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TMI Blog2023 (10) TMI 1510X X X X Extracts X X X X X X X X Extracts X X X X ..... t, who is a consumer and therefore the Appellants have the option to move an application Under Section 8 of the Arbitration Act, 1996 for reference before Arbitration. Consequently, the Appellants moved an application for referring the dispute for arbitration. The District Consumer Forum dismissed this application on the ground that the complainant has invoked a public law remedy before a "Judicial Authority", under a beneficial legislation for consumers, which is the Consumer Protection Act, 2019 (hereinafter referred to as 'The 2019 Act") and therefore under the facts and circumstances of this case, the dispute is non-arbitrable. Consequent to the dismissal of their application Under Section 8 of the Arbitration Act, 1996, the Appellants filed a Review Application before the High Court for review of its earlier order dated 19.05.2022. This Review Application was dismissed vide the second order of the High Court dated 25.11.2022, (which is again impugned before this Court), on the ground that the Appellants had already acted upon the order dated 19.05.2022, and therefore is now estopped from seeking review of the order dated 19.05.2022. It is these two orders which are under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties. Further, the act of the opposite parties amounts to deficiency of service and unfair trade practice. Hence, point no. a is answered in favour of the complainant. 10. Point No. b: Homebuyers put their hard-earned savings into the real estate projects with a hope that they will own their dream house one day. However, their dreams get shattered when the builders fail to deliver the possession of their houses even after a prolonged delay. In the present case, the obligation of the opposite party no. 3 (who is the land owner and developer) to deliver the Villa on the time mentioned in the agreement of sale was not fulfilled despite receipt of payment of amount as per the said agreement. The receipt of part payment towards transfer of the plot by the opposite parties without discharging their obligations for the construction of the Villa and finally cancelling the agreement of sale unilaterally on the pretext that the prices have gone up for the subject property is nothing but commission of deficiency of service and adoption of unfair trade practice on the part of the opposite parties. The builders, who are the Appellants before this Court, have already filed their statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agar Mandal, Ranga Reddy District, Telangana, and the total construction was 4,000 sq. feet for a total sale consideration of Rs.49,42,000/- (Rupees Forty Nine Lakhs and Forty Two Thousand Only). 6. As per the agreement, the mode of payment was to be done as per clauses 9.1, 9.2 and 9.3 which read as under: 9.1 Mode: The purchaser paid to the Developer, the total consideration mentioned in Clause 8.1 above, in the following manner: S.No. Date Chq. No. Bank Amount 1. 29/08/2013 303650 ING, Vysya Bank, Hyderabad 4,94,200 Total 4,94,200 9.2 The balance of Rs.44.47,800/- (Rupees Forty Four Lakhs Seven Thousand Eight Hundred Only) shall be paid by the vendee at the time of registration of sale deed in favour of purchaser or her nominee/s. 9.3 Essence: timely payment of the total consideration is the essence of this contract. The possession of the house was to be given as per clauses 10.1 and 10.1.1 of the agreement which reads as under: 10.1 Possession: Vacant and peaceful possession of the said plot along with constructed villa shall be delivered by the Developer to the Purchaser simultaneously with the full payment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court. In her reply, the Respondent apprised the High Court that she being a consumer has moved a complaint before a Judicial Authority, which is District Consumer Forum, where an application Under Section 8 of the Arbitration Act, 1996 for appointment of Arbitrator is always available to the Appellants. Vide the impugned order dated 19.05.2022, the application of the present Appellants was dismissed by the High Court, and the Appellants were granted liberty to move a Section 8 application of the Arbitration Act, 1996 before the District Consumer Forum. This application (Under Section 8 of the Arbitration Act, 1996), as we have already referred to above, was later dismissed by the District Consumer Forum on the ground that the legislature had purposely provided a remedy under the 2019 Act in addition to any other remedy which may be available to the consumer and although there is an Arbitration clause between the parties but that itself will not oust the jurisdiction of a Consumer Court for the reason that it is a remedy available to the consumer in a public fora. The District Consumer Forum relied upon the Judgment of this Court in Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, will refuse to refer the parties to arbitration, Under Section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes. 36. The well-recognised examples of non- arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes. The exclusion of a dispute from arbitration may be express or implied, depending again upon the nature of the dispute, and a party to a dispute cannot be compelled to resort to arbitration merely for the reason that it has been provided in the contract, to which it is a signatory. The arbitrability of a dispute has to be examined when o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s bound to refer the matter for reference to arbitration. This was in the case of National Seeds Corporation Limited v. M. Madhusudhan Reddy and Another (2012) 2 SCC 506 and it was answered thus: 64. According to the learned Counsel for the Appellant, if the growers had applied for