Judgement Briefs

Alternative Dispute Resolution

Emaar MGF Land Ltd. v. Aftab Singh

(2019) 12 SCC 751

Citation
(2019) 12 SCC 751
Court
Supreme Court of India
Date
10 December 2018
Bench
A.K. Sikri and S. Abdul Nazeer, JJ.

Facts

  • Homebuyers entered into agreements with Emaar MGF for purchase of residential properties.
  • The builder-buyer agreements contained arbitration clauses.
  • Delays and alleged deficiencies arose in the housing projects.
  • Consumers filed complaints before consumer forums seeking:
  • refund;
  • compensation;
  • interest;
  • possession; and
  • relief for deficiency in service.
  • Emaar MGF applied under Section 8 of the Arbitration and Conciliation Act.
  • It argued that after the 2015 amendment:
  • the court or forum must refer parties wherever a valid arbitration agreement exists;
  • the amended non-obstante wording overrides earlier consumer-law decisions; and
  • the buyers were contractually bound to arbitrate.
  • The National Consumer Disputes Redressal Commission rejected the applications.
  • Emaar MGF appealed to the Supreme Court.

Issue

  • Whether an arbitration clause ousts consumer-forum jurisdiction.
  • Whether amended Section 8 overrides the Consumer Protection Act.
  • Whether consumers must arbitrate once the builder invokes the clause.

Rule

  • The Consumer Protection Act creates a special, additional and beneficial remedy.
  • Its remedy exists in addition to:
  • civil suits;
  • arbitration; and
  • other contractual remedies.
  • An arbitration clause does not bar a consumer from choosing the statutory consumer forum.
  • Section 2(3) of the Arbitration Act preserves other laws under which certain disputes may not be submitted to arbitration.
  • The 2015 amendment to Section 8 strengthened referral in ordinary judicial proceedings.
  • It did not repeal or override the special jurisdiction created by consumer legislation.
  • Beneficial statutes must be interpreted to protect the class for whom they were enacted.

Application

  • The homebuyers did not approach an ordinary civil court merely to enforce the builder-buyer agreement.
  • They invoked a special statutory remedy created to address:
  • unequal bargaining power;
  • deficiency in service;
  • unfair trade practices;
  • delay;
  • consumer compensation; and
  • accessible dispute resolution.
  • Compelling arbitration would undermine the consumer’s statutory choice.
  • Builder-buyer agreements are frequently standard-form contracts.
  • The existence of an arbitration clause does not necessarily represent a freely negotiated waiver of statutory protection.
  • The Court reviewed earlier decisions consistently holding that:
  • arbitration is not an exclusive remedy;
  • consumer forums retain jurisdiction; and
  • consumers may choose the more beneficial statutory procedure.
  • Parliament enacted the 2015 arbitration amendment against that settled legal background.
  • It did not expressly state that consumer jurisdiction was abolished.
  • A general amendment to Section 8 could not impliedly repeal the special Consumer Protection Act.
  • The non-obstante wording required ordinary judicial authorities to respect arbitration agreements.
  • It did not require a specialised statutory forum to abandon a remedy that Parliament expressly made additional.
  • The builder remained free to invoke arbitration in an appropriate dispute if the consumer chose that route.
  • It could not force the consumer away from the statutory forum.
  • The Court also treated consumer disputes as a recognised category in which public and beneficial policy justifies specialised adjudication.
  • Later decisions, including Vidya Drolia, continued to cite consumer disputes as non-arbitrable at the consumer’s instance in this statutory sense.
  • The decision protects the remedial choice rather than declaring that every factual consumer dispute is inherently incapable of private settlement.

Conclusion

  • The Supreme Court held that consumer forums are not required to refer complaints to arbitration merely because a builder-buyer agreement contains an arbitration clause.
  • The Consumer Protection Act supplies an additional statutory remedy.
  • Emaar MGF’s request for compulsory arbitration was rejected.
  • Use this case for: an arbitration clause cannot deprive a consumer of the special remedy and forum provided by consumer-protection legislation.