Arbitration clause does not bar filing complaints

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In M/S Emaar MGF Land & Anr v Aftab Singh, the Supreme Court dismissed an appeal where the National Consumer Dispute Redressal Commission (NCDRC) held that an arbitration clause in buyers’ agreements does not circumscribe the jurisdiction of a consumer forum, notwithstanding amendment of section 8 of the Arbitration and Conciliation Act, 1996.

In this case, the complainants purchased residential villas/flats/plots in Gurugram and Mohali from Emaar, a property developer, and executed buyers’ agreements, and subsequently alleged that Emaar had failed to deliver possession of these villas/flats/plots by the date agreed in the buyers agreement. The buyers sought directions from the NCDRC to take possession of the villas, etc., and for the developer to provide compensation. However, Emaar filed a set of applications under section 8 of the arbitration act that the parties be referred to arbitration as per the buyers’ agreements executed between them.

The issue before the NCDRC was whether section 8 mandates consumer forums, constituted under the Consumer Protection Act, 1986, to refer parties to arbitration in terms of a valid arbitration agreement.

The NCDRC, while dismissing the applications, held that even if there exists an arbitration clause in an agreement and a complaint is made by the consumer in relation to efficiency of service, then the existence of an arbitration clause will not be a bar to the entertainment of the complaint by the redressal agency constituted under the Consumer Protection Act, since the remedy provided under the consumer act is in addition to provisions of any other law currently in force.

The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at [email protected] or [email protected] Readers should not act on the basis of this information without seeking professional legal advice.