The Supreme Court recently held that the mere existence of an arbitration clause in an agreement would not preclude the consumer forum from adjudicating the dispute on merit.
“…an arbitration clause does not, by itself, oust the jurisdiction of the consumer forum.”, observed a bench of Justice Vikram Nath and Justice V. Mohana, while setting aside the concurrent findings of the National Consumer Dispute Redressal Commission (NCDRC), State Commission and the District Forum order which had referred a dispute over delay in handing over the possession of the residential flat unit to arbitration.
The case relates to the Appellant's filing of a consumer complaint alleging 'deficiency in service' for the delayed handing over of possession of the flat. Since the flat purchase agreement contained an arbitration clause, the District Forum, despite admitting the complaint and issuing notice to the Respondent, referred the dispute to the arbitration. The District Forum's decision was affirmed by the State Commission, and thereafter by the National Commission, leading to an instant appeal before the Supreme Court.
Allowing the appeal, the order pronounced by Justice Nath referencing Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751 observed:
“The 1986 Act creates a special adjudicatory mechanism for consumer disputes. Once that mechanism is validly invoked and the complaint is admitted, the consumer cannot be driven out of that forum merely because the agreement between the parties contains an arbitration clause. A private contractual clause cannot be permitted to defeat the continued operation of a statutory remedy which Parliament has expressly made additional to other remedies under Section 3 of the 1986 Act.”
“The fact that the agreement between the parties contained an arbitration clause could not, by itself, be treated as sufficient to non-suit the appellant before the consumer forum.”, added the Court, stressing that “once the complaint is admitted and allowed to be proceeded with, the forum is required to deal with it in the manner provided under the Act. The proviso to Section 12(4) contains a clear legislative restraint. It provides that where a complaint has been admitted by the District Forum, it shall not be transferred to any other court, tribunal or authority set up by or under any other law for the time being in force.”
As a result, the appeal was allowed, with a direction to the District Forum to decide the dispute on the merits, preferably within one year.
Cause Title: T.K.A. PADMANABHAN VERSUS ABHIYAN COOPERATIVE GROUP HOUSING SOCIETY LTD
Click here to download order
Appearance:
For Appellant(s) : Petitioner-in-person
For Respondent(s) : Mr. Chandrachur Bhattacharyya, Adv. Mr. Sahil Tagotra, AOR Ms. Shreya Kasera, Adv.