TMI Blog2018 (12) TMI 1940X X X X Extracts X X X X X X X X Extracts X X X X ..... ng down that Consumer Protection Act being special remedy can be initiated and continued despite there being any arbitration agreement between the parties?. HELD THAT:- This Court in the series of judgments 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existence of arbitration agreement to that effect between the parties. This Court held that the remedy provided under the Arbitration Act for deciding such disputes is barred by implication. The ratio laid down in the above case is fully applicable with regard to disputes raised in consumer fora. There are no error has been committed by the NCDRC in rejecting the application filed by the Appellant Under Section 8 - review petitions are dismissed. - Review Petition (C) Nos. 2629-2630 of 2018 in Civil Appeal Nos. 23512-23513 of 2017 - - - Dated:- 10-12-2018 - U.U. Lalit And Ashok Bhushan, JJ. For the Appellant : Fali Sam Nariman, Sr. Adv., Aditya Narain, Arnav Narain, Anjana G. Bali, Arjun Jain, Anushree Narain, Kabir Dixit, M. Rajshekhar, Naeemollahazeem, Waheb Hussaini, Aasita and Subhash Sharma, Advs. For the Respondents : Aditya Swarup, Dhruv Pall, Samarth Khanna and Aprajita Mukherjee, Advs. JUDGMENT Ashok Bhushan, J. 1. These review petitions have been filed seeking review of the judgment dated 13.02.2018 of this Court by which civil appeals were dismissed. 2. The Civil Appeal Nos. 23512-23513 of 2017 had been filed challenging t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May be pleased to grant compensation to the tune of ₹ 20,00,000 on account of deficiency in service on the part of the opposite parties, mental agony and harassment suffered by the complainant, and f. the cost of this complaint may be awarded from the opponent to the complainant, and g. the Hon'ble National Commission may be pleased to grant any other relief deemed in fit just and proper by the Hon'ble National Commission in the Circumstances of the case. 5. Notice was issued to the Appellant by the NCDRC on 09.11.2015 asking the Appellant to appear on 11.01.2016. The Appellant appeared and made an application for extension of time for filing the written statement. The Appellant also filed an application Under Section 8 of the 1996 Act for referring the matter to arbitration for and on behalf of the Appellant. In the application, Appellant has referred to Clause 43 of the Buyer's agreement, which according to Appellant would constitute a valid arbitration agreement in terms of Section 7(2) of the 1996 Act. The Appellant also filed a reply to the complaint. The application filed Under Section 8 of the 1996 Act was objected by the Respondent with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the Complainants and the Builder cannot circumscribe the jurisdiction of a Consumer Fora, notwithstanding the amendments made to Section 8 of the Arbitration Act. 7. After the reference having been answered by Three Members Bench, the Consumer Complaint No. 701 of 20156 alongwith other applications was taken by a Single Member of the Commission and by order dated 28.08.2017, the applications filed by the Appellant Under Section 8 of the 1996 Act were rejected. After rejecting the application Under Section 8, the Commission directed the parties to proceed further with the complaint. The Appellant filed F.A.O. No. 395 of 2017 in the Delhi High Court challenging the orders dated 13.07.2017 and 28.08.2017 of NCDRC. The High Court held that appeals filed by the Appellant Under Section 37(1)(a) of the 1996 Act have been wrongly brought before the High Court. The High Court refused to entertain the appeals and returned to be presented before the appropriate Appellate Court. After the judgment of the Delhi High Court dated 07.11.2017, the Appellant filed Civil Appeal No. 23512-23513 of 2017 challenging the judgment of Larger Bench of NCDRC dated 13.07.2017 as well as the conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that Constitution Bench of this Court has already held that consumer fora are covered by the term judicial authority for the purposes of Section 8 of the 1996 Act, hence, it was obligatory for the Commission to refer the dispute to arbitration in view of the arbitration Clause between the parties. NCDRC has wrongly termed consumer disputes as non-arbitrable, which is contrary to the decision of this Court in National Seeds Corporation Limited v. M. Madhusudhan Reddy and Anr. (2012) 2 SCC 506. This Court had interpreted the words notwithstanding any judgment, decree or order of the Supreme Court or any Court as occurring in newly added Section 11(6A) of the 1996 Act in Duro Felguera, S.A. v. Gangavaram Port Limited, (2017) 9 SCC 729, which interpretation is equally applicable to Section 8 as amended by Act 3 of 2016. NCDRC has erred in relying on judgment