Will an arbitration clause exclude a consumer forum?

By Trinath Tadakamalla and Manvi Adlakha, Phoenix Legal
0
3205
LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link

Persons and companies who claim to be “consumers” of goods or services (such as real estate, insurance, etc.) can approach the National Consumer Disputes Redressal Commission (NCDRC). Indian courts have held that companies can do so even where their contract contains an arbitration clause, as the NCDRC provides a parallel remedy. In a recent decision of the NCDRC, upheld by the Supreme Court, it has been held that this position will hold even in light of far-reaching amendments to the Arbitration and Conciliation Act, 1996 (arbitration act).

Trinath TadakamallaPartnerPhoenix Legal
Trinath Tadakamalla
Partner
Phoenix Legal

In the case of Aftab Singh v Emaar MGF Land, the NCDRC was hearing a matter related to amendments made to section 8(1) of the arbitration act. Home buyers approached the NCDRC after the builder failed to deliver possession. The builder relied on arbitration clauses in the buyers’ agreement to seek reference to arbitration. The question that arose was whether the legislature’s intention was to relegate the consumer disputes in that case only to arbitration notwithstanding the existence of the Consumer Protection Act, 1986 (COPRA), and its social welfare purpose. The NCDRC, by way of an order of 13 July 2017, held that the NCDRC continued to offer a parallel remedy (in keeping with an earlier line of judgments).

Section 8(1) mandates that a judicial authority “shall” refer the parties to arbitration, “notwithstanding any judgment, decree or order of the Supreme Court … unless it finds that prima facie no valid arbitration agreement exists”. The buyers argued that irrespective of an arbitration clause, consumer forums could hear cases. The builder argued that the arbitration act was amended to oust the jurisdiction of courts.

You must be a subscribersubscribersubscribersubscriber to read this content, please subscribesubscribesubscribesubscribe today.

For group subscribers, please click here to access.
Interested in group subscription? Please contact us.

你需要登录去解锁本文内容。欢迎注册账号。如果想阅读月刊所有文章,欢迎成为我们的订阅会员成为我们的订阅会员

已有集团订阅,可点击此处继续浏览。
如对集团订阅感兴趣,请联络我们

Trinath Tadakamalla is a partner and Manvi Adlakha is an associate at the New Delhi office of Phoenix Legal.

PL

Second Floor

254, Okhla Industrial
Estate Phase III

New Delhi – 110 020
India

Vaswani Mansion, 3/F

120 Dinshaw Vachha Road, Churchgate

Mumbai – 400 020
India

Contact details:

Tel +91 11 4983 0000 / +91 22 4340 8500

Fax: +91 11 4983 0099 / +91 22 4340 8501

Email: delhi@phoenixlegal.in

mumbai@phoenixlegal.in

LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link