Authors : Shikha Ginodia - Equity Partner, Shalini Singh - Principal Associate, Shivangi Gupta - Associate

The Issue

Real estate agreements routinely contain arbitration clauses, reflecting the preference of parties for private and expeditious dispute resolution. However, the presence of an arbitration agreement does not, by itself, determine whether a particular dispute is capable of being referred to arbitration.

The Bombay High Court's recent decision in Laxman Mura Vaid & Anr. v. Shree Siddhivinayak Infrastructure & Realty, a Partnership Firm, Judgment dated 21 September 2026, Bombay High Court (Original Side), brings this distinction into sharp focus. The Court reiterated that disputes between an individual allottee and a promoter which fall within the regulatory framework of the Real Estate (Regulation and Development) Act, 2016 ("RERA") are non-arbitrable, notwithstanding an arbitration clause contained in the agreement between the parties.

The decision is particularly relevant for developers, homebuyers and counsel drafting or reviewing agreements for sale, particularly where such agreements contain broad arbitration clauses.

The dispute before the Court

The applicants had booked Flat No. 3903 in the promoter's project, "Ruparel Skygreens", under a 5:90:5 subvention scheme involving DHFL. A tripartite agreement was executed in 2017 and was followed by a registered Agreement for Sale dated 11 March 2022.

The applicants alleged, inter alia, that the promoter had failed to discharge certain pre-interest EMI obligations payable to DHFL, as a result of which the applicants claimed to have paid approximately Rs. 12.99 lakh towards interest. They further alleged that possession, which was expected by December 2022, had not been delivered. The promoter subsequently issued a termination notice dated 3 January 2026.

The Agreement for Sale contained an arbitration clause in Clause 86. Relying upon that clause, the applicants invoked arbitration and approached the Bombay High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 ("Arbitration Act") seeking appointment of an arbitrator. They also invoked Section 9 of the Arbitration Act seeking interim relief.

The central question was therefore not whether an arbitration agreement existed. It did. The more fundamental question was whether the disputes raised by the applicants were legally capable of being referred to arbitration.

Existence of an arbitration agreement is not the end of the inquiry

The judgment draws an important distinction between the existence of an arbitration agreement and the arbitrability of the underlying dispute.

The Court accepted that Clause 86 constituted an arbitration agreement and that the applicants had raised a genuine dispute. However, the existence of a valid arbitration clause did not automatically confer jurisdiction upon an arbitral tribunal over every dispute arising between the parties.

In considering a Section 11 application, the Court recognised that its examination is ordinarily limited. Nevertheless, where the subject matter of the dispute is prima facie non-arbitrable, the Court is not required to mechanically appoint an arbitrator and leave the question entirely to the arbitral tribunal.

This is consistent with the broader jurisprudence of the Supreme Court on non-arbitrability, including Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532, and Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1.

In Vidya Drolia, the Supreme Court formulated the framework for determining when a dispute is non-arbitrable, including where the subject matter affects third-party rights, requires centralised adjudication, concerns sovereign or public functions, or is expressly or by necessary implication rendered non-arbitrable by statute.

Why did the Court treat RERA disputes differently?

The Bombay High Court's reasoning principally followed its earlier decision in M/s Rashmi Realty Builders Pvt. Ltd. v. Rahul Rajendrakumar Pagariya & Ors., 2024 SCC OnLine Bom 3871. In Rashmi Realty, the Bombay High Court had undertaken a detailed examination of the relationship between RERA and arbitration. It concluded that disputes falling within RERA between promoters and allottees are, by necessary implication, non-arbitrable. The Court reasoned that RERA is not merely a mechanism for resolving an isolated contractual dispute between two private parties. It creates a specialised statutory framework for regulation of the real estate sector and protection of the interests of homebuyers.

A significant feature of RERA is that an individual allottee's dispute can potentially have implications beyond that particular allottee. Questions relating to possession, obligations of the promoter, the project itself and the rights of the association of allottees may affect other purchasers within the same development.

The Bombay High Court has therefore considered such disputes to have an erga omnes dimension, meaning that their consequences may extend beyond the immediate parties to the dispute.

This was an important consideration in Laxman Mura Vaid. The Court observed that the applicants' claims were not merely conventional contractual claims for recovery of money. They concerned delayed possession, payment obligations, the promoter's alleged subvention obligations, interest, reconciliation of accounts and termination of the allotment. These matters arose within the statutory relationship between a promoter and an allottee governed by RERA.

