Allottees Who First Elected HRERA Cannot Seek Section 9 Arbitration Relief on Same Claims: Supreme Court in Neo Developers v. Rahul Bhargava [2026 INSC 875]

In Neo Developers Private Limited v. Rahul Bhargava & Anr. Etc. (2026 INSC 875), the Supreme Court held that allottees who elected first to approach the Haryana Real Estate Regulatory Authority (HRERA), and had initiated execution of its order, could not pursue parallel arbitration and seek interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 on substantially the same prayers (paras 8–9, 14). A Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran set aside the High Court's order restraining the developer from leasing out the commercial space, restored the Commercial Court's order and relegated the parties to the HRERA (paras 15, 17).

Status: High Court's order in the appeal under Section 37 of the Arbitration Act set aside; Commercial Court's order rejecting Section 9 relief restored; HRERA direction on possession modified; appeals allowed and parties relegated to the HRERA (paras 3, 15–17).

Headnote: Election of Remedy Between RERA and Arbitration

Arbitration and Conciliation Act, 1996 – Sections 9, 37 – Interim measures – Real Estate (Regulation and Development) Act, 2016 – Section 63 – Real Estate (Regulation and Development) Rules, 2017 – Rule 27 – Commercial space – Builder Buyer Agreement and MoU – Assured return scheme – Allottees first electing HRERA – Execution pending – Parallel arbitration – Fresh cause of action – Injunction against leasing – Undivided, un-demarcated space – No separate possession.

Held: (i) The Court could not concur with the High Court's view that the HRERA complaints and the Section 9 application were distinct (para 6).

(ii) Despite the arbitration clause, the respondents elected to go before the HRERA, and the interim measures sought to enforce rights under the BBA and MoU were the same attempt that had already succeeded before the HRERA (para 8).

(iii) Parallel proceedings of arbitration and execution of HRERA orders cannot be carried on; a later communication proposing leasing and demanding charges did not give a fresh cause of action for arbitration (para 9).

(iv) Under the BBA, there was no handing over of possession, only nominal ownership of an undivided share that would earn rental in lieu of assured return; the High Court's injunction against leasing would impede the Food Court project (paras 13–14).

(v) The Section 9 proceedings could not continue; the respondents may agitate conveyance of the undivided area and the development and fit out charges before the HRERA, with the developer's contentions left open (paras 14–15).

(vi) The respondents cannot raise any contention in derogation of the BBA, and clause (iii) of the HRERA's directions stands modified to that extent (para 16).

(paras 6–17)

Case Details: Neo Developers v. Rahul Bhargava (2026 INSC 875)

Final Outcome: Appeals allowed; High Court's order set aside; Commercial Court's order restored; HRERA direction on possession modified; parties relegated to the HRERA.

Case: Neo Developers Private Limited v. Rahul Bhargava and Anr. Etc.

Neutral Citation: 2026 INSC 875

Case No.: Civil Appeal Nos. 10899–10904 of 2026 (arising out of SLP (C) Nos. 10086–10091 of 2026)

Court: Supreme Court of India (Civil Appellate Jurisdiction) – Non-Reportable

Date of Decision: 11 August 2026

Bench: Justice J.B. Pardiwala and Justice K. Vinod Chandran (order of the Bench; no individual author named)

Relevant Acts & Sections: Arbitration and Conciliation Act, 1996 – Sections 9, 37; Real Estate (Regulation and Development) Act, 2016 – Section 63; Real Estate (Regulation and Development) Rules, 2017 – Rule 27

Impugned Order(s): Order of the High Court in the appeal under Section 37 of the Arbitration Act, restraining the appellant from creating third-party interests, including leasing, and directing status quo till commencement of arbitration (para 3; date not stated in the order)

Counsel: Sri Amit Sibal, Senior Counsel, for the appellant; Sri Rajinder Singh, AoR, for the respondents (para 5)

Source: Supreme Court of India (official website)

Key Holdings of the Supreme Court

• Allottees who first elect to approach the HRERA, and obtain orders that are under execution, cannot invoke arbitration for substantially the same reliefs (paras 8–9).
• A later communication proposing leasing and demanding development and fit out charges does not give a fresh cause of action for arbitration (para 9).
• The High Court wrongly treated the HRERA complaint and the Section 9 application as distinct (para 6).
• Under the assured-return scheme, the allottees get assured returns, or rental in lieu, on an undivided portion, not separate possession (paras 13–14).
• An injunction against leasing would put a spanner in the works and impede the Food Court project (para 14).
• The HRERA has ample powers under Section 63 of the RERA Act read with Rule 27 of the Rules, 2017 to deal with the dispute (para 17).