of this Court in A. Ayyasamy v. A. Paramasivam and Ors. (2016) 10 SCC 386. The amendment in Section 8 of Arbitration Act by Act 3 of 2016 now makes it obligatory to judicial authority to refer disputes to arbitration notwithstanding any judgment, decree or order of the Supreme Court or any Court. Judgments of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be so large as to inundate the domains of other legislations and jurisprudence, painstakingly built by the Legislators and Courts, especially without any engagement, debate and critique with the foundations of these related laws . Section 2(3) of the Arbitration Act expressly states that Part I of the Arbitration Act shall not affect any other law for the time being in force by virtue of which certain disputes may not be referred to arbitration . Under this Section, if any law provides, either expressly or by necessary implication that specified disputes may not be submitted to arbitration, then, in spite of the non obstante provision in Section 5 of the Arbitration Act, the law will be saved by Section 2(3) of the Arbitration Act. Section 2(3) of the Arbitration Act restricts the overriding effect apparent in Section 5 of the Arbitration Act. The Consumer Act being a beneficial legislation enacted to give an additional remedy for the settlement of disputes, the same cannot be taken away by Section 8 of the 1996 Act. This Court in jurisdiction cases have already held that Arbitration Act does not exclude the jurisdiction of the Consumer Forum to decide disputes under the Consumer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015, Act and its real intent and consequences, it is necessary to look into the law as was existing prior to the said amendment in relation to proceedings under Consumer Protection Act in reference to arbitration agreement under 1996 Act. 15. The Consumer Protection Act, 1986 has been enacted to provide for better protection of the interests of consumers and for the purpose, to make provision for the establishment of Consumer Councils and other authorities for the settlement of consumer disputes and for matter connected therewith. This Court had occasion to consider the object and purpose of the Act in Lucknow Development Act v. M.K. Gupta, (1994) 1 SCC 243, this Court elaborately noticed the object and purpose of the Act in the following words: To begin with the preamble of the Act, which can afford useful assistance to ascertain the legislative intention, it was enacted, 'to provide for the protection of the interest of consumers'. Use of the word 'protection' furnishes key to the minds of makers of the Act. Various definitions and provisions which elaborately attempt to achieve this objective have to be construed in this light without departing from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h wide range of powers vested in them. These quasi-judicial forums, observing the principles of natural justice, are empowered to give relief of a specific nature and to award, wherever appropriate, compensation to the consumers and to impose penalties for non-compliance with their orders. 12. As per Section 3 of the Act, as already stated above, the provisions of the Act shall be in addition to and not in derogation of any other provisions of any other law for the time being in force. Having due regard to the scheme of the Act and purpose sought to be achieved to protect the interest of the consumers better, the provisions are to be interpreted broadly, positively and purposefully in the context of the present case to give meaning to additional/extended jurisdiction, particularly when Section 3 seeks to provide remedy under the Act in addition to other remedies provided under other Acts unless there is a clear bar. 17. This Court had occasion to consider the provisions of Section 34 of Arbitration Act, 1940 in reference to the Consumer Protection Act, 1986 in Fair Air Engineering Pvt. Ltd. and Anr. v. N.K. Modi, (1996) 6 SCC 385. This Court in the said case held that con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a suit under the provisions of the Code of Civil Procedure. Thereby, as seen, Section 34 of the Act does not confer an automatic right nor create an automatic embargo on the exercise of the power by the judicial authority under the Act. It is a matter of discretion. Considered from this perspective, we hold that though the District Forum, State Commission and National Commission are judicial authorities, for the purpose of Section 34 of the Arbitration Act, in view of the object of the Act and by operation of Section 3 thereof, we are of the considered view that it would be appropriate that these forums created under the Act are at liberty to proceed with the matters in accordance with the provisions of the Act rather than relegating the parties to an arbitration proceedings pursuant to a contract entered into between the parties. The reason is that the Act intends to relieve the consumers of the cumbersome arbitration proceedings or civil action unless the forums on their own and on the peculiar facts and circumstances of a particular case, come to the conclusion that the appropriate forum for adjudication of the disputes would be otherwise those given in the Act. 18. