Arbitration Clause Cannot Oust The Jurisdiction Of Consumer Courts
IN THE SUPREME COURT OF INDIA
M/S. EMAAR MGF LAND LIMITED V. AFTAB SINGH
(REVIEW PETITION (C) Nos. 2629-2630 OF 2018)
(ARISING OUT OF CIVIL APPEAL NOS. 23512-23513 OF 2017)
The appellant (hereinafter referred to as Emaar MGF) is a company which has acquired and purchased land to develop an integrated township in District Mohali, Punjab. The respondent (Aftab Singh) was the buyer of a villa in the project of Emaar.
A Buyer’s agreement was entered dated 06.05.2008 between Emaar MGF and the respondent. In the Buyer’s agreement, there was an arbitration clause providing for settlement of disputes between the parties under the 1996 Act.
When a dispute arose between the parties, the respondent approached NCDRC (National Consumer Dispute Redressal Commission) and filed a complaint.
Emaar MGF appeared and made an application for extension of time for filing the written statement. Appellant also opposed the complaint and filed an application under Section 8 of the Arbitration Act for referring the matter to arbitration as per clause 43 of the Buyers Agreement.
Single Member bench of NCDRC observed that the matter involved legal issues of vital importance and far reaching implications and thus referred the matter to a larger bench of NCDRC.
Consequently, a Three-member Bench of NCDRC was constituted to hear the applications. This bench held that an arbitration clause in a contract cannot circumscribe the jurisdiction of a Consumer Forum.
The NCDRC observed that there are disputes which are to be adjudicated and governed by specific public purpose statutory enactments which are established for to sub-serve a particular public policy, and thus these are not Arbitrable notwithstanding the amendments made to Section 8 of the Arbitration Act.
Based upon this reference, the single member bench of NCDRC took up the consumer complaint and other applications; and, consequently rejected the Section 8 Application by Emaar MGF.
Emaar MGF filed application in Delhi H.C challenging the above order, however, the H.C held that appeals filed by the appellant under Section 37(1)(a) of the 1996 Act have been wrongly brought before it, and refused to entertain the appeals and returned them to be presented before the appropriate Appellate Court.
Consequently, Emaar MGF filed Civil Appeal challenging the judgment of Larger Bench of NCDRC as well as the consequential order of NCDRC Single bench in S.C. However, both the appeals were dismissed by S.C.
Emaar MGF thus filed review petitions to review the judgment of Supreme Court.
ISSUES BEFORE SUPREME COURT
Following were the principal issues which arose for consideration in these petitions:
Whether the NCDRC committed an error in rejecting the application of the appellant filed under Section 8 of 1996, Act praying for reference to the arbitrator as per Arbitration clause in the builders agreement.
Whether after the amendments made in Section 8 by the Arbitration and Conciliation (Amendment) Act, 2015 the application filed under Section 8 by the appellant could not have been rejected in view of the substantial changes brought in the statutory scheme by inserting the words “notwithstanding any judgment, decree or order of the Supreme Court or any Court” in sub-section (1) of Section 8.
Whether NCDRC as well as this Court committed an error in not adverting to the above statutory amendment which completely changed the legal position as was earlier-existing prior to the aforesaid amendment?
Whether by the insertion of words “notwithstanding any judgment, decree or order of the Supreme Court or any Court” under Section 8(1) by the (Amendment) Act, 2015 legislature intended to do away with the decision of judgments of Supreme Court laying down that Consumer Protection Act being special remedy can be initiated and continued despite there being any arbitration agreement between the parties?
The Court firstly elaborated on the evolution of Consumer Protection law in the Country.
The Court then took note of the provisions of Arbitration act with reference to Consumer Protection Act.
On reading the provisions in consonance with each other, it held that the 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 was committed by Consumer Forum in rejecting the application.
The Court, with reference to the Arbitration Act and Consumer Protection Act had finally held that:
There is reason for not interjecting proceedings under Consumer Protection Act on the strength an arbitration agreement by Act, 1996.
The Court further noted that:
“……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 neither stop or stultify the proceedings.”