moreover, the continued non-adherence of any obligations by the Respondent, constitutes a continuing cause of action in favour of the Appellants. Thus, the Appellants are well within their rights to seek further relief from the appropriate forum for securing their interest.”
The Court recorded that appellants had been deprived of benefits despite payments since 2015, while the respondent had leased the units and was earning substantial rent. It noted: “Under such circumstances, this Court has no doubt that some protection ought to be extended to the Appellants at this stage.”
The Court ordered: “The Respondent shall, deposit the entire lease amount being earned qua each of the Appellants and in respect of each of the units which belong to the Appellants with the worthy Registrar General of this Court. The date of lease entered into by the Respondent is stated to be from 30th June, 2025, therefore, from 1st July, 2025 onwards, the entire rent amount, without any deduction, applicable to the units of Appellants shall be deposited by 30th September, 2025 by Respondent with the worthy Registrar General of this Court. Going forward, the said rent from 1st October, 2025 onwards shall be deposited by the Respondent by 15th of each month with the worthy Registrar General.” The sums were to be kept in fixed deposit with auto-renewal mode.
The Court further directed both appellants and respondent to file computations of dues concerning each unit at least one week before the next hearing. It appointed Advocate Syed Hussain Adil Taqvi as Local Commissioner to inspect the third and fourth floors of Neo Square Mall, Sector 109, Gurugram, to ascertain the status of occupancy. The Commissioner was to file a report with photographs, videos, and copies of sub-lease documents, if any, within two weeks of inspection. His fee was fixed at Rs. 2 lakhs, payable by the respondent.
The Court scheduled inspections for 20 and 22 September 2025, allowing two representatives and one lawyer from each side to accompany the Local Commissioner. It reiterated that the respondent must also comply with earlier directions to file affidavits detailing the status of the commercial spaces and amounts collected.
“List this matter on 30th October, 2025. Other interim orders granted to continue”.
Advocates Representing the Parties
For the Petitioners: Mr. Tanmay Mehta, Mr. Rajinder Singh, and Mr. Arjun Sharma, Advocates
For the Respondents: Mr. Jitender Chaudhary, Ms. Shilpa Chouhan, Mr. Mohit Matani, Ms. Ritika Harplani, and Ms. Anshita Shrivastava, Advocates
Case Title: Harmeet Singh Kapoor & Ors. v. M/s Neo Developers Pvt. Ltd.
Case Number: FAO (COMM) 237/2025 & connected matters
Bench: Justice Prathiba M. Singh, Justice Shail Jain
