RAHUL BHARGAVA and ANR. Vs. M/S NEO DEVELOPERS PVT LTD

FAO (COMM) 210/2025

Prathiba M. Singh and Justice Shail Jain, JJ

Overview

This Delhi High Court decision examines the scope of interim relief that may be granted under Section 9 of the Arbitration and Conciliation Act, 1996, and the appellate jurisdiction as per Section 37 of the Act, as interpreted by Section 13(1A) of the Commercial Courts Act, 2015. The case stems from a series of related claims issued by a number of individuals who bought commercial units on the file M/s Neo Developers Pvt. Ltd., on the issue of discharging their Section 9 petitions before the Commercial Court on the premise of lack of territorial jurisdiction. It further addresses the relationship that arbitration has with arbitration clauses that result within the framework of EU proceedings and relief afforded by statutory bodies such as HARERA.

Facts

The Appellants signed agreements entitled “Builder Buyer Agreements” (BBAs) for the period between 2015 and Memoranda of Understanding (MoUs) with the Respondent developer for the purchase involving several commercial units in a project named “Neo Square” located at Sector 109, Dwarka Expressway, Gurugram, Haryana. The entire purchase consideration has been paid in cash. In accordance with the MOUs, the Respondent guaranteed the Appellants a fixed return every month until commencement of the first lease. Since July 2019, the respondent has stopped the payment of assured returns, issued. demand notices regarding unexplained dues, threats of cancelling allotments, and Delayed construction and possession. Aggrieved, the Appellants filed a criminal proceeding pending before the Economic Offences Wing and filed complaints before HARERA. HARERA, vide orders of 14.08.2024 and 14.05.2025, gave considerable Appellants have cancelled/demanded notices requiring the payment of arrears of assured returns with interest, restraining the Respondent from raising non-contractual claims on the Applicant Companies’ charges, and supervision of the delivery of possession and execution of conveyance deeds. The Respondent did not contest these orders. Notwithstanding this, the Respondent sent new letters demanding fit-out costs and so forth. alleged dues, and threatened cancellation. As a result, the Appellants filed petitions under section 9 of the Arbitration Act before the Commercial Court at Delhi seeking interim protection. The Commercial Court rejected these petitions on 09.06.2025, holding that it lacked territorial jurisdiction as the project is in Gurugram, Haryana. This dismissal gave rise to the appeals before the court.

Legal Issues

1. Whether the Commercial Court at Delhi had territorial jurisdiction to entertain claims related to contracts entered into outside India, for a Section 9 arbitration petition under the Arbitration and Conciliation Act, 1996.
2. Whether the dismissal of Section 9 petitions based solely on the lack of territorial jurisdiction was justified in this case.
3. The effects of the existence of unchallenged HARERA orders on the award of interim relief under the Arbitration Act.

Decision

The Court affirmed the assessment of the Commercial Court that it did not have territorial jurisdiction: “Territorial jurisdiction, which is only rarely jurisdiction, as the project, the immovable property, and the substantial cause of action were situated in Gurugram, Haryana. Thus, the dismissal of the Section 9 petitions was held to be legally sustainable. However, the High Court clarified that the Appellants are not remediless and could have availed of appropriate interim relief before the competent court with territorial jurisdiction. Therefore, the appeals were dismissed, upholding the principle that jurisdictional limits must also be followed, even for matters requiring urgent interim relief in arbitration-related disputes.