Brief Facts of the Case

The appellant developed a commercial project, 'Neo Square', at Sector 109, Dwarka Expressway, Gurugram, and agreed to sell undivided, un-demarcated commercial space to the respondents under a Builder Buyer Agreement (BBA) and a Memorandum of Understanding (MoU). The BBA provided for an assured return, which was initially paid and then defaulted, and the project was delayed (para 2).

The respondents approached the HRERA, which passed an order dated 14.08.2024. It set aside a cancellation dated 07.06.2021, directed payment of assured return at Rs. 22,500 per month from 31.01.2015 till the first lease, and directed the developer to offer possession and execute conveyance after the occupation certificate. The order was not appealed, and the respondents initiated execution in April 2025 (paras 2, 10).

After communications dated 24.02.2025 and 11.03.2025 proposing to lease out the property and demanding development and fit out charges, the respondents sought interim measures under Section 9 before the Commercial Court. The Commercial Court held that, having first approached the HRERA, they could not invoke the arbitration clause (para 3).

In appeal under Section 37, the High Court restrained the appellant from creating third-party interests, including by leasing, and directed status quo till the commencement of arbitration. A request for arbitration is pending before the High Court (para 3).

Issues Before the Supreme Court

1. Whether allottees who first elected the HRERA, and were executing its order, could seek interim measures under Section 9 for arbitration on substantially the same claims (paras 6, 8–9).
2. Whether the High Court's injunction against leasing was consistent with the BBA's assured-return scheme (paras 12–14).

Court's Findings and Reasoning

High Court's distinction rejected (para 6): The High Court treated the HRERA complaints as an exercise of statutory rights under the RERA Act and the Section 9 application as only seeking interim protection of the property. The Supreme Court was unable to concur.

Limited scope argument (para 7): The respondents relied on the Constitution Bench decision in In Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Stamp Act, 1899 to argue that the Court should only see whether an arbitration clause exists and leave maintainability to the arbitrator.

Same reliefs already pursued (para 8): The Court observed that, despite the arbitration clause, the respondents chose the HRERA. They sought completion, possession, compensation, assured returns and a declaration against the development and fit out charges. The Section 9 relief was sought to enforce the same rights under the BBA and MoU, when execution was already pending.

No parallel proceedings (para 9): Arbitration and execution of HRERA orders cannot run in parallel. The prayers before both fora were substantially the same, and a communication proposing leasing did not create a fresh cause of action. The application for arbitration was misplaced.

HRERA's directions (paras 10–11): The HRERA intended assured return to be paid till the first lease, recognising that leasing could enhance the returns.

BBA terms (paras 12–14): Clause 3 gave the respondents a preference to occupy space on the 3rd Floor, in the area designated for the Food Court. Clause 7(a) made assured return cease on the first lease, and Clause 7(b) adjusted payments if rent rose above or fell below the assured return. Read with Clause 8(a) to (e), the scheme gave only assured returns on an undivided portion, not separate possession. The injunction against leasing would therefore impede the project.

Final Outcome and Directions

• The High Court's order is set aside and the Commercial Court's order restored; the Section 9 proceedings cannot continue (paras 14–15).
• The respondents may approach the HRERA on conveyance of the undivided area and on the development and fit out charges; the developer's contentions on the balance due under the BBA and MoU are left open (para 15).
• The findings on the assured-return scheme are based on the BBA, and the respondents cannot raise any contention in derogation of it; clause (iii) of the HRERA's operative directions stands modified to this extent (para 16).
• Appeals allowed; parties relegated to the HRERA, which has ample powers under Section 63 of the RERA Act read with Rule 27 of the Rules, 2017 (para 17).

