The Supreme Court dismissed the review petitions filed by the appellant builders against the judgment dated 13.02.2018 of the Supreme Court itself stating that the reasoning of the NCDRC in holding that consumer disputes are non-arbitrable and that the arbitration clause in an agreement cannot bypass the jurisdiction of Consumer Courts.
The appellants contended that the enactment of the Arbitration and Conciliation Amendment of 2015 mandated the judicial authority,in this case the consumer forum, to refer the dispute for arbitration if there exists a valid arbitration agreement. It was further contended that the Supreme Court had pronounced the Consumer Forum to be covered by the term ‘judicial authority’ for the purposes of Section 8 of the Arbitration and Conciliation Act,1996 which thereby makes it obligatory to refer the matter dispute to arbitration as per the agreement.
The following issues were framed for consideration arising out of the review as follows:
(i) Whether NCDRC committed error in rejecting the application of the appellant filed under Section 8 of 1996, Act praying for reference to the arbitrator as per Arbitration clause in the builders agreement?
(ii) 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 Court” in sub-section (1) of Section 8?
(iii) Whether NCDRC as well as this Court committed error in not adverting to the above statutory amendment which completely changed the legal position as was earlier existing prior to the aforesaid amendment?
(iv) Whether by the insertion of words “notwithstanding any judgment, decree or order of the Supreme Court or any Court” under Section 8(1) by the (Amendment) Act, 2015 legislature intended to do away with the decision of judgments of Supreme Court laying down that Consumer Protection Act being special remedy can be initiated and continued despite there being any arbitration agreement between the parties?
Addressing the contentions of the appellant as well as referring to the Amendment Act of 2015, the Bench of Justice UU Lalit and Justice Ashok Bhushan observed:
“The words “notwithstanding any judgment, decree or order of the Supreme Court or any Court” added by amendment in Section 8 were with intent to minimise the intervention of judicial authority in context of arbitration agreement. As per the amended Section 8(1), the judicial authority has only to consider the question whether the parties have a valid arbitration agreement? The Court cannot refuse to refer the parties to arbitration “unless it finds that prima facie no valid arbitration agreement exists”. The amended provision, thus, limits the intervention by judicial authority to only one aspect, i.e. refusal by judicial authority to refer is confined to only one aspect, when it finds that prima facie no valid arbitration agreement exists.”
Perusing the various precedents and arguments of the counsels for the parties, the Bench dismissed the review petitions and answered the issues framed in totality as follows:
“52. The amendment in Section 8 cannot be given such expansive meaning and intent so as to inundate 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 submission of the petitioner that after the amendment the law as laid down by this Court in National Seeds Corporation Limited(supra) is no more a good law cannot be accepted. The words“notwithstanding any judgment, decree or order of the Supreme Court or any 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 words added in Section 8 cannot be meant for any other meaning……..”
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