In The National Consumer Disputes Redressal Commission New Delhi

MANU/CF/0480/2017
Equivalent Citation: III(2017)C PJ270(NC )
IN THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI
Consumer Case No. 701 of 2015, IA/247/2016, IA/505/2017, IA/7294/2015,
IA/9570/2015, IA/11813/2016, Consumer Case No. 1373 of 2015, IA/247/2016,
IA/505/2017, IA/7294/2015, IA/9570/2015, IA/11813/2016, Consumer Case No.
1423 of 2015, IA/247/2016, IA/505/2017, IA/7294/2015, IA/9570/2015,
IA/11813/2016, Consumer Case No. 159 of 2016, IA/247/2016, IA/505/2017,
IA/7294/2015, IA/9570/2015, IA/11813/2016, Consumer Case No. 423 of 2016,
IA/247/2016, IA/505/2017, IA/7294/2015, IA/9570/2015, IA/11813/2016, Consumer
Case No. 424 of 2016, IA/247/2016, IA/505/2017, IA/7294/2015, IA/9570/2015,
IA/247/2016, IA/505/2017, IA/7294/2015, IA/9570/2015, IA/11813/2016 and
Consumer Case No. 99 of 2016, IA/247/2016, IA/505/2017, IA/7294/2015,
IA/9570/2015, IA/11813/2016
Decided On: 13.07.2017
Appellants: Aftab Singh and Ors.
Vs.
13-08-2021 (Page 1 of 22) www.manupatra.com Hemant Sahai Associates

Respondent: Emaar MGF Land Limited and Ors.
Hon'ble Judges/Coram:
D.K. Jain, J. (President), Ajit Bharihoke and V.K. Jain, J. (Members)
Counsels:
For Appellant/Petitioner/Plaintiff: Ankur Talwar, Sonam Sharma and Srishty Kaul,
Advocates
For Respondents/Defendant: Amarjit Singh Chandhiok, Senior Advocate, Aditya
Narain, Arnav Narain, Anushree Narain, Arjun Jain, Mishra Raj Shekhar, Gaurav
Sharma, Sweta Kakkad, Arveena Sharma and Anupam, Advocates
Case Note:
Consumer - Jurisdiction of court - Arbitrability of dispute - Section 8(1) of
Arbitration and Conciliation Act, 1996 and Consumer Protection Act, 1986 -
Applications filed under Section 8 of Act to refer dispute to arbitration as
per buyers' agreements - Reference came for adjudication impugning
Section 8(1) of Act - Whether seminal ramifications for adjudicatory
mechanism envisaged for settlement of consumer disputes, falling within
ambit of Act of 1986 - Held, statutory regime concerning arbitration would
not be applicable where public law regime operates - There were certain
disputes that were to be adjudicated and governed by statutory
enactments, established for specific public purpose and to sub-serve a
particular public policy - Such disputes were not arbitrable - Disputes which
governed by statutory enactments, established for specific public purpose to
sub-serve a particular public policy were not arbitrable - Arbitration Clause
in agreements between Complainants and Builder could not circumscribe
jurisdiction of a consumer for a complaints listed on fixed date. [48],[55]
and[56]
ORDER
1. These applications and the consequential reference to a larger Bench are triggered
by the amendment to Sub-section (1) of Section 8 of the Arbitration and Conciliation
Act, 1996 (for short the "Arbitration Act") by Act 3 of 2016, with retrospective effect
from 23.10.2015. The question for consideration before this Bench is profound,
having seminal ramifications for the entire adjudicatory mechanism envisaged for
settlement of consumer disputes, falling within the ambit of the Consumer Protection
Act, 1986 (for short the "Consumer Act").
2 . In order to bring into focus the issue involved in these hotly contested
Applications, we deem it appropriate and expedient to reiterate the history and
essence of the referral order dated 31.08.2016, passed by the Learned Single
Member, especially since both sides have pressed into service certain observations
from the said order, dated 31.08.2016, in support of their respective stands.
3 . The Opposite Party in the Original Complaints (for short, "the Builder") filed this
set of captioned applications under Section 8 of the Arbitration Act praying therein
that the parties be referred to Arbitration as per the Buyers' Agreements executed
between them. The complainants in these matters had booked residential
villas/flats/plots in Projects of the Builder to be developed in Gurgaon/Mohali and
accordingly executed Buyers' Agreements. The aggrieved Complainants allege that the
Builder has failed to deliver possession of these villas/flats/plots by the date

committed in the Buyers Agreement and hence, are seeking directions to the Builder
for delivery and possession of the villas, etc. and/or, in the alternative, refund of the
amounts deposited by them, along with compensation.
4 . The Arbitration Clauses in the different Buyers' Agreements seem to follow a
standard template and construction. The Arbitration Clause contained in one such set
of Buyers Agreements, reads as under:
"This or any dispute arising out of or touching upon or in relation to the
terms of this Agreement or its termination, including the interpretation and
validity thereof and the respective rights and obligations of the Parties shall
be settled amicably by mutual discussion, failing which the same shall be
settled through arbitration. The arbitration proceedings shall be governed by
the Arbitration & Conciliation Act, 1996, or any statutory amendment,
modifications or re-enactment thereof for the time being in force and shall be
held at New Delhi. The High Court of Punjab & Haryana at Chandigarh and
the Courts subordinate thereto having territorial jurisdiction over the Built up
villa shall be to the specific exclusion of all other courts, alone have the
exclusive jurisdiction in all matters arising out of/touching and/or concerning
this Agreement".
The Arbitration Clause in another set of Buyers' Agreements is to the following effect:
"37. All or any dispute arising out of or touching upon or in relation to the
terms of this Buyer's/provisional allotment letter or its termination, including
the interpretation and validity thereof and the respective rights and
obligations of, the parties shall be settled amicably by mutual discussion,
failing which the same shall be settled through arbitration. The arbitration
proceedings shall be governed by the Arbitration & Conciliation Act, 1996, or
any statutory amendments, modifications or re-enactment thereof for the
time being in force. A Sole Arbitrator, who shall be nominated by the
Developer, shall hold the arbitration proceedings at the registered office of
the Developer in New Delhi. The Allottee(s) hereby confirms that he shall
have no objection to such appointment even if the person so appointed, as
the Arbitrator, is an employee or advocate of the Developer or is otherwise
connected with the Developer and the Allottee(s) confirms that
notwithstanding such relationship/connection, the Allottee(s) shall have no
doubts as the independence or impartiality of the said Arbitrator and shall
not challenge the same".
5 . The Builder relied upon Section 8(1) of the Arbitration Act, as amended by the
Arbitration & Conciliation (Amendment) Act, 2015 with effect from 23.10.2015, to
make their claim for a reference to Arbitration. Section 8(1) of the Arbitration Act [as
amended] reads as under:
"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 to the arbitration
agreement or any person claiming through or under him, so applies not later
than the date of submitting his first statement on the substance of the
dispute, then, 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."
The aforesaid Sub-section before amendment read as under:
"(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".
6 . This batch of Applications was listed before the Learned Single Member, who
noted the Arbitration Clauses; the erstwhile and amended form of Section 8(1) of the
Arbitration Act; case law surrounding the quondam Section 8(1) of the Arbitration
Act, and the contentions around the interpretation of the untrodden amendment to
Section 8(1) of the Act. At the outset, on a prima facie construction of the Sections,
before and after the amendment, the Learned Single Member drew the following
important inferences. First, it is evident that in the pre-amendment era, only a party
to the Arbitration Agreement could seek reference to Arbitration; however, as a result
of the amendment, even persons claiming through such parties may seek reference to
Arbitration. Second, it is apparent that judicial authorities can examine the prima
facie validity of the Arbitration Agreement, before deciding on the question of
reference to Arbitration. Third, the amendment mandates that judicial authorities,
before which, an action is brought, shall refer the parties thereto to Arbitration,
"notwithstanding any judgment, decree or order of the Supreme Court...unless it
finds that prima facie no valid arbitration agreement exists."
7 . The crux of this reference revolves around these last few words of amended
Section 8(1) of the Arbitration Act. The complainants argue that the said words leave
the ability of Consumer Forums to hear such cases, such as the captioned ones that
triggered this reference, unaffected, notwithstanding any Arbitration Clauses in the
Agreements, while the Builder believes that the said amendment was enacted
primarily to oust the jurisdiction of the Courts and Tribunals, and limit the resolution
of these cases solely through Arbitration. As a result, there is a need to understand
the legal position on Applications under Section 8 of the Arbitration Act for referral to
Arbitrations in light of the amendment, and resolve whether status quo ante persists,
or if a new regime has been ushered that ousts the jurisdiction of
Tribunals/Commissions etc. completely in case of valid Arbitration Clauses. In light of
the same, the Learned Single Member has made the following reference:
"14. The Arbitration Clauses are generally contained in the Buyers Agreement
between the builders and the purchasers of the plot and flats. They also find
incorporation in the insurance policies and several other agreements which
later on become the subject matter of the consumer disputes. Therefore, the
decision of this Commission on these applications is likely to impact a large
number of consumer disputes. Considering the vital importance and the far
reaching consequence of the legal issue involved in these applications, it
would only be appropriate that these applications are considered and decided
by a Larger Bench, consisting of atleast Three-Members. The Hon'ble
President is therefore, requested to constitute a Larger Bench to hear and
decide these applications. Subject to the order of the Hon'ble President, list
these applications before the Larger Bench, at an early date, for hearing."
8 . Therefore, the short yet significant question before this Bench is the following:
whether the newly inserted Sub-section (1) of Section 8 of the Arbitration Act

