2018 (12) TMI 1940 - SC - Indian Laws

Section 8: Consumer disputes non-arbitrable; application to refer builders' agreement to arbitration rightly rejected after 2015 amendment

The SC affirmed that consumer disputes remain non-arbitrable and that the forum correctly rejected the respondent's Section 8 application seeking ... Effect of consumer disputes - non-arbitrable or not - dismissal of application filed Under Section 8 of the Arbitration and Conciliation Act, 1996 by the appellant - application for extension of time for filing the written statement - NCDRC committed 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 or not - application filed Under Section 8 by the Appellant could have been rejected in view of 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 - statutory amendment which completely changed the legal position as was earlier existing prior to the aforesaid amendment - whether 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?. 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 Act - 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. 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. Effect and consequences of the above stated position of law consequent to the Arbitration and Conciliation (Amendment) Act, 2015 amending Section 8 - HELD THAT:- This Court has noticed that amendments are expressed to apply notwithstanding any prior judicial precedents, but the scope of amendment Under Section 8(1) was confined to three categories as has been noted in Paragraph No. 29. Amendments Under Section 8, thus, were aimed to minimise the scope of judicial authority to refuse reference to arbitration and only ground on which reference could have been refused was that it prima facie finds that no valid arbitration agreement exists. Notwithstanding any prior judicial precedents referred to Under Section 8(1) relates to those judicial precedents, which explained the discretion and power of judicial authority to examine various aspects while exercising power Under Section 8. The Legislative intent and object were confined to only above aspects and was not on those aspects, where certain disputes were not required to be referred to arbitration. Can it be said that after amendment Under Section 8(1), the law laid down by this Court in reference to Section 2(3), where large number of categories have been held to be non-arbitrable has been reversed or set at naught. Neither any such Legislature intendment was there nor any such consequence was contemplated that law laid down by this Court in context of Section 2(3) has to be ignored or reversed. 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 - this Court held that disputes within the trust, trustees and beneficiaries are not capable of being decided by the arbitrator despite 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. Issues Involved:1. Whether NCDRC committed 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 builder's agreementRs.2. 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 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 8Rs.3. Whether NCDRC as well as this Court committed error in not adverting to the above statutory amendment which completely changed the legal position as was earlier existing prior to the aforesaid amendmentRs.4. 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 partiesRs.Issue-wise Detailed Analysis:1. Whether NCDRC committed 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 builder's agreementRs.The Supreme Court affirmed that consumer disputes are non-arbitrable, as established in the National Consumer Disputes Redressal Commission (NCDRC) decision. The NCDRC held that the Consumer Protection Act, 1986 provides a special remedy that cannot be overridden by an arbitration agreement. The Supreme Court reiterated that consumer fora are judicial authorities and thus have the discretion to proceed with consumer complaints despite the existence of an arbitration clause.2. 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 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 8Rs.The amendments to Section 8 of the Arbitration and Conciliation Act, 1996, aimed to minimize judicial intervention by mandating that judicial authorities refer parties to arbitration unless it is found that no valid arbitration agreement exists. However, the Supreme Court clarified that this amendment does not override the special remedies provided under other statutes, such as the Consumer Protection Act, 1986. The legislative intent was to limit judicial discretion in arbitration matters but not to nullify special statutory remedies.3. Whether NCDRC as well as this Court committed error in not adverting to the above statutory amendment which completely changed the legal position as was earlier existing prior to the aforesaid amendmentRs.The Supreme Court found no error in the NCDRC's decision or its own previous dismissal of the appeals. The Court emphasized that the amendment to Section 8 was not intended to override the established legal position that consumer disputes are non-arbitrable. The amendment was designed to streamline arbitration proceedings and reduce judicial intervention, not to negate the special remedies provided under the Consumer Protection Act.4. 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 partiesRs.The Supreme Court concluded that the insertion of the words 'notwithstanding any judgment, decree or order of the Supreme Court or any Court' was meant to ensure that judicial authorities refer parties to arbitration unless no valid arbitration agreement exists. This amendment was not intended to affect the special remedies provided under the Consumer Protection Act. The Court held that consumer disputes remain non-arbitrable, and the special remedy under the Consumer Protection Act continues to be available despite the existence of an arbitration agreement.Conclusion:The Supreme Court dismissed the review petitions, affirming that consumer disputes are non-arbitrable and that the amendments to Section 8 of the Arbitration and Conciliation Act, 1996, do not override the special remedies provided under the Consumer Protection Act, 1986. The Court emphasized that the legislative intent behind the amendments was to streamline arbitration proceedings and reduce judicial intervention, not to nullify special statutory remedies.