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. The contention was dealt with in paragraph 66 where following was laid down: 66. The remedy of arbitration is not the only remedy available to a grower. Rather, it is an optional remedy. He can either seek reference to an arbitrator or file a complaint under the Consumer Protection Act. If the grower opts for the remedy of arbitration, then it may be possible to say that he cannot, subsequently, file complaint under the Consumer Protection Act. However, if he chooses to file a complaint in the first instance before the competent Consumer Forum, then he cannot be denied relief by invoking Section 8 of the Arbitration and Conciliation Act, 1996. Moreover, the plain language of Section 3 of the Consumer Protection Act makes it clear that the remedy available in that Act is in addition to and not in derogation of the provisions of any other law for the time being in force. 21. Another judgment where this Court reiterated the position of law is Rosedale Developers Private Limited v. Aghore Bhattacharya and Ors. (2018) 11 SCC 337 (decided on 06.09.2013). In the above case, a complaint was filed by the Respondent before NCDRC. An application was filed by the Appellant praying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y-bound to make a reference to the arbitrator because that Section is mandatory in character. 23. This Court rejected the above submission and laid down in paragraph 4: 4. In our opinion, there is no merit in the submission of the learned Counsel. The question whether the existence of an arbitration Clause contained in the agreement executed between the parties excludes the jurisdiction of the consumer forum and on an application made by either party, the consumer forum is duty-bound to make a reference to the arbitrator was extensively considered in National Seeds Corporation Ltd. v. M. Madhusudhan Reddy and it was observed: (SCC pp. 534-35, paras 64-66.) 24. This Court held that there is no merit in the above submission of the counsel. This Court referred to judgments of this Court in National Seeds Corporation Ltd. (supra) and Fair Air Engineers Pvt. Ltd. (supra) and laid down following in paragraph 6 and 7: 6. The judgments relied upon by Shri Ghose do not have any bearing on the issue raised in this appeal. In neither of those cases, has this Court interpreted the provisions of the 1996 Act in the light of the provisions contained in the 1986 Act. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. This Court had occasion to consider the above aspect and has noticed various disputes which are non-arbitrable, reference is made to the judgment of this Court in Booz Allen and Hamilton Inc. v. SBI Home Finance Limited and Ors. (2011) 5 SCC 532. In paragraphs 35 to 38 following has been laid down: 35. The Arbitral Tribunals are private fora chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public fora constituted under the laws of the country. Every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of the Arbitral Tribunals is excluded either expressly or by necessary implication. Adjudication of certain categories of proceedings are reserved by the legislature exclusively for publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however a rigid or inflexible rule. Disputes relating to subordinate rights in personam arising from rights in rem have always been considered to be arbitrable. 27. The complaints filed under the Consumer Protection Act can also be proceeded with despite there being any arbitration agreement between the parties which have been well settled by the catena of decisions as noticed above. 28. Now, the issue to be addressed is effect and consequences of the above stated position of law consequent to the Arbitration and Conciliation (Amendment) Act, 2015 amending Section 8. Section 8(1) and 8(2) of Act, 1996 (as existed prior to amendment of the Act, 1996) are as follows: 8. Power to refer parties to arbitration where there is an arbitration agreement.- (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. (2) The application referred to in Sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which certain disputes may not be submitted to arbitration. 