mandates Consumer Forums, constituted under the Consumer Act, to refer parties to
Arbitration in terms of valid Arbitration Agreement, notwithstanding other provisions
of the Arbitration Act and the provisions of the Consumer Act?
9. We have heard Mr. Ankur Talwar, Ms. Sonam Sharma, Mr. Sangram S. Saron, Mr.
Rahul Rathore, Mr. Sushil Kaushik, Ms. Himanshi Singh, Mr. Rajeev Kumar Jha, Mr.
C.P. Sharma and Mr. Iggu Chittiappa, Advocates for the Complainants and Mr. Amarjit
Singh Chandhiok, Learned Senior Counsel assisted by Mr. Aditya Narain, Advocate on
behalf of the Builder.
SUBMISSIONS ON BEHALF OF THE COMPLAINANTS:
10. The complainants argue that the amendment to Section 8 of the Arbitration Act
does not have the effect of nullifying the ratio of a catena of decisions of the Hon'ble
Supreme Court, particularly in National Seeds Corporation Limited v. M.
Madhusudhan Reddy & Anr. MANU/SC/0038/2012 : (2012) 2 SCC 506. They contend
that it has been authoritatively held in these decisions that remedies provided under
the Consumer Act are in addition to and not in derogation of other laws in force;
consequently, Consumer Fora would not be bound to refer parties to Arbitration even
if the contract between the parties contained an Arbitration Agreement. The said
pronouncements are primarily based on Section 3 of the Consumer Act, which
admittedly has not been amended or overridden by any provision in the amended
Arbitration Act. On the contrary, the intention of the Legislature to leave the ratio of
the said decisions undisturbed is evident from the conspicuous absence of the words
'notwithstanding anything to the contrary in any other law for the time being in force'
in the amended Section 8 of the Arbitration Act. Thus, they assert, that Section 3 of
the Consumer Act still occupies the field.
11. The Complainants point to the legislative history and intent of the amendment in
question, gathered from the Statement of Objects and Reasons of the Amendment
Act, as well as the 246th Report of the Law Commission of India on which, the said
Amendment Act was substantially based, to argue that altering the legal position
settled by the aforementioned judgments of the Hon'ble Supreme Court (including the
National Seeds Corporation Case) was not even a matter in contemplation or
consideration. In their view, the intention behind amending Section 8(1) of the
Arbitration Act, along with a similar amendment to Section 11 of the said Act [by the
insertion of Sub-section (6A)] is to neutralize a totally different line of judgments,
starting with SBP & Co. Vs. Patel Engineering Ltd. - MANU/SC/1787/2005 : (2005) 8
SCC 618 [later followed and explained in National Insurance Co. Ltd. Vs. Boghara
Polyfab Pvt. Ltd. - MANU/SC/4056/2008 : (2009) 1 SCC 267 and Shin Etsu Chemicals
Co. Ltd. Vs. Aksh Optifibre & Anr. - MANU/SC/0488/2005 : (2005) 7 SCC 234], which
enlarged the scope of enquiry to be undertaken at the stage of appointment of
Arbitrators under Section 11 of the Arbitration Act, as also while referring parties to
Arbitration under Section 8 of the Arbitration Act. They submit that the purpose of the
amendment in question is to overcome these judgments, and to curtail the nature and
scope of enquiry to be undertaken in terms of Sections 8 and 11 of the Arbitration Act
to the existence of an Arbitration Agreement only. Thus, in their reading of the
amendment, there is no intention to alter the interplay between the provisions of the
Arbitration Act and the Consumer Act as settled by the Hon'ble Supreme Court of
India in the National Seeds Corporation case (Supra).
12. They further contend that a bare reading of the amended Section 8(1) shows that
the operative words of the provision ["shall ... refer the parties to arbitration"] have

