The Consumer Protection act, 1986 (hereinafter CPA) is a social legislation
and cannot be interpreted in as technical manner as to take away its basic
fundamental roots. On this note, I am obliged to share this landmark verdict
decided by Hon’ble Federal court in matter of Emaar MGF Land Limited v/s Aftab
Singh Review Petition (C) Nos. 2629-2630 of 2018 in Civil Appeal Nos.
23512-23513 of 2017.
The Brief facts of this case are that the Complainant had entered into a buyers
agreement dated 06.05.2018 with the (Builder) Opposite Party whereas the
agreement contain one arbitration clause according to which all disputes must
bring before arbitration. Further the cause of action arise on 27th July 2015 ,
when the complainant filed the complaint before National commission praying the
possession of said flat for which he agreed into the buyers agreement. The
Opposite Party seeks extra time and filed its written statement. However in the
meantime , the Opposite Party invoked the arbitration clause and filed the
application under section 8 of arbitration and conciliation act, 1996. Under
section 8 of arbitration act, the Opposite Party place its reliance on section
7(2) meaning thereby the arbitration clause has the same importance as that of
an arbitration agreement. i.e. Deemed Arbitration Agreement.
Thus , the single member National commission referred this question before
Larger bench. The larger bench held that the arbitration clause cannot be
invoked when the consumer opt to file consumer complaint in contrary. Thereafter
, the Builder moves before Delhi High court under section 37(1)(a) of
arbitration act,1986 to set aside the order of National commission rejecting
Section 8 Application. The Delhi HC rejected the said application for want of
proper jurisdiction.
Further, the Hon’ble Supreme court both in Civil appeal as well as Review
Petition have agreed to the observations made by the larger bench, National
Commission. The Ratio of this Judgment is very Important to understand for
future litigations. Here the Hon’ble Supreme court Widely construe the
Provisions of CPA , Provisions of Arbitration and Conciliation act, 1996 and
Arbitration and Conciliation (Amendment) act, 2015 in togetherness with law
commission 246th Report and various Judicial Precedents. The Court construe
Section 3(2) of arbitration act which recognize the non arbitral schemes under
other legislation. The court Find Present case under purview of this scheme
only. Thereafter the court look into extent of Judicial Intervention under
section 5. The Court also gave the example of a cheque bounce case where despite
of having the arbitration agreement , the dispute can only be adjudicated by
criminal court. Thus, the court find out that the mandate of section 8 of
arbitration act is not justified in light of section 2(3) reorganization of non-arbitarble
matters. The court also look into 246th law commission Repot and Provisions of
Section 8 before 2015 amendment and after 2015 amendment.
There is one matter of National Seeds Corporation Limited v. M. Madhusudhan
Reddy and Anr. MANU/SC/0038/2012 : (2012) 2 SCC 506 where the Supreme court
find out that the remedy of arbitration is not the only remedy available to a
grower. Rather, it is an optional remedy. He caneither 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. The
Court in Present case briefly explained the Right in rem and Right in persona in
connection with Complaints under Consumer Protection act. The Court without
setting aside the ratio of previous Judicial Precedents , decided a new ratio
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. Thus,
it all depends upon discretion of a complainant whether he opted for complaint
under consumer protection act or refer the matter to arbitration. But once he
opted either of remedy, he is not allowed to take himself back and he is bound
by estoppel.
Written By: Shubham Budhiraja, The author is company secretary by qualification
and is undergoing its management trainee with a reputed corporate law firm.
Further, he is First Year Law student at faculty of law, University of Delhi. He
is also enrolled as Para Legal volunteer with Delhi State Legal Service
authority and also active Participant in Moot Court.
Ph no:
+919654055315
Email:
[email protected],
[email protected]
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