Legal Principle Laid Down

Where allottees, despite an arbitration clause, first elect to approach the Real Estate Regulatory Authority and obtain orders that they are executing, they cannot later invoke arbitration and seek interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 on substantially the same claims. A fresh communication from the developer does not create a new cause of action, and the dispute must be pursued before the RERA authority, which has ample powers of enforcement.

Precedents Relied Upon

• In Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Stamp Act, 1899, (2024) 6 SCC 1 (Constitution Bench) – Cited by the respondents on the limited scope of interference where an arbitration clause exists; not applied. Discussed at paras 7–8.

Important Paragraphs of the Judgment

Verbatim extracts from the order. For the full text, refer to the judgment PDF below.

Para 9: "We are not convinced that parallel proceedings of arbitration and execution of HRERA orders can be carried out and the former cannot be resorted to, for reason of the respondents having elected first, to go before the HRERA."

Para 9: "The application for arbitration in the facts of this case is misplaced."

Para 14: "... the scheme of purchase of the respondents would only give them the assured returns on the undivided portion conveyed and not separate possession."

Para 14: "There is no reason to now invoke the arbitration clause since the respondents had elected to approach the HRERA in the first instance."

Para 16: "We make it clear that the findings rendered by us on the assured return scheme, are based on the BBA and the respondents cannot raise any contention in derogation of the specific agreement entered into by both the parties."

Para 17: "With the above observation, the appeals are allowed and the parties are relegated to the HRERA, which has ample powers under Section 63 of the Real Estate (Regulation and Development) Act of 2016 read with Rule 27 of the Real Estate (Regulation and Development) Rules, 2017."

Practical Impact of the Ruling

• For homebuyers and commercial allottees: Choosing RERA first may bar a later resort to arbitration on the same claims; the choice of forum must be made carefully (paras 8–9).
• For developers: Section 9 injunctions against leasing assured-return space can be resisted where the allottees are already executing RERA orders (paras 9, 14–15).
• For assured-return schemes: Allottees of undivided, un-demarcated space under such schemes are entitled to returns or rental, not separate possession (paras 13–14, 16).
• For arbitration practitioners: The existence of an arbitration clause does not by itself permit parallel arbitration once the party has elected a statutory forum (paras 7–9).
• For RERA proceedings: The HRERA remains the forum for conveyance, fit out charges and balance dues, with ample powers of enforcement (paras 15, 17).

FAQs on RERA Election and Section 9 Arbitration Relief

1. What did the Supreme Court hold in Neo Developers v. Rahul Bhargava?

It held that allottees who first approached the HRERA and were executing its order could not seek Section 9 interim measures for arbitration on the same claims, and it set aside the High Court's injunction against leasing (paras 9, 14–15).

2. Why was there no fresh cause of action for arbitration?

The prayers before the HRERA and the Commercial Court were substantially the same, and a communication proposing leasing and demanding charges did not create a new cause of action (para 9).

3. Were the allottees entitled to possession of their units?

No separate possession was contemplated; the BBA gave nominal ownership of an undivided share earning assured return or rental, and the HRERA's possession direction was modified accordingly (paras 14, 16).

4. Where can the allottees now pursue their claims?

Before the HRERA, on conveyance of the undivided area and on development and fit out charges, with the developer's contentions left open (paras 15, 17).

5. What was the respondents' argument based on the Constitution Bench ruling?

They argued that the Court should only check for an arbitration clause and leave maintainability to the arbitrator, but the Court held that the respondents had elected the HRERA (paras 7–9).

Keywords: 2026 INSC 875, Neo Developers v. Rahul Bhargava, Section 9 Arbitration Act, interim measures, HRERA, Haryana RERA, election of remedy, parallel proceedings, assured return scheme, builder buyer agreement, Neo Square Gurugram, leasing commercial space, Section 63 RERA Act, Justice J.B. Pardiwala, Justice K. Vinod Chandran, Supreme Court non-reportable judgment

Related on LegalTaxGuru

• More Corporate Law Supreme Court Non-Reportable judgments
• Corporate Law articles

Download Judgment PDF – Neo Developers v. Rahul Bhargava

Judgment PDF: 2026 INSC 875 – Neo Developers Private Limited v. Rahul Bhargava & Anr. Etc. (SLP (C) Nos. 10086–10091 of 2026) – Download Judgment PDF

Source: Supreme Court of India (official website).