arbitration then in terms of Section 8 of the Arbitration and Conciliation Act the dispute arising out of the arbitration clause had to be referred to an appropriate arbitrator and the District Consumer Forums were not entitled to entertain their complaint. This contention represents an extension of the main objection of the Appellant that the only remedy available to the farmers and growers who claim to have suffered loss on account of use of defective seeds sold/supplied by the Appellant was to file complaints with the Seed Inspectors concerned for taking action Under Sections 19 and/or 21 of the Seeds Act. 65. The consideration of this issue needs to be prefaced with an observation that the grievance of a farmer/grower who has suffered financially due to loss or failure of crop on account of use of defective seeds sold/supplied by the Appellant or by an authorised person is not remedied by prosecu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaint before the Judicial Authority, or go for arbitration. This option is not available to the builder, as they are not 'Consumers', under the 2019 Act. It is the Respondent here Smt. B. Udayasri who has to make a "choice" between submitting before the private fora i.e., the Arbitration Tribunal or to make a complaint before the Consumer Forum, which is a public fora. She has chosen to go to the latter. Her reply before the Telangana High Court on the Section 11 application of the builder is not her submission to the arbitration process. In her reply, she informs the High Court of the complaint made by her as a consumer before the District Consumer Forum, which is a 'Judicial Authority' and hence Section 8 of the Arbitration Act, 1996 would come into play and not an application Under Section 11 of the Arbitration Act, 1996. Now merely because the builder had approached a Court first (Under Section 11 of the Arbitration Act, 1996) will itself not oust the jurisdiction of the Consumer Courts. The jurisdiction of a Court is not determined by the fastest finger first, but the nature of the dispute, the public policy in the matter, the will of the legislature, the ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d arbitration agreement exists. (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 certified copy thereof. Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration Under Sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that court. (3) ...... Section 11: Appointment of arbitrators.- (1) ........ (2) ....... (3) ...... (4) If the appointment procedure in Sub-section (3) applies and- (a) ......... (b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (5) Failing any agreement referred to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement. (6B) The designation of any person or institution by the Supreme Court or, as the case may be, the High Court, for the purposes of this section shall not be regarded as a delegation of judicial power by the Supreme Court or the High Court. Now post amendment, the newly incorporated Sub-section (1) to Section 8 has the words "notwithstanding any judgment, decree or order of the Supreme Court or any court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists". When complaints were filed before the consumer forum, such matters were referred to a larger three-member bench of NCDRC. The question referred was whether the judicial authority i.e., the consumer forum had any option (post amendment), but to refer the dispute to arbitration when an application Under Section 8 is moved before it. The answer which was given by the NCDRC in a well-considered order, holds that there is no change in the law on the arbitrability of a dispute before a consumer forum, and the Consumer Court is hence not liable to refer the matter for arbitration. This decision of NCDRC dated 13.07.2017 was challenged by the builder in his statutory appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumer Protection Act. It would also have similar effect in cases relating to trusts, tenancy disputes, industrial disputes, IPR and other non-arbitrable disputes. It was for this reason that the three-member Bench of NCDRC in Emaar I (supra) had said "the ripple of the amendment to Section 8(1) cannot be so large as to inundate 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." 14. This court then examined the legal position as it existed prior to the amendments and the effect of the amendment on the legal position. The preamble of the 1986 Act was examined.3 The 1986 Act was enacted to provide better protection of consumer interest and to have level playing field for the consumers in the market driven economy. The 1986 Act as a beneficial legislation was considered in Lucknow Development Authority v. M.K. Gupta (1994) 1 SCC 243. It was considered thus: ............. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. It was held that the 1986 Act was enacted to provide better protection of the interest of consumers and for providing a redressal mechanism, which is cheaper, easier, expeditious and effective. For this purpose, various quasi-judicial forums were setup at district, state and national lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 Act is mandatory cannot lead to an inference that the consumer forum is bound to make a reference to the Arbitral Tribunal. 7. In view of the abovestated legal position, the National Commission did not commit any error by holding that the remedy of arbitration available to the complainant does not bar the jurisdiction of the consumer forums and the consumer forums are not under an obligation to refer the matter to the Arbitral Tribunal. With the above observation, the appeal is dismissed. 