The Bombay High Court on August 20, 2022 in the matter of Ashok Palav Coop. Housing Society Ltd v. Pankaj Bhagubhai Desai & Anr. held that Arbitral tribunal is not a Civil Court within the meaning and purview of the Code of Civil Procedure, 1908 (“CPC”) and thus, the arbitral proceedings cannot be said to be barred under Section 79 of the Real Estate (Regulation and Development) Act, 2016 (“RERA”).

In the instant matter, an appeal was filed under section 37 of the Arbitration and Conciliation Act, 1996 (“the Act”) challenging an order passed by the Arbitral tribunal whereby the tribunal rejected an application filed under Section 17 of the Act on the ground that by the virtue of section 79 of the RERA, the tribunal was barred from passing any order of injunction under section 17 of the Act. In the present case, the dispute between the parties concerned an agreement under which the parties had agreed for the disputes being referred to arbitration. It was contented that the tribunal was erroneous in rejecting the application filed under section 17 of the Act as the parties had entered into the aforementioned agreement, which contained an arbitration clause, much before the provisions of the RERA were brought into force and the Supreme Court, by an order passed on Special Leave Appeal, appointed a sole arbitrator to adjudicate the disputes between the parties.

The Court observed that from the scheme of the RERA, it is certain that the same has been enacted for regulation and promotion of the real estate sector and to establish an adjudicating mechanism to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority. Section 79 of the RERA postulates a bar on the Civil Court to exercise any jurisdiction to entertain any suit or proceedings, as also that no injunction shall be granted by “any Court” or “any other authority” as provided in the concluding part of the said provision. Thus, the issue before the court was whether arbitral tribunal can be construed as Civil Court falling under the CPC.

The Court referred to an earlier judgment of the Supreme Court in the matter of Food Corporation of India v. Evdomen Corporation where it was held that “Civil Court having jurisdiction to decide” as contained in Section 2(c) of the Arbitration Act,1940, would refer to a court having jurisdiction under Section 20 of the CPC. Further, the Supreme Court in the matter of Nahar Industrial Enterprises Ltd. v. Hong Kong and Shanghai Banking Corporation held that even though a “tribunal” which is authorized to take evidence of witnesses would ordinarily be held to be a “court” within the meaning of Section 3 of the Evidence Act, 1872 and the Arbitrators were excluded from the definition of “court”.

The Court observed that it can never be the intention of the legislature to elevate the status of the arbitral tribunal to that of a Civil Court as to construe the arbitral tribunal as an authority like a Civil Court even though the arbitral tribunal being a private tribunal has adjudicatory functions. Hence, the Court held that the arbitral tribunal is not a Civil Court within the meaning and purview of the CPC and directed the tribunal to reconsider the application filed by the appellant under Section 17 of the Act on merits.