not been amended or altered, except for the addition of the words "unless it finds
that prima facie no valid arbitration agreement exists". These added words make no
material difference to the issue at hand as Section 3 of the Consumer Act remains
completely un-amended and unaffected. Thus, the interplay between Section 8(1) of
the Arbitration Act and Section 3 of the Consumer Act, as interpreted by the Hon'ble
Supreme Court in earlier judgments remains unaffected by the amendment in
question. They further submit that without amending (or overriding) Section 3 of the
Consumer Act, and removing the basis, as it were, of the judgments of the Hon'ble
Supreme Court, it would be wholly impermissible for Parliament to simply overrule
the said judgments - an extremely well settled jurisprudential principle under our
Constitution [See: State of Kerala Vs. PUCL - MANU/SC/1302/2009 : (2009) 8 SCC
46].
13. The complainants also submit that to interpret the amendment to Section 8 of the
Arbitration Act as having altered the law declared by the Hon'ble Supreme Court,
without in any manner altering the statutory basis for the judgments of the Hon'ble
Supreme Court would render the Amendment unconstitutional and beyond the
competence of Parliament in as much as, it would tantamount to the law declared by
the Hon'ble Supreme Court, being simply overruled by Parliament. Thus, their
argument is that while such an interpretation of the amended Section 8 is wholly
unsustainable even going by its plain language, in any event, even if such an
interpretation were possible, it would be eschewed by the Fora concerned in view of
the settled legal principle that where two interpretations of a statutory provision are
possible, the one that has the effect of making the provision unconstitutional has to
be avoided, and the interpretation, which renders the provision constitutionally valid
ought to be accepted.
14. The lynchpin of this approach is that the Consumer Act is a beneficial legislation,
enacted to protect the interests of Consumers. It is evident from the Preamble that its
provisions must be interpreted purposively, so as to advance these objects. Accepting
the contentions of the Builder would not only do grave injustice to the Complainants
but would also defeat the very purpose for the enactment of this salutary legislation.
Moreover, they stressed that the Forums constituted under the Consumer Act, though
vested with some powers of a Civil Court, yet they exercise quasi-judicial powers
conferred upon them under the said Statute, and hence, may not fall within the
purview of Sections 5 and 8 of the Arbitration Act, divesting them of their Statutory
jurisdiction as in both these provisions reference is only to a "Judicial Authority".
SUBMISSIONS ON BEHALF OF THE BUILDER
1 5 . Learned Senior Counsel appearing for the Builder argued that in Fair Air
Engineers Pvt. Ltd. & Anr. Vs. N.K. Modi MANU/SC/0141/1997 : (1996) 6 SCC 385
and SBP & Co. (Supra), while dealing with the Arbitration Act, the Supreme Court has
held that the National Commission is a "Judicial Authority" within the meaning of
Sections 5 and 8 of the said Act and, therefore, had jurisdiction to decide an
application under Section 8 of the Arbitration Act, including the prima-facie
determination of validity of an Arbitration Agreement. They submitted that this is not
by virtue of any provisions of the Consumer Act but by virtue of the provisions of the
Arbitration Act. Thus, on filing of an application under Section 8 of the Arbitration
Act, the District Forum, the State and the National Commission become a "Judicial
Authority" within the meaning of Part I of the Arbitration Act and the said application
is required to be decided in terms of the amended Section 8 of the Arbitration Act.

16. The expression used by the Legislature - "notwithstanding anything contained in
any other law for the time being in force" - not only includes other Acts/Laws
including the Consumer Act but also includes law as laid down by the Hon'ble
Supreme Court; under Article 141 of the Constitution of India, its judgment is the
law. Thus, the prohibition under Section 5 of the Arbitration Act is express, viz. that
the "judicial authority" shall not only exclude reference to on any other law for the
time being in force, it shall also not rely on any judgment of the Hon'ble Supreme
Court or any other Court. There was, therefore, no need to further amend Section 5
of the Arbitration Act.
17. That the two enactments viz, the Arbitration Act and the Consumer Act, are two
distinct enactments. Once a Complaint is preferred invoking the Consumer Act, the
Opposite Party has an option to either continue to defend the proceedings under the
Consumer Act or to exercise an equally important option, i.e. to invoke the provisions
of Part I of the Arbitration Act by moving an Application under Section 8 of the said
Act before the Consumer Fora itself. Once such an application is filed, the effect
thereof would be that the Consumer Forum, constituted under the Consumer Act, by
virtue of the provisions in the said Act becomes the "judicial authority", exercising
the jurisdiction as a "judicial authority" under section 8 of the Arbitration Act.
Therefore, there is no interplay at all between Section 8 of the Arbitration Act and the
Consumer Act.
18. In National Seeds Corporation (Supra), the Supreme Court has not dealt with the
option available to the Opposite Party, if there is a valid and subsisting Arbitration
Agreement between the parties. If the Complainant has two forums to opt for, so
does the Opposite Party. He may continue if served with the Complaint and submit to
the jurisdiction of the Consumer Forum or may invoke the statutory right and file an
application under Section 8 of the Arbitration Act. The moment a party agrees to
Arbitration as a forum to adjudicate its disputes, then the effect of Section 5 read
with Section 8 of the Arbitration Act comes into play and ousts jurisdiction of any
other forum under any statute, including the Consumer Act. The Builder argues that
the legislature, through amendment to Section 8 of the Arbitration Act, has now
prohibited the "judicial authority" to refer to or rely upon any judgment rendered
even by the Hon'ble Supreme Court, which is inconsistent with the intent of the
legislature under the Arbitration Act. Thus, the judgment in National Seeds
Corporation Ltd. (Supra) ceases to be a precedent or has any relevance.
1 9 . According to Mr. A.S. Chandhiok, Learned Senior Counsel appearing for the
Builder, unfortunately, attention of the Hon'ble Supreme Court was not drawn to
Section 5 of the Arbitration Act and, therefore, the effect of the legislative intent of
Section 5 read with Section 8 was not even considered; none of the judgments relied
upon by the Complainants even look at or refer to Section 5 of the Arbitration Act;
Section 5 all along had mandated that a "judicial authority" shall not act except as
provided under Part I of the Arbitration Act; and since the judgments were not based
on the legislative intent as aforesaid, the Legislature in its wisdom amended Section
8 to clarify that all judgments pronounced by the Supreme Court or any other Court
shall have no relevance and/or precedence, while considering an application under
Section 8 of the Arbitration Act. It was strenuously urged that the law has been
altered by the amendment for it puts an additional bar on the "judicial authority" that
it shall not rely upon or refer to any decision interpreting Section 8 of the Act prior to
the date of the amendment coming into force.
20. The pre-amended Section 8 read with Section 5 of the Arbitration Act creates a