16. This Court in a series of decisions, while considering both the provisions in the Consumer Protection Act, 1986 and the Arbitration Act, 1996, has held that the Consumer Protection Act being a special and beneficial legislation, the remedies provided therein are special remedies and a consumer cannot be deprived of them should he choose to avail such a remedy, in spite of an arbitration agreement between the parties. It is a remedy provided to the consumer where the consumer finds a defect in either goods or services provided to him and therefore seeks a redressal of his grievances before the consumer forum provided to him by the legislature. While referring to a plethora of precedents in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me being in force by virtue of which certain disputes may not be submitted to arbitration. Those disputes which cannot be submitted for arbitration have already been referred to above and have been discussed in detail in Booz Allen and Hamilton Inc. (supra). For the sake of repetition and in order to just make an illustration, these disputes would be: (i) patent, trademarks and copyright; (ii) anti-trust/competition laws; (iii) insolvency/winding up; (iv) bribery/corruption; (v) fraud; (vi) criminal matter. In A. Ayyasamy v. A. Paramasivam and Ors. (2016) 10 SCC 386, this Court in para 35 had held as under: 35. Ordinarily every civil or commercial dispute whether based on contract or otherwise which is capable of being decided by a civil court is in principle capable of being adjudicated upon and resolved by arbitration "subject to the dispute being governed by the arbitration agreement" unless the jurisdiction of the Arbitral Tribunal is excluded either expressly or by necessary implication. In Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. [Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532 : (2011) 2 SCC (Civ) 781], this Court held that ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art. 19. What were then the factors which necessitated an amendment, inter alia, in Sections 8 and 11 of the Arbitration Act, 1996 and what was the purpose behind these amendments? This aspect again has been examined in detail in Emaar III (supra). Such amendments were recommended by the Law Commission in its 246th Report, paragraph 33 of the 246th Report of the Law Commission stated as under: 33. It is in this context, the Commission has recommended amendments to Sections 8 and 11 of the Arbitration and Conciliation Act, 1996. The scope of the judicial intervention is only restricted to situations where the court/judicial authority finds that the arbitration agreement does not exist or is null and void. Insofar as the nature of intervention is concerned, it is recommended that in the event the court/judicial authority is prima facie satisfied against the argument challenging the arbitration agreement, it shall appoint the arbitrator and/or refer the parties to arbitration, as the case may be. The amendment envisages that the judicial 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 vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Sub-sections (4) to (6) shall confine to the examination of an arbitration agreement. 20. The amendment which was made in Section 8 of the Arbitration Act, 1996 came up for consideration before this Court in Ameet Lalchand Shah v. Rishabh Enterprises, (2018) 15 SCC 678, where in paras 28 and 30, it was stated as under: 28. 'Principally four amendments to Section 8(1) have been introduced by the 2015 Amendments - (i) the relevant "party" that is entitled to apply seeking reference to arbitration has been clarified/amplified to include persons claiming "through or under" such a party to the arbitration agreement; (ii) scope of examination by the judicial authority is restricted to a finding whether "no valid arbitration agreement exists" and the nature of examination by the judicial authority is clarified to be on a "prima facie" basis; (iii) the cut-off date by which an application Under Section 8 is to be presented has been defined to mean "the date of" submitting the first statement on the substance of the dispute; and (iv) the amendments are expressed to apply notwithstanding any prior judicial precedent. The proviso to Section 8(2) has been added to allow a party that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for arbitration. In Para 59 of Emaar III (supra), it was stated as under: 59. 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 Corpn. Ltd. [National Seeds Corpn. Ltd. v. M. Madhusudhan Reddy, (2012) 2 SCC 506 : (2012) 1 SCC (Civ) 908] 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 be entitled 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. Emaar III (supra) though ends with a caveat, where it leaves the option with the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing further on the matter as the dispute is still sub judice before the State Consumer Forum (Appellate Authority). 24. The appeals are hereby dismissed. No order as to costs. FOOTNOTE 1. It may be necessary to note that the aforesaid provision was inserted by an Act No.3 of 2016 and though by an Act No.33 of 2019, Sub Section 6A has been omitted but as the relevant provisions of the amending Act (No.33 of 2019) has not been notified as yet, Sub Section 6A continues to be in operation. 2 "Not all matters are capable of being referred to arbitration. As a matter of English law certain matters are reserved for the court alone and if a tribunal purports to deal with them the resulting award will be unenforceable. These include matters where the type of remedy required is not one which an Arbitral Tribunal is empowered to give." [Russel on Arbitration (22 Edn.)] 3 Although the Consumer Protection Act of 1986 has now been repealed and the new Act of 2019 i.e., the Consumer Protection Act, 2019 has come into force, yet for our purpose the reference to the 1986 Act at various places in the present judgment would not make any difference as the basic ..... 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