Skip to main content
Browse Law School Education ADR: Arbitration Important Arbitration Cases

READ FULL CASE

Now let’s start with another interesting case which is that of Emaar MGF Land Limited & Anr. v. Aftab Singh, 2018 SCC Online SC 2771—which is a 2018 SC case.

BRIEF FACTS:

The facts of this case are that the appellant, who is a builder, had developed an integrated township in Mohali, Punjab. The respondent was one of the purchasers of a villa in the said township. A Buyer’s agreement was entered into between the appellant and the respondent. In the Buyer’s agreement, there was an arbitration clause which provided for settlement of disputes between parties under the 1996 Act. However, the respondent filed a Complaint before the National Consumer Dispute Redressal Commission (NCDRC) against the appellant, praying for a direction to the opposite Parties to deliver the possession of the built-up villa and adjustment of final accounts, penalty etc. among others.

The appellant also filed a reply to the complaint. The appellant also filed an application under Section 8 of the 1996 Act, for referring the matter to arbitration for and on behalf of the appellant. In the application, appellant has referred to Clause 43 of the Buyer’s agreement, which according to appellant would constitute a valid arbitration agreement between them. 

The NCDRC held that 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. The Commission further held that the Builder cannot circumscribe the jurisdiction of a Consumer Forum, notwithstanding the amendments made to Section 8 of the Arbitration & Conciliation Act. The appellant then filed a Civil Appeal, challenging the judgment of NCDRC in the Supreme Court, which was dismissed. Therefore, this review petition was filed.

ISSUES:

Now, what were the issues in this case then?

First, whether NCDRC committed an error in rejecting the application of the appellant filed under Section 8 of the 1996 Act, praying for reference to the arbitration as per Arbitration clause in the builders agreement?

Second question was, 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 other Court” in sub-section (1) of Section 8?

The third question that was raised over here was, whether by the insertion of words “notwithstanding any judgment, decree or order of the Supreme Court or any Court” under Section 8(1) of the (Amendment) Act, 2015 whether the legislature intended to do away with the decision of the judgments of the Supreme Court laying down that the Consumer Protection Act being a special remedy can be initiated and continued despite there being any arbitration agreement between the parties?

HELD:

Now what did the Supreme Court hold in this case?

The Hon’ble Supreme Court held that—“ Amendments under Section 8 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 was prima facie finding that no valid arbitration agreement exists between them. Notwithstanding any prior judicial precedents referred to under Section 8(1) relates to those judicial precedents, which explained the discretion and power of the judicial authority to examine various aspects while exercising power under Section 8…”

The Supreme Court further held that the amendment in Section 8 cannot be given such expansive meaning and intent so as to inundate the 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 Court also made an important observation in the present case, that all disputes relating to rights in personam are considered to be amenable to arbitration; and all disputes relating to rights that are in rem are required to be adjudicated by courts and public tribunals, being unsuited for private arbitration between the parties.

The Court relied on the judgement in the case of National Seeds Corporation Limited v. M. Madhusudhan Reddy and others, (2012) 2 SCC 506—which is a 2012 SC case, wherein it was clearly stated that the remedy of arbitration is not the only remedy which is available to any consumer. 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 consumer opts for the remedy of arbitration, then it may be possible to say that he cannot, subsequently, file a complaint under the Consumer Protection Act.

The Court observed that with the 2015, amendment of the arbitration act the words “notwithstanding any judgment, decree or order of the Supreme Court or any other Court” were meant only to those precedents where it was laid down that the judicial authority while making reference under Section 8 shall entitle 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 review petition therefore was dismissed by the SC.

RATIO:

Now, if we look at the ratio that is derived from this judgement. The 2015 amendment to Section 8 cannot be given such expansive meaning and intent so as to inundate the entire regime of special legislations where such disputes were held to be not arbitrable.

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 to by 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.

Raw HTML