mandate for the "judicial authority" to refer parties to Arbitration. By virtue of the
amended Section 8, the right to adjudicate upon the prima facie validity of the
Arbitration Agreement has been conferred on the "judicial authority", which was not
there earlier. The Amendment mandates the judicial authority to relegate the parties
to the Arbitration, unless prima facie it finds the Arbitration Agreement to be invalid,
dehors all judgments.
21. The Parliament has the legislative competence to pass a law to take away the
effect of any order or judgment, including that of the Hon'ble Supreme Court, and
consequently, the above amendment has rendered all the judgments, orders and
decrees, prior to the said amendment irrelevant, and/or ceased to be precedent(s) for
the interpretation of Section 8 of the Arbitration Act. Thus, it is evident that by virtue
of the twin bars expressly contained in Section 5 and Section 8 of the Arbitration Act,
the "judicial authority" (Consumer Fora) exercising the jurisdiction under Section 8 of
the Arbitration Act as "judicial authority", cannot refer to or rely upon any other
provisions of law for the time being in force (including the Consumer Act) or any
judgment or order prior to 20.10.2015, when the said amendment was incorporated
in the statute.
22. There was no need for the Legislature to again add 'notwithstanding anything
contained in any other law', in Section 8 of the Arbitration Act, because of the non-
obstante clause already contained in Section 5 of the Arbitration Act.
2 3 . The intent of the Legislature, in adding Sub-section (6A) to Section 11, and
adding the same words to Section 8 is identical; while the former seeks to neutralize
the judgments of SBP & Co. (supra) and the latter seeks to efface the effect of all
judgments including National Seeds Corporation (Supra). What applies to Section 11
equally applies to Section 8 of the Arbitration Act and there cannot be a piecemeal
distribution of the intent of the Legislature with the words used therein.
2 4 . The question before the Hon'ble Supreme Court in A. Ayyasamy Vs. A.
Paramasivam & Ors. - MANU/SC/1179/2016 : (2016) 10 SCC 386, was whether
allegation of fraud simplicitor was a ground to nullify the effect of Arbitration
Agreement between the parties. The Hon'ble Supreme Court while dealing with the
said question has observed that in so far as the Arbitration Act is concerned, it does
not make any specific provision excluding any category of disputes terming them to
be non-arbitrable. While dealing with Section 34(2)(b) and Section 48(2), the
Hon'ble Supreme Court has observed thus:-
"34. Section 34(2)(b) and Section 48(2) provide as one of the grounds for
challenge to or in respect of the enforceability of an award that "the subject-
matter of the dispute is not capable of settlement by arbitration under the
law for the time being in force". Clearly, therefore, the Act contemplates and
acknowledges that before it can be held that a particular subject-matter is
not capable of settlement by arbitration, such a consequence must arise
under the law for the time being in force."
However, according to the Builder, in the present case, firstly, there is no exclusion
of such disputes in the Arbitration Act and secondly, there is nothing to show that the
subject matter of the present dispute is not capable of settlement by Arbitration under
the law for the time being in force.
DISCUSSION

25. It is clear that prior to the amendment, the Hon'ble Supreme Court had resolved
and settled that the Consumer Forums were not bound to refer disputes to Arbitration
under Section 8 of the Arbitration Act. In other words, an Arbitration Clause in a
contract could not circumscribe the jurisdiction of the Courts and the Tribunals,
especially those which are constituted to achieve a particular purpose and objective.
Therefore, it is imperative for us to determine whether an Arbitral Clause, even if
empowered through a new statutory amendment, can undermine other statutory
protections for some types of disputes, without engaging with their foundations.
Certainly, the scope of this amendment cannot be to oust all kinds of jurisdictions of
Courts and Tribunals be it criminal, testamentary, matrimonial, insolvency, tenancy
and surrender them to private alternate dispute resolution mechanisms. The Hon'ble
Supreme Court has already defined bright line tests to determine what is arbitrable
and what is not. Thus, we have to determine if this line has changed for consumer
disputes (and other disputes, if any) by virtue of the amendment to Section 8 of the
Arbitration Act. And if not, what is the purpose of the new amended Section 8 of the
Arbitration Act, since an amendment executed through a parliamentary process must
not be rendered nugatory through judicial interpretation?
ARBITRABILITY OF DISPUTES
26. Russel on Arbitration (22nd Edition pp. 28 Para 2007) famously stated, "not all
matters are capable of being referred to arbitration." He observed that as a matter of
law, certain matters are reserved for Courts 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. Mustill and Boyd in the Law and Practice of Commercial Arbitration in England
(2nd Edition, 1989) stated the following: "In practice therefore, the question has not
been whether a particular dispute is capable of settlement by arbitration, but whether
it ought to be referred to arbitration or whether it has given rise to an enforceable
award. No doubt for this reason, English law has never arrived at a general theory for
distinguishing those disputes which may be settled by arbitration from those which
may not. ... Second, the types of remedies which the arbitrator can award are limited
by considerations of public policy and by the fact that he is appointed by the parties
and not by the State. For example, he cannot impose a fine or a term of
imprisonment, commit a person for contempt or issue a writ of subpoena; nor can he
make an award which is binding on third parties or affects the public at large, such as
a judgment in rem against a ship, an assessment of the rateable value of land, a
divorce decree, a winding-up order...."
27. The locus classicus on the subject is Booz Allen and Hamilton Inc. v. SBI Home
Finance Limited & Ors. MANU/SC/0533/2011 : (2011) 5 SCC 532, which delineates
the conceptual framework behind making only some kinds of disputes arbitrable in
the following manner:
"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 public fora as a
matter of public policy. Certain other categories of cases, though not

expressly reserved for adjudication by public fora (courts and tribunals), may
by necessary implication stand excluded from the purview of private fora.
Consequently, where the cause/dispute is inarbitrable, the court where a suit
is pending, 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".
(Emphasis Supplied)
28. The principles highlighted above form the bedrock for the determination of the
arbitrability of disputes. The Hon'ble Supreme Court has often been asked to examine
the contents of a special legislation and accordingly determine if the participants
under the said legislation may outsource dispute resolution to Arbitration, away from
public Courts, Tribunals and Forums. In the context of the Trusts Act, 1882, the
Hon'ble Supreme Court made the following observations in Vimal Kishor Shah & Ors.
v. Jayesh Dinesh Shah MANU/SC/0913/2016 : (2016) 8 SCC 788:
"50. When we examine the scheme of the Trusts Act, 1882 in the light of the
principle laid down in Condition 2, we find no difficulty in concluding that
though the Trusts Act, 1882 does not provide any express bar in relation to
applicability of other Acts for deciding the disputes arising under the Trusts
Act, 1882 yet, in our considered view, there exists an implied exclusion of
applicability of the Arbitration Act for deciding the disputes relating to trust,
trustees and beneficiaries through private arbitration. In other words, when
the Trusts Act, 1882 exhaustively deals with the trust, trustees and
beneficiaries and provides for adequate and sufficient remedies to all
aggrieved persons by giving them a right to approach the Principal Civil Court
of Original Jurisdiction for redressal of their disputes arising out of trust deed
and the Trusts Act, 1882 then, in our opinion, any such dispute pertaining to
affairs of the trust including the dispute inter se trustee and beneficiary in
relation to their right, duties, obligations, removal, etc. cannot be decided by
the arbitrator by taking recourse to the provisions of the Act. Such disputes
have to be decided by the civil court as specified under the Trusts Act, 1882.
51. The principle of interpretation that where a specific remedy is given, it
thereby deprives the person who insists upon a remedy of any other form of
remedy than that given by the statute, is one which is very familiar, and
which runs through the law, was adopted by this Court in Premier
Automobiles Ltd. v. Kamlekar Shantaram Wadke [Premier Automobiles Ltd. v.
Kamlekar Shantaram Wadke, MANU/SC/0369/1975 : (1976) 1 SCC 496 :
1976 SCC (L & S) 70 : AIR 1975 SC 2238] while examining the question of
bar in filing civil suit in the context of remedies provided under the Industrial
Disputes Act (see G.P. Singh, Principles of Statutory Interpretation, 12th Edn.,
pp. 763-64). We apply this principle here because, as held above, 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."
[Emphasis supplied]
2 9 . In the context of the Bombay Rent Act, the Hon'ble Supreme Court in Natraj
Studios (P) Ltd. v. Navrang Studios MANU/SC/0477/1981 : (1981) 1 SCC 523 had
made the following important observations:
"17. The Bombay Rent Act is a welfare legislation aimed at the definite social
objective of protection of tenants against harassment by landlords in various
ways. It is a matter of public policy. The scheme of the Act shows that the
conferment of exclusive jurisdiction on certain courts is pursuant to the social
objective at which the legislation aims public policy requires that contracts to
the contrary which nullify the rights conferred on tenants by the Act cannot be
permitted. Therefore, public policy requires that parties cannot also be
permitted to contract out of the legislative mandate which requires certain
kind of disputes to be settled by Special Courts constituted by the Act. It
follows that arbitration agreements between parties whose rights are
regulated by the Bombay Rents Act cannot be recognised by a court of law."
[Emphasis supplied]
30. Therefore, disputes are not characterized as arbitrable and non-arbitrable at the
whim and fancy of the Legislature. The classification is based on the crucial
distinction, repeatedly explained by the Hon'ble Supreme Court. This division has
been taken into account and entrenched into different legislations with a clear and
distinct public policy objective. The Legislature and Judiciary have built this
jurisprudence with consensus and harmony.
31. Our legal framework is a complex and intricate network--working with it often
involves simultaneous engagement of different laws. Since laws cannot be enacted in
strict silos, they often affect each other in unanticipated ways. The Supreme Court
and High Courts wade through this framework to harmonise these seemingly differing
aspects to sustain a cohesive and coherent legal framework. No legal amendment
intends to reduce a harmonized and established legal framework to a "useless
lumber" or a "dead letter". The Legislators are cognizant of the edifice on which laws
are built and envisage amendments, often specific and with a narrow purport,
keeping in mind the larger legal ecosystem. The corollary of the argument that
through the route of Section 8(1) of the Arbitration Act, the Parliament intended to
undo jurisprudence under the Consumer Act, is much larger than envisaged by
Learned Counsel for the Builder. If the said amendment can undo existing
jurisprudence under the Consumer Act, it should, with the same force, also unfasten
jurisprudence related to tenancy, trusts and related fields, as enunciated in Natraj
Studio; Booz Allen; Vimal Kishor and Ayyaswamy (Supra). In effect, the argument of
Ld. Senior Counsel for the Builder is that with a single stroke of Section 8(1) of the
Arbitration Act, the legislature has undone the entire framework of not just Consumer
jurisprudence, but also jurisprudence related to trusts, tenancy and other such