32. We have already noted several categories of cases, which are not arbitrable. While referring to judgment of this Court in Booz Allen and Hamilton Inc. (supra), those principles have again been reiterated by this Court in A. Ayyasamy (supra), Dr. A.K. Sikri, J. delivering the judgment in that case has noticed certain cases, which are not arbitrable in paragraph No. 14, which is as follows: 14. In the instant case, there is no dispute about the arbitration agreement inasmuch as there is a specific arbitration Clause in the partnership deed. However, the question is as to whether the dispute raised by the Respondent in the suit is incapable of settlement through arbitration. As pointed out above, the Act does not make any provision excluding any category of disputes treating them as non-arbitrable. Notwithstanding the above, the courts have held that certain kinds of disputes may not be capable of adjudication through the means of arbitration. The courts have held that certain disputes like criminal offences of a public nature, disputes arising out of illegal agreements and disputes relating to status, such as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onam which is an interest protected against specified individuals. All disputes relating to rights in personam are considered to be amenable to arbitration while rights in rem are required to be adjudicated by courts and public tribunals. The enforcement of a mortgage has been held to be a right in rem for which proceedings in arbitration would not be maintainable. In Vimal Kishor Shah v. Jayesh Dinesh Shah, (2016) 8 SCC 788 this Court added a seventh category of cases to the six non-arbitrable categories set out in Booz Allen, namely, disputes relating to trusts, trustees and beneficiaries arising out of a trust deed and the Trust Act. 34. Another Section, which needs to be noted is Section 5, which is as follows: Section 5. Extent of judicial intervention.-- Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part. 35. Section 5 contains an injunction to judicial authority from intervening except where so provided in this Part. Section 2(3), Section 8, Section 11 and Section 34 are some of the provisions, which provides for judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial authority shall not refer the parties to arbitration only if it finds that there does not exist an arbitration agreement or that it is null and void. If the judicial authority is of the opinion that prima facie the arbitration agreement exists, then it shall refer the dispute to arbitration, and leave the existence of the arbitration agreement to be finally determined by the arbitral tribunal. However, if the judicial authority concludes that the agreement does not exist, then the conclusion will be final and not prima facie.... 37. The Report of the Commission on amendment to Section 8 as well as Note thereon contains a Note, which is to the following effect: [NOTE: The words such of the parties... to the arbitration agreement and proviso (i) of the amendment have been proposed in the context of the decision of the Supreme Court in Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya and Anr., (2003) 5 SCC 531, - in cases where all the parties to the dispute are not parties to the arbitration agreement, the reference is to be rejected only where such parties are necessary parties to the action - and not if they are only proper parties, or are otherwise legal strangers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Conciliation (Amendment) Bill, 2015 was submitted. The Statement of Objects and Reasons of the Bill throws considerable light on the Objects and Reasons of the amendments. Relevant part of the Statement of Objects and Reasons is as follows: 2. The Act was enacted to provide for speedy disposal of cases relating to arbitration with least court intervention. With the passage of time, some difficulties in the applicability of the Act have been noticed. Interpretation of the provisions of the Act by courts in some cases have resulted in delay of disposal of arbitration proceedings and increase in interference of courts in arbitration matters, which tend to defeat the object of the Act.... 6. xxxxxxxxxxxxxxxxxxxxxxx (iv) to provide that while considering any application for appointment of arbitrator, the High Court or the Supreme Court shall examine the existence of a prima facie arbitration agreement and not other issues; xxxxxxxxxxxxxxxxxxxxx 40. Notes on the Clauses on amendment in Section 8 reads as follows: Clause 4 of the Bill seeks to amend Section 8 of the principal Act to specify that the judicial authority shall refer the parties to arbitration u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (2003) 5 SCC 531, this Court had occasion to consider the ingredients of Section 8. This Court noticed certain circumstances, where matter was not required to be referred to the Arbitral Tribunal. In Paragraph No. 12, 13 and 15, following has been held: 12. ... Further, the matter is not required to be referred to the Arbitral Tribunal, if: (1) the parties to the arbitration agreement have not filed any such application for referring the dispute to the arbitrator; (2) in a pending suit, such application is not filed before submitting first statement on the substance of the dispute; or (3) such application is not accompanied by the original arbitration agreement or duly certified copy thereof.... 