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QUESTION

Whether a Consumer Complaints filed before NCDRC can be referred to arbitration in case there is an Arbitration Clause in the agreement between the buyer and the purchaser.

LET'S ANSWER THROUGH A CASE STUDY

EMAAR MGF LAND LIMITED (APPELLANT) vs. AFTAB SINGH (RESPONDENT) [SC]

A Buyer's agreement was entered into between the appellant and the respondent. In the Buyer's agreement, there was an arbitration clause providing for settlement of disputes between parties under the 1996 Act.

On 27.07.2015, the respondent filed a Consumer Complaint before the NCDRC against the appellant praying for delivery of possession of the built-up Villa, adjustment of excess payment and compensation for deficiency of service.

Case Law: The Consumer Protection Act, 1986

Appellant filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the matter to arbitration for and on behalf of the appellant.

The single judge referred the issue to the larger Bench and the larger bench dismissed the application on the ground that the consumer dispute is not arbitrable.

On appeal, The Supreme Court also concurred with the National commission, but the appellant sought a review of the judgement under the present review petition.

DECISION: PETITION DISMISSED.

REASON

This Court in the series of judgments as noticed above considered the provisions of Consumer Protection Act, 1986 as well as Arbitration Act, 1996 and laid down that complaint under Consumer Protection Act being a special remedy, despite there being an arbitration agreement the proceedings before Consumer Forum have to go on and no error committed by Consumer Forum on rejecting the application.

There is reason for not interjecting proceedings under Consumer Protection Act on the strength an arbitration agreement by Act, 1996.

The remedy under Consumer Protection Act is a remedy provided to a consumer when there is a defect in any goods or services. The complaint means any allegation in writing made by a complainant has also been explained in Section 2(c) of the Act. The remedy under the Consumer Protection Act is confined to complaint by consumer as defined under the Act for defect or deficiencies caused by a service provider, the cheap and a quick remedy has been provided to the consumer which is the object and purpose of the Act as noticed above.

Not only the proceedings of Consumer Protection Act, 1986 are special proceedings which were required to be continued under the Act despite an arbitration agreement, there are large number of other fields where an arbitration agreement can either stop or stultify the proceedings.

For example, any action of a party, omission or commission of a person which amounts to an offence has to be examined by a criminal court and no amount of agreement between the parties shall be relevant for the said case.
For example, there may be a commercial agreement between two parties that all issues pertaining to transaction are to be decided by arbitration as per arbitration clause in the agreement.

In case where a cheque is dishonoured by one party in transaction, despite the arbitration agreement party aggrieved has to approach the criminal court. Similarly, there are several issues which are non- arbitrable.

There can be prohibition both express or implied for not deciding a dispute on the basis of an arbitration agreement.

We have already noted several categories of cases, which are not arbitrable. While referring to judgment of this Court in Booz Allen & Hamilton Inc v. SBI Home Finance Ltd. & Ors. (2011) 5 SCC 532 those principles have again been reiterated by this Court in A. Ayyasamy v .A. Paramasivam & Ors. (2016) 10 SCC 386.

 

The amendment in Section 8 cannot be given such expansive meaning and intent so as to inundate entire regime of special legislations where such disputes were held to be not arbitrable. Something which legislation never intended cannot be accepted as side wind to override the settled law. The submission of the petitioner that after the amendment the law as laid down by this Court in National Seeds Corporation Limited(supra) is more a good law cannot be accepted.

The words "notwithstanding any judgment, decree or order of the Supreme Court or any Court" were meant only to those precedents where it was laid down that the judicial authority while making reference under Section 8 shall entitle to look into various facets of the arbitration agreement, subject matter of the arbitration whether the claim is alive or dead, whether the arbitration agreement is null and void.
The words added in Section 8 cannot be meant for any other meaning.

DECISION

We may, however, hasten to add that in the event a person entitled to seek an additional special remedy provided under the statutes does not opt for the additional/special remedy and he is a party to an arbitration agreement, there is no inhibition in disputes being proceeded in arbitration. It is only the case where specific/special remedies are provided for and which are opted by an aggrieved person that judicial authority can refuse to relegate the parties to the arbitration. We, thus, do not find that any error has been committed by the NCDRC.

 

ANSWER

Consumer Protection Act, 1986 is a special act , promulgated to provide quick and hassle-free remedy to the consumers. The Consumer Court has special and specific powers and any dispute filed with the Consumer Courts will not be transferred to the arbitration even there is an arbitration clause in the agreement between the parties.

DISCLAIMER: The case law presented here is for sharing information with the readers. The views are personal.


 

Published by

FCS Deepak Pratap Singh
(Manager Compliance -SBI General Insurance Co. Ltd.)
Category Corporate Law   Report

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