welfare laws. This, in our view, is untenable.
32. The ripples 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.
JURISPRUDENCE ON ARBITRABILITY OF CONSUMER DISPUTES
33. As recently as 2016, after the 2015 amendment to Section 8 of the Arbitration
Act, in A. Ayyaswamy (Supra), while answering the question: as to whether a mere
allegation of fraud simpliciter is a ground to nullify the effect of Arbitration
Agreement between the parties, in the negative, the Hon'ble Supreme Court touched
upon the issue of arbitrability of a dispute, in the context of Section 8 of the
Arbitration Act. Drawing support from the crucial observations in Booz Allen (Supra)
[para 35-36), to the effect that though not exclusively reserved for adjudication by
Courts and Tribunals, but by necessary implication, certain category of disputes
which are assigned by Legislature to public Fora as a matter of public policy, stand
excluded from the purview of private Fora, in his concurring opinion, Dr. D.Y.
Chandrachud J. referring to the decisions of the Hon'ble Supreme Court in Skypack
Couriers Ltd., National Seeds Corporation (Supra) and Rosedale Developers Pvt. Ltd.
Vs. Aghore Bhattacharya [MANU/SC/1390/2013 : (2015) 1 WBLR 385 (SC)], wherein
it had been authoritatively opined that the existence of an arbitration clause will not
be a bar to the entertainment of a Complaint by a Forum under the Consumer Act,
has observed as under:-
"Hence, in addition to various classes of disputes which are generally
considered by the courts as appropriate for decision by public fora, there are
classes of disputes which fall within the exclusive domain of special fora
under legislation which confers exclusive jurisdiction to the exclusion of an
ordinary civil court. That such disputes are not arbitrable dovetails with the
general principle that a dispute which is capable of adjudication by an
ordinary civil court is also capable of being resolved by arbitration. However,
if the jurisdiction of an ordinary civil court is excluded by the conferment of
exclusive jurisdiction on a specified court or tribunal as a matter of public
policy such a dispute would not then be capable of resolution by arbitration."
(Emphasis Supplied)
34. Thus, in the context of Consumer Jurisprudence, the Hon'ble Supreme Court has
not disturbed its earlier opinion regarding the arbitrability of Consumer disputes
rendered in the pre-amendment era. Rather, it has affirmed the protection granted to
the Consumers from private resolution.
35. This Commission also took a similar view in Lt. Col. Anil Raj & Anr. Vs. M/s.
Unitech Ltd., Consumer Complaint No. 346 of 2013, decided on 02.5.2016, relying
upon the decisions of the Hon'ble Supreme Court in Secretary, Thirumugugan
Cooperative Agricultural Credit Society Vs. M. Lalitha (through LRs) & Ors.
MANU/SC/1025/2003 : (2004) 1 SCC 305 Skypak Couriers Ltd. (supra) and National
Seeds Corporation (supra), to hold that the existence of an Arbitration Clause will not
be a bar for the entertainment of the Complaint by a Consumer Fora.
36. The above observations are based on entrenched ideals surrounding consumer
jurisprudence, honed and built by the Apex Court. Therefore, it is imperative to dwell

on the foundation of the Consumer Act to understand the kind of rights it seeks to
protect, the statutory provisions that it lays out for the same, and accordingly, if by
virtue of the amendment to Section 8(1) of the Act, the erstwhile scheme has been
set at naught.
37. In Skypak Couriers Ltd. Vs. Tata Chemicals Ltd. (supra), the Hon'ble Supreme
Court inter-alia observed as under:
"2. ... Even if there exists an arbitration clause in an agreement and a
complaint is made by the consumer, in relation to a certain efficiency of
service, then the existence of an arbitration clause will not be a bar to the
entertainment of the complaint by the Redressal Agency, constituted under
the Consumer Protection Act, since the remedy provided under the Act is in
addition to the provisions of any other law for the time being in force".
(Emphasis supplied).
38. In M. Lalitha (Supra) the Hon'ble Supreme Court inter-alia observed and held as
under:
"10. The preamble of the Act declares that it is an Act to provide for better
protection of the interest of consumers and for that purpose to make
provision for the establishment of Consumer Councils and other authorities for
the settlement of consumer disputes and matters connected therewith. In
Section 3 of the Act in clear and unambiguous terms it is stated that the
provisions of the 1986 Act shall be in addition to and not in derogation of the
provisions of any other law for the time being in force.
11. From the Statement of Objects and Reasons and the scheme of the 1986
Act, it is apparent that the main objective of the Act is to provide for better
protection of the interest of the consumer and for that purpose to provide for
better redressal, mechanism through which cheaper, easier, expeditious and
effective redressal is made available to consumers. To serve the purpose of
the Act, various quasi-judicial forums are set up at the district, State and
national level with 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".
39. In Fair Air Engineers Pvt. Ltd. & Anr. Vs. N.K. Modi (Supra), the Supreme Court,
while holding that the Consumer Fora were judicial authorities, inter-alia observed:
"15. ... It is seen that Section 3 envisages that the provisions of the Act are in
addition to and are not in derogation of any other law in force. It is true, as
rightly contended by Shri Suri, that the words "in derogation of the provisions
of any other law for the time being in force" would be given proper meaning
and effect and if the complaint is not stayed and the parties are not relegated
to the arbitration, the Act purports to operate in derogation of the provisions
of the Arbitration Act. Prima facie, the contention appears to be plausible but
on construction and conspectus of the provisions of the Act we think that the
contention is not well founded. Parliament is aware of the provisions of the
Arbitration Act and the Contract Act, 1872 and the consequential remedy