Sections 79, 88 and 89 of RERA

The Court's conclusion also rests on the statutory architecture of RERA.

Section 79 restricts the jurisdiction of civil courts in respect of matters which the Authority or the adjudicating officer is empowered to determine under RERA.

Section 88 provides that RERA is in addition to, and not in derogation of, other laws, subject to the statutory framework.

Section 89 gives RERA an overriding effect in the event of inconsistency with other laws.

The Bombay High Court considered these provisions alongside the nature and purpose of the RERA mechanism. The result was that a private contractual arbitration clause could not be permitted to displace the statutory adjudicatory framework where the dispute falls squarely within RERA.

This does not mean that every dispute remotely connected with real estate becomes non-arbitrable. The crucial question remains whether the dispute is one which is governed by and falls within the statutory regime of RERA.

That distinction is important for commercial parties because real estate transactions frequently involve several layers of contractual and corporate arrangements which may extend beyond the promoter-allottee relationship contemplated by RERA.

The Court's treatment of contrary jurisprudence

The applicants' case also brought into focus a divergence in judicial approaches concerning the arbitrability of certain RERA-related disputes.

The Court considered Priyanka Tak Sood v. Sunworld Residency Pvt. Ltd., where the Delhi High Court had treated certain individual refund claims as arbitrable. The Bombay High Court distinguished that approach and followed the binding position adopted by the Bombay High Court in Rashmi Realty.

This is significant because the broader jurisprudence concerning RERA and arbitration has not been entirely uniform across jurisdictions. The interaction between a specialised statutory regime and the principle of party autonomy under arbitration law continues to generate questions, particularly where the relief sought appears to be purely monetary.

The Bombay High Court's position, however, is clear: where the dispute is one covered by RERA and concerns the statutory promoter-allottee relationship, the existence of an arbitration clause will not, by itself, oust the jurisdiction of the RERA authorities.

What does this mean for real estate agreements?

The decision has several practical implications.

First, an arbitration clause should not be treated as a universal dispute-resolution mechanism in real estate documentation. Parties and their counsel should identify the nature of the disputes that may arise and determine which statutory forums may have exclusive or overriding jurisdiction.

Second, promoters should be cautious about assuming that contractual drafting can completely control the forum in which disputes will ultimately be adjudicated. A broadly drafted arbitration clause may still be subject to statutory limitations.

Third, for purchasers, the judgment reinforces that the presence of an arbitration clause does not necessarily mean that RERA remedies are unavailable.

Fourth, lawyers drafting agreements for sale should consider expressly recognising the operation of mandatory statutory remedies rather than attempting to contract out of them. This can reduce jurisdictional disputes at a later stage.

Finally, parties should distinguish between RERA-governed disputes and genuinely independent commercial disputes. The mere fact that a transaction concerns real estate does not necessarily answer the question of arbitrability.

A larger question for real estate arbitration

The judgment also raises a broader question about the balance between party autonomy and statutory regulation.

Arbitration is premised upon the parties' agreement to privately resolve disputes. RERA, on the other hand, was enacted to create a statutory regulatory and adjudicatory framework for a sector involving not only private contractual interests but also broader consumer and project-level considerations.

The Bombay High Court's approach places the latter consideration ahead of the former where the dispute falls within RERA.

Whether the Supreme Court will ultimately provide a uniform nationwide position on the arbitrability of RERA disputes remains an important question. The divergence in approaches across jurisdictions makes this an area that developers, investors, homebuyers and transactional counsel will need to continue monitoring.

For now, however, the message from the Bombay High Court is significant: an arbitration clause is not, by itself, a passport out of RERA.

Case Reference

Laxman Mura Vaid & Anr. v. Shree Siddhivinayak Infrastructure & Realty, A Partnership Firm, Bombay High Court, Judgment dated 21 September 2026, Original Jurisdiction.

Statutes considered: Arbitration and Conciliation Act, 1996 — Sections 9, 11 and 16; Real Estate (Regulation and Development) Act, 2016 — including Sections 18, 79, 88 and 89.

Key precedent: M/s Rashmi Realty Builders Pvt. Ltd. v. Rahul Rajendrakumar Pagariya & Ors., 2024 SCC OnLine Bom 3871.

Other key authorities: Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532; and Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1.