Case: – M. Hemalatha Devi & Ors v/s B. Udayasri; Civil Appeal No.6500 – 6501 of 2023
In a recent ruling, the Supreme Court reaffirmed that consumer disputes are non-arbitrable and that parties cannot be compelled into arbitration solely based on their status as signatories to an arbitration agreement.
The judgment of the Apex Court elucidated that consumer disputes, by legislative design, are entrusted to public forums as a matter of public policy. Therefore, such disputes inherently fall under the category of non-arbitrable disputes unless both parties mutually opt for arbitration over the remedies offered by public fora. The Hon’ble Court also made observations emphasizing that the Consumer Protection Act is a welfare legislation, primarily focused on safeguarding consumer interests.
This case involved a consumer complaint filed by a home buyer against a builder. The builder, the Appellant before the Supreme Court, had sought the appointment of an arbitrator under Section 11 of the Arbitration & Conciliation Act, 1996, and had also filed an application under Section 8 for arbitration. The Telangana High Court rejected these applications, affirming that the dispute was pending before the District Consumer Disputes Redressal Forum, asserting the non-arbitrable nature of the issue.
The Apex Court emphasized that the nature of the dispute determines the appropriate forum for resolution. In consumer disputes, the consumer holds the option to approach either the consumer forum or opt for arbitration. In this particular instance, the Consumer had chosen the Consumer Redressal Forum for resolution, thus exercising their right as per the Consumer Protection Act.
The Hon’ble Court further stressed that despite the existence of an arbitration agreement, consumers cannot be deprived of the remedies provided under the Consumer Protection Act, considering it a special and beneficial legislation designed for consumers’ welfare. The court also observed that while Sections 8 and 11 of the Arbitration Act limit judicial intervention in arbitration matters, matters deemed non-arbitrable or covered under specific legislation such as the Consumer Protection Act cannot be automatically referred for arbitration.
Ultimately, the Supreme Court upheld the Telangana High Court’s decision, refusing to interfere with the orders declining the appointment of an arbitrator, affirming the non-arbitrable nature of the dispute under consideration.
Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate
Connect with Mr. Bhatt on Linkedin: https://www.linkedin.com/in/adit-ravishbhatt/
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