available under Section 9 of the Code of Civil Procedure, i.e. to avail of right
of civil action in a competent court of civil jurisdiction. Nonetheless, the Act
provides the additional remedy.
16. It would, therefore, be clear that the legislature intended to provide a
remedy in addition to the consentient arbitration which could be enforced
under the Arbitration Act or the civil action 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 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 conclusion that the appropriate
forum for adjudication of the disputes would be otherwise those given in the
Act".
40. In National Seeds Corporation Limited Vs. M. Madhusudhan Reddy & Anr. (supra)
the Hon'ble Supreme Court, despite the existence of an Arbitration Agreement
between the parties, upheld the jurisdiction of the Consumer Forum to proceed with a
Consumer Complaint. The following was the view taken by the Apex Court in this
regard:
"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".
(Emphasis supplied)
41. It is thus, absolutely clear that the Consumer Act was envisaged as a special
social legislation to protect consumer rights. Unlike other legislations that create
dispute resolution mechanisms between level players, this legislation establishes a
level-playing field between unequal players i.e. Consumers and large Corporations.
The following observations of the Hon'ble Supreme Court in Lucknow Development
Authority v. M.K. Gupta MANU/SC/0178/1994 : (1994) 1 SCC 243, clearly and finally
delineate the objective behind the enactment of the Consumer Act:
"But before doing so and examining the question of jurisdiction of the District
Forum or State or National Commission to entertain a complaint under the

Act, it appears appropriate to ascertain the purpose of the Act, the objective it
seeks to achieve and the nature of social purpose it seeks to promote as it
shall facilitate in comprehending the issue involved and assist in construing
various provisions of the Act effectively. 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 settled
view that a preamble cannot control otherwise plain meaning of a provision.
In fact the law meets long felt necessity of protecting the common man from
such wrongs for which the remedy under ordinary law for various reasons has
become illusory. Various legislations and regulations permitting the State to
intervene and protect interest of the consumers have become a haven for
unscrupulous ones as the enforcement machinery either does not move or it
moves ineffectively, inefficiently and for reasons which are not necessary to
be stated. The importance of the Act lies in promoting welfare of the society
by enabling the consumer to participate directly in the market economy. It
attempts to remove the helplessness of a consumer which he faces against
powerful business, described as, 'a network of rackets' or a society in which,
'producers have secured power' to 'rob the rest' and the might of public
bodies which are degenerating into storehouses of inaction where papers do
not move from one desk to another as a matter of duty and responsibility but
for extraneous consideration leaving the common man helpless, bewildered
and shocked. The malady is becoming so rampant, widespread and deep that
the society instead of bothering, complaining and fighting against it, is
accepting it as part of life. The enactment in these unbelievable yet harsh
realities appears to be a silver lining, which may in course of time succeed in
checking the rot. A scrutiny of various definitions such as 'consumer',
'service', 'trader', 'unfair trade practice' indicates that legislature has
attempted to widen the reach of the Act. Each of these definitions are in two
parts, one, explanatory and the other expandatory. The explanatory or the
main part itself uses expressions of wide amplitude indicating clearly its wide
sweep, then its ambit is widened to such things which otherwise would have
been beyond its natural import. Manner of construing an inclusive clause and
its widening effect has been explained in Dilworth v. Commissioner of Stamps
[1899 AC 99 : 15 TLR 61] as under:
"'include' is very generally used in interpretation clauses in order to
enlarge the meaning of the words or phrases occurring in the body of
the statute, and when it is so used these words or phrases must be
construed as comprehending, not only such things as they signify
according to their natural, import, but also those things which the
definition clause declares that they shall include."
It has been approved by this Court in Regional Director, Employees' State
Insurance Corpn. v. High Land Coffee Works of P.F.X. Saldanha and Sons
[MANU/SC/0607/1991 : (1991) 3 SCC 617];CIT v. Taj Mahal Hotel,
Secunderabad [MANU/SC/0239/1971 : (1971) 3 SCC 550]and State of
Bombay v. Hospital Mazdoor Sabha [MANU/SC/0200/1960 : AIR 1960 SC 610
: (1960) 2 SCR 866 : (1960) 1 LL J 251].The provisions of the Act thus have
to be construed in favour of the consumer to achieve the purpose of
enactment as it is a social benefit oriented legislation. The primary duty of the

court while construing the provisions of such an Act is to adopt a constructive
approach subject to that it should not do violence to the language of the
provisions and is not contrary to the attempted objective of the enactment."
42. A similar approach has been recommended by the Hon'ble Supreme Court in a
recent decision in National Insurance Co. Ltd. Vs. Hindustan Safety Glass Works Ltd.-
MANU/SC/0390/2017 : (2017) 5 SCC 776, wherein, it has been observed as follows:-
"...... in a dispute concerning a consumer, it is necessary for the courts to
take a pragmatic view of the rights of the consumer principally since it is the
consumer who is placed at a disadvantage vis-Ã -vis the supplier of services
or goods. It is to overcome this disadvantage that a beneficent legislation in
the form of the Consumer Protection Act, 1986 was enacted by Parliament."
2015 AMENDMENT TO THE ARBITRATION ACT
43. Hence, in our reading of the Hon'ble Supreme Court's afore-noted analysis, the
categories discussed above - trusts, tenancy, matrimonial, criminal, insolvency,
guardianship, testamentary, mortgage, etc. continue to be within the exclusive
domain of the Courts, Tribunals and Forums. However, the question that remains for
consideration is whether by the amendment in question, the intention of the
legislature is to relegate the consumer disputes only to private resolution,
notwithstanding the fact that the Consumer Act continues to be a social welfare
legislation, designed to protect the interests of Consumers?
44. To buttress their respective arguments on the nature of the 2015 Amendment,
Learned Counsel for both sides placed heavy reliance on the Reports of the Law
Commission of India. Learned Senior Counsel for the Builder argued that it was the
specific purpose of the amendment to undo the earlier legislative scheme, explained
by the Hon'ble Supreme Court, and hence, any order or judgment of the Court ought
to be completely disregarded for the purpose. For the sake of ready reference, the
relevant portions of the said report are extracted below:
"SCOPE AND NATURE OF PRE-ARBITRAL JUDICIAL INTERVENTION
2 8 . The Act recognizes situations where the intervention of the Court is
envisaged at the pre-arbitral stage, i.e. prior to the constitution of the
arbitral tribunal, which includes sections 8, 9, 11 in the case of Part I
arbitrations and section 45 in the case of Part II arbitrations sections 8, 45
and also section 11 relating to "reference to arbitration" and "appointment of
the tribunal", directly affect the constitution of the tribunal and functioning of
the arbitral proceedings. Therefore, their operation has a direct and
significant impact on the "conduct" of arbitrations. Section 9, being solely for
the purpose of securing interim relief, although having the potential to affect
the rights of parties, does not affect the "conduct" of the arbitration in the
same way as these other provisions. It is in this context the Commission has
examined and deliberated the working of these provisions and proposed
certain amendments.
29. The Supreme Court has had occasion to deliberate upon the scope and
nature of permissible pre-arbitral judicial intervention, especially in the
context of section 11 of the Act. Unfortunately, however, the question before