13. Secondly, there is no provision in the Act that when the subject-matter of the suit includes subject-matter of the arbitration agreement as well as other disputes, the matter is required to be referred to arbitration. There is also no provision for splitting the cause or parties and referring the subject-matter of the suit to the arbitrators. 15. The relevant language used in Section 8 is: in a matter which is the subject of an arbitration agreement . The court is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement? The Court cannot refuse to refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists . The amended provision, thus, limits the intervention by judicial authority to only one aspect, i.e. refusal by judicial authority to refer is confined to only one aspect, when it finds that prima facie no valid arbitration agreement exists. Other several conditions, which were noticed by this Court in various pronouncements made prior to amendment were not to be adhered to and the Legislative intendment was clear departure from fulfilling various conditions as noticed in the judgment of P. Anand Gajapathi Raju (supra) and Sukanya Holdings (P) Ltd. (supra). Same Legislative intendment is decipherable by amendment of Section 11 by adding Sub-section (6A). Section 11(6A) is as follows: 11. Appointment of arbitrators.-- xxxxxxxxxxxxxxxxxxxxxxxx [(6A) The Supreme Court or, as the case may be, the High Court, while considering any application Under Sub-section (4) or Sub-section (5) or Sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any prior judicial precedent. The proviso to Section 8(2) has been added to allow a party that does not possess the original or certified copy of the arbitration agreement on account of it being retained by the other party, to nevertheless apply Under Section 8 seeking reference, and call upon the other party to produce the same. (Ref: Justice R.S. Bachawat's Law of Arbitration and Conciliation, Sixth Edition, Vol. I (Sections 1 to 34) at page 695 published by LexisNexis). 31. The language of amendment to Section 8 of the Act is clear that the amendment to Section 8(1) of the Act would apply notwithstanding any prayer, judgment, decree or order of the Supreme Court or any other Court. The High Court laid emphasis upon the word ..... unless it finds that prima-facie no valid agreement exists . The High Court observed that there is no arbitration agreement between Astonfield and Rishabh. After referring to Sukanya Holdings and the amended Section 8 and Section 45 of the Act, the High Court pointed out the difference in language of Section 8 and Section 45 of the Act. The High Court distinguished between Sukanya Holdings and Chloro Controls, and observed that Sukanya Holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was never the intent of amendment in Section 8. 52. 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 no 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. Reference is also made to the judgment of this Court in Vimal Kishor Shah and Ors. v. Jayesh Dinesh Shah and Ors. (2016) 8 SCC 788. This Court in the above case had occasion to consider the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Trusts Act, 1882 creates an obligation and further specifies the rights and duties of the settlor, trustees and the beneficiaries apart from several conditions specified in the trust deed and further provides a specific remedy for its enforcement by filing applications in civil court. It is for this reason, we are of the view that since sufficient and adequate remedy is provided under the Trusts Act, 1882 for deciding the disputes in relation to trust deed, trustees and beneficiaries, the remedy provided under the Arbitration Act for deciding such disputes is barred by implication. 53. We, accordingly, hold that the disputes relating to trust, trustees and beneficiaries arising out of the trust deed and the Trusts Act, 1882 are not capable of being decided by the arbitrator despite existence of arbitration agreement to that effect between the parties. A fortiori, we hold that the application filed by the Respondents Under Section 11 of the Act is not maintainable on the ground that firstly, it is not based on an arbitration agreement within the meaning of Sections 2(1)(b) and 2(1)(h) read with Section 7 of the Act and secondly, assuming that there exists an arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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