Case Details Smt. M. Hemalatha Devi & Ors. vs B. Udayasri

Court

Supreme Court of India

Date

5 October 2023

Case No.

Civil Appeal Nos. 6500-6501 of 2023

Result

Dismissed

Bench

Sanjay Kishan Kaul, Sudhanshu Dhulia

Citation

[2023] 13 S.C.R. 258 : 2023 INSC 870

Issue for consideration

Whether the dispute between the parties is arbitrable, and once a party has availed the remedy before a public forum under a special beneficial legislation, can it be compelled to go for arbitration. Consumer Protection Act, 2019 – Consumer Protection Act, 1986 – Arbitration Act & Conciliation, 1996 – s.11(6A), 8(1) – Arbitrability of consumer dispute – Constructed house/villa was not handed over to the buyer/consumer-respondent on time – Later, builder terminated the agreement and the appellants-builders/owners filed application u/s.11(5), (6), Arbitration Act, 1996 before the High Court for appointment of Arbitrator, in terms of the arbitration clause in the agreement – Respondent filed complaint before the District Forum – Appellants’ application was dismissed, liberty was granted to file a s.8 application before the District Forum which when filed was dismissed – Review filed by the appellants, dismissed – Plea of the appellants that the High Court erred in dismissing their application as under the amended provisions of s.11, Arbitration Act, 1996 i.e. after insertion of sub-section 6A to s.11, by way of an amendment in 2016, the High Court had no choice but to refer the matter for arbitration: Held: All disputes are not capable of being referred to arbitration – The exclusion of a dispute from arbitration may be express or implied, depending upon the nature of the dispute, and a party to a dispute cannot be compelled to resort to arbitration merely for the reason that it has been provided in the contract, to which it is a signatory – The arbitrability of a dispute has to be examined when one of the parties seeks redressal under a welfare legislation, in spite of being a signatory to an arbitration agreement – Consumer Protection Act is a piece of welfare legislation with the primary purpose of protecting the interest of a consumer – Consumer disputes are assigned by the legislature to public fora, as a measure of public policy – Therefore, by necessary implication such disputes will fall in the category of non-arbitrable disputes, and these disputes should be kept away from a private fora such as ‘arbitration’, unless both the parties willingly opt for arbitration over the remedy before public fora – In the present case, the application u/s.11, Arbitration Act, 1996 filed by the appellants for appointment of an arbitrator, was not maintainable – Impugned orders which held this position upheld – High Court adopted the right approach in its two impugned orders, where it declined to interfere in the matter and appoint an arbitrator – Reasoning given in Emaar MGF Land Ltd. v. Aftab Singh [2018] 14 SCR 791 (Emaar III) would be equally applicable to s.11 application before the High Court – Both the provisions incorporated in s.8 and s.11 [i.e. sub-section (1) and sub-section 6A respectively], seemingly restrict the scope of the examination by the concerned courts, in their reference to arbitration, or appointment of arbitrator, as the case might be, and the language being common, “notwithstanding any judgment, decree or order” places a similar question before the two courts – Appeals dismissed. [Paras 9, 22, 23]

Headnote

Consumer Protection Act, 2019 – Arbitration Act, 1996 – ss.11,8 – Plea by the appellants that since it is the builder who first approached the “Court” by filing an application u/s.11 for appointment of arbitrator, in terms of the agreement, the consumer should have submitted before the jurisdiction of the Arbitration and Conciliation Act, as agreed between the parties (in their agreement), rather than seeking remedy before the Consumer Forum:

Held: The question is of election, or of choice, and not of which party had approached the court first – More importantly it would be the nature of the dispute, which would determine the forum for its redressal – The law gives this choice to the consumer to either avail a remedy under the Consumer Protection Act, by filing a complaint before the Judicial Authority, or go for arbitration – This option is not available to the builder, as they are not ‘Consumers’, under the 2019 Act – It is the respondent here who had to make a “choice” between submitting before the private fora i.e., the Arbitration Tribunal or to make a complaint before the Consumer Forum, which is a public for a – She chose to go to the latter – Her reply before the High Court on the s.11 application of the builder was not her submission to the arbitration process – In her reply, she informed the High Court of the complaint made by her as a consumer before the District Consumer Forum, which is a ‘Judicial Authority’ and hence s.8 of the Arbitration Act would come into play and not an application u/s.11 of the Arbitration Act – Merely because the builder had approached a Court first (u/s.11, Arbitration Act, 1996) will itself not oust the jurisdiction of the Consumer Courts – The jurisdiction of a Court is not determined by the fastest finger first, but the nature of the dispute, the public policy in the matter, the will of the legislature, the election or choice of the consumer amongst various factors. [Para 10]

JUDGMENT / ORDER OF THE SUPREME COURT JUDGMENT SUDHANSHU DHULIA, J. Leave granted. 2. The appellants before this Court have challenged two orders of the Telangana High Court. The first is the order dated 19.05.2022, dismissing the application of the appellants filed for the appointment of an arbitrator under Section 11 of the Arbitration & Conciliation Act, 1996 (for short ‘Arbitration Act, 1996’). It was dismissed by the High Court on the ground that the dispute was pending before a Judicial Authority, which is the District Consumer Disputes Redressal Forum (for short ‘District Consumer F

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