the Supreme Court was framed in terms of whether such a power is a
"judicial" or an "administrative" power - which obfuscates the real issue
underlying such nomenclature/description as to the.
- scope of such powers - i.e. the scope of arguments which a Court
(Chief Justice) will consider while deciding whether to appoint an
arbitrator or not - i.e. whether the arbitration agreement exists,
whether it is null and void, whether it is voidable etc; and which of
these it should leave for decision of the arbitral tribunal.
- the nature of such intervention - i.e. would the Court (Chief
Justice) consider the issues upon a detailed trial and whether the
same would be decided finally or be left for determination of the
arbitral tribunal
3 0 . After a series of cases culminating in the decision in SBP v. Patel
Engineering, MANU/SC/1787/2005 : (2005) 8 SCC 618, the Supreme Court
held that the power to appoint an arbitrator under section 11 is a "judicial"
power. The underlying issues in this judgment, relating to the scope of
intervention, were subsequently clarified by RAVEENDRAN J. in National
Insurance Co. Ltd. V. Boghara Polyfab Pvt. Ltd., MANU/SC/4056/2008 :
(2009) 1 SCC 267, where the Supreme Court laid down as follows -
"1. The issues (first category) which Chief Justice/his designate will
have to decide are:
(a) Whether the party making the application has
approached the appropriate High Court?
(b) Whether there is an arbitration agreement and whether
the party who has applied under section 11 of the Act, is a
party to such an agreement?
2 . The issues (second category) which the Chief Justice/his
designate may choose to decide are:
(a) Whether the claim is a dead (long barred) claim or a live
claim?
(b) Whether the parties have concluded the
contract/transaction by recording satisfaction of their mutual
rights and obligation or by receiving the final payment
without objection?
3 . The issues (third category) which the Chief Justice/his designate
should leave exclusively to the arbitral tribunal are:
(a) Whether a claim falls within the arbitration clause (as for
example, a matter which is reserved for final decision of a
departmental authority and excepted or excluded from
arbitration)?
(b) Merits of any claim involved in the arbitration."
3 1 . The Commission is of the view that, in this context, the same test

regarding scope and nature of judicial intervention, as applicable in the
context of section 11, should also apply to sections 8 and 45 of the Act -
since the scope and nature of judicial intervention should not change upon
whether a party (intending to defeat the arbitration agreement) refuses to
appoint an arbitrator in terms of the arbitration agreement, or moves a
proceeding before a judicial authority in the face of such an arbitration
agreement.
32. In relation to the nature of intervention, the exposition of the law is to
be found in the decision of the Supreme Court in Shin Etsu Chemicals Co.
Ltd. V. Aksh Optifibre, MANU/SC/0488/2005 : (2005) 7 SCC 234, (in the
context of section 45 of the Act), where the Supreme Court has ruled in
favour of looking at the issues/controversy only prima facie.
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. In so far 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 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. The amendment also envisages that there
shall be a conclusive determination as to whether the arbitration agreement
is null and void. In the event that the judicial authority refers the dispute to
arbitration and/or appoints an arbitrator, under sections 8 and 11
respectively, such a decision will be final and non-appealable. An appeal can
be maintained under section 37 only in the event of refusal to refer parties to
arbitration, or refusal to appoint an arbitrator."
(underlined for ready reference)
45. In our conviction, the purpose of the Law Commission's Report, is self-evident. It
was dedicated to the "scope and nature of permissible pre-arbitral judicial
intervention, especially in the context of Section 11 of the Act" and the extension of
the Apex Court's view ["after a series of cases culminating in the decision in SBP &
Co. (Supra), in which, the Supreme Court had held that "the power to appoint an
arbitrator under Section 11 is a "judicial power"] to Sections 8 and 45 of the Act-
"since the scope and nature of judicial intervention should not change upon whether
a party (intending to defeat the arbitration agreement) refuses to appoint an
arbitrator in terms of the arbitration agreement, or moves a proceeding before a
judicial authority in the face of such an arbitration agreement."
46. It is manifest that the Report did not even refer to the law evolved by the Hon'ble
Supreme Court regarding the non-arbitrability of consumer disputes, or for that
matter, any other kind of dispute including tenancy, matrimonial, criminal,
guardianship etc. Therefore, in our view, the import of the Law Commission's Report

is very clear and limited-it deals with the fallout of the judgment in SBP & Co. v.
Patel Engineering (supra) regarding the scope of judicial intervention in the context
of the appointment of an Arbitrator, and nothing more.
4 7 . Moreover, the widely touted argument on behalf of the Builder, surrounding
Section 5 of the Act has a simple answer within the Arbitration Act itself, in Section
2(3). Section 5 of the Act reads:
"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."
Learned Counsel for the Builder suggested that judicial intervention is allowed only
within the contours of Part I of the Act. In other words, he argued that the complete
repository of all possible opportunities of judicial intervention with regard to disputes
covered by an Arbitration Agreement is by way of Arbitration under the Arbitration
Clause. We are unable to persuade ourselves to agree with this blanket proposition,
the dangers of which, have already been highlighted above. The non-arbitrability of
some categories of disputes is not covered in Part I of the Arbitration Act, is no
longer res-integra. An offender cannot seek an exit from the criminal justice system
by virtue of a duly executed Arbitration Agreement. Pertinently, this safeguard for
devices and mechanisms envisaged through other legislations is found in Section
2(3) of the Arbitration Act itself, which reads as follows:
"(2) Definitions.
....................
"(3) This Part shall not affect any other law for the time being in force by
virtue of which certain disputes may not be submitted to arbitration."
48. The mandate of the provision is that the statutory regime concerning Arbitration
will not be applicable where public law regime operates. Unlike many general savings
Sections, this is a Section that specifically saves the application of the Arbitration Act
to certain disputes (which) may not be submitted to arbitration. It means that there
are certain disputes that are to be adjudicated and governed by statutory enactments,
established for specific public purpose and to sub-serve a particular public policy.
Such disputes are not arbitrable. In other words, the Arbitration Act itself excludes
from its purview the disputes with respect to which statutory remedy is put in place
to sub-serve a public policy. A catena of such disputes, highlighted above, including
the Consumer disputes, are protected by the umbrella of Section 2(3) of the
Arbitration Act, that were not intended to be snatched vide the subject amendment to
Section 8 of the Arbitration Act. In our view, therefore, the Legislature clearly
intended to preserve the larger legal framework by virtue of which it bestowed the
responsibility of the resolution of some disputes--including Consumer disputes,
solely to public Courts, Tribunals and Forums. We are convinced that neither the
amendment to Section 8 of the Arbitration Act, nor Section 5 of the Arbitration Act
affects status quo ante.
49. Support to the above view is also lent by Section 79 of the recently enacted Real
Estate (Regulation and Development) Act, 2016 (for short "the Real Estate Act").
Section 79 of the said Act reads as follows:-
"79. Bar of jurisdiction - No civil court shall have jurisdiction to entertain any

suit or proceeding in respect of any matter which the Authority or the
adjudicating officer or the Appellate Tribunal is empowered by or under this
Act to determine and no injunction shall be granted by any court or other
authority in respect of any action taken or to be taken in pursuance of any
power conferred by or under this Act."
It can thus, be seen that the said provision expressly ousts the jurisdiction of the
Civil Court in respect of any matter which the Real Estate Regulatory Authority,
established under Sub-section (1) of Section 20 or the Adjudicating Officer,
appointed under Sub-section (1) of Section 71 or the Real Estate Appellant Tribunal
established under Section 43 of the Real Estate Act, is empowered to determine.
Hence, in view of the binding dictum of the Hon'ble Supreme Court in A. Ayyaswamy
(supra), the matters/disputes, which the Authorities under the Real Estate Act are
empowered to decide, are non-arbitrable, notwithstanding an Arbitration Agreement
between the parties to such matters, which, to a large extent, are similar to the
disputes falling for resolution under the Consumer Act.
50. At this juncture, we may also deal with the second argument revolving around
Section 5 of the Arbitration Act. Learned Senior Counsel for the Builder suggested
that "unfortunately, the Hon'ble Supreme Court's attention was not drawn to Section
5 of the Arbitration Act." He indicated that if the same had been done, the Supreme
Court would not have taken its position on the non-arbitrability of Consumer
disputes. As detailed above, Section 5 does not affect the Hon'ble Supreme Court's
view and Section 2(3) of the Arbitration Act would have only consolidated this
position.
51. Moreover, this submission is squarely in the teeth of Articles 141 and 144 of the
Constitution of India; a number of judgments of the Hon'ble Supreme Court and the
fundamental doctrine of stare decisis. In South Central Railway Employees Coop.
Credit Society Employees Union Vs. B. Yashodabai & Ors. MANU/SC/1133/2014 :
(2015) 2 SCC 727 it was held:
"15. If the view taken by the High Court is accepted, in our opinion, there
would be total chaos in this country because in that case there would be no
finality to any order passed by this Court. When a higher court has rendered
a particular decision, the said decision must be followed by a subordinate or
lower court unless it is distinguished or overruled or set aside. The High
Court had considered several provisions which, in its opinion, had not been
considered or argued before this Court when CA No. 4343 of 1988 was
decided. If the litigants or lawyers are permitted to argue that something
what was correct, but was not argued earlier before the higher court and on
that ground if the courts below are permitted to take a different view in a
matter, possibly the entire law in relation to the precedents and ratio decided
will have to be rewritten and, in our opinion, that cannot be done. Moreover,
by not following the law laid down by this Court, the High Court or the
subordinate courts would also be violating the provisions of Article 141 of
the Constitution of India.
5 2 . In an earlier judgment in Suganthi Suresh Kumar Vs. Jagdeeshan
MANU/SC/0037/2002 : (2002) 2 SCC 420, the Hon'ble Supreme Court had observed
thus:-

"It is impermissible for the High Court to overrule the decision of the Apex
Court on the ground that the Supreme Court laid down the legal position
without considering any other point. It is not only a matter of discipline for
the High Courts in India, it is the mandate of the Constitution as provided in
Article 141 that the law declared by the Supreme Court shall be binding on
all courts within the territory of India. It was pointed out by this Court in Anil
Kumar Neotia Vs. Union of India MANU/SC/0027/1988 : (1988) 2 SCC 587
that the High Court cannot question the correctness of the decision of the
Supreme Court even though the point sought before the High Court was not
considered by the Supreme Court."
(Emphasis supplied)
53. Particularly, on the aspect of lack of consideration of some aspects by a higher
Court, in Director of Settlements, A.P. & Ors. Vs. M.R. Apparao & Anr.
MANU/SC/0219/2002 : (2002) 4 SCC 638 the Hon'ble Supreme Court made the
following emphatic observations:-
"The decision in a judgment of the Supreme Court cannot be assailed on the
ground that certain aspects were not considered or the relevant provisions
were not brought to the notice of the Court (see Ballabhadas Mathurdas
Lakhani v. Municipal Committee, Malkapur MANU/SC/0391/1970 : (1970) 2
SCC 267 and AIR 1973 SC 794).When the Supreme Court decides a principle
it would be the duty of the High Court or a subordinate court to follow the
decision of the Supreme Court. A judgment of the High Court which refuses
to follow the decision and directions of the Supreme Court or seeks to revive
a decision of the High Court which had been set aside by the Supreme Court
is a nullity.
(Emphasis supplied)
54. Finally, acceptance of the arguments canvassed on behalf of the Builder would
lead to another undesirable outcome - setting at naught the entire purpose and object
of the Consumer Act, as detailed above, viz. to ensure speedy, just and expeditious
resolution and disposal of consumer disputes. Exposure of such disputes to the
Arbitration Act may invite application of portions of the Arbitration Act that are
enforceable only through Civil Courts, which would be repugnant to the manifest
purpose underlying the enactment of the Consumer Act. Undoubtedly, that could not
have been the intention of the Legislature while substituting sub-section (1) of
Section 8 of the Arbitration Act. As an illustration, a brief reference to Section 29-A of
the Arbitration Act would suffice. It provides that if the award is not made within the
time specified in Sub-section (1) or the extended period, specified under Sub-section
(3) [on consent by the parties], the mandate of the Arbitrator(s), terminate unless
the Civil Court of Competent jurisdiction, extends the period for making the award,
only on being satisfied that a sufficient cause for such extension is made out.
55. In view of the afore-going discussion, we arrive at the following conclusions: (i)
the disputes which are to be adjudicated and governed by statutory enactments,
established for specific public purpose to sub-serve a particular public policy are not
arbitrable; (ii) there are vast domains of the legal universe that are non-arbitrable
and kept at a distance from private dispute resolution; (iii) the subject amendment
was meant for a completely different purpose, leaving status quo ante unaltered and
subsequently reaffirmed and restated by the Hon'ble Supreme Court; (iv) Section
2(3) of the Arbitration Act recognizes schemes under other legislations that make

disputes non-arbitrable and (iv) in light of the overall architecture of the Consumer
Act and Court-evolved jurisprudence, amended sub-section (1) of Section 8 cannot
be construed as a mandate to the Consumer Forums, constituted under the Act, to
refer the parties to Arbitration in terms of the Arbitration Agreement.
56. Consequently, we unhesitatingly reject the arguments on behalf of the Builder
and hold that an Arbitration Clause in the afore-stated kind of Agreements 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.
57. The reference is answered accordingly.
5 8 . All the Complaints shall now be listed on 28.08.2017 before the Appropriate
Bench(s), for adjudication on merits.
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MANU/CF/0480/2017

Equivalent Citation: III(2017)C PJ270(